Good morning, and welcome to the Dollarama, Fiscal 2020 First Quarter Results Conference Call. Neil Rossy, President and CEO; and Michael Ross, CFO will make a short presentation, which will be followed by a question-and-answer period, opened exclusively to financial analysts. The Press Release, Financial Statements and management's discussion and analysis are available at dollarama.com in the Investor Relations section, as well as on SEDAR. Before we start, I have been asked by Dollarama to read the following message regarding forward-looking statements. Dollarama's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements or any other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believe are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. 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 the assumptions and risks, please consult the cautionary statements regarding forward-looking information contained in Dollarama's MD&A dated June 13, 2019, available on SEDAR. Forward-looking statements represent management's expectations as of June 13, 2019, and except as maybe required by law, Dollarama has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to Neil Rossy.

Thank you, operator, and good morning everyone. Fiscal 2020 is off to a good start for Dollarama with strong top-line growth fueled by store openings and solid comparable store sales combined with the efficient management of our operations. These factors contributed to a 6.5% increase in diluted net earnings per share year-over-year. We recorded comparable store sales growth of 5.8% in Q1, which includes a notable increase in unit per basket and store traffic. This was achieved thanks to a strong consumer response to our value proposition. Successful category management and merchandising tactics and the popularity of our Easter product offering among other factors. Gross margin came in lower than last year at 42.1% of sales due to a slight decrease in product margins, higher sales of lower margin item and the timing of certain logistics costs. Keep in mind that we continue to operate in a low inflation environment in which retailers are more reluctant to pass on cost to consumers. On the operational front, we opened a 11 net new stores in Q1 compared to 10 in Q1 last year. Total store count rose to 1236, our store pipeline is strong and we are on track to meet our target of 60# to 70 net new stores in fiscal 2020. Our distribution center expansion project is also proceeding well and now entering its final phase on-time and on-budget. The final phase consists of the integration of the new building extension with the existing facility and the installation of equipment such as conveyors. This work is ongoing and will continue over the coming months. We expect to be fully operational before the end of the current calendar year. Once completed, our expanded distribution center will enable us to very comfortably support our long-term growth plans to 1700 stores by 2027. Looking now at Dollar City in Latin America. They opened a 11 net new stores in their first quarter ended March 31, 2019, bringing their total number of stores to 180 with 82 in Colombia, 44 El Salvador and 54 in Guatemala. As a reminder, we provide sourcing services and business expertise to Dollar City while they own and operate the chain. We have an option to acquire a 50.1% interest in the business starting in 2020. Michael over to you.

