Dollarama Enters Into An Agreement To Provide Business Expertise And Sourcing Services To Central American Dollar Store Chain Dollar City
MONTREAL, Feb. 5, 2013 /PRNewswire/ - Dollarama Inc. ("Dollarama" or the "Corporation") (TSX: DOL) announced today that it has, through a wholly-owned subsidiary, entered into an agreement to share its business expertise and provide sourcing services (the "Agreement") to Dollar City, a Central American dollar store chain looking to expand its activities in Central America, Colombia, Peru and Ecuador (the "Region"). Dollar City currently operates 15 locations in the Region.
"Dollarama is as much an importer as it is a retailer. Our business isn't just based on growing our network of stores; it's also based on the continued development of our low-cost direct sourcing platform," said Larry Rossy, Chairman and CEO of Dollarama.
As per the terms of the Agreement, Dollarama will share its business and operational expertise with Dollar City as well as leverage its direct sourcing and importing expertise to provide their growing network of stores with a compelling product offering. Dollarama will not be taking on any operational responsibilities with respect to Dollar City or making any capital commitments. The Agreement has a term of eight years and contains key financial performance indicators at specified milestones throughout the term. It also includes an option to acquire a majority interest in Dollar City as of the beginning of the seventh year of the term.
"Dollarama's unique dollar store concept and compelling product offering continues to be very successful with Canadian consumers. Our objective is to test the potential of the Latin American market in a way that minimizes risk, capital and time investment and we believe that we have found the right strategic approach and the right partners to achieve this," added Mr. Rossy.While Dollarama does not expect the Agreement to have a material operational or financial impact on the Corporation in the medium term, it believes that the Latin American market holds long-term potential.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts