DOLLARAMA
Hazard
Strategic
Amendment to normal course issuer bid, changed the 2015 - 2016 NCIB to allow max number of common shares to go from 6.5 million to aprox. 11.8 million
Adverse result from relationship with El Salvador based Dollar City
Potential cashflow issues from recent 11.1% dividend increase from 9 to 10 cents per share
Risks from move to the untested price cap of $3.50-4 for all products from previous cap of $3
Risk of choosing an unsuitable location for a new store or losing a potential profitable location to a competitor
Financial
Potential increases in shipping and handling costs associated directly with fuel price fluctuations
Foreign exchange risk from fluctuations in $CAD $USD relative valuation
Potential increase in equity from amendment to allow max number of common shares to go from 6.5 million to approximately 11.8 million
Increase in mandated minimum wage (as almost all store employees are paid minimum wage)
Inflation, large purchases made in China as well as other Asian markets. Large fluctuation home ad abroad could play roles in financial outcomes
Brand damage due to issues with quality, reliability or ethics of products and suppliers
Operational
Supply chain disruptions, because most products are shipped and imported a large number of factors could hold up sections of the supply chain that bring in business merchandise
Errors in merchandise selection and replenishment, identifying the volume and consumer needs in a timely manner
Increase in rent and occupancy costs on their store locations the majority of which are leased
Potential issues surrounding appointment of new president and CEO, Neil Rossy (as of May 01 2016)
Unprepared for peak seasonal sales, since the majority of sales come during the fourth quarter, as well as in times of major holidays (Christmas, St. Patrick's day, Easter etc.)
Risk of high level of indebtedness because as of the end of the 2016 fiscal quarter Dollarama long term debt amounted to about $1.2 billion
Risk of reliance on key personnel and the indirect effect of business interruption should a board member or executive be incapacitated
Attempted unionization of retail store or distribution centre employees
Potential issues stemming from construction of new warehouse, i.e. wasn't constructed to code
Potential litigation resulting from injury or harm caused by a product purchased at Dollarama
Worker injury at retail stores or distribution centres
Damage to merchandise within warehouses and distribution centres from natural hazards or catastrophe.