Thank you, Neil and good morning everyone. So before I dive into our performance this quarter a quick note on a significant accounting change. Several of our key financial metrics including gross margin, EBITDA and EBITDA margin have been impacted by the new lease Accounting Standards IFRS 16 that came into effect on February 4, 2019. Prior year financial information has been restated to reflect IFRS 16 on a consistent basis. As a result of this new standard most occupancy costs related to lease properties are no longer expense in the gross margin as they are recorded on the balance sheet as a right of use asset offset by a lease liability. The asset is depreciated on a straight-line basis or the term of the lease, while the liability accrues at a discounted interest expense and is reduced as we make lease payments over the remaining term of the lease. With that in mind, let's take a look at the results for the first quarter of fiscal 2020 in more detail which were driven once again by a strong performance across our key financial metrics. Sales were up 9.5% to over $828 million and same-store sales increased by 5.8%. Neil provided some color and what drove this strong performance. We also continued to see an increase in the penetration of payment by plastic versus cash as the credit card penetration rate continues to increase 2 years after the chain wide acceptance of this payment method. Gross margins stood at 42.1% of sales, lower gross margin year-over-year is attributable to a slight decrease in product margin, higher sales of lower margin items and the impact of certain logistics costs associated with the temporary inefficiencies at our distribution center. The impact of these logistics costs will be felt throughout the year and have been factored into our full year gross margin guidance range. On the other hand, we expect gross margin to be positively impacted by merchandising and product mix initiatives in the second half of this year. G&A was very strong this quarter at 14.7% of sales. This can be explained by the positive impact of the annualization of non-labor related initiative implemented at the end of Q1 last year. And in this case, the positive impact of this initiative is expected to subside in the remaining quarters of fiscal 2020. So that was up 4.1% to $226.8 million representing 27.4% of sales, net earnings were $103.5 million, a 1.9% increase over the prior year and diluted earnings per share grew 6.5% to $0.33. CapEx for Q1 of fiscal 2020 totaled $30.3 million compared to $64.2 million the prior year when the corporation acquired a previously leased distribution center for $39 million. Looking at capital allocation, our board approved a quarterly dividend of $0.044 per share. Another note, we took a pause from share repurchases under our normal course issuer bid in Q1 in order to maintain our leverage ratio in the range of 2.75x adjusted net to EBITDA. In step three, cash flows were used for working capital and capital expenditures. Finally looking at our outlook for fiscal 2020 based on first quarter performance, we are reiterating our full year guidance across all key metrics, net new stores, gross margin, SG&A and EBITDA as a percentage of sales. We are also revising upward our full year assumption for comparable store sales by 50b to a new range of 3% to 4%. Please note here again that our guidance range have been restated to reflect IFRS 16 where appropriate. Our net new store target is at 60 to 70, we expect gross margin to be in the range of 43.25% to 44.25% as modified for IFRS 16 due to the capitalization of occupancy costs to the right of use asset that gets depreciated. SG&A as a percentage of sales remains in the range of 14.25% to 14.75% and EBITDA margin in the range of 28.5% to 30% as modified per IFRS 16. CapEx for the fiscal 2020 stays in the range of $130 million to $140 million, which includes the remaining commitments for the distribution center expansion, new store openings, maintenance and renovations as well as IT projects. If we exclude distribution center expansion costs and store growth CapEx we are aligned with the historical capital intensity ratio of approximately 2% of sales. With that, I will now turn it over to Neil for concluding remarks.

Thank you, Michael. In conclusion, I would like to say a few words about the last year and our priorities in fiscal 2020. There is no question that the retail environment was more challenging in fiscal 2019. On one hand, our competitors were reluctant to pass on higher costs through price increases. And on the other hand consumer spending was more sluggish at the macro level. We responded with purposeful decisions with the long-term in mind. In full knowledge of the potential, shorter term impact this could have on product margins. We made the strategic decision to be aggressive in maintaining our strong value proposition. We believe this was the right approach, which has been validated by the strong top-line growth in Q1. We continue to reinvest in our strong value proposition to tweak our merchandising and to enhance the shoppers in-store experience. Consumers are responding favorably. We will continue on this path as we execute our growth strategy with discipline and as we continue to improve our productivity and operational efficiency. Our business model is strong and our growth potential remains compelling in the short-term and into the future. I am confident that we will continue to grow profitably and to create sustainable value for our shareholders. With that, I will now turn it over to the operator to take questions from financial analysts. Thank you.

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

Thanks and good morning everyone.

Good morning.

I think what everyone is struggling with this morning is the very strong same-store sales print at a more granular level, what were some of the initiatives that drove that? But the offset is the gross margin level and where the confidence comes from in your ability to deliver gross margin in your guidance range for the balance of the year.

Okay. So, its Michael, I'll take that. So, part of the -- as I mentioned in the script, part of the decrease in gross margin is attributed to logistic costs. These are onetime logistics costs that will continue throughout the year and are related to the integration of the new DC, the expansion and integration of the two buildings if you want of the new DC. So last year, we had purchased the land and the buildings that were on them, we demolished those and built separately from the DC where we were operating from. So, we built up that complex. This year since the beginning of the year, we've been integrating the old with the new dismantling equipment and moving things around and have been incurring costs because of that. Now these obviously will be one-time cost, the DC is not finished as we mentioned also and will continue the integration of that over the next three quarters and so will fill that and by the end of this year, it should be completed. So that's one part. Now the outlook we gave you factors that. So, we despite this, we do feel confident that our margin will stay within the range of 38% to 39% using the prior accounting way of doing things like you were used to. So, the other component was, there was a reduction or an increase in the cost of goods or a reduction in the margin of goods a slight one. And also as we told you and it's still the case, we have been passing on more costs. We do a bit of markups like we did last year, but again we don't feel that we haven't been passing on costs and doing ramping up our markups. So, obviously, and for the expected gross margin of the year, in other words the outlook we assume a bit the same conditions that we're living through today. So I think we project like it was last year more stable environment from that point of view. And so those are the main components. And we did have increased sales of lower price point more on the consumable side. These are -- it's not added skews from on that side. It's simply that with the productivity initiatives we did internally more lower price points sales were stimulated and so that also transpired into the results.

