Dollarama Inc. Adds Another 10% to Dollarcity Stake as Retailer Plans to Expand to Mexico

Canadian retail chain Dollarama Inc. (TSX: DOL) recently announced that it has acquired an additional 10% equity interest in Dollarcity as the Latin American retailer solidifies its plans to expand into Mexico.

The new stake was acquired in exchange for the issuance of 6,060,478 common shares of Dollarama and increases the Montreal-based company’s equity interest to 60.1%. Additionally, Dollarama noted that it has an option to purchase an additional 9.89% equity interest “at any time on or before December 31, 2027, according to the Montreal-based company.”

Dollarama said it expects the transaction to be neutral to its net earnings per share for the fiscal year 2025.

With respect to expansion plans in Mexico, which is expected to see its first store open in 2026, the company stated that “Dollarama and the Dollarcity founding stockholders will indirectly have an 80.05% and 19.95% equity interest, respectively, in the Mexico portion of the business.”

“Dollarcity continues to represent a compelling, long-term growth platform for Dollarama, with the Dollarcity leadership team successfully executing on its strategy throughout the course of our over decade-long partnership,” said Neil Rossy, president and CEO of Dollarama. “Since we initially acquired a majority equity interest in 2019, Dollarcity has more than tripled its revenues and significantly grown its presence in key Latam markets, demonstrating the underlying strength of its business model and the appetite for our value proposition from Latam consumers.”

Colombia is currently the leading market for Dollarcity. Overall, 324 of the firm’s 547 retail locations are in Colombia. Guatemala has 99 stores, El Salvador has 72, and Peru has 52.

Dollarama recently updated its growth forecast to nearly double its overall footprint to 1,050 stores by 2031, with the bulk of the expansion expected to come in Colombia and Peru. The figure does not take into account any future expansion in Mexico, the firm noted.

“With its strong leadership team, Dollarcity is well-positioned to continue delivering profitable growth, both from its current markets of operation and as we eye our next market of entry,” said Rossy. “We look forward to preparing for entry in Mexico in the near term, a large and dynamic market with untapped potential in the value retail space, guided by the same careful and disciplined approach as with our successful entries in Colombia in 2017 and in Peru in 2021.”

Dollarcity signage at El Tesoro mall in Medellín. (Photo credit: Loren Moss)