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COMPANY UPDATE | COMMENTAPRIL 29, 2010

Dollarama Inc. (TSX: DOL)

Reiterating Outperform Post-Secondary Offering

OutperformAverage Risk

Price: 24.71

Shares O/S (MM): 75.2Dividend: 0.00BVPS: 8.18Float (MM): 33.0

Price Target: 28.00Implied All-In Return: 13%Market Cap (MM): 1,858P/BVPS: 3.0xEnterprise Val. ($MM): 2,282.0Avg. Daily Volume (MM): 0.18

Event

We are reiterating our outperform thesis following the recent secondary offering

Investment OpinionDOL has closed its secondary offering. A total of 11.7 million shares were solby insiders at a price of $24.60 per share. We estimate the public float isapproximately 44.7 million shares (61% of shares outstanding). We haveincluded a table outlining the estimated proforma ownership.

Expect to hear more from the U.S. dollar stores toward the end of May. Weanticipate that Dollar Tree (DLTR) will report its fiscal Q1 sales in early Maywith its full results toward the end of the month. Before mid-June, we expect 99Only Stores (NDN) will report its fiscal Q3 and Dollar General (DG) will reporits Q1 results. We anticipate DOL will report its Q1 results before mid-June.

Sales and gross margin performance should continue to drive strongperformance. The gross margin potential was probably one of the moreundersold aspects of DOL's business as it went public. While rising freight islikely to create a margin drag over the next year, we believe that DOL's improvesourcing of higher-price-point goods (resulting in lower product costs), theincreased penetration of higher-price-point merchandise and the improved valueof the C$ should serve to help gross margins through F2011E. DOL's salesmomentum is outpacing its U.S. peers, driven by solid traffic and the impact ofits multi-point pricing strategy. In recent local store checks, we have continued tsee good execution (e.g., timely introduction of seasonal merchandise through thChristmas, Valentine's Day, Easter holiday periods) and solid traffic (good linesat the tills).

Index inclusion is possible by late 2010. We believe DOL has sufficientfloat/liquidity to qualify for index inclusion. The earliest we would expect to see

this happen is December 2010.

We are maintaining our Outperform rating and $28 target. Our $28 targetequates to 16.0x our F2012E EPS estimate of $1.75, consistent with the top-tiergrowth-focused large cap Canadian consumer names and U.S. dollar storeretailers.

Priced as of prior trading day's market close, EST (unless otherwise noted).

30 WEEKS 09OCT09 - 28APR10

18.00

20.00

22.00

24.00

D J F M A M J J A S O N2008

D J F M A M J J A S O N2009

D J F M A2010

HI-09APR10 25.55

LO/HI DIFF 42.34%

C LOSE 2 4. 71

LO-23OCT09 17.95

1500

3000

4500

PEAK VOL. 6353.0

VOLUME 490.0

100.00

110.00

120.00Rel. S&P/TSX COMPOSITE INDEX HI-09APR10 122.40

LO/HI DIFF 29.72%

CLOSE 119.97

LO-16OCT09 94.36

RBC Dominion Securities Inc.

Irene Nattel (Analyst)(514) 878-7262; [email protected]

Tal Woolley, CFA (Analyst)(416) 842 7857; [email protected]

Martin Gravel, CFA (Associate)(514) 878-7264; [email protected]

Daniel Armstrong (Associate)(416) 842-7880; [email protected]

FY Feb 2010A 2011E 2012EEPS (Op) - FD 1.15 1.50 1.75

P/E 21.5x 16.5x 14.1x

EBITDA (MM) 191.9 218.5 242.2

Revenue (MM) 1,253.7 1,409.5 1,528.2

EPS (Op) - FD Q1 Q2 Q3 Q42011 0.23E 0.34E 0.39E 0.54E

2012 0.27E 0.40E 0.46E 0.62E

EBITDA (MM)2010 35.3A 42.3A 46.7A 67.5A

2011 38.6E 51.1E 55.8E 73.0E

2012 43.1E 56.7E 61.8E 80.6E

Revenue (MM)2010 273.4A 303.4A 312.8A 364.1A

2011 309.9E 343.1E 351.1E 405.5E2012 336.5E 372.1E 380.4E 439.2EForecasting F2010 pro-forma net earnings of $86.6 MM andpro-forma EPS of $1.15.