So, I guess, the question then Michael is given everything that you've just said. So, what has to happen for you to reach the higher end of the gross margin guidance range because the question really is around what's perceived to be current absence of operating efficiency probably because of the DC initiatives? So, what has happened to get to the higher end of the range versus the lower end of the guidance range?

Right. So we're going to see that in the second half of the year happening and where we've got the bigger sales period, the higher seasonal items sales. And we expect that, for example product margins should improve in those last two quarters from the mix of the products that we'll be selling in that period. Logistics costs impact is higher at the beginning of the year and although it will impact the next quarters, it will slow down towards the end of the year. And so those are the main factors. So, yes.

Okay. And then just one other -- one unrelated question and I'll pass it on. I suspect more on that subject. You didn't -- you weren't active on the NCIB in Q1. Does that mean that we shouldn't expect much activity as we move through the year? Or do you see a resumption on the NCIB as we move through the year?

Yes. No, it's going to resume because typically Q1 is the quarter where we have the least cash flow generation. And two, as you all know, our comfort zone is around 2.75x adjusted debt to EBITDA where more in the range of 2.83. So, that said, the main reason why we haven't been buying back shares. So, we said we would respect that that structure. And so being at 2.85 again of the quarter times is slightly above that level. And as we move out in time Q2, Q3 and Q4 you should expect within -- the cash flow coming in that leverage falling back down and then buying back shares again.

That's great. Thank you.

You are welcome.

Thank you. The following question is from Patricia Baker of Scotiabank. Please go ahead.

Good morning. And thank you very much. Just want to circle back on the same-store sales. It's pretty impressive that you're able to drive 5.8% same-store sales and as you indicated more units in the basket. All of that in the absence of the normalized level of inflation. Can you speak to some of the more effective tactics the merchandising strategies that permit you to really drive the items per basket?

So, what stimulated as I was mentioning when touring because we don't get the benefit of inflation. In other words passing on costs and because we don't have the benefit following the introduction of higher price point. The only thing left to stimulate more sales is unit sales and traffic. So, obviously, we don't want to publicly disclose our tactics and specific tactics on how we did that. But it's certainly worked and we're doing everything to keep it working for the rest of the year. And so Neil mentioned that we have better tools, better tools meaning more information. We hired competencies, if you want to help us understand a bit more the addressable market and I think Neil you could say it even better than I said.

I think you said it fine. In the end, we agree with you. We think it's fantastic.

Thanks for that Neil.

Thank you. The following question is from Kenric Tyghe of Raymond James. Please go ahead.

Thank you and good morning.

Good morning.

Michael just on the gross margin performance in quarter. You saw the highlighted that obviously there was very strong. It would appear there was very strong sell through of higher ticket items. In other words getting that value proposition more rights or corrected at that sort of $4 type price point. But we still so obviously a margin drag because of the as you said lower margin to those price points could you just make sure we're understanding exactly what happened and why the size of the drag which is obviously an offset on that same-store sales number.

Right. So, the three components, one is logistics. So, logistics is definitely one component. And if we mentioned it's because it's significant enough to be mentioned. Then there's the added sales of lower price point items so that automatically -- so the good news is it's not that we're replacing a higher price point by a lower price point it's just that instead of selling one, we're selling two that lower price point. So in terms of volume, it's a lower price point item but you're selling more of it. And the third one is, effectively because we're not -- still not passing on costs. And I think we've all seen a lot of our competitors and their recent disclosures showing reduced margins on their side is that where we all get inflation, but we're still not passing that on. So it's normal to see a bit of impact on our margins of the products we were sourcing. So those are the three components. One of those is a one-time for this year that we won't -- we shouldn't see next year because it'll be fixed. It's the D.C., the other we will still encourage as the sound of a lower price point items but not to the detriment of higher price point. It's not that we're we don't want to sell our higher price point item. And so we expect, we're in Q1 the lowest quarter sales of the year. We expect more so in Q3 and Q4 where you get the higher price point, the higher margin items, the seasonal stuff taking in to improve the margin in that second half of the year.

