Larry Rossy - Chairman and CEO Michael Ross - CFO Neil Rossy - CMO

Irene Nattel - RBC Capital Markets Kenric Tyghe - Raymond James David Hartley - Credit Suisse Peter Sklar - BMO Capital Markets James Durran - Barclays Capital Vishal Shreedhar - National Bank Financial Keith Howlett - Desjardins Securities Derek Dley - Canaccord Genuity

All participants please standby, your meeting is about to begin. Good morning and welcome to the Dollarama Conference Call for the Fourth Quarter and Fiscal 2016 Year-End Results. Mr. Larry Rossy, Chief Executive Officer and Mr. Michael Ross, Chief Financial Officer and Mr. Neil Rossy, Chief Merchandising Officer, will be on the call today. The call will begin with a short presentation from management and will be 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 at dollarama.com in the Investor Relations section and 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 believes 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 that 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 statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on the underlying assumptions and risks, please consult the cautionary statements regarding forward-looking information contained in Dollarama's MD&A dated March 30, 2016, available at www.sedar.com. Forward-looking statements represent management's expectations as of March 30, 2016, 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 conference call over to Mr. Larry Rossy.

Okay, thank you operator and good morning everyone. I will try and keep this short and sweet. This morning we reported strong financial results for the fourth quarter and for the full fiscal year 2016. Overall, I am very pleased with the solid growth in sales and improved bottom line results. These excellent results highlight Dollarama's enduring strength, the compelling value and breadth of our product offering, our highly capable leadership team, great execution throughout the supply chain, and store network as well as cost discipline and attention to detail. We are proud of the shopping experience Dollarama offers Canadians today, and we remain focused on exceeding customer expectations. Today, we also announced Neil's appointment as Dollarama's next President and CEO, effective May 1, 2016. CEO succession planning has been an important focus for our Board over the past several years and the time is right for an orderly leadership transition. I am pleased to say that both the Board and I are of the view that Neil is more than ready for this opportunity. Over the years, Neil has shown strong leadership as one of the architects of our success and has played a key role in the development of our unique business model. He is an experienced retail executive with an intimate knowledge of all of our company's operations and is respected by his colleagues. The Board, myself included has full confidence in Neil's ability to lead Dollarama's growth in the coming years with support of the team in place which includes our Executive team of course but also the managers and employees across the organization. For my part, I am not going anywhere. I’ll be the Executive Chairman of the Board and I will continue to focus on our real estate activities in support of our store footprint expansion as well as my responsibilities as a buyer. And I will be there to support Neil when I am asked. My opinion, as you all know, I am passionate about these areas of the business and I plan on continuing to excel at doing what I love for many years to come. Now I’ll pass the mike over to Michael to discuss our financial and operational results in more detail. Michael?