All values in CAD unless otherwise noted.

For Required Non-U.S. Analyst and Conflicts Disclosures, see page 10.

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Reiterating Outperform Post-Secondary OfferingDOL completed its most recent secondary offering. On April 12, DOL announced a secondary offering by certain shareholders(Bain and other entities controlled by Rossy and other management) for a total of 11.7 million shares (base offering 10.2 millionshares, overallotment of 1.5 million shares). These shares were sold at a price of $24.60 per share and boosted the public float toapproximately 44.7 million shares (or approximately 61% of shares outstanding). Following the sale and over-allotment option, Bainremains DOLs largest shareholder, owning approximately 22.0 million shares (30% ownership). The transaction closed on April 28.

Exhibit 1: Public Float Expands To 61% Of Shares Post-April Secondary

Post Proforma Secondary Post Proforma Own.

millions IPO Own. Offering Secondary Own. Change

Bain 31.7 44% (9.7) 22.0 30% -13%

Rossy 6.4 9% (2.0) 4.4 6% -3%

Other Mgmt 1.6 2% 0.0 1.6 2% 0%

Public 33.0 45% 11.7 44.7 61% 16%

Basic Shares 72.7 100% 0.0 72.7 100% 0%

Source: RBC CM Estimates, Company Filings

Sales Momentum Remains Attractive

DOL comp performance among the best in the peer group. Despite the challenging retail sales environment, the U.S. dollar storecomps have been quite resilient over the past two years. Led by Dollar General and Dollar Tree, the average quarterly comps acrossthe four peers have shown remarkable consistency at +5.5% and ranging from a low of +2.3% in Q1/CY08 to a high of +8.7% inQ1/CY09. Interestingly, DOLs comps in recent quarters have exceeded this average. The four graphs below compare DOLsquarterly comps to each of its U.S. dollar store peers. As compared to Dollar General (considered by many to be its closest peer) andDollar Tree, DOLs comps have been largely in line at roughly 7-8% with Q4 showing above average performance at 9%. DOLsrecent comp performance and stability have been much better compared to 99 Cents Only and Family Dollar, in large part due to theintroduction of DOLs multiple price point strategy.

Dollarama IncApril 29, 2010

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Exhibit 2: U.S Peer Comps Comparison

Dollar General (DG):

-5%

0%

5%

9%

14%

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Dollarama

Dollar Tree (DLTR):

-5%

0%

5%

9%

14%

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Dollarama

99 Cents Only (NDN):

-5%

0%

5%

9%

14%

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Dollarama

Family Dollar (FDO):

-5%

0%

5%

9%

14%

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Dollarama

Source: Company reports

DOLs margin performance continues to exceed its peers given the higher penetration of higher-margin discretionarycategories in the overall sales mix. U.S. dollar stores continue to generate the bulk of their sales in lower-margin staple categories(i.e., food), whose sales have been assisted in the past year by the enhanced and expanded SNAP food assistance program offered bythe federal government.

Peer News FlowDG reported strong Q4 results in late March. Dollar General delivered adjusted Q4 EPS of $0.51, up 104% over last year andabove Street at $0.43. Comps were up +7.4% (on top of +9.4% last year). Total revenue was in line with Street forecasts at $3.19billion, up 12% over last year. Margin performance was solid as well: gross margins of 32.2% (up +275 bp over last year) were up onimproved category management efforts, net markups and shrinkage rates. Management indicated that both increased traffic andaverage transaction size helped achieve the Q4 comp performance. Additionally, consumables (+13.8% year-over-year) and seasonal(+13.7% year-over-year) categories performed well during the quarter. Adjusted EBITDA of $409.6 million (up +47.9%) was fuellednot just by the sales growth and higher gross margins, but also by improved leverage on operating costs. EBITDA margins were up+312 bp to 12.9%.