Okay. Thank you, Michael. If I could just ask one more quick question, on the same-store sales performance, was it fairly -- is anything we need to think about either by way of category or events in quarter that perhaps were bigger than expected or performed better than expected or is it a fairly clean same-store sales print.

It means same-store sales print.

Great. Thank you.

Thank you. The following question is from Jim Durran of Barclays. Please go ahead.

Yes. I just wanted to go back to the comp store sales conversation a bit. I know from touring the stores that one of the things you did is put the -- I will call it The Temptation Island to check a number of stores. How broadly is that now distributed through the network?

Half of our stores have a queue line.

And would it be unfair to say that's had a material benefit to the comp store sales number this quarter?

It did have an effect for sure.

And is there any other initiatives that you've talked about in the last couple of quarters try to get a hold of the situation that you could talk to us about that you've deployed now and that would give us a sense of the sustainability of that support comps?

No. Well, it's a whole bunch of things. As you've been used to in the past that some of which helped directly to reduce costs, but also our aim by -- for example giving us more visibility on our inventory, the movement to better replenish, to better merchandise, no initiatives sometimes give you both. So it's a combination of all of that. But the only real new thing that we mentioned to you over the past now it's going to be in the third quarter, its emphasis on category management and using those tools or that information that those tool give us to maximize our offering.

Okay. And did -- whether it did have a negative effect on your business at all in the quarter?

No.

And finally, just with respect to the foot new expanded capacity on your DC. Do you expect that initially because you've got excess capacity that the cost -- the handling cost per case will go up before it has an opportunity to go down through efficiency? Or how should we be thinking about how that's going to progress as that new facility comes on stream?

I don't think that the difference between that larger facility being less than efficient to perfectly efficient will have any material effect on our cost to be honest. So, I don't believe that will be the case.

So we should just think of it as you can handle more growth. And there's no set of automation or other efficiencies that you'll grab that might be giving an opportunity to materially reduce your handling costs.

Right. Because the way it works is, you build your functionality closest to let's say the automation. And then as you keep expanding in fact the areas that are being worked on physically are a little further from the actual automation. So if anything that allows you the ability to expand and have a larger store base, but it gets a little less efficient rather than more efficient. But even at that it's not material.

Okay. That's helpful. Thank you.

Thank you.

Thank you. The following question is from Peter Sklar of BMO Capital Markets. Please go ahead.

Michael on the 170 basis points deterioration and gross margin and to keep referring to the logistics costs. Can you frame as like what the magnitude of that was. And is that like a third of the margin compression or a half or a quarter, anything you can wrap around that.

Good try, Peter. But we won't disclose what it is, but if we mentioned it, it's because it was significant enough for us to mention it.

Okay. And when you're talking about, the impact of mix of your sales mix and the impact that had on margin, I think you're implying that lower price point items carry lower margins in traditional retailing typically it's higher price point items that carry lower percentage margins although they have higher dollar margins. Is yours like the flip flops of that?

Yes. So, in other words the gross -- here, if you look at in -- we disclose in that our consumable mix went up from 39% to 41%. So that consumable mix, if you remember so 16% is seasonal. That's our higher margin mix. Second, general merchandise and third consumables. So it's that consumable mix portion that grew that is lower margin if you want than the other, so you can have some higher price point and lower price point, but a lot of those are lower price point items.

So, what you said is correct, but it depends on the category of goods of the lower price line items.

Okay. And Neil, in your remarks you said that Dollarama is aggressively maintaining a strong value proposition. What does that mean? Does that mean you're lowering prices and margins? Or does that mean you have -- in terms you have more assortment at the entry level price points? Just explain what that statement means.

Basically it means that I'm speaking to the question of inflation in the market. We're just at a time when the market is less stable like it is now or the retailers in the market are being more wary of price increases, we are going to be the least aggressive to raise prices. And so we want to just take our time and make sure our relative value offering, which is our bread and butter. And what we do that that special stuff remains what it is and that it's a focus of the buyers to ensure that; one, we have an offering at our lowest price points in every category; and two, that we are competitive at all of those price points. That's all.

