Michael Ross – Chief Financial Officer and Secretary Larry Rossy – Chief Executive Officer Neil Rossy – Chief Merchandising Officer

Irene Nattel – RBC Capital Markets Perry Caicco – CIBC World Markets Emily Foo – BMO Capital Markets Derek Dley – Canaccord Genuity Vishal Shreedhar – National Bank Financial David Hartley – Credit Suisse Jim Durran – Barclays Keith Howlett – Desjardins Chris Li – Bank of America Brian Morrison – TD Securities

Good morning and welcome to the Dollarama Conference Call for the Fourth Quarter and Year End Results of Fiscal Year 2015. Today’s call will be led by Mr. Larry Rossy, Chief Executive Officer. Also with Mr. Rossy on the phone today is, Mr. Michael Ross, Chief Financial Officer and Secretary. Furthermore, during the question period, Mr. Neil Rossy, Chief Merchandising Officer will also be available for questions. They will begin with a short presentation followed by a question-and-answer period open exclusively to investors and financial analysts. For your convenience, the press release along with the annual financial statements and Management’s Discussion and Analysis are available on the Investor Relations section of the website at dollarama.com. They are also available on SEDAR. Before we start, I have been asked by Dollarama to read the following message regarding forward-looking statements. I would like to remind everyone that Dollarama’s remarks today may contain forward-looking statements about its current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments. Several assumptions were made by Dollarama in preparing these forward-looking statements and many factors could cause actual results, levels of activity, performance, achievements, future events or developments, to differ materially from those expressed or implied by the forward-looking statements. As a result, Dollarama cannot guarantee that any forward-looking statements will materialize and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on such assumptions and risks, please consult the cautionary statement regarding forward-looking information contained in Dollarama’s MD&A dated March 25, 2015, available at www.sedar.com. Forward-looking statements represent Dollarama’s expectations as of March 25, 2015, and except as may be required by applicable securities laws. Dollarama has no intention and undertakes no obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise. I would now like to turn the conference call over to Mr. Rossy.

You’re ready?

Okay, thank you, operator, and good morning, everyone. This morning we reported our financial results for the fourth quarter and fiscal year 2015 and overall, we are a very pleased with the solid growth and sales and improved bottom line results. Our profitability remains driven by three fundamental elements, a broad assortment of product that compelling prices and aggressive store network expansion strategy across Canada and we focus on productivity and cost reduction initiatives that drive improved operating results. I will briefly go over the fiscal 2015 results and store expansion highlights and Michael will provide you with a more detailed update on our and financial key operating initiatives for the fourth quarter and fiscal year ended February 1, 2015. From a financial point of view, fiscal 2015 was an excellent year for Dollarama. We’re able to deliver strong top line sales growth of 12.9% for the year. These sales were driven by continued expansion of our store network and strong same-store sales growth of 5.7%, including a strong performance in the fourth quarter as same-store sales increased by 8.5%. We continue to generate strong margins through our compelling merchandise offering at truly great value. This year our margin was 36.9%, as we absorbed part of the headwinds related to the weaker Canadian dollar, but benefited from the positive scaling effects of higher sales on occupancy costs, as well as continued logistic efficiencies. Our net earnings improved by 18% to $295 million in fiscal 2015, while diluted earnings per share increased by 27% to $2.21 per share. From a real estate point of view, we opened 81 net new stores over the past 12 months, compared to 89 net new openings in the same period last year, thereby increasing our total store count across Canada to 955 stores, compared to 874 stores at the end of Q4 last year. The quality of available real estate, combined with our unique value proposition has allowed us to reach out to our customer base to increase traffic to our stores and improve our stores’ economics. For fiscal 2016, we expect to keep up the same pace by opening another 70 to 80 net new stores, focusing on markets that remain under penetrated by dollar stores. Up until now we have disclosed publicly there was a potential for at least 1,200 Dollarama stores in Canada. We have now revised that number to 1,400 this is based on an update of our market analysis which takes into account the retail competitive landscape, the rates of per capital store penetration and the performance of comparable and new stores. This estimate of 1,400 stores assumes a consistent store format and the same quality of real estate locations. Of course as we get closer to the 1,400 stores, naturally the cannibalization is expected to increase, which will, in turn will likely have an impact on a new store pay back periods. The average capital pay back period now is approximately two years, could range between two and three years as we get closure to that number of stores mainly 1,400. Now from a merchandising point of view, our customers continue to respond positively to our product mix. Our sales for major holidays including Easter, Halloween and Christmas were stronger this year than the prior year and we’ll continue to update and diversify our product selection in order to sustain the healthy growth over the next year. For additional information on such assumptions and risks, no, I think I – I’m on to that Page. Okay. Not surprisingly margins are under pressure as the Canadian dollar is weaker than whereas one year ago. Where as we have currency hedges in place to mitigate some of our adverse impact of foreign exchange rate fluctuations on merchandised costs. Our buyers are also working hard to ensure that we continue to offer a wide variety of products at price points that meet customers’ expectations in terms of value. Finally, I would like to express my thanks to our management team and all of our dedicated employees that have contributed to the success of this past fiscal year. Our employees make this company better and more successful every day and I would like to thank them all. Now, let me turn the call over to Michael.

