Neil Rossy - President and Chief Executive Officer Michael Ross - Chief Financial Officer Larry Rossy - Executive Chairman of the Board of Directors

Irene Nattel - RBC Capital Markets Peter Sklar - BMO Capital Markets Mark Petrie - CIBC World Markets James Durran - Barclays Vishal Shreedhar - National Bank Financial Brian Morrison - TD Securities Keith Howlett - Desjardins Securities

Good morning and welcome to the Dollarama conference call for the fiscal 2017 second quarter results. Mr. Neil Rossy, President and Chief Executive Officer, and Mr. Michael Ross, Chief Financial Officer, will make a short presentation, which 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 second quarter 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, and 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 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’re cautioned not to place undue reliance on these forward-looking statements. For additional information on the assumptions and risks, please consult the cautionary statement regarding the forward-looking information contained in Dollarama’s MD&A dated September 1, 2016 available at www.sedar.com. Forward-looking statements represent management’s expectations as of September 1, 2016. And except as may be required by law, 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. Neil Rossy.

Thank you, operator. And good morning, everyone. Our results for the second quarter of fiscal 2017 were characterized by strong growth in sales, earnings and earnings per share. The improved bottom line reflects our focus on offering products with compelling value, while managing our margins and our costs. The 5.7% increase in same-store sales this quarter, over and above the very strong 7.9% SSS reported in the same quarter last year, was one of the main drivers of sales growth during the period. The continued expansion of our store network across Canada also stimulated sales. We've opened 62 net new stores over the last 12 months, bringing our total store count to 1,051 at quarter-end. During Q2, we opened 13 net new stores compared to 17 in Q2 last year. We expect the pace of new store openings to continue to accelerate throughout the second half of the year and reach our target of 60 to 70 net new stores for fiscal 2017. We're confident that we will reach this objective. Work on our new 500,000 square foot warehouse in Montréal area to support our long-term network growth continues on time and on budget. We expect to start moving inventory into the premises this winter. Since the beginning of August, we've also begun introducing select items at our new price points of CAD 3.50 and CAD 4. We do not expect these new price points to have a significant impact on our overall offering in the short term. We will continue to carefully introduce items at these price points, as has been our practice in the past. Now, I’ll pass it over to Michael to discuss our financial and operational results in more detail.