So when you talk about inflation, you're talking about like product inflation not overhead inflation and labor inflation.

Mostly exactly what you just said, but it entails all of it to be honest.

Okay. And lastly, Michael, the option to acquire the interest in Dollar City, which kicks in February 2020. What is the term of that option?

We don't disclose that, Peter. But it does begin at that date, contractual…

Actually, there is some term, it's not like you asked to design...

No, no. It's not that specific date. It goes beyond a year. I'll say that.

Thank you very much.

Okay.

Thank you. The following question is from Mark Petrie of CIBC. Please go ahead.

Yes. So, obviously, you've touched on this a number of times now, but I just wanted to ask you again with regards to sort of the strategic decision to invest in the value proposition. Obviously, the same-store sales growth would suggest it paid-off in the minds of consumers, but at the same time, the gross margin investment was material, EBITDA growth was the lowest we've seen. It sounds like you've got sidelines to gross margin flattening out. So, should we think of this as effectively like a one-year initiative to sort of rebalance and invest in that value proposition? And then, if that is the right way to think about it, what sort of risks do you see to how consumers perceive value once that initiative rolls off?

Well, it's always with -- it's not like, we throw something out there once and then look at it. This is managed daily. So, like Neil said and as you all know, we do 25%, 30% refresh this is done throughout the year. Every week there's something going on evaluating markups, looking at the markets, looking at the opportunities. And for the margin improving over the quarters, I kind of explained through logistics impact of that how that naturally happens. The other portion is the seasonal stuff Halloween's and Christmas seasons, which are the biggest or towards in the second half of the year with the higher margins. And so it's monitoring like that. So, if inflation does kick in later in the year then we'll re-evaluate and see how we follow that or not. But, clearly in terms of compelling value as you just stated 5.8% same-store sales, 0.9% traffic clearly shows that as we told you last year that that compelling is still there and that's our whole business model. It's all about compelling value or price differentiation. And for us it's managing it like we've always done and nothing will change this year.

Okay. And then, again, it seems like the gap between total sales growth and same-store sales growth has narrowed a little bit relative to the store openings. I mean I know that timing can be a swing factor, but it does imply slightly slower new store ramp up. I'm just interested to hear how the block of stores that you opened in the second half of last year. How have they ramped relative to other recent cohorts?

No. Still they have been ramping up very well. The other little maybe color that can be Dollar City as you know we account for a portion of the revenues of Dollar City as Dollar City grows the direct shipment increase and the shipments that go through our network decrease. So that has a small impact too. So just there was a bit of noise in there that relates to Dollar City also.

Okay. And then, just the last one, I mean in terms of the same-store sales outlook you did bump it, but obviously the Q1 number was well above even the higher range. Is this just sort of conservatism or are there other drivers or risks that you see to bring the comps back to the range of what we saw last year?

We're going to do our best to beat that range, you can be assure about that, but to reflect what we see today and what we're comfortable and disclose.

Okay. Appreciate it. Thank you.

Thank you. The following question is from Brian Morrison of TD Securities. Please go ahead.

Hey, good morning. Michael, if I can just follow up on the same-store sales growth. I think you said on the consumable side as you invest in lower price points drove units, it went from 39 to 41. Can you just quantify how much of the same-store sales growth in the quarter was attributed to that strategy?

No. We don't disclose it, but you can appreciate it through the fact that the mix grew from 39% to 41%. And like we've talked about, it's a mix of making sure, we've got the best products at the best price, but also Neil mentioned the initiatives we had at the chain level with the cue line. So it's all of that kicking in. And so that's the main explanation. We don't -- we won't carve out more.

Put it in another way; was it the most important driver this quarter?

No. It's all like we said, it's all categories did very well.

Okay. I guess when I look at the shift towards more units through lower margin consumables, I'm just curious, is there a long runway that this can drive further traffic and basket next year or in order to maintain or sustain that revised comp that you put out there? Or will there be some level of importance towards returning to the inflationary price environment or introduction of a new price point?

Yes. We haven't factored inflation like I said. We factor normal inflation like last year. We are going to do some markups like we did last year, but much less than what we've seen in prior years. So, if we do, if inflationary pressures -- if inflation or put another way competitors are passing on more costs and we feel we have that opportunity that will be over and above.