Thank you, Larry, and good morning, everyone. So I’ll briefly go through the fourth quarter results and some of our financial and operating initiatives. During the fourth quarter, we increased our sales by 14.9% to $669 million, from $482.3 million in prior year. The increase in sale was fueled by the opening of 81 net new stores in fiscal 2015 and strong Q4 same-store sales. Same-store sales increase by 8.5% and sustaining of 12.7% increase in transaction size, which reflects the consumer demand for our higher price point items and [indiscernible] increase in the number of transaction, primarily attributable to the positive impact of favorable weather conditions experienced during the holidays, this year compared to last year. Same-store sales growth is, in Q4 last year was only 1.1%. This quarter 72% of our sales originated from products priced higher than the dollar, compared to 61% the corresponding quarter last year. Debit card penetration also increased as 46% of sales were paid with debit cards compared to 43% in the corresponding period of previous fiscal year. Our gross margin was 38.8% of sales, compared to 38.4% of sales in Q4 last year. This improvement is primarily attributable to the positive scaling effect of higher sales on occupancy and logistics costs. Our Q4 G&A as a percentage of sales was 16.1%, compared to 15.9% last year. We continue to deliver savings related to labor productivity initiatives, but these were offset by timing of certain expenses incurred. Moving to the bottom line, Q4 net earnings increased to a $100.3 million or $0.76 per diluted share, compared to $83.0 million or $0.59 per diluted share, in the fourth quarter of fiscal 2014. Cash flows from operations increased to a $168 million in Q4 2015, from a $120 million in Q4 2014, this mainly reflects improvement in financial results in the quarter. During the quarter we also repurchased 1.7 million shares for consideration of $97.1 million. Now looking at our full year fiscal 2015 results, we are proud to say that we improved on all of our key metrics. Starting on the top line, as Larry mentioned earlier, sales increased by 4.9% to $2.3 billion. We achieved a 5.7% increase in the same-store sales for the full year, fueled by a 4.2% increase in average transaction size and the 1.4% increase in the number of transactions. These were enhanced by the fourth quarter same-store sales increase of 8.5% as we benefited from strong Christmas sales and much better weather conditions, owing to holiday season at this year versus last year. Our gross margin decreased slightly to 36.9% from 37.1% last year as we saw some of the cost increases that relate primarily to the weakening Canadian dollar. We manage our margins by continually investing in the value proposition offered by our products. Looking forward to fiscal 2016, we expect this trend to continue as we target a gross margin in the range of between 36% and 37% in order to stimulate continued sales growth. Our G&A expenses represented 17.1% of sales which continue to improve as we benefited from labor productivity, cost containment initiative and disciplined execution. Overall, we are very satisfied with the progression our G&A over the year as we achieved the lower end of the 17.1% to 17.5% range that we were targeting. Looking forward to fiscal 2016, we expect to improve this ratio slightly as we continue to benefit from our productivity initiatives and the positive scaling impact of higher sales on fixed cost. EBITDA in fiscal 2015 grew 14.5% to $461 million or 19.8% of sales, compared to 19.5% of sales last year. And net earning increased by 18% to $295 million from $250 million, per diluted earnings per share increased 27% to $2.21 from $1.74 last year. In fiscal 2015, through our NCIB program, we bought back 9.3 million shares for a total of $436 million at a weighted average share price of $47.04 per share. In terms of 2014, 2015 NCIB program, which started in June 2014, we have purchased 3.4 million shares of over 72% of the 4.7 million shares that we are authorized to buy back by June 2015. In addition, we invested over $85 million in capital expenditures to continue to expand the store network, renovate or refresh existing stores and enhance the store information technology infrastructure. Cash flow for the year was positive as we generated free cash flow from operations net of capital expenditures of $272 million in fiscal 2015, compared to $202 million in fiscal 2014. Profits were higher this year, we improved our working capital position and we incurred lower capital expenditures over the prior year, included the major investments related to our new point-of-sales terminals. We continue to generate excess free cash flows well above our investment needs; our healthy balance sheet and strong and improving free cash flow support our decision to increase the quarterly dividend by 12.5% to $0.09 per common share. Management favors a balanced approach between paying dividends and buying back shares to return value to share holder. Therefore, the NCIB remains a viable option that will also be reviewed upon expiry of the current program in June 2015. Now, let me give you an update with regards our productivity initiatives. In fiscal 2014, we rolled out the Kronos advanced scheduling initiative in all our stores, then as such we realized in fiscal 2015 as we fine tuned the use of this tool turned on additional features and gained more visible and labor metric to improve reporting. These reports have resulted in better labor scheduling at peak operating hours and have also improved our ability to manage seasonal fluctuations in labor hours to more efficiently match labor needs to sales volumes. In fiscal 2014 we also rolled out 40,500 new NCR point-of-sale terminals running on SAP retail platform in all our locations. This project has allowed us to implement additional in-store productivity initiatives that improve the customer service and eliminate non-value added activities in the store. We now rely more on POS data than on information from manual inventory accounts to drug inventory replenishment. This has improved our in-stock positions and reduced our labor hours related to counts in fiscal 2015. Dollarama also upgraded its store item infrastructure and plans to rollout this fiscal year 2016, WiFi across its network to provide additional opportunities such as mobile scanning technology to improve conversion rates by reducing waiting times at the check out and to reduce time spent taking inventory counts. Our goal is to continue to invest in higher return initiative that will enable us to be and a better in-stock position, optimize our in-store labor productivity, maximize warehousing capacity and generate logistic efficiency. Overall, we are very pleased with the performance of the Company this year and the progress we made on the key initiatives that will support profitable growth in the future. This now ends our formal remarks and we can now take questions. Operator I’ll turn the call over to you.