Thank you, Neil. And good morning, everyone. So Dollarama reported an 18.9% increase in diluted earnings per share compared to corresponding quarter of the previous fiscal year. EPS increased from CAD 0.74 to CAD 0.88 per share. Our strong financial performance was driven by continued improvements across all key financial and operating metrics. Total sales were up 11.6% to CAD 729 million. Same-store sales increased by 5.7% over and above the 7.9% increase in same-store sales reported in Q2 last year. There was a 1% increase in number of transactions, which reflects more store traffic compared to the prior year. Transaction size increased by 4.6%, reflecting consumer demand for our higher price point items. Finally, our store count grew 6.3% over the past 12 months, with the opening of 60 net new stores, bringing our total store count to 1,051 stores at the end of Q2 fiscal 2017. Looking at guidance and targets now, as mentioned by Neil, we are maintaining our 60 to 70 net new store target for the fiscal year. We are focused and confident in achieving this year's target, despite the slower pace in the first half year, primarily due to timing factors. Gross margin for the quarter was 38.4%, which is the same as the margin recorded last year. We are maintaining our guidance for fiscal 2017 in the range of 37% to 38%. G&A for the quarter represents 15.2% of sales compared to 15.9% last year. This improvement reflects the positive impact of store labor productivity initiatives and positive scaling impact of higher sales. For fiscal 2017, we are maintaining our outlook on G&A in the range of 15.5% to 16%. Capital expenditures increased from CAD 21.5 million in Q2 to CAD 37 million in F2016 to CAD 37 million in Q2 of F2017. This CAD 15.5 million increase is mainly attributable to the construction costs related to the new warehouse. Our guidance on CapEx for this year is unchanged in the CAD 160 million to CAD 170 million range. Cash flows from operations increased to CAD 166.1 million in Q2 from CAD 124.8 million in the corresponding quarter of the previous fiscal year. This increase is due to the higher earnings and improved working capital position, driven by lower inventory levels and the timing of payments. Inventory levels per store have decreased this year. This reduction is the result of lower safety stock level as we improved on-time delivery to stores through the use of improved monitoring and replenishment solutions. In Q2 F2017, we renewed our NCIB for another year. The 2016/2017 program allows us to repurchase up to 5% of shares outstanding or just under 6 million shares. Combining the 2015/2016 program, which expired in June 2016, and the 2016/2017 program, we repurchased 2 million shares during Q2 F2017 for CAD 184.2 million at a weighted average share price of CAD 90.88. On July 22, we issued senior unsecured notes in the aggregate principal amount of CAD 525 million, bearing interest at a fixed annual rate of 2.337%. Those new notes were given a rating of BBB with stable trend by DBRS. Net proceeds of the offerings were used to repay variable-rate indebtedness outstanding under the credit facility. Any excess will be used for general corporate purposes. This offering allows the corporation to decreases its exposure to interest rate fluctuation by fixing the rate on a sizable portion of its variable rate indebtedness. Now, looking at some in-store initiatives, we recently completed the rollout of the new IT infrastructure. This includes installation of Wi-Fi technology in our stores and the roll-out and training related to the new handheld mobile scanner – handheld, sorry, mobile scanners that will further improve store labor productivity by eliminating manual activities. These mobile scanners reduce the time required for store inventory counts and improve data accuracy for replenishment purposes. We will continue to leverage this platform and other technology investments in stores to support store management and employees in their day-to-day work. All of these initiatives, from the back store to the front store, are aimed at enhancing our patients and providing better customer service. Before providing an update on the credit card pilot, I'd like to address the subject of e-commerce, which is very much in the news and something all storefront retailers are looking into as a way to complement their business. Dollarama is no exception. We have been paying close attention to what's happening in the market and giving careful consideration to if and how we can fit e-commerce successfully into our unique business model. We've been looking at it the same way we are always looking at the different retail and consumer trends. More broadly, we are always considering different ways to provide either more value or convenience to our customers. At this stage, we continue to proactively explore e-commerce options that would complement our business model, such as to facilitate bulk buying, but our primary – our priority very much remains the continual enhancement of our in-store customer experience. Turning to the credit card pilot, a little over six months in, we continue to measure and monitor the impact on sales in our BC stores. We are satisfied with the direction of the pilot today, but have not concluded yet on the results. So it's still an ongoing project. We’ll most likely continue through Q3 and Q4 before arriving at a decision. So I will now turn the call over to the operator.

Thank you. [Operator Instructions] The first question is from Irene Nattel of RBC Capital Markets Irene. Please go ahead.

Thank you and good morning, everyone. First question, if we could just talk a little bit about store-level traffic trends. You had very nice same-store sales trend, but we did see a slight deceleration in the traffic. So just wondering if you could talk about what you might have seen, whether any regional variations, anything out of the ordinary that you may have picked up on.

Hi, Irene. This is Michael. And, Neil, feel free to also add. So, for us, the level it is right now is more in the range we were used to having historically. It's hard to measure exactly what the reason – specific reasons are. There are many factors that influence traffic, whether it's economic conditions, weather, timing of different things, also competition. So we don't have a specific answer. But, certainly, 1% we're satisfied with. And in terms of regional, we don't disclose information by region, but I think it's safe to assume that the – in terms of newer stores – for instance, we are opening the younger stores, which are in more maturing phase are out west, so it's normal to see a bit more traffic out there, but otherwise it’s business as usual.

That's very helpful. Thank you. And just on the DC, there was a bit of a change in language. I guess, before you were talking about – by the end of this current fiscal year, Neil, in your opening remarks, you said sometime this winter. Just kind of wondering what's going on there.