You know what I'm getting at, is there a long runway here that you can continue to stimulate traffic and units with the new strategy?

Yes. I mean we -- yes, hopefully there is, that's what we're looking for.

Okay. Last one just housekeeping, Michael. I can go through the notes. But can you just outline the annual impact on the decline in rent, increase in D&A and increase in interest from IFRS 16 just high level what those numbers are approximately?

Yes. So Q1 was about 50 million for improved EBITDA with the operating lease which was capitalized. You've got 11.7 million which was additional interest expense and 39 million of depreciation expense. On whole year for what will be capitalized it's about 200 million of our operating leases.

That's great. Thank you.

All right.

Thank you. The following question is from Derek Dley of Canaccord Genuity. Please go ahead.

Hi guys. Just switching gears a little bit to Dollar City. Can you comment just on any metrics that you're seeing there other than net new store openings. I mean can you give us any idea of how revenue growth has been occurring within those stores?

No. I'm sorry. What we gave you today, obviously, doing very well on the store base, revenues per square foot in Canadian dollars is better than or equal or almost better than what we're doing here and store size 6.5000 square feet-ish. And that's about it for now. And we'll see, if we exercise the call. Well, we'll see what we disclose there.

Okay. I appreciate that. And then, how about on the bulk buying e-commerce initiative, is it roughly in terms of sales contribution, would it be similar to that of Dollar City?

Oh, no. It has nothing to do with that and we're not attempting to tie that, but as I told you for the bulk sale, it's for the purposes of projection, it's a very small amount this year, next year. Again, this was for convenience purposes and I do not attribute any value to that other than the value of being more convenient and looking at our -- improving our customer service.

But, it would be safe to say that you haven't seen any cannibalization from the bulk sales into your consumer channel.

No, no, no.

Okay. Thank you very much.

Thank you. The following question is from Vishal Shreedhar of National Bank. Please go ahead.

Thanks. On these merchandising initiatives that you were talking about last quarter and we're seeing the results from this quarter to stimulate the traffic, how far are you in terms of implementing them. Is there a lot more opportunity associated with them in the quarters ahead as you cycled this? Or how should we think about that?

I would say we've done what we wanted to do and whether continuing to maintain what we did, create the same results or not, it's not something I can project on. But, I like where we're positioned in the market on relative retails and competitiveness and offering and mix. And so maintaining what we've done is the goal at this point.

Okay. And the benefits from the better data usage. Is reflected that in this and I know it's difficult to isolate, but is that reflected in this comp or there more things that will come from that looking forward?

No. It is not reflected in this comp. And again, I cannot tell you what that will translate into in the future, but I can tell you, it is not reflected at all in this comp.

Okay. And is that early days kind of analyzing the data and will take time for you to implement the strategies or have you been on it for some period of time now?

We're on it but it's too early in the process to tell you, which strategies we are or are not going to execute.

Okay. And just a common question here for Michael. On the SG&A, what initiatives are now the key initiatives that you're implementing in order to improve the efficiency?

Well, we've got a number of initiatives, obviously and like I told you in the past, even the initiatives we started out 7, 8 years ago you had -- you're always turning on some certain functionalities, but we don't have big impactful initiatives this year like we've seen last year. So for Q1, we have the annualization of that non-labor related initiatives that we had last year that came in much better than we had anticipated that had that allowed us to offset that Ontario minimum wage hike. We have started that initiative again in Q1, this year where we're getting that nice little bump in Q1 that's helping us that benefit. But that will not transpire in Q2, Q3 and Q4. So we'll come back to more normal differences between quarters. So, like I said, it's harder and harder, the lower hanging fruit is definitely behind us and now grinding it out and generating as much as we can from that.

Thanks for the color.

All right.

Thank you. The following question is from Keith Howlett of Desjardins Securities. Please go ahead.

Yes. I'm wondering if you could speak to the cadence of same-store sales growth, February, March, April.

It was as normal. Last year if you recall in April, we had poor weather conditions. So this year we were comping against that, but we didn't feel this year in terms of weather. We didn't feel any weather issue, specific to this year whereas last year we did in April.