Thank you. We will now take questions from the telephone line. [Operator Instructions] The first question is from Irene Nattel with RBC Capital Markets. Please go ahead.

Thanks, and good morning everyone.

Good morning.

Good morning. On the subject of FX on the Q3 call, you indicated that, yes, this is the fact something that you faced before and is something that you will have to deal with but the dollar of course has continued to slide. So I was just wondering, other than the hedging that you had in place, if you could just walk through some of the initiatives that you have or the tools that you can use to help offset the gross margin pressure.

Okay. So you’re right. The hedging this year, obviously, allowed us to offset a good portion of the headwinds and also we did absorb part of that, which impacted our gross margins going down. The other available alternative is comes from our ability when we refresh between 25% and 30% that’s still the case of our offerings to manage the margin accordingly, by introducing and having access, for example, which was a case this year to higher price point items. And so that we make sure that with the visibility that the buyers have which includes the cost of the currency to make sure we meet our margin target.

Yes, that’s very helpful. And just turning to the SG&A piece, you did note in the press release in the SG&A that there was some timing on expenses in Q4, if you could just walk through that as to what the nature was and the magnitude?

Okay. Well, one that impact, I think, everyone will understand is last year in Q4 because of the weather conditions and that we missed the sales significantly we had to adjust the incentive provision in Q4. So that means that you have to not only reduce the Q4 provision, but correct the Q1, Q2, Q3 that were all recorded in the Q4. So that’s an example of one timing amount. And then naturally, G&A depending on the timing of projects that are incurred and that’s why in Q2 and Q3 of this year, I pre-announce that we were investing sometime and cost and efforts for Q3 and Q4 in initiatives that we will see materializing in fiscal 2016 and fiscal 2017. And in the script this morning I alluded to, to Wi-Fi, so that’s kind of the next stage that will benefit – give us benefits over the next two, three, four years. So it’s the timing of certain expenses.

Excellent. And just one final one if I may, in terms of CapEx projects for fiscal 2016 anything you going to replacing the key tabs this year?