Yes, thank you Larry and I would also like to take this opportunity to congratulate Neil on his well deserved appointment. I couldn’t agree more with what Larry said and I look forward to continue working with Neil, Larry, and the rest of our team to grow this company. As you've seen in the press release this morning, our strong financial performance in the fourth quarter was driven by improvements across all key financial and operating metrics. Sales volume was fueled by strong same store sales and continued organic growth. Same store sales increased by 7.9% over and above the 8.5% increase reported in Q4 of last year. We are particularly pleased with the 4.2% increase and the number of transactions which reflects more store traffic over the holiday period over and above the strong holiday period reported last year. Transaction size also increased by 3.5% reflecting consumer demand for a higher price point item. We completed fiscal 2016 with an annual same store sales increase of 7.3%. For fiscal 2017, we continued to assume an SSS increase in the range of 4% to 5%, which is consistent with what we said back in December 2015. Sales this quarter were driven by the continued growth of our store network across Canada with 25 net new stores in Q4. In fiscal 2016, we opened a total of 75 net new stores in line with our previously reported target. For fiscal 2017, we are maintaining our target at 60 to 70 net new stores. The first quarter will be slower than the last year due to natural ebb and flow of timing of site availability. The store opening pace is expected to accelerate as the year progresses. In December, we stated that we expected gross margin for fiscal 2016 to be in the 38% to 39% range. We ended the fiscal year on the higher end of the range at 39% following a very strong fourth quarter with gross margins in Q4 at 40.8% of sales. These higher gross margins were primarily due to higher product margins, lower logistics and transportation costs, and the positive scaling effect of higher sales on fixed costs. Higher product margins reflect changes to the product mix and selective price changes in anticipation of higher average foreign exchange contract rates. For fiscal 2017, we are revising our gross margin guidance from 36% to 37% range to the 37% to 38% range. This change is the result of better visibility on open orders and better pricing on merchandizing purchased in China as a result of soft economic conditions. In Q4, G&A was 16.1% of sales in line with prior year. For fiscal 2016, G&A was 16.4% of sales, just slightly 10 basis points better than the guidance provided in December 2015 as a result of higher than anticipated sales in the fourth quarter. In fiscal 2016, we continued to deliver savings to labor productivity initiatives. We completed the WiFi roll out across the network to laying the foundations for Dollarama's mobile road map. So after having invested a lot in the past few years in information technology infrastructure, the corporation is now leveraging this platform to roll out a three-year planned focus on improving store offering processes, labor productivity, as well as operations visibility and reporting through the development of mobile application. So far an application for field management has been successfully launched to improve operational control and standardization across the chain. Also the corporation successfully piloted mobile scanning technology at store level to automate manual processes thereby improving inventory accuracy and labor productivity. The full roll out of these two mobile initiatives comprising the first phase of the mobile road map should be completed by the end of fiscal 2017 and benefits are expected to be realized during the following fiscal years. Our targeted G&A margin for fiscal 2017 remains unchanged in the range of 16% to 16.5% of sales. With the adjustment of our fiscal 2017 gross margin outlook, our EBITDA outlook has also increased to a range of 20.5% to 22% which is up 100 basis points over previous guidance. We are comfortable with the strong operating margins that have been generated by the business as we continue to maintain a strong value proposition by offering our customers great products and compelling prices. CAPEX for the fiscal 2017 was adjusted upwards as we communicated to you in February to a range of 160 million to 170 million following our decision to build our own 500,000 square foot warehouse in the Montreal area. The total cost is expected to be approximately 60 million, 20 million for land and 40 million for the building and this new warehouse will provide additional capacity required to support the corporation's growth plans. The total CAPEX envelope also includes investments in new existing stores, warehouse, equipment, and IT projects. We continued to generate excess free cash flow well above investment needs. Our healthy balance sheet and strong free cash flow support the Board's decision to increase the quarterly dividends by 11.1% to $0.10 per common share. Furthermore we repurchased 7.7 million shares for a total consideration of $625 million at the weighted average price of $80.91 per share during fiscal 2016. This includes the 6.4 million shares that we were authorized to repurchase under the 2015, 2016 NCIB program as amended in December 2015. Today we received approval from the TSX to upsize the 2015 and 2016 NCIB program once again to allow for the purchase of up to 5.4 million additional shares by the end of June 16, 2016. Regarding our business venture in Central America, we recently amended the agreements governing our relationship with Dollar City. Among other things we agreed to postpone by one year from February 2019 to February 2020, the date on which Dollarama's option to acquire the majority interest in Dollar City becomes exercisable. This additional year will provide both parties with more time to properly validate and test the dollar store concept in a bigger market within the agreed upon territory as in our usual -- as is our usual practice. Looking now at other in store initiatives, debit card penetration continues to increase year-over-year with 49.2% of sales paid with debit in Q4 compared to 46.4% in the corresponding period of the previous fiscal year. In November of 2015 we activated the tap and go contact list technology for the benefit of our customers and to save time at the checkout. In February 2016 we launched a credit card pilot we told you about during our last conference call. This pilot is being conducted in our stores throughout British Columbia and only in that province. We will provide an update of results in due time but at this time it is too early to say. I will now turn it over to Neil to provide some additional color on our priorities going forward. Neil, over to you.