So, or the comps sort of in the 5.8% range through each of the three months.

I'm not going to split it between all of them, but they were good I mean they were good throughout.

And you didn't feel the weakness in spring merchandise as you did last year. It was a normal spring?

Yes. But, it was a bit easier because we were comping against a softer April last year.

And then, just on the consumables, the consumable mix was 41% last year. So is it still moving higher than 41%?

It moved from 39 to 41. That's where we're at for the time being.

So, you're still -- in Q1 you're still at the last year's 41% level?

Yes. Well, we don't disclose it by quarter, so the AIF that we just reported is as of that date.

Right. Just in terms of sourcing in China, do you have any benefit from U.S.-China trade issues or no impact or…?

The situation between the U.S. and China has caused instability for sure. So a lot of Chinese orders, the production is being moved from China to other countries. Often those other countries are Asian countries. And often those factories taking the orders are still Chinese owned companies or manufacturers in the other Asian countries. However, even if it's a Chinese factory, if it's in Thailand or Vietnam or somewhere else Malaysia what have you. They don't face the tariffs that they would if it was actually shipping out of China. So, the movement of those orders from the Chinese mainland has certainly left some production gap in China. And so the market for orders in China now for the rest of the world is a little softer and so we're trying to take advantage of that, but it's still too early to appreciate the impact that might or might not have.

Thank you. And then, just one question on items priced at $1.25 or less, those items are growing as a proportion of sales again. There used to be a policy, I mean a soft policy that food products would not be priced above $2. So, I'm just wondering is the proportion of consumables products that are priced at $1.25 or less significantly greater than other categories?

Yes. As a rule the answer is yes. And we do have a rule that food should be $2 or less. There's a small minute handful of exceptions that come in and out, but really it's statistically insignificant. And so the answer to your question is relative to the balance of our store, the answer is yes.

And then, just finally on the Q lines, have you accelerated that or you pretty much rolled out the same number in Q1 that you did in Q4 and Q3 last year sort of thing.

It's a steady pace. It's like last year. So, like we said we started this 2.5 years much slower pace, but compared to last year, I'd say we're more or less the same, so about 200 a year.

200 a year.

Approximately 200 stores are built and converted a year.

Great. Thank you very much.

Thank you.

Thank you. The following question is from Edward Kelly of Wells Fargo. Please go ahead.

Yes. Hi, guys. Good morning. Few questions for you. Just to follow up on the comps, I was hoping, could you maybe give us any color around what you're seeing so far in the second quarter, have you noticed any notable change in May early June in terms of trend?

No. We don't comment on the second quarter, sorry.

Okay. And then, just taking a step back, could you provide a bit more color in terms of what you're seeing from the consumer. I mean you've obviously mentioned sluggishness. I'm just kind of curious as to whether you've seen much change underneath of all this. And I'm not sure to what extent the work that you do internally to provide you with more insights around that are on that?

No change. Really no change for now.

Yes. And as I said earlier, the buyers everyone is -- it's a daily thing. It's not like once a month we sit down and decide to look at the market. It's feeling it out. It's food to supply base. It's through the comp shop and everything else that goes on. But for the time being like said, it's -- no, we don't feel any -- it's neutral.

Right. And then, just lastly for you on Dollar City. Can you maybe just help us understand a bit what the variables that you are considering as you contemplate the decision to exercise the option?

Well, it's fine. When you're looking at finalizing the due diligence process, it's a lot of things. It's not just like one thing. Obviously, we've covered a lot of the risks. Our exposures through working with these potential partners for the past eight years, so in terms of implementing system, culture fit all of that obviously that's working very well. So, if we do exercise the call, you don't have to deal with that at the same extent that if it was an M&A. And it's appreciating the market just monitoring everything until it's time to do it. So it's nothing more and nothing less.

That's the difference in the margin structure and I guess presumably return, does that does that bother you?

No. I mean, it preoccupies us in the sense that obviously, we don't want to go there if there's no margin, or it needs to be accretive so that's clear. And we gave you some information on the top-line where obviously they are doing very well. And we would not exercise that call if we felt that there wasn't any interesting bottom line. And so that will -- we'll find out as soon as we exercise the call, if we do.

Great. Thank you.

You bet.

Thank you.

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.