High GM, EBIT margin & ROIC support high valuation; Initiate at Buy with a C$220 PO

Research evidence excerpt

High GM, EBIT margin & ROIC support high valuation; Initiate at Buy with a C$220 PO

Exhibit 13: DOL average store payback time is two years

Dollarama Canada estimated store economic model

DOLLARAMA (CANADA)

Total $0.92

Store Pre-tax ROI 42% 63% 87% 106% 122% 138%

Cumulative ROI 42% 106% 193% 299% 421% 559%

NOTE: Store Size ~10,500 Sq. Ft. Gross

Source: Company filings, BofA Global Research

BofA GLOBAL RESEARCH

DOL could improve margin through supply chain efficiency

DOL operates a centralized inventory management model. Inventory needs are identified

centrally rather than through store-level signaling (a push, not pull model), which allows

the corporate level to proactively allocate products where needed. This supports tighter

inventory control, better in-stock position and more streamlined execution. Inventory

replenishment is driven by point of sale scan and inventory algorithms to prevent over-

replenishment. The system also handles localized demand through automated inventory

push. Pallet building follows strict criteria on weight distribution and height limits based

on store door dimensions.

Approximately 1.2MM pallets are shipped annually (3.2 pallets per store per day) from

the Montreal DC. Three shipping models are used, including live load (for a high volume

area like greater Montreal), appointment based shipping (for lower value areas where

value must be consolidated first), and container reload (empty Asia import containers are

refilled with 20 pallets and sent west via rail on Canadian Pacific at a discount).

The DC spans 575,000 sqft and has grown organically by purchasing adjacent parcels.

Delivery windows are strictly managed to avoid early or late delivery to enable proper

store staffing. DOL pays C$24-25 hourly wage on average at DC (vs. Quebec minimum