Thank you, Michael and thank you, Larry. I am excited to take the helm of a company that is part of my DNA and I thank the Board of Directors for their confidence. I look forward to working with our talented team and leading the execution of our growth strategy. So, looking at fiscal 2017 let me reiterate some of our key priorities; first, looking at real estate and the expansion of our store network. Over the last 12 months we've opened 75 net new stores compared to 81 in the same period last year. This brings the total count to a 1030 stores nationwide. There is still plenty of runway in quality sites to attain our previously stated target of 1400 stores. Most importantly we are confident that we can do so while maintaining our attractive store economics. For fiscal 2017 we previously confirmed our objectives of 60 to 70 net new stores. While this is slightly more conservative than last year's pace it still represents an aggressive target and we believe a target that is achievable. We see opportunities for new stores across the country. This means both in our core markets of Quebec and Ontario but also in faster growing markets in Western Canada. Turning to merchandising and product offering, as confirmed last year we will be gradually introducing the $3.50 and $4 price points in the second half of fiscal 2017. We have not set a particular target in terms of critical math at these new price points and do not expect these to have a significant impact on our overall offering for the year as a whole. As stated before we have confidence that as our buyers become increasingly familiar with these additional price points, we will continue to enhance the customers shopping experience. These new price points also provide flexibility to ensure that we continue carrying an attractive product assortment despite various headwinds. As we have stated time and time again we invest in our value proposition so that it remains compelling to our customers and so that our offering always remains competitive. We continue to generate strong margins through our compelling merchandise offering. As mentioned by Michael this year gross margin was 39% compared to 36.9% last year as we were proactive in managing anticipated currency headwinds related to the weaker Canadian dollar through a selective product mix and price changes. The slowdown in the global economy is having an impact on demand for product manufactured in China. As a result we are seeing more pricing flexibility from our vendors providing an opportunity to offset some of the adverse impact of a weaker Canadian currency. As Michael indicated for fiscal 2017 we are increasing our guidance on gross margin to the range of 37% to 38%. Again maintaining our value proposition as a top priority so that’s where we are comfortable for the upcoming year. In conclusion we are very pleased with the performance of the company this year and the progress made on key initiatives that will support profitable growth into the future. I want to thank the entire Dollarama team for their contribution to our success and look forward to another busy and exciting year ahead. With that I'll now turn the call over to the operator to open the floor to questions.

Thank you Mr. Rossy. [Operator Instructions]. Our first question is from Irene Nattel with RBC Capital Markets. Please go ahead.

Thanks and good morning everyone. If I might just start please, Larry you mentioned in your opening remarks that the time seemed right at this particular point for you to make a little bit more room and step aside in the present CEO role, so just wondering what in particular do you view that feeling at this point?

Well Irene going back to 2009, I think that was the question, the question of succession was the one that was the most popular one that was asked to me. And I was still a young man then. I still am, but I think Neil is ready so there is no time like the start of a new fiscal year to proceed with an orderly transition. Succession planning has been an important focus for the Board over the past several years, and we believe that this is the right time for an orderly leadership transition as I mentioned. Neil has shown strong leadership as one of the architects of Dollarama's success, and the Board has full confidence in his ability to lead Dollarama’s growth in the coming years with the support of a strong team in place. So, I think that is the reason Irene.

Well, it makes perfect sense and thanks and congratulations to Neil. Just couple of other questions if I might, on the gross margin issue, certainly we understand the guidance for the current year 2017 being revised upwards, but how should we think about the longer term, are you still comfortable with 36% to 37%, should we see some level of erosion as we look further out, but maybe sort of not entirely down to the bottom end of that range, how really should we be thinking about gross margin?

Hi, Irene it is Michael. So, the -- this year as Neil was mentioning and with the visibility we have, our comfort zone is 37% to 38%, and that is matching the balance between that compelling offering and a return to our investor. For the future, I think it is reasonable to expect that the competitive landscape will continue increasing and that there will be pressures on the gross margin to go down. But for the time being, what we are comfortable with is talking about the gross margin this year and we will monitor that as we go along as we have always done. And we will see and we will come back to give you more guidance as to how we feel comfortable, at what level we feel comfortable.