The timing of the warehouse – it’s not a distribution center, just to be clear.

Sorry. Yes, sorry, warehouse.

Don’t be sorry, but I just want to make sure that everybody else understands. The timing of the warehouse remains exactly what it always was, which is we will beginning the racking phase and probably be in business in the building itself sometime around November, December the latest.

That’s great. Thank you very much.

Thank you, Irene.

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

Thank you. Michael, your gross margin percentage, again, was above the high end of your guidance range. And I noticed that you’ve let the guidance range unchanged. So can you just take us through how you expect to see the gross margin percentage unfold in the latter two quarters of the year? I assume you expect it to come back down into the guidance range as favorable FX contracts begin to roll off.

Yeah. Yes, we do. It’s not because of the hedge necessarily roll-off. We manage the margin. But, you’re right, it's coming down in Q3 and Q4 compared to last year. And the other factor impacting the margin, as you know, in Q3 and more so in Q4, over the past two years, we've had extremely strong sales results. So we – and that's why we left, in our assumptions, the 4% to 5% same-store sales for the fiscal 2017 year, meaning that everyone should expect that we – the same-store sales levels to fall in Q3 and Q4 because we’re comping against two very strong years of traffic growth and basket size growth. So the scaling also has an impact on your gross margin.

Okay. And the gross margin performance in Q2 then, was that in line with your expectation or did it exceed what you had anticipated

Well, it exceeded a bit because we didn't anticipate such strong sales. Again, we are comping against 7.9%. We finish at 5.7%. That’s, in my mind, exceptional. And so, it wasn't sandbagging. It was really the scaling impact of these better sales. And we've got some good visibility three, four months down the line for our gross margin. And it's with that in mind that we set our outlook for the rest of the year.

Okay. And lastly, could you or Neil talk about the Canadian consumers? You know the Canadian economy really slowed in the second quarter. And I’m just wondering if you're seeing that in terms of the consumer that's visiting your stores. Any regional differences? And do you think you are benefiting from trade-down from other retail concepts?

Our customer base remains almost the entire Canadian population thankfully. We're, obviously, benefiting from the tougher economy, but, I guess, we've lived through ups and downs in the economy over time. And it's proven to be the case that the economy is, I guess, less a driver of our sales than our assortment and our relative value, which remains our core principle.

And, Neil, how are your Alberta stores performing?

The Alberta stores – sorry, while Neil knows the answer, but the Alberta stores are not performing more or differently from the other provinces. Out west, all the provinces are doing well. I talked early about the traffic a bit higher than the chain because of the maturing state of those stores, but it's not Alberta more than BC more than Manitoba more than Saskatchewan. They’re all performing the same compared to the chain.

Which speaks to the fact that the tougher economic conditions in any given geography in the country aren’t seemingly driving our sales in particular.

Okay. Thank you for your comments.

Thank you.

Thank you.

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

Hi. Good morning. You guys just increasingly have spoken about the competitive landscape. I wonder if you could just sort of elaborate on your view on Dollarama’s fit within the landscape today. And then related to your comments on e-commerce, how you view that as part of the competitive landscape?

I don't think there’s anything that right now more macro or – whether it's the competitive landscape, economics, governmental things going on, nothing has really changed structurally that would have us revise our business model. So that’s the background. So it continues to be very competitive like it's always been. We try to keep ourselves as agile as possible to be able to react to it as best we can. And as I've always said, competition will always intensify. The consumer will always ask for more. And we just cannot assume otherwise.

And on the e-commerce front, with our growing store network and our desire to service people as close to home as possible, the intention of our e-commerce endeavors is not to have an e-commerce platform going to customers and it’s more to look for ways to service customers that are looking for things within the Dollarama that we can't service at the store level. So when a customer, for example, wants hundreds of an item, they’d have to go to multiple stores to get that and that's simply impractical. And so, we’re looking for ways to solve the customers that aren’t satisfied with their particular needs by going store to store and that's how we see e-commerce playing into our future, potentially as servicing the customer base that is looking for Dollarama goods, but is not capable of finding them in the way that they want them at our actual physical locations.