DG expects many of its new customers to stick around after the recession. Management indicated that consumers with incomeshigher than $70,000 per year were the fastest-growing segment in their customer base. More importantly, their research indicated that

97% of these customers stated they would remain customers at DG even if economic circumstances improved. This potential retentionis in line with the rest of the companys customer base. To the extent that this research holds true, it is potentially indicative of a morefrugal consumer mindset going forward, which could mean that traffic rates for value/discount formats may remain healthy even in aneconomic recovery (including, in our opinion, for DOL).

DG also recently announced the pricing of its first secondary offering after its recent IPO. The company is offering 29.9 millionshares (base offering of 26.0 million, with an overallotment of 3.9 million shares) at a price of $27, well ahead of its IPO price of $21.We estimate that after the offering the private equity syndicate that owned DG prior to its IPO will retain an 81% interest.


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DLTR also announced a substantial share buyback program. DLTR announced a $200 million accelerated share repurchaseprogram in late March. DLTR had over $600 million in cash on hand at the end of its fiscal year. An exhibit outlining U.S. peer newsflow is below.

Exhibit 3: U.S. Peer Tentative Reporting Schedule

Dollar Tree Q1 Comps Release Beginning of May

Dollar Tree Q1 Results End of May

99 Cents Only Stores Q4 Results Early June

Dollar General Q1 Results Early June

Dollar General AGM June 3

Family Dollar Q3 Results Early July

Source: Company reports, press releases, RBC CM estimates

Valuation & RecommendationWe are reiterating our Outperform rating and $28 target. Our $28 target equates to 16.0x our F2012 EPS of $1.75, consistent with

the top tier of growth-focused large cap Canadian consumer names and U.S. dollar store retailers. This target translates to 10.0x ourF2012 EBITDA of $242.2 million (using end of year net-debt), which is a premium to the group, but consistent with recent LBO IPO,Dollar General. We believe Dollaramas premium valuation is warranted based on its sustainable, industry-leading profitability, peergroup leading square footage growth, solid free cash flow generation and strong earnings growth. Key risks to our earnings forecastsand rating include near-term minimum wage increase, the increased market risk in levered names, cost inflation that can tempermargins for fixed-price retailers and currency movements that can impact an importer like DOL. Catalysts include better-than-expected performance, a market shift to defensive names and an increased float.

Exhibit 4: Valuation Multiples

P / E Valuation F2012E EV / EBITDA Valuation F2012E

Earnings Per Share $1.75 EBITDA ($ MM) $242

Multiple 16.0 x Multiple 10.0 xEnterprise Value ($ MM) $2,417

Net Debt ($ MM) $334

Equity Value ($ MM) $2,083

Equity Value Per Share $28 Equity Value Per Share $28

Diluted WASO 75

Source: RBC Capital Markets estimates

The table below depicts the valuation ranges of the comparable Canadian retailers, along with selected growth rates. The

current range for comparable Canadian retailers is 10.5x-15.0x on current CY11 earnings.


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Exhibit 5: P/E Trading Multiples, Calendar Year-End Basis (consensus estimates)

Cash Adjusted

2010/04/28 Market P/E P/E Dividend

Company Ticker Price ($) Cap ($M) 09E-10E 10E-11E 09E-11E LTM 10E 11E 10E 11E Yield (%)

U.S. Dollar Stores

99 Cents Only NDN US$16.10 US$1,111 18% 14% 16% 21.3x 17.2x 15.1x 15.3x 13.4x 0.0%

Dollar General DG US$29.01 US$10,641 53% 18% 34% 27.4x 17.9x 15.2x 17.9x 15.2x 0.0%

