Dollarama ups stake in Latin America value retailer, plans expansion to Mexico
Another retailer is targeting Mexico for growth.
Dollarama has increased its stake in Latin American retailer Dollarcity to 60.1% with the acquisition of an additional 10% stake. The Montreal-based extreme discounter, which has 1,569 stores across Canada, also announced plans for Dollarcity to expand into Mexico.
Dollarcity, which operates 547 locations throughout Latin America, intends to pilot its first store in Mexico in 2026. The news comes days after off-price retailer TJX Cos. entered into a joint venture to expand its footprint south of the border into Mexico.
"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.”
The founding stockholders of Dollarama and Dollarcity have agreed on governance terms providing for the future expansion of the business to Mexico. The stockholders will indirectly have an 80.05% and 19.95% equity interest, respectively, in the Mexico portion of the business.
As at March 31, 2024, Dollarcity had 547 stores with 324 locations in Colombia, 99 in Guatemala, 72 in El Salvador and 52 in Peru. The retailer offers a broad assortment of consumable products, general merchandise and seasonal items at select, fixed price points up to $4.00.
Following an updated evaluation of the market potential, Dollarcity's management has revised its long-term store target in these four current markets of operation to 1,050 stores by 2031, up from its previous target of 850 stores by 2029.
The increased target reflects anticipated growth primarily in Peru and Colombia and does not take into account any future expansion in Mexico.