Okay, that’s helpful. Thanks. And then, Michael, I think you said that the training costs and the Wi-Fi and IT infrastructure projects are complete, I just wanted to confirm that. And then as we think about the payoff, obviously, there’s benefits in terms of labor productivity, but can you just give us relative sense in terms of how important that is relative to the efficiencies that you’re going to be getting from an inventory perspective or even from a space productivity perspective within the stores?

Yeah. So the first question on training is, the project implementation training, yes, is complete. However, as you could well understand, there will always be some, what I call, maintenance training, employees change and so on. The other thing is – so this year's improvement in G&A comes from continued savings generation from prior-year projects. The one that we implemented this year because of the cost to implement, i.e. training, installation and all the work required, kind of offset certain level benefits. That should start kicking in next year. So the on-handing is going on right now with the new devices. And some of the savings are offsetting the cost of implementing all of this this year. So that's why I was mentioning in the past that, for this year, it’s more or less neutral, the implementation and the rollout of the mobile devices. So you'll see more of that benefit kicking in next year. We still have initiatives going on with the store productivity, with logistics. So, this year, you have the guidance. and in the following years, hopefully, we generate enough savings to offset the headwinds, which will come mainly from wage increases and create more savings that will help us improve our G&A. And if we do, we probably reinvest it in our product offering, therefore, impacting the margin and keep that at this level, which is in the 20% range right now, 20% to 21% level. That's what we would try to maintain.

All right. That’s very helpful. Thanks very much.

Can I add – Larry here. Can I add that we really don’t – there seems to be an impression that we do better – or we’re retailers geared for tough economic times. We don’t see yourselves as that. And over the last 25 years, I don’t think that’s been proven to be the case. I don’t think that offering merchandise as good value is necessarily a retailer that is poised for tough economic times as opposed to good times when there’s more disposable income. I think people today are very aware of good value. And I think stores like Costco are stores where you have good value that are very successful during good and poor economic times. So we don’t see ourselves at all as a retailer for tough economic conditions. And I don’t think we should be positioned that way. I'll leave it at that. And we should go back to Michael.

Okay, good.

And to the questions.

Excellent. Next person please.

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

Just everybody sort of focused on similar issues. Obviously, the competitive landscape is kind of a question mark. So we have seen some additional pressures, obviously, with the consumer into the first part of this year, largely from food inflation pressuring the wallet and gas fuel savings coming off as we’ve seen a bit of an improvement in the WTI print. as you sort of digest what's gone on in the first half – I don't want to put words in your mouth – but do you feel that the competitive environment, while intense, has been at least stable, in that you’ve been able to execute your retail pricing strategy without any significant changes versus what you might have hoped for?

I think that's a very fair statement.

And when you look out, in the second half of this year and into the following year – let me try again in a different way. Do you very often take prices down as opposed to moving price points up?

I need you to specify the question more specifically.

I realize it’s a difficult thing to answer. But, I guess, one of the questions, I think, that’s hovering in investors’ minds and also analysts’ is you’ve got this long-term guidance, obviously, on gross margin of 36% to 37% versus your current guidance for the year, right? And, I guess, what I'm kind of wondering is what’s your aptitude historically for taking price points down on similar product, right? And I realize that's a tricky thing because if we’re talking about a pack of colored pencils, those are 18 or 12 in the pack, but have you ever found a situation where because of volume pressure, you needed to take a price point down as opposed to only moving prices up?