The pin tabs were all replaced this year in fiscal 2015. So in terms of hardware, I’d say all of the heavy lifting is behind us, whether it’s the NCR cash registers, pin pad, Kronos machines. Then it becomes part of store opening costs with that equipment. And but coming down this year, it will be the WiFi, so there is some hardware that’s going to go in and some software also. And the aim here is to continue eliminating administrative, as much as the administrative work and manual work that’s done in-store to make the job more interesting to make it more efficient and safe cost all at the same time. And maybe I expect that you to follow up with what type of example, for instance, instead of doing the inventory manually filling out the sheets we could do it with scanners. And also it’s the risk of ours is reduce, because as the scanner picks it up, it sends it through SAP to our system directly. As where before we had to fill up the sheet, send it to head office, enter it in this system, compare it to what the POS gave us, to validate and then forward it. So it’s initiatives like that, where you do inventory counts, pack-aways and other manual work in the store that will be eliminated. Makes a job more interesting for our employees that work very hard every day, so that’s just one of the examples.

That’s great, thank you very much.

Thank you. The next question is from Perry Caicco with CIBC World Markets. Please go ahead.

Thank you. I was just wondering, how your stores are performing that are located near the target locations and how you expect that to unfold over the next few months?

Good morning Perry. Wise that I think you asked that. I think at the moment, I would say that during the liquidation period we’d be slightly, negatively affected, because dollars are going that way. I think the same thing happened during the Zellers liquidation. It’s not very serious at all, but it’s not positive, it’s negative. I’m answering your question, I probably not continue – yes okay.

And related to sales, I’m just wondering how, if you have any idea, how being more in-stock has actually affected your sales line?

I wonder that ever day. I have to think being more in-stock and that’s the same case for every retailer in the world, the more in-stock you are and the more you have the product that the customer wants, that will impact positively on sales, no question about that. So my answer is being in-stock is a good thing as a retailer.

Okay.

The right product at the right time. Yes I’m sorry go ahead.

That’s okay. You’ve got another minimum wage increase coming up in Ontario. Just wondering if you feel you can engineer enough efficiency to overcome that.

We expect…

Yes, I think so.

It’s a small increase this year so in the norm so….

I would appreciate if you could talk to your friends in the on tear Ontario government though see what you can do about that.

You’re assuming that I have friends?

Yes, I do.

Okay. And just my last question probably for Michael, you’ve got pretty good improvements in your working capital in the last couple of years and just, I wonder if you could talk about how are you managing that?

Well, a lot of that came through POS, the tools that we have and the management in-store so we clearly benefited from that. A lot of the improvements you see in Q4 though well a lot that. Yes, a big portion of that is timing also, so but if you talk more, I mean it’s a fact over the past years it hasn’t improved, and we have more visibility on the inventory, the declining has improved, because we had more visibility on that. We were more just in time, for example, when goods are delivered when we order them. The only little offset I say that we had in Q4 and we discussed that in prior calls was the fact that we pre-ordered inventory, because of the duties impact. But other than that for the rest it’s under control. And we work to continue improving it into the future that should improve slightly overtime as we continue using and actioning the functionalities of the tools that we have.

Okay. Thank you.

Thank you. The next question is from Peter Sklar with BMO Capital Markets. Please go ahead.

Hi, good morning, it’s Emily Foo for Peter.

Hi.

We noticed that sales of the product price over f $1, was that of that how many 1.5% which seem to be quite an increase for both sequentially and year-over-year. Can you just talk a little bit about that and how that was achieved?

Yes, well, if you look at quarter-over-quarter so its what you saw obviously Q4 this year was much better than Q4 the year before and included were price points, more price points in the $2.50, $3 range and so all of that had an impact on the increase. The other thing too which helps is. And I don’t know, which well, I’m going to say which come first, but it’s combination of both, our debit transactions as you know, double that of cash transaction. The penetration there also increased a bit more than usual. So I think the combination of that made it, made this total to go up.

I think I could add to that. From the time we introduce that multi-price of $2.50 and $3, that’s a phenomenon that’s been happening, there’s been more sales in the over $1 price point, when we went to multi-price. I think it’s a combination of buyers doing a better job and getting use to that niche. The offering has been very good. And I think you’ll continue to see less products at $1, unfortunately that’s reality, I mean, you are reading at there. As inflation continues to happen as dollar has its struggles. And the value we can offer for the extra quarter, to go from a $1 to $1.25, is significant. I think at $1 we’re struggling to get good value decline today. Don’t forget, we started off with $1, 23 years ago. And we’re 23 years later into that price point. So we’re going to see some attrition at that level.

Okay. And my second question is will you be providing a SG&A margin range for next fiscal year?

Well, at this time we’re comfortable and saying in we’ll improve slightly and as we move throughout the year like we’ve done in entire year if you a bit more give you a bit more visibility.

That’s great, that’s all my question. Thank you.

Thank you. The next question is from Derek Dley with Canaccord Genuity. Please go ahead.

