Dollarama Inc.

net new store openings this year. The strategy is to take some of the pressure off the last quarter of the year, which is always our busiest quarter. Note that the acceleration in the net new store openings in Q1 has no impact on our annual target, which remains between 60 and 70 net new stores by fiscal year end. Among those 21 stores in Q1 was our 15th 100th store in Canada. which opened in the Rockland Centre here in Montreal this past April. A milestone we were pleased to reach in our hometown and celebrate as a team. Hats off to our real estate, field and operations teams for their disciplined execution on our long-term growth plans of reaching 2,000 stores across Canada by 2031. Today, about 85% of Canadians live within 10 kilometres of a Dollarama store, which represents no small feat and is something we are very proud of. The team at Dollar City also continues to execute on their long-term growth plans in the four LATAM countries where they operate. In the first quarter this year, eight net new stores were opened, bringing their total store count to 448. It's been just over two years since Dollar City launched its first store in Peru. With 24 stores and counting in that country, We are very pleased with how this new market is performing and with the team's execution. Turning to ESG, we published our latest comprehensive annual ESG report this morning, outlining our evolving ESG strategy as well as our progress against goals. Our commitment to managing our business responsibly, we are further building our organizational ESG capacities and integrating ESG into our daily decision-making. Last year we created an ESG function and earlier this year we established an ESG steering committee responsible for the advancement of our ESG strategy across the organization. We continue to move our climate strategy forward, including the introduction of our first generation GHG intensity reduction goal for Scope 1 and 2 emissions last year. We are proud to have taken this initial step and of the progress made year over year. We are now further advancing our climate roadmap and alignment with TCFD by focusing our attention on identifying and tracking relevant Scope 3 emissions. Across our ESG pillars, our operations, our people, our products and customers, our supply chain, and our governance, we will continue to implement goals and initiatives that are meaningful and actionable and that enable us to deliver on our value promise to our customers and our shareholders. JP, over to you to review our Q1 financial results in more detail.

Thank you, Neil, and good morning, everyone. As expected, we continue to benefit from sustained demand for affordable everyday items during the first quarter of fiscal 2024. This translated into strong demand across our three product segments and the same store sales above 17%, as mentioned by Neil. SSS was comprised of a strong 15% increase in traffic, and a 1.4% increase in average basket size. This quarter, we also maintained our industry leading gross margin which was 42.2% of sales compared to 42.1% in the same quarter last year. Q1 represented the tail end of supply chain related cost pressures on our margin with higher logistics costs and saw continued products mixed pressure offset by lower ocean freight costs. For its part, SG&A also remained relatively flat over a year at 15.1% of sales compared to 15% last year. Our strong financial performance has enabled us to absorb continued wage pressures to date with additional minimum wage increases in the pipeline and reflected in our annual guidance. While the persistent tight supply in the labour market that has impacted the entire industry remains a concern. It has not resulted in any significant disruptions to our operations. Our 50.1% share of Dollar City's net earnings grew by 50% to $13.1 million compared to $8.7 million for the same period last year, reflecting the ongoing strong financial and operational performance of Dollar City. With an acceleration in same-store sales, along with active gross margin and SG&A management, and a higher equity pickup from Dollar City, EBITDA increased by over 22% to $366 million, representing 28.3% of sales, and net earnings were $180 million, or 63 cents per share, representing a 29% increase year-over-year. Finally, once again, Inventory remained stable sequentially this quarter at $938 million as at April 30, 2023, compared to $957 million as at the end of January. In light of our Q1 performance, we are maintaining our fiscal 24 guidance ranges published this past March. While we acknowledge that there may potentially be some upside to our same-store sales guidance, We prefer to remain conservative at this point and wait to see how the consumer laps last year's very strong Q2 SSS performance. That being said, so far in Q2, SSS cadence is generally in line with Q1's two-year stack SSS. On the capital allocation front, the board approved a quarterly dividend of 7.08 cents per share. While there were no buybacks in Q1, primarily due to higher CapEx with a large number of net new stores, combined with the racking of our Laval warehouse and the forthcoming closing of our previously announced industrial property acquisition, we do intend to remain active in subsequent quarters contingent on market conditions. As mentioned on our last call, our strategy is to maintain a balanced approach to capital allocation by continuing to invest in organic growth and returning capital to shareholders. We intend to continue to allocate our excess free cash flows towards the repurchase of shares through our NCIP. In conclusion, we continue to execute well from an operational and financial standpoint in what remains a complex environment. As always, we're focused on maintaining our value promise to our customers and maximizing long-term value for our shareholders. That concludes our formal remarks. I'll turn it over to the operator for the Q&A.

Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star 1 on the device's keypad. You also may cancel at any time you question by pressing star 2. So please press star one at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from Irene Natel from RBC Capital Markets. Please go ahead, your line is open.