So I'll answer your question by saying this. Our concept remains relative value. And so, on any given day, over all the years – and this has never changed – if we feel that any one of our offerings needs to be addressed cost-wise, from a retail perspective, down or up because we’re either not competitive the way we’d like to be competitive as a buying group or we feel that our value – and I can say this honestly – is too good on certain items and we remain very competitive and offer a very compelling value at one price point higher. We use those tools of up and down to balance our goals of our final gross margin. So when we’re buying, we always have a gross margin percentage in mind and we realize, as we go along, that there will be some up and some down.

Good, thanks. Keep going.

It’s Michael, Jim. Just also, so everyone understands too, we refresh 25% to 30% of our items every year too. So, obviously, we've got 30% of the SKUs or items that come in at a – these are new items at a price established at that time.

And sometimes you don't have to, as a buying group, change a price. You can change the count, of course. So 12 pencils may become 10 pencils instead of going from CAD 1.25 to CAD 1 and the opposite happens as well.

Right. So on assumption that the competitive environment just remains sort of as is, right, when you look at your second half, I think Michael was talking about comp store sales potentially slowing because of two years of very strong prior-year performance. That has, therefore, I'm assuming, nothing to do with the fact that the FX headwinds are going to ease off and that you’re going to take prices down proactively, right? So is your thinking in terms of your guidance that retail price is going to stay where they are on average, right, after having taken them up in advance of the FX cost of goods sold impact and you just hold the line for now, and then – so the slowing of comps is more about just transaction as opposed to average basket decline?

Well, there is a lot in your – lot of things in your question, Jim. But, essentially, just to reassure you, for Q2 and Q4, everything has been bought. It's priced. So there's no adjustment that’s going to be going on in the next weeks or month. The buying that’s going on right now is for next year. So that’s all done well in advance. Again, the currency is – and that's why we hedge in advance, is to give the buyer the clear view as to all the cost components including the currency. So when the buyers commit to a purchase, they know exactly at what cost they’re committing and that's how they establish the price and the margin from there. Once that's done, the margin is frozen for that item. Then what goes on into the spot rate fluctuation has no more bearing directly on the price and the margin.

Right. So on the assumption that the FX rate over the next 6 to 12 months may be lower, right, than it has been in the past year, it doesn’t mean that you would necessarily take the retail price down to retain the same gross margin percentage?

But it’s going to be factored when we refresh 25% to 30% of our new items in those new items, right?

Yeah.

So we're going to discontinue products that don't meet the velocity or margin dollar or margin percentage criteria and we're going to look at – the buyers look at this every day. They are buying and looking and been doing this for 25 years now. So nothing is changing in that market.

So if we took it to a more micro level, if an item was bought at a specific hedge rate or value and, over time, our ability to offer greater value presents itself to the buyer and the value currently being bought is no longer, let’s say, as relatively great value in the market, then the buyers would be picking on those items first to get rid of and making sure that the new items bought with the new hedge rates in mind would be coming in at that relative value that our customers have come to expect.

Great. No, that’s very helpful. Thanks to everybody.

Thank you, Jim.

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

Hi. Thanks for taking my questions. Just a quick one here on inventory. Pretty well controlled. Better than I would've thought it to be. It was down year-over-year, down sequentially despite the solid sales growth. Just wondering what's driving that trend and if there's any considerations we should reflect as we look forward in building our models on inventory.

I think it was simply the continuation or the materializing of what we told you in the past. So the system giving us more visibility on the movement of inventory, us working more and more with that information, the great job that Johanne has been doing at store level in terms of ops, and the better tools give us much more visibility on the movement of inventory. So that allows us to adjust. I think you’ve seen huge improvement. The other things too, however, you have to keep in mind is, if you recall last year's Q2 was a bit higher than normal because the year before we had – the buyers had pre-purchased in advance of the adjustment of the duties that increased in January of that year. So last year’s inventory was a bit higher than usual. So it makes for a bigger delta. But all in all, it’s better – more visibility on our inventory. And is that going to continue improving a lot? We see, definitely, opportunity to continue improving it, but for the time being we’ll see, but it won't be as drastic as what you’ve seen compared to last year.