Yes, hi guys. Just on your new store revised guidance, where are you seeing most of these additional opportunities that are I think it’s going to be on last Ontario or they relatively, evenly spread?

Evenly spread.

I would confirm that. Again, we’re going to open a bunch of stores in Quebec and we well penetrated in Quebec. So surprisingly so but it is what it is and I keep amazing myself and other expect the stores are there to be opened. And if you put the stores where the people are, they will come. It doesn’t mean we are not cannibalizing because if you have two stores in, for example, and you put a third or fourth obviously, you’re going to cannibalize but it is still worth opening the location.

Okay, that’s great and what the new store openings, I know we talked about it a lot in the past whether they require or would it increase a need for a DC or less?

For the moment now we are – again because we’ve improve efficiencies in Montreal over the periods where we’re still pushing back the, if you want the outlets are reevaluating that. But for the time being its not something that we will trigger short-term.

Okay, thanks and just one more if I can. Just on the CapEx with a new rollout of the mobile scanning the Wi-Fi, what do you forecast CapEx for 2016?

The envelope for being a bit higher than this year, it’s mid between this year and the prior year, so between $85 million and $100 million.

Okay, that’s great. Thank you very much.

Thank you. The next question is from Vishal Shreedhar with National Bank. Please go ahead.

Hi, thanks for taking my questions, just few fast ones here. The EBIT margin in fiscal 2015 was slightly above 18% and that’s a higher than that [indiscernible] range in the 17% range. And you see there’s variability from year-to-year but I’m just curious on that EBIT margin target?

Yes you’re right a good portion of that brought it from 17% to 17.8% with the amortization adjustment that we did at the beginning of the year in Q1 that we announced. So in other word, that same present thing goes up to 17.8%, so we finished up it better than that. But I would say it’s around 17.8% to 18%. So that’s kind of where we like that percentage, so any as we’ve said in the past, our aim is to generate G&A savings above the headwind, the G&A headwinds enough to reinvest into the margin that the product offering. But keep that EBIT level where it is and just stimulate more sales at that level.

Got it. And then just wondering when you decide on price point such you’re going to implement in the store increasing the maximum price point does unfavorable currency stock during the decision.

Well, good question. This continues to roll out in the same direction and we have a CAD130, CAD135, CAD140. The answer would probably be yes, we’ll hold on as long as we can, but we’re going to see some inflation, I would say in Canada. Unavoidably it’s just going happen. So I think the yes or no answer to your question will be yes.

Okay and just given the durability of the business model, I guess, it continues to perform very well through challenging economic conditions. And given that the historical buyback has been a very good use of excess capital; would the company consider increasing leverage targets?

Well when you say increasing, so again we’re rated and the – we want to maintain the two or three times adjusted to EBITDA 2.5 times, depending on whether you use eight as a factor or six as a factor. So we want to maintain our rating and where it’s close to that limit right now and that’s our intention. So as we move up in time in the future we’re going to, our available cash flow to buyback and deleverage increase that our EBITDA increased EBITDA will give us to its buyback. So as you’ve seen we’re more conservative on the dividend, but share buyback is definitely are favored way of returning value to our share holders.

Got it. And just a last one here, in areas like Western Canada or in Alberta, where there has been negative pressure relate on the consumer related energy price declines, does Dollarama feel a negative impact or this is to benefit as consumers try to maximize value?

I don’t think we’re feeling a negative impact to tell, I’m waiting for the price of real-estate to go down but that’s not happening either, so we’re waiting in the wings.

Okay, got it. Thanks for your time.

Thank you.

Thank you. The next question is from David Hartley with Credit Suisse. Please go ahead.

Thanks and good morning.

Good morning.

Just a question on gasoline pricing, oil prices falling and I know Vishal just alluded a bit to it, but with the gasoline prices falling, have you seen any positive impact on demand in your stores either regionally or national?

It’s hard to measure that.

And how do you measure that and honestly…

I…

I would say no, but I can’t measure that. You mean more disposable income, is that coming our way?

Correct.

Well actually David you know….

The number…

David, how boring we are, David. So, I don’t know, I can’t – I’m not sure.

There’s been numbers circulating at the many billions of dollar available and for consumers and that they use that to spend but, to tell you truth we don’t measure that specifically at Dollarama so it’s hard to say.

Yeah. I would agree with Michael there.

How do you look at demand in 2016 fiscal year, what you think about your budgeting process, you think about oil prices going down, you think about the potential impact around employment in Canada? Do you make your guidance a lot more conservative? Or could you give us some idea, what you think the cadence of sales growth can be this year relative to normalized last year?