That is great, thank you Michael, it is helpful. And then just, sorry, one final question if I might, just one more.

Yes, absolutely.

Thank you Michael, this kind of follows on from what you were just talking about different terms of the compelling value. And maybe Neil as the Chief Merchandising Officer and soon to be the CEO, you can address this one, really just wondering what you are seeing in China right now, not only around pricing which you mentioned, but just even in terms of both type of products you are being offered, how you feel about the type of products you are being offered at the higher price points? And it sounds like we will see more of an impact of the higher price points if we move it late this year and into next year but just kind of wondering how, what the cadence is likely to be there?

Sure, thank you Irene. Well I guess the softness in the Chinese economy has been creating opportunities for us to negotiate better pricing with our vendors. It certainly can’t fully compensate for the change in the Canadian currency, but it helps. And the good news is that the buyers all continue to find new and exciting products at all price points and like the $2.50 and $3 introduction, I think as the buyers get more comfortable and our vendors get more comfortable with the new price points at $3.50 and $4, we will have more opportunities in the future.

And just one more question on that subject, in the past there has been specific categories or subsets of categories that the higher price points have enabled you to get at, anything in particular we should be anticipating without the $3.50 and $4?

I don’t think so. I think at the beginning that might have been the case, but in the end even at the $2.50 and $3 price points, the buyers all made use of those price points in whatever categories they were buying, and we expect that $3.50 and $4 will be the same story.

That is great, thank you.

Thank you.

Thank you. Our next question is from Kenric Tyghe with Raymond James. Please go ahead.

Thank you, good morning and congrats on the quarter. I just wanted to follow-up on the $3.50 and $4 introduction. If I am hearing you correctly, the $3.50 and $4 introduction is not expected to have any impact in the year or any positive mix impact in the year on your gross margin or on your revised guidance or whatever impact it has will be negligible, is that fair?

That is fair.

Thank you, just wanted to clarify that one. And then if we could Michael just to check something there as well, between your mix and selective price changes in quarter what was the greater of the two driver there, I mean was that pretty evenly split to your mind or was it -- where price change is driving more of the gross margin increase?

You have to markup the product margin first and then you have the logistic second and scaling third.

Correct, thank you and just a final one for me, you flagged a couple of the key initiatives in your field management launch and mobile scanning, could you provide a little more color on what else is perhaps in the pipeline and how we should think about the sequencing there as we look to 2017, on the transformational side?

Right I mentioned earlier, now that we've invested a lot over the past few years in our information technology infrastructure so we receive this, all this tsunami of information that we have been analyzing and looking at here. Now with the last portion of installing WiFi at the store level, this gives us now the opportunity to share this analysis or intelligence with the field, with the district managers, RDMs, and the managers. So those are -- that’s what we call the next phase from the mobile road map. So the initiatives are geared at that. So we’ll have user friendly devices that our employees can use at the store level for different purposes whether its unhanding packaways, pilot reception, or as we mentioned in the past mobile cash register to unclog waiting lines. So all of those devices now will be for F17. Most of it rolled out to the chain which involves training and the benefits of which we should see kicking in you know F18 and following years. And as you have seen in the guidance that we gave you for this year, we are looking to possibly improve our G&A as percentage of sales by 50 beeps. Now it factors the annualization of last year's initiatives and past year's initiatives and also take some into account the cost of training for the new initiatives that we are implementing this year that will benefit us in future years.

Great, thanks so much. I’ll leave it there.

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

Hi, thanks, good morning and Larry I guess going over the bank or Neil is coming in with one. Just on traffic, I mean in the results itself it seems like that was the wow number for the quarter 4.2% comping on a strong number from last year and then your guidance for next year 4% and 5%, I mean that’s almost strong traffic from the quarter. Can you maybe talk about what influenced that number in the quarter?

We don’t have -- have not analyzed it in great detail but what we do suspect obviously it all starts with the product offering. The compelingness of the in store operations effort and the improvement that we are seeing over the years in terms of in stock position and so and on. And obviously also the weather I am sure helps out, although we did have good weather last year also but I think now those would be the main reasons.