But I would add that we are very happy with the results of – of the differences in our inventory and very excited and satisfied with our IT initiatives and operational efforts to get better data into our systems.

So are you seeing inventory reduce and in-stocks improve as well?

Yes, exactly.

With respect to the inventory reduction, just the dollar value, what percentage of the way are you complete on these initiatives? I know you said, we’ve seen the bulk of it, but is there a substantial amount left to still benefit from?

I'll be cautious, but I don't see substantial, material changes. But good – there will definitely be some improvement.

Okay, thanks. Thanks for those answers.

You’re welcome.

Yeah, it’s Larry again. Just another two cents here [indiscernible]. We have a monitor in our office and our name is spelt Rossi. So just to bring a little levity to this question and answer period, in this period of Donald Trump, Rossi is Italian. So they made us Italians. So, again, in this period of Donald Trump, we love those people. And really, if you want to buy at Dollarama, it would be just fine. So it’s ridiculous. So we’ll get that corrected for the next time. Another effect of the lowering of inventory is that our stores look better. We are removing those horrible looking brown cartons, import cartons from the top level of our stores that have always been an eyesore and an eyesore to the landlord and ourselves as retailers, and slowly, but surely, the lowering of our inventory has allowed us to remove both the shelf and the products that were above them that were really, really an eyesore. So other than seasonal, at Christmas time, when we need – very much need them, our stores are too small to absorb all of the seasonal that is sent, you will see in most of our stores that they will work better as a result of removing those, what we call, risers with all kind of brown import boxes above them. So that's one of the side benefits of lowering our inventory. Thank you, guys.

Thank you.

Next person. Operator?

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

Good morning. I just want go back to thinking about the progression of the gross margin as we move towards next year. And I think the reason there is so much focus is because there’s many dynamics, whether it’s the rising hedge book or the devaluation of the renminbi and the new price point introduction. So two questions here. Will the intro of the CAD 3.50 and CAD 4 price points have an initial impact upon gross margin? I believe earlier commentary had been marginally dilutive. And then the second question, again, going back to pricing with respect to the currency outlook, I realize there is the ongoing refresh. But on existing product, are you content with current pricing on average looking forward? Or do you feel that there are further adjustments upward that will be necessary as we enter 2018?

Okay. So your first question, Brian, was on…

The new price points.

New price point. No, there's – it’s so small, there's no impact. Typically, the margin percentage is lower when you introduce price points, but it's so small that it won't have an impact. You won't see that in gross margin this year or even next year because it ramps up over time. But it will be offset by other products that will factor to meet the margin requirements we want. So no impact there. It’s minute. For the currency, right now, the goods that were purchased, again, were purchased with the cost of currency known because it was hedged, and that’s not changing for next year. So as buyers commit to next year, they’re going to commit based on a fixed currency, known cost, and so that guarantees the margin that the buyer decides to go into. And so, that’s going to be the case for next year too.

Including the re-evaluation of the renminbi in the cases where the goods are bought from China. That’s all taken into account, as Michael said, at the time of purchase.

Okay. So you’ve factored it. But I thought that you hadn’t locked into the renminbi at the time of purchase; and as a result, you do have exposure to that movement within.

Now, the renminbi, if we’re negotiating in USD, the renminbi is the suppliers’ exposure and we negotiate the price with – the price of the item with the suppliers. So whatever the renminbi done, it’s the suppliers’ exposure, not ours.

Okay. So – okay, I got it. And then second question, Michael, and really this just a question for clarification. In your notes on the hedge book, typically, you have a line disclosure that details the hedge gain or loss realized in the quarter. And, clearly, you can pull it out of the cash flow. But I'm just curious as to why it’s omitted this quarter. Is it simply a matter of materiality now?