No, we look at all those factors obviously and so we – and we looked at historically how we’ve performed under these circumstances, just in the last five years we’ve had wide fluctuations weather it was the currency, the inflation turn out, the energy, at prices going up quickly and coming down now. So for us yes, we do factor that otherwise its business as you will not gain structurally major changing around us. That would have us re-question our model or projections and direction.

Okay. And just back to the oil prices, as it relates to product procurement cost, I was wondering how much of a natural hedge is there with falling oil prices in your product procurement cost of the Far East?

Well, our product procurement.

Yes.

Well, when it’s riding up, you will hear a lot about it and when it’s going down, you don’t hear about it.

Yes.

And that’s life. So I think it may have we’re going to the orient in about a month and we’ll get it directly. And confront them as you’ve just confronted us. In the same way, but we’re going to get the same answer. Yes, all of a sudden, oil is a very small part of a product and when it goes up, it’s a huge part of the product. So we’re going to hear that over and over again. And as we’re going to hear about the labor and we’re going to hear about everything else that’s offsetting those decreases in buying of oil, the oil based products. And there I think prices in the orient and namely in China are stable and it may be as a result generally speaking of the oil prices. It’s hard to measure those things.

And again, I think with other factors that were raised, we’re all on the same level of playing field, more or less, and as long as we keep and think this in terms of value proposition and compelling this compared to our competitor that the model. And so you have to factor that also.

Fair enough thank you. And just on the tax rate, I think, 26% in the quarter, is that the level you expect it to be at next year or is it going to be at 27%?

No, its – we’re close to the statutory tax rate with just the 26.7% we had one time refund there. So that’s the statutory rate, the rate you should be using is closer to 26.7%, 27%.

Okay, that’s helpful. And last question, just on your distribution center at Montreal. I mean its I guess lately efficient given tax sizes, and so on, how do you get that to be more efficient now going forward, is there much room there that makes material benefit in future years or it is what it is for now?

Well, if you have a distribution center of so many square feet, you keep putting more and more stores into that distribution center, you are going to lose some efficiency. We’ve expanded once, I don’t think we can expand much more but there is no question that inefficiencies were absorbing compared to going elsewhere and opening another one. So yes, it’s a little more inefficient, because you are tighter and you’re bumping into each other in the DC, in particular in the DC as opposed to the other warehouses that are strictly warehouses. So the DC is a little less efficient than ideally could be, but if you compare that to any other alternative you would be very happy with – I’m very happy with the results.

Okay, thank you very much.

Thank you, Dave.

Thank you. The next question is from Jim Durran with Barclays. Please go ahead.

Good morning.

I want to go back. Good morning, I just want to go back to items above the dollar, I just want to make sure I correctly understand that number, so it’s a SKU or item count reference, when you talk about the 71.5% not a share of dollars, right?

That’s a share of dollars.

Share of dollars, okay

Yes.

So have you been able to take certain items from a $1 to a $1.25 to offset the FX impact and that’s part of what’s going on here in terms of driving that rate out there?

I think, the answer would be yes, we’ve taken some items from a $1 to $1.25, as we’ve taken some items from $1.50 to $2 I guess. We’re trying to avoid that as much as possible we would rather cancel the item and buy something new, if we’re going to do that it’s not our choice to mark up, an item by 25% or more at all. So that’s why we are absorbing as much as we can until we can no longer do so. But the preference again is to check out that item, cancel it and buy something new.

Okay. And just thinking about your new store program, Larry, I know that’s a kind of conceptual big question, it may have an equally big answer, but when you think about store saturation and the dollar store space in Canada, do you look it like a we all sort of calculate on a pop per thousand basis, but how do you guys approach it? Is it really sort of one store at a time assessed for viability in a geographic trading area or do you also keep an eye on sort of the macro which is store saturation?

Yes, it’s a good question. Look, I thought we are saturated in Quebec when we opened our 100th store we’re almost 250 stores now. The model changes and the model effects how many store you can eventually open. The model has changed over the last 20 years from one price point to this multi-price point and it has allowed us to go into areas that we formerly would not have considered at the $1 price point. The store penetration population is something we look at, well, let’s put it this way, I was in Ontario this week and my guys there saying that we’re better penetrated in Quebec than Ontario so you should get off your tushes and move a bit. In that sense I’ll use it. But really every city and every country you can talk all you want, but trying to get penetration Downtown Vancouver is just almost impossible. And there’s a lot of people that live there. So every province is different, every country is different. And it’s tough to use that penetration other than to get people moving as the guideline. I think it goes store by store opportunity by opportunity. You look at it and then you make a call. That’s a way we do it, anyways.