Let me add to that David, I mean that’s hard to measure. Sometimes we look at each other across the table and throw our hands up in the air and say isn’t this great. I think basically what we have been doing over the years as its coming to fruition, where all was working on every aspect of the business and when you are always doing that I guess one day these type of results will happen. Whether it is you know -- I’ll use an example of a toothpick. There was a time when we looked at toothpicks and say lets buy as many toothpicks for a dollar as we could. Today I think it is more important that we don’t leave wooden chips between our teeth as we used those toothpicks and we buy a good toothpick. So, we are taking pride in our offering and it seems to be paying off. This is a tight but I am giving you an example, a small example of a toothpick here. And I think we have to continue doing that. It is not so much that we can offer 500 toothpicks but it is more if we offer 200 very good toothpicks that the customer will be happy with. I think that is what accounts at the end. It is a culture that we are trying to instill in everyone and again it is not quantity but quality that counts and maybe that is part of the reason. And there are other little reasons like that, that add up to today's numbers.

Larry, appreciate that response and it is helpful but when I think about that 4.2% in the previous year four quarters before that and now your guidance going 4% to 4% to 5%. I am just trying to reconcile that without taking down the basket number a lot. I mean you would expect that some of the initiatives that lead to that great result this quarter would carry over into the coming quarters and if that is true, then maybe your guidance is too low and your basket is going to fall significantly? I am just trying to reconcile that and look for some help from that.

And you may be right, go ahead Michael if you have two cents to add to this.

Yes, no I do. Just to repeat what we have said in the past is one of the -- to predict same store sales it is harder or more comfortable with the stores because we have a store pipeline and more visibility. But when it comes to same store sales there are other variables that we don’t control which mainly competition and weather and different factors that make it hard to predict. So, it is not that we are not doing every effort to beat that 4% to 5%. Obviously that is the case but at this point in time to predict more than 4% to 5% which is already I think a very dynamic forecast.

Okay, let me jump onto another question, I am just thinking about that competitive environment that you are in and the fact that you are able to drive some good results and price increases, etc. from previous quarters to help drive those results. Can you give us a sense of what the competitive response has been in pricing. I appreciate the fact that your product mix is a little different than your competitors in the categories where you compete, but what are you seeing there, are the pricing gaps between your products and those of your competitors in those categories are they increasing, decreasing, do you expect them to come back in line, maybe some help there?

That is another tough one. Thank you David. I guess the delta between our prices and competitors prices has been the same over the years and that is why we are where we are. I can't predict what they are going to do or what they can do. I guess we are operating a lean machine that allows us to execute and we keep it simple, better than other people do. I am trying to find reasons for you, I am groping here because of the difficulty of your question. But, those could be some of the answers. It is anecdotal I know. I can't give you facts but let's go with those answers for now.

You are ready for one more.

Sure.

Just last one and I don’t want belabor all of this but just the time line in terms of consumer perception around these prices, I mean, do you kind of have a window here of opportunity that closes as a result of some of these potential impacts to some of the demand you are seeing in your store and then if gaps are widening between you and your competitors, I mean when does a consumer figure that out, what's your experience there, I’ll leave it at that? Thanks.

I don’t think the gaps are widening. No, in fact I am quite sure they are not. Neil do you have two cents to add to that.

We can't judge what other retailers will do of course but I think it is the buyer's jobs quite simply to make sure that any product they are buying is offering competitive relative value. And I think it all starts and ends there. So we will continue to keep our eye on the market and make sure to the best of our abilities that that’s what happened.

Okay guys, thanks a lot. Appreciate it.

Thank you David.

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

Thanks and good morning. In the write up, in the discussion of the foreign exchange headwinds and gross margin you also said you made select changes to your product mix. I am just wondering if you could elaborate are there certain categories that’s your emphasizing in certain categories, you are deemphasizing I am just wondering what that sentence really meant?

It's really an item by item discussion. Where the compelling value remains and we are able to take for example two pencils out of a pack and still be competitive to help with offsetting some of the headwinds, that’s the way we handle it or in other cases if we replace the product with a new offering that’s just as compelling but different at a lower cost potentially. That’s another way buyers can use that tool to help them with the current challenges.