Dollar Tree DLTR US$60.83 US$5,324 20% 12% 16% 17.2x 14.4x 12.9x 13.3x 11.9x 0.0%

Family Dollar FDO US$39.22 US$5,306 28% 14% 21% 16.7x 19.6x 15.3x 14.1x 12.4x 1.6%

Average 30% 14% 22% 20.7x 17.3x 14.6x 15.1x 13.2x 0.4%

Average (market-weighted) 38% 15% 26% 22.2x 17.4x 14.6x 15.8x 13.7x 0.4%

Grocery/Convenience

Couche-Tard ATD.B US$18.68 $3,430 10% 10% 10% 15.2x 11.5x 10.5x 11.0x 10.0x 0.9%

Empire Company EMP.A $52.25 $3,577 10% 2% 6% 14.3x 11.5x 11.3x 11.4x 11.2x 1.4%

Loblaw L $36.70 $10,136 16% 14% 15% 17.7x 15.2x 13.4x 13.6x 12.0x 2.3%

Metro Inc. MRU.A $44.57 $4,782 21% 9% 15% 13.0x 15.4x 12.7x 12.4x 11.4x 1.5%

North West Company NWF.UN $18.30 $885 53% -19% 11% 15.8x 10.4x 12.9x 10.0x 12.4x 7.4%

Average 22% 3% 11% 15.2x 12.8x 12.1x 11.7x 11.4x 2.7%


Discount/Multi-Line Retailers

Big Lots, Inc. BIG US$38.88 US$3,153 16% 13% 15% 16.3x 14.1x 12.4x 13.6x 12.0x 0.0%

Canadian Tire CTC.A $56.03 $4,572 21% 12% 17% 15.2x 12.6x 11.2x 9.8x 8.8x 1.5%

Fred's, Inc. FRED US$13.99 US$550 18% 19% 19% 23.4x 19.7x 16.6x 18.1x 15.2x 1.1%

Macy's M US$24.03 US$10,113 39% 14% 26% 18.1x 13.0x 11.4x 12.1x 10.6x 0.8%

Sears Canada SCC $28.66 $3,084 14% na na 13.6x 11.9x na 8.1x na 0.0%

Shoppers Drug Mart SC $36.15 $7,860 16% 6% 11% 15.0x 12.9x 12.2x 12.9x 12.1x 2.5%

TJX Companies TJX US$46.70 US$19,118 17% 11% 14% 16.4x 14.0x 12.6x 13.0x 11.7x 1.3%

Target TGT US$56.61 US$42,154 18% 14% 16% 17.7x 15.0x 13.1x 14.5x 12.7x 1.2%

Tim Horton's THI $33.71 $5,968 21% 13% 17% 20.6x 16.9x 15.0x 16.6x 14.7x 0.0%

Tuesday Morning TUES US$6.42 US$276 na 63% na na 26.8x 16.5x 24.9x 15.3x 0.0%

Wal-Mart WMT US$53.61 US$201,100 9% 9% 9% 14.7x 13.5x 12.3x 13.1x 12.0x 2.3%

Average 19% 12% 16% 17.1x 14.4x 13.0x 13.2x 12.2x 1.0%


Dollarama (consensus) DOL $24.71 $1,858 29% 15% 22% 21.5x 16.7x 14.5x 15.5x 13.4x 0.0%

Dollarama (RBC CM) DOL $24.71 $1,858 30% 17% 23% 21.5x 16.4x 14.1x 15.2x 13.1x 0.0%

Dollarama at target DOL $28.00 $2,105 30% 17% 23% 24.3x 18.6x 16.0x 17.4x 14.9x 0.0%

Notes: ATD.B market price of $18.73 was converted to US$ at the FX rate of US$0.9973/C$1 as ATD.B reports in US$.

Notes: Negative PE multiples not shown in table and excluded from averages.

Source: Company reports, ThomsonOne Analytics, Capital IQ. Consensus estimates used unless noted.