And as you’ve progressed on taking items above [indiscernible] to a greater percentage of your business, has that also allowed you to take on slightly higher rent expense and still make a good return?

I would think that that is so.

Yes, definitely

Michael is saying yes, so there you go.

Michael is obviously right.

He is obviously right.

And last question, just in the quarter, like obviously gross margin being up 25 basis points pre-rent was a very strong outcome. Is there any dynamic as a result of the prior year ice storm disruption that helped…

For sure, for sure. I think in December last year we were down 11% or something like that. It was ridiculously low and…

Yes, for December was minus 7.5.

Okay, and this year?

And this year, yes, the transaction if you I recall was down 3.1% in Q4 last year. So it clearly had an impact this year.

Yes and the same thing is happening in the maritimes right now by the way but this is February, it’s not Christmas.

Yes, so then on gross margin rate in the quarter, I assume that the negative impact on seasonal sales last year which is high margin category would have potentially this year contributed to a gross margin recovery with less disruption.

I’d say that is the impact. So, yes.

Great, thank you for your help.

Thank you.

Thank you. The next question is from Keith Howlett from Desjardins. Please go ahead.

Good morning, Keith.

Good morning. A question on the freight cost. I presume you’re buying mostly FOB, the orient. I’m wondering if you are saving significant amounts on freight at the moment.

Absolutely not, confirm that.

Yes, yes, yes, yes. Not, significantly saving.

No, there is not even, never mind. You can remove the word significant…

I also greatly impacted by the demand, not just the cost of oil. And the demand is very high right now. So you’re competing for the same boats. And so the freight industry is happy.

So with the resurgence of the American economy, it’s more is an offset the gasoline prices. Unless you’re a better negotiator of freight rates than we are.

I expect not.

And then just on the use of your POS systems, does that help reduce the pack-away? Does it help you forecast seasonal demand or seasonal demand so volatile or variable that it’s hard to reduce pack-away with the systems?

Alright, it gives definitely gave us more information now instead of having one pack-away for a season, we’re able to split it in the more efficient way, the other, the savings I was alluding to before were in terms of when you change over seasons and you actually do the pack-away, packing away it will be quicker with the Wi-Fi application and, therefore, you have to have POS before. But now with the Wi-Fi to actually do the so you have time savings.

So let me add to that, POS is putting more of the right stock into the right stores. So hopefully, our pack-away will be less and less as time goes on, because the ideal is to buy 100 dozen to a store and to be sold out with the last customer on December 24. And as POS gets more sophisticated that’s the goal. And it’s improving every year, but we’re far from there. And I’m looking forward to the day that we can sell out of Christmas have no pack-away and satisfy every single customer until 5 [ph] on December 24. And I repeat that every seasons, yes.

And just one question on the general preferential care of, I guess, we’ve been dealing with now for few months. Before you said there wasn’t much impact on your business and I just wondering if that’s still continue?

Yes, well, it has an impact, but not material in the sense that we said we would be able to manage it, which clearly we’ve done and will continue to do. So its just part of the headwinds that we deal with, but we’re equipped to manage it likely, were equipped to manage the currency, the energy cost inflation, the merchandising inflation, and so on.

Thank you.

It’s not fun, but if we’re talking about duty rate increases.

Yes, yes, yes.

Here as the duty goes up from 5% to 6.5%, well, you have that to deal with, but if the duty – if there was no duty on as an example…

Paint rollers.

On paint rollers is that as Neil will testify, go ahead.

And it goes up to 15.5% well, and then it’s much less fun as my father put it. So we have to find alternatives, other countries and other suppliers and its part of the buyer’s job to find a way.

And so is it much of a percentage of the goods that are creating those problems or is it…

Thankfully it’s not at all material.

Yes, – we mainly its two extremes, well, we named one extreme there.

Yes, that’s most [ph] extreme.

Yes, so buy your paint brushes now.

Paint rollers, paint roller.

Paint rollers now.

Not paint brushes.

Before it goes through the system at from Dollarama to Rona whatever.

I’m going to tell my wife because she buys all her brushes at Dollarama’s.

By them now, I’m telling.

Thanks a lot.

Okay.

Thank you, Keith.

Thank you. The next question is from Chris Li with Bank of America. Please, go ahead.