And to add to that I think that when we say what was the statement that you are referring to in particular the different mixes?

Yes Larry, here is the language you’re talking about in addition we make select changes to our product mix and prices and expect these initiatives to help us manage currency headwinds?

I think that means more that in the spirit. Again I think I’ve used this analogy before but if you are able to offer a box at a dollar and you can offer one that’s more practical it is the same merchandise category but I don’t think we are changing categories or going into areas that we are not familiar with. I think we are covering most of the daily consumable areas quite well and we don’t have any intention of going into freezers, etc, etc. Fridge it, there is no thought of that whatsoever. I think what we mean is that we can offer within the category maybe a $2 item that shows a lot better value, is more practical, and you can only do so much at a dollar when it comes to a vase but you can do a lot more at $2 and $3. And I don’t know about $4 but I would imagine $4 too when the time comes. Then you can and it is more practical, its more salable. I think that’s what we are referring to.

Okay, on another topic I am just wondering if you can give some further background on what went on in terms of pushing out the option on Dollar City one year, it sounds like from your commentary that they are going to be expanding into a third market and do you want to see how that proceeds before any decisions are made?

Right, so all it is truly just buying one more year of due diligence if you want, analyzing the markets we are going into. As we have told you in the past that’s the culture is to do the homework before and investigate thoroughly. And we just agreed together. Within the countries already part of the agreement, larger countries such as Columbia, Peru, Ecuador so we need just a bit more time, that’s all.

Okay so nothing has changed fundamentally in the business either positive or negative in terms of the outlook?

No.

Okay and lastly Michael, you increased the size of the current normal course assured bid which would allow you to buy back quite a bit of stock between now and I think it is the end of June. Has there been any change in terms of your philosophy or the way you want to operate the NCIB?

No, absolutely not. So, it is the same approach as you told, so as long as your earnings here is higher than your after tax cost of that it is more accretive. We have demonstrated that and we will continue to prioritize share buyback as a value creating tool and all of which within our investment grade zone respecting that rating.

Okay, thank you.

You are welcome.

Thank you. Our next question is from Jim Durran with Barclays, please go ahead.

Good morning everyone. You reiterated your new store growth which was at a lower rate than what you had been delivering over the last few years. I was wondering if you could just talk about what the major driver is to slowing that down and what are you seeing in Western Canada given what has been going in Alberta that might actually be helpful to new store opening?

Yeah, I don’t think -- well, we are seeing between 60 and 70 stores. It all depends on when these stores are delivered and when we kind of consummate the legal part of our dealings and it is being me. 60 to 70 is being conservative and preferring to over deliver then under deliver it and our pipeline is very healthy. We are getting off to a slow start which concerns me a bit and that again we are getting off to a slow start not because we haven’t signed the store opportunities and not because the legal hasn’t been consummated which they have all been consummated but it is Canada and Canada is difficult to get stores in the middle of the winter unless you have stores that haven’t been opened in November, December for many reasons. And they flow over into January, February, and March. But to get delivery of stores in March is not easy in general. So, we may end up with the same number, the number this is year is 75. It is net for various reasons, the more stores you have the more reasons there are to have some closures not because of any reasons other than redevelopment of the shopping centers about pyrites and they want to redo it during the winter season. And they kick us out for that reason. Or there is a fire or whatever, things like that. Those are the reasons why we closed stores and I think we were affected by more stores last year which is the number that is not indicative to you but brings our total to net 75. We may have been closer to 80 to 82 stores. So we had about seven closures or six to seven closures for other reasons and the more stores you have, the more reasons you will have to have those closures, more exposed you are. So, there is no design. Our COO is here looking at me and she is saying open as many stores please, please, please open more stores. And of course I want to please her. And well I will do the best I can but sometimes it is not in our control. We certainly have a pipeline again that is very healthy, that will run over into, oh God time is flying, 2017 or FY2018 but how many of those will be delivered this year I just can't predict, I can't tell you. So, that is my answer on that one.