You see, what the accounting rules do with, the buyer – because we record inventory at spot – so let me just give you a very quick, clear example. When the buyer commits, today he’s committing for something that we're going to pay in five months from now. So they ask us what’s the hedge rate in five months from now. We give it to them. So that’s going to be the actual cost of the inventory. But when we get five months later, as the inventory comes in, if the spot rate is higher, we record the inventory at that higher amount and it goes into COGS at that higher amount and the accounting adjustment will be again to bring back the COGS to the hedged cost. In other words, the real cost. So that's why you have adjustment. Whether it's a gain or loss, it really – it’s just to reconcile the spot rate with reality.

Yeah.

And so, that's all it is.

Yeah. No, I understand that. I'm just wondering you didn't have a note disclosure with respect to the amount of gain or loss that was – that accrued in the quarter. Because, typically, over the last seven, eight quarters, you’ve had a one-liner in there, disclosing it. In this one, we had to pull it out of the cash flow statement.

Okay. I’d have to look at what you’re…

[indiscernible].

No worries, we can follow-up.

Yeah.

Thank you.

Okay.

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

Yes. I had a question on the SG&A rate, which was particularly low this quarter. Is there a timing issue there on expenses or is there some reason why second quarter has SG&A rate?

Yeah, there is always timing with G&A depending on the cost of the projects we are working on and so on. But, no, there's no specific thing that I can mention that needs to…

Aren’t your sales bigger in the second half, and so your SG&A? Michael?

Yeah, there's the scaling impact, obviously. But, no, there's…

The SG&A, I guess, was below your guidance range for the year in that particular quarter. That's why I was interested as to whether there’s something specific there.

Yes. Yes. It was because of the scaling impact. But we're still, for the year, all of that considered, the range has not moved. It’s still the same range.

And then, just in terms of other payment mechanisms, I think you are testing some mobile, people walking around with some handheld device, I'm just wondering how that's going and whether you're looking at other ways of paying, PayPal or other things.

Okay. So the mobile devices that we use, these are iPods that we use for doing the on-handing, the pack-aways are also – in certain stores, not all stores, will be used as a mobile cash register, and especially during peak times. So you’re most likely going to see those during Halloween and Christmas. They're not in all stores, again. And so, those are different – those are definitely going to be used for debit transactions only and in BC for credit card transactions also. And in terms of payment methods, it’s debit across the chain, credit in BC and cash otherwise. That’s it.

Tap & Go. Apple.

Yeah.

As well as Tap & Go and Apple Pay.

So you have Apple Pay?

Well, the Apply Pay is also – works on our system because it's like a simulator credit card or debit card purpose. So it's only that Apple Pay also works on the system.

And in terms of the use of the iPad, is the…?

iPod.

iPod as a cash register, is that based on high-volume stores or is it a regional test or…?

No, it’s based on high-volume stores.

Right.

So, basically, it’s existing hardware that’s in our stores that can be used for multiple functions. And so, in the stores where we have particularly high seasonal peaks, instead of bringing in more traditional cash registers and cash counters that, obviously, you don't want to be moving in and out for different seasons, in specific stores with abnormal peaks, we use that device to help cash-out our customers faster.

Debit-only.

And debit-only, as Michael had said.

And just a question, the quarterly question on Latin America or Central America, can you provide any update since the last quarterly call on what the progress is there?

Sure. It still remains a non-material piece of business to date. But it still remains very interesting. And our partners continue to do a fine job and execute well and we’re very pleased with where that's heading. And I think the company as a whole has learned a lot from the experience and it’s helped our whole team grow in many ways.

And, I guess, we’ll just wait to see on extension to other markets in the region.

You’re exactly right. That’s exactly – as they become material, we promise you will be the first to know.

All right, thanks. Just one last question on the dollar store segment, in particular in Canada, are you seeing a sort of a net shrinkage or a net growth by the other dollar stores in Canada?

The dollar market in Canada remains very steady. No growth or shrinkage out of the norm of what's been happening for the last four or five years.

Great, thank you.

Thank you.

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