We anticipate DOL will trade at a premium valuation. Given our forecast for 7% square footage growth and 20% average annualEPS growth over our forecast period, and the outlook for stabilizing economic backdrop, we would expect DOL to trade at a premiumto the group average.

EV/EBITDA ValuationLeverage from the Bain era drives the EV/EBITDA premium. Among large-cap Canadian retailers, EV/EBITDA multiplestypically peak in the mid-9x range (e.g., Tim Hortons), which is lower than DOLs 10.4x based on current year; however, DOLsleveraged balance sheet relates not to debt incurred to grow the business but rather to the debt taken on during the Bain era to drivereturns to the private-equity investors. As we move through our forecast period, balance sheet de-leveraging is a key factor in drivingthe forecast the 20% forecast EPS growth, and as such, benefits equity investors. Consequently, as we move through this period ofbalance sheet de-leveraging, we would expect DOL to trade at a higher EV/EBITDA multiple than the peer group, much as Shoppersdid in its post-IPO period, when balance sheet de-leveraging post the KKR-led leveraged buy-out drove similar EPS growth rates inthe 24 months post-IPO.


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Exhibit 6: EV/EBITDA Trading Multiples, Calendar Year-End Basis (consensus estimates)

2010/04/28 EV EV/EBITDA LTM

Company Ticker Price ($) ($M) 09E-10E 10E-11E 09E-11E LTM 10E 11E SALES EV/SALES EBITDA %

U.S. Dollar Stores

99 Cents Only NDN US$16.10 US$941 13% 12% 12% 8.4x 7.2x 6.5x US$1,345 0.7x 8.3%

Dollar General DG US$29.01 US$14,436 19% 11% 15% 11.9x 10.0x 9.0x US$11,796 1.2x 10.3%

Dollar Tree DLTR US$60.83 US$4,992 11% 8% 10% 7.4x 6.7x 6.2x US$5,231 1.0x 12.8%

Family Dollar FDO US$39.22 US$5,045 20% 7% 14% 7.3x 8.2x 6.8x US$7,568 0.7x 9.1%

Average 16% 9% 13% 8.8x 8.0x 7.1x 0.9x 10.1%

Average (market-weighted) 18% 10% 13% 10.0x 8.9x 7.9x 1.0x 10.3%

Grocery/Convenience

Couche-Tard ATD.B $18.73 US$4,154 8% 6% 7% 7.2x 6.2x 5.9x US$15,430 0.3x 3.7%

Empire Company EMP.A $52.25 $4,648 6% 5% 5% 6.0x 5.4x 5.2x $15,388 0.3x 5.1%

Loblaw L $36.70 $13,471 5% 8% 7% 7.0x 7.2x 6.6x $30,735 0.4x 6.3%

Metro Inc. MRU.A $44.57 $5,720 8% 5% 6% 7.7x 8.0x 7.4x $11,268 0.5x 6.6%

North West Company NWF.UN $18.30 $1,067 4% 6% 5% 8.2x 7.9x 7.4x $1,444 0.7x 9.0%

Average 6% 6% 6% 7.2x 6.9x 6.5x 0.5x 6.1%


Discount/Multi-Line Retailers

Big Lots, Inc. BIG US$38.88 US$2,869 14% 10% 12% 7.4x 6.5x 5.9x US$4,727 0.6x 8.2%

Canadian Tire CTC.A $56.03 $7,417 5% 8% 6% 8.5x 8.0x 7.5x $8,687 0.9x 10.1%

Fred's, Inc. FRED US$13.99 US$500 10% 12% 11% 7.7x 7.0x 6.3x US$1,788 0.3x 3.6%

Macy's M US$24.03 US$17,096 10% 4% 7% 6.4x 5.8x 5.6x US$23,489 0.7x 11.3%

Sears Canada SCC $28.66 $2,051 3% na na 4.1x 4.0x na $5,201 0.4x 9.6%

Shoppers Drug Mart SC $36.15 $9,293 7% 6% 6% 8.2x 7.7x 7.3x $9,986 0.9x 11.3%

TJX Companies TJX US$46.70 US$18,147 10% 7% 9% 7.5x 6.8x 6.3x US$20,288 0.9x 12.0%