No, that is very helpful, thank you. And with respect to Alberta specifically like would you expect that with increased unemployment and weaker demand for retail sales that you may have a chance at some additional pickups in Alberta over the course of next year?

We haven’t witnessed any effect to rental rates yet. It may be premature, they maybe still diluting themselves and yet maybe not. So, there could be some opportunities, we haven’t seen it yet. Certainly that’s not the case in BC by the way. Alberta has suffered more than anybody I would say but so is Saskatchewan and Manitoba is stable, BC is as aggressive as ever especially because the population is on the lower mainline there. And you know things are going higher and higher in BC by I mean construction wise and BC is a tough place to penetrate especially the lower mainline part because of rents. But Alberta we will have to wait and see. I wish I could predict but there maybe a few opportunities, we don’t see them yet. So.

So just in summary to make sure we are clear so this year 60 to 70 stores we are comfortable with. Its opportunity, a pace driven so you know. And as Larry said we do have a healthy pipeline, we do have visibility but it is a question of the timing of the exact opening. But again for this year F17 60 to 70 net new stores we are very comfortable with.

And that target you were talking about six to seven closures possibly this past year, right are we thinking of closures on a similar band or do you have that figured out yet?

We just don’t know, we just don’t know.

That’s why we say net.

I don’t know. The more stores you have, the more you are vulnerable to a fire or flood and redevelopment by someone that they don’t like the way their shopping center looks and they want to remodel it and that’s another reason for closure. But those are temporary closures but in our company we call them closures. They are closed for now, they may reopen the year after. Galeries de la Capitale which is a major shopping center in Quebec city we had to close for about a year for them to redo their floors because their floors were becoming undulated because of pyrites coming through with it which is a disease of cement of some kind. But it is a closure and the more stores you have the more reasons you have for those types of things to happen.

So that’s why we talk about the net stores Jim.

No, that’s very helpful thank you. I just want to shift the conversation to the hedge book. So your disclosure for the year end is that your average hedge is like about 28 right now versus -– I am interested to understand like I assume that around this time last year you made a conscious decision to move retail prices up ahead of the timing of the clogs impact of your hedge book right. At a $1.28 versus where we were last year at a $1.09 right, what is you are thinking about that kind of approach again I recognize that maybe the China slow demand piece is going to helpful in that regard but will you take a similar approach as you look into 2017 as you did last year?

Yes and maybe just to clarify the process, so this is not like a yearly meeting where we decide at the beginning of the year okay, what's the decision. This is an ongoing, we got visibility as I mentioned in the past. We have the hedging policy that typically minimum six month typically goes out to a year, so that the buyers have clear visibility on the currency effect. And we refreshed 25% to 30% of our items. This goes on every week, every month. It is not like a one day event per year. So all of this visibility, obviously the buyers have they understand well the timing of the seasons and the effect at any given point in time. So this is all captured and this is like for 24 years that’s been the way of managing the returns that you have been seeing.

Okay so as you stand now if you got a book of $550 million, you are kind of hedged out to 6 to 12 months somewhere in that time frame?

Yes, closer to 12 months I would say.

Okay, that’s helpful. Thank you.

Alright.

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

Good morning. Thanks for taking my questions. Just a quick one here on working capital, it has been a bit more beneficial than expected over the last few years let's call it, how should we think of working capital looking forward will that be a benefit or a drag to your cash flow?

It won't be a drag and so we’ve improved it and well you will see the biggest part of the improvement in prior years but they are still room moving ahead.

Okay and what elements are you -- so it will not be a drag looking forward.

No

And what elements are you looking to improve looking forward?

Well it is the visibility, the added visibility we have on our moment of inventory. Now as I mentioned we with the tsunami of information we receive from the implementation of the POS and from analyzing it over the past few years and now pushing it down to the store level we figure that will give us more accuracy again on the inventory movement and flow and stock position. So with that we believe it is just normal that your working capital improved.

Okay, thanks that’s helpful. And with respect to Latin America could you talk about intentions or perhaps opportunity to develop Dollarama test in other parts of the world, is that something management is looking at or is that an opportunity down the line?