Well hi, good morning.

Good morning.

As first question, the 1,400 store target you have, over what timeframe is that do you expect that to be achieved?

I think it saved to so we have 70 to 80 stores for F’16. In the future I tend to say as 60 stores per year-ish. So that’s a six to seven or eight years of runway in front of us.

Okay. And then for the F16 stores are all the locations pretty much locked in or then are you looking at locations.

Yes, pretty are very much locked in.

Perfect, okay. And then let’s just say if Walmart were to announce tomorrow they’re going to take over 50 of the target locations in Canada. Is that a concern for you or would it be a positive as it would drive more traffic to the shopping centers where there’s…

I think it would be a positive. I don’t know if they’re going to take 50 but you may be giving us some insight there. But any locations that Walmart takes will drive a lot more traffic than - well, Zellers or unfortunately Target was drawing. So I think it’s positive.

And the assumption there is the product mix is different enough that there wouldn’t be a lot overlap.

There’s very little overlap.

Okay.

And Chris, as you know, we’ve got the experience of our current stores which overlap with the 300 other Walmart stores in Canada. And again, these stores – our stores perform very well.

Okay. And then just in terms of your store traffic, sounds like from the press release that you’ve exclude the impact of the ice storm, the traffic was roughly stable compared to the year-ago quarter. Is that right?

No. Well, this year it was much more positive. Obviously last year was negative 3.1. This year was positive 3.6. So the average of that is slightly positive.

And that’s more or less in line with what you were expecting?

Yes.

Okay, perfect, thanks, guys.

Thank you, Chris.

Thank you. The next question is from Brian Morrison with TD Securities. Please, go ahead.

Hi, good morning.

Good morning, [indiscernible].

Just going back to a couple of comments you made with respect to the penetration rate currently over 71% over a dollar right now. You mentioned you have less opportunity items at $1, you now had the $2.50 and $3 price pointsand for coming up on three year now. I’m wondering if you can just discuss your thoughts on potential to have an increase to the maximum price point of $3 right now, what goes into that and when you may need or consider implementing a higher price point.

Well, that’s a good question I’ve been asking myself and we’ve been asking ourselves. I think it’s going of to depend a lot on the foreign exchange. There’s only so much managing you can do and it’s happened very quickly. I’m getting calls from individuals who know me, what are we doing about that and how we’re going to absorb that. Everybody in Canada has those concerns and its making retail in Canada a lot more difficult and a lot less fun. It’s not fun to increase something, its not fun to increase price as curious. Especially the our competitor everything else and you don’t know what your fellow retailer’s doing or how he’s handling it. So the speed at which this Canadian dollar has lost value is a concern to everybody. And we’re going to have to look at it very quickly and soon in just again to take an item from $2 to $2.50 or $2.50 to $3 is not very well, I’ll use the word fun. Now, would that necessitate going above those price points? Not for now, we hope, but we have to fight very hard to be able to say that going forward at CAD1.30, CAD1.35 that we can maintain our price points without looking at them very carefully.

So, how far in advance do you have to make that decision prior to…

Well I would say that as an example, I would say six months, six months to a year.

Okay. And if you were to introduce the new price point, would you maintain say six or seven number of price points that you currently have offered and eliminate others, or would just add additional price points?

Not, now you are getting ahead all of us here. I can’t answer that question because I don’t know the answer to it. I would like to eliminate some of that and add someone if that’s it we have to do but, I don’t know, I can’t answer that question.

Okay. And then very last question. Is there any update on the progress of what’s going on down at dollar city in terms of expansion or number of new stores or anything you can provide us on that front?

There’s, again, nothing material, no major change, but for us it’s going – they’re meeting expectations, clearly, and so it’s still very much alive.

Thanks very much Michael.

You’re welcome.

Thank you.

Thank you.

Irene is back.

Thank you. The last question is from Irene Nattel with RBC Capital Markets. Please go ahead.

Thanks and one more question, most of my questions have been answered. Just one more. Given all the discussion we’ve been having on the call today, do you have any updated thoughts on credit cards and when you might move to accepting credit cards?

Yeah, no update especially that the debit card continues to – penetration continues to increase steadily and specially in the last quarter. So, as long as that’s very much alive, there’s where we will continue with that and there’s no intention to, at this point to implement credit card.

I agree with Michael 100%.

Outstanding.

Okay, thank you Irene.

Thank you.

There are no further questions registered at this time. This concludes today’s conference call. Please disconnect your lines at this time, and we thank you for your participation.