Target TGT US$56.61 US$56,594 9% 7% 8% 8.5x 7.8x 7.3x US$65,357 0.9x 10.2%

Tim Horton's THI $33.71 $6,204 16% 7% 11% 11.1x 9.6x 9.0x $2,242 2.8x 24.9%

Tuesday Morning TUES US$6.42 US$223 77% 32% 53% 7.9x 6.6x 5.0x US$811 0.3x 3.5%

Wal-Mart WMT US$53.61 US$233,183 5% 7% 6% 7.4x 7.0x 6.6x US$408,214 0.6x 7.8%

Average 15% 10% 13% 7.7x 7.0x 6.7x 0.8x 10.2%


Dollarama (consensus) DOL $24.71 $2,282 13% 11% 12% 11.9x 10.5x 9.5x $1,254 1.8x 15.3%Dollarama (RBC CM) DOL $24.71 $2,282 14% 11% 12% 11.9x 10.4x 9.4x $1,254 1.8x 15.3%

Dollarama at target DOL $28.00 $2,529 14% 11% 12% 13.2x 11.6x 10.4x $1,254 2.0x 15.3%

Notes: For comparability, EV/EBITDA multiples for all companies above use the net debt figure for the last reported quarter, including Dollarama.

ATD.B market price of $18.73 was converted to US$ at the FX rate of US$0.9973/C$1 as ATD.B reports in US$.

Notes: EBITDA multiples greater than 20x (or negative) not shown in table and excluded from averages.

LTM

Source: Company reports, ThomsonOne Analytics, Capital IQ, RBC Capital Markets estimates. Consensus estimates used unless noted.

The balance sheet continues to strengthen as leverage comes in below expectations. Higher earnings and higher than expected netproceeds from the IPO transaction drove better cash generation in Q4 as total cash finished the year at $93.1 million and net debt fellto $423.8 million. Net debt of $423.8 million is down from approximately $750 million at the end of F2009 and represents a net debt /LTM EBITDA of 2.2x (from 4.9x at the end of 2009). We expect DOLs considerable cash generation to drive net debt below $200million in F2012. This could represent approximately $2.00 to the share price.


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Exhibit 7: Deleveraging Boosts Debt-to-Capital and Debt-to-EBITDA Metrics

Debt to Capital

58% 53% 91% 88% 41% 31% 20%

0%

20%

40%

60%

80%

100%

F06 F07 F08 F09 F10 F11E F12E

Net Debt to EBITDA

5.1X 3.8X 4.6X 4.9X 2.2X 1.5X 0.9X

0X

1X

2X

3X

4X

5X

6X

F06 F07 F08 F09 F10 F11E F12E

Source: Company reports, RBC CM estimates


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ValuationDOL is rated Outperform, Average Risk with a $28 target. Our $28 target equates to 16.0x our F2012E EPS of $1.75, consistentwith the top tier of growth-focused large cap Canadian consumer names and U.S. dollar store retailers. This target translates to 10.0xour F2012E EBITDA of $242.2 million (using end of year net-debt), which is a premium to the group but consistent with recent LBOIPO, Dollar General. We believe Dollarama's premium valuation is warranted based on its sustainable, industry-leading profitability,peer group leading square footage growth, solid free cash flow generation and strong earnings growth. Key risks to our earningsforecasts and rating include near-term minimum wage increase, the increased market risk in levered names, cost inflation that cantemper margins for fixed-price retailers and currency movements that can impact an importer like DOL. Catalysts include

better-than-expected performance, a market shift to defensive names and an increased float.

Price Target ImpedimentImpediments to our target price include a market shift to more cyclical names impeding valuation expansion and results that do notmeet consensus expectations. Key risks that influence our forecasts include minimum wage rate increases, a sustained decline in theCanadian dollar, and sustained product cost inflation.

Company DescriptionDollarama is Canada's leading fixed-price point retailer. With 594 stores across the country, DOL is four times larger than its closestcompetitor and has more stores than the next five largest competitors combined. All stores are corporate-owned and each store offers abroad assortment of everyday consumer products, general merchandise and seasonal items. Products are sold in individual or multipleunits at select fixed price points between $1.00 and $2.00, with the exception of select candy offered at $0.65.


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INCOME STMT ($M) 2008 2009 2010 2011E 2012E OPERATING METRICS 2008 2009 2010 2011E 2012E

Sales $972.4 $1,089.0 $1,253.7 $1,409.5 $1,528.2 Store Count 521 564 603 643 683

comps % -1.5% 3.4% 7.9% 5.8% 3.0% sq. ft. growth 13.6% 10.1% 7.4% 7.1% 6.6%

growth % 9.5% 12.0% 15.1% 12.4% 8.4%

Sales per square foot $207 $207 $220 $230 $234

Gross margin $331.5 $364.9 $443.1 $504.8 $549.6 growth % -5.6% 0.2% 5.9% 4.8% 1.5% margin % 34.1% 33.5% 35.3% 35.8% 36.0%

change bp 37 bp -59 bp 184 bp 48 bp 15 bp USD/CAD Rate $0.95 $0.93 $0.89 $0.95 $0.95

growth % 10.7% 10.1% 21.4% 13.9% 8.9% growth % 7.7% -1.9% -4.7% 7.4% 0.0%

EBITDA $143.0 $153.3 $191.9 $218.5 $242.2

margin % 14.7% 14.1% 15.3% 15.5% 15.8%

change bp -138 bp -64 bp 123 bp 20 bp 35 bp

growth % 0.1% 7.1% 25.2% 13.9% 10.9%

Proforma EPS (1) $1.15 $1.50 $1.75

growth % nmf 30.5% 16.6%

Proforma Earnings $86.6 $113.0 $131.8

Diluted WASO 75.2 75.2 75.2

CASH FLOW ($M) 2008 2009 2010 2011E 2012E

CFO ex. W/C $72.0 $127.8 $84.3 $147.8 $166.5

W/C -$20.6 -$12.2 $38.2 -$23.7 -$18.6

CFO $51.3 $115.7 $122.5 $124.1 $147.9

Capex $46.0 $40.5 $33.8 $34.0 $34.0

Free Cash Flow $5.3 $75.2 $88.7 $90.1 $113.9

Dividends $0.0 $0.0 $0.0 $0.0 $0.0

per share $0.00 $0.00 $0.00 $0.00 $0.00

Net Debt $652.5 $755.5 $423.8 $333.7 $219.9

Net Debt / LTM EBITDA 4.6x 4.9x 2.2x 1.5x 0.9x

Net Debt / Total Capital 41% 31% 20%

Source: Company Reports, RBC CM Estimates


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Required Disclosures

Non-U.S. Analyst DisclosureTal Woolley, CFA and Daniel Armstrong (i) are not registered/qualified as research analysts with the NYSE and/or FINRA and (ii)may not be associated persons of the RBC Capital Markets Corporation and therefore may not be subject to FINRA Rule 2711 andNYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a researchanalyst account.

Conflicts DisclosuresThe analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including totalrevenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated byinvestment banking activities of the member companies of RBC Capital Markets and its affiliates.

A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities forDollarama Inc. in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services fromDollarama Inc. in the past 12 months.

A member company of RBC Capital Markets or one of its affiliates expects to receive or intends to seek compensation for investmentbanking services from Dollarama Inc. in the next three months.

RBC Capital Markets is currently providing Dollarama Inc. with investment banking services