We as I mentioned in the past we have NDA so and it is not material, the relationship now. So we certainly don’t want to start communicating publicly the strategy. But I’ll just say that obviously we have been three and half to four years into the process and we are doing a lot of work underground including obviously product shopping and much more. And as we said until we are satisfied that we have completed the due diligence and comfortable in moving ahead then in 2020 February we would look at possibly exercising the call option.

Okay and you can't exercise it before that?

No.

Okay and just lastly here, could you provide any incremental color on the credit card test?

No, it is too soon to say. We just implemented it and as soon as we feel we have got meaningful information we will communicate that to you.

Let me add, I have been asking this same question and I get the same answer so, its confirmed too early to predict as they say in American politics.

Great and congrats to Neil and congrats on the quarter.

Thank you very much.

Thank you.

Thank you. Our next question is from Keith Howlett with Desjardins Securities. Please go ahead.

Yes, I had a question on the traffic of 4.2%, given the economy has been quite different versus Saskatchewan and the rest of the country, does your traffic reflect, meaning positively does your traffic go up a lot in Alberta Saskatchewan or is it uniform across the country?

Its uniform across the country Keith.

Yes and I would agree with that. I think when you keep referring -- you referred to out West it is still premature yet. That they have -- while Mr. Trude [ph] is trying to help them out but maybe they haven’t separate quite enough to and I have always maintained that our stores are not driven by poor economic conditions. I think we service well during poor economic conditions and good economic conditions. During good economic conditions we have this more disposable income, during poor economic conditions maybe people think they are getting a better deal or they buy things one piece at a times that are going to cost go have them to buy four pieces or four units. So, not yet Keith, not yet. Nothing and pretty even across the country.

And then I guess it maybe a similar answer but are you noticing any particular relevant strength in the consumables category or any particular categories feeling in particular strength?

We haven’t had any changes in our product mix either from an offering point of view or a sales point of view.

And then just finally on the, I am amazed that you could fit another 4.2% customers in the traffic lines at the cash but I am wondering if you are able to measure the impact of the tap and go or other changes you’ve made as to whether you are able to speed up the average time the person is at the cash during say the peak holiday season?

Okay, so you are asking if we believe there is an impact. I mean we do some before introducing tap and go we do some what we call it time and motion study. And it was definitely conclusive and that it does accelerate the time to speed to cash out. But otherwise since the technology is relatively new it is a growing use space as well. So as people become more accustomed to paying that way, it is an incredibly convenient way to pay and the more people that use it and understand it we believe that the more you stay will be within our stores. And there is no question that the use of it does decrease the cash out times which we look forward to seeing grow in the future.

And let me add I think that cashing out time is very important and we keep putting emphasis. In fact we are changing the cash out area in our stores to had to put more emphasis on the time to cash out. I think that’s an attraction that we should take advantage of. I think people should know they can come into a Dollarama shop easily and get out easily. I think that’s what one of the reasons that maybe what I know I refer to a bunch of reasons before, we can't put our fingers on it but it may be one of the reasons why we are getting this 4% or 5% increase. I think we are concentrating more on getting people out of the store, well they can stay in as long as they want but certainly getting out as quickly as possible that’s very important. And it is something we are giving a lot of attention to.

Thank you very much.

You are welcome Keith.

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

Good morning. I just had a couple of questions around SG&A. The percent of revenue is flat year-over-year and you see some nice gains and on the top you got as well going forward, can you just talk about some of the timing of the expenses that you did occur in Q4, what were some of those?

Yes, well its developmental project. There is some IT costs there, so it is the just timing, we just roll out the WiFi. There are applications that we’re going to push down into the stores with the devices and to train the employees. So it Is simply the timing of certain expenses that aren’t necessarily straight line during the whole year. So that’s what we have seen in Q4.

Okay, great and do you see any wage increases coming this year in fiscal 2017?

Any what, I am sorry?

The minimum wage increases?

Yes, while there is the usual, there will be wage increases. And wage increases yes, and some of which are already announced but all that is obviously a factor.

Okay, great. Thank you very much.

Thank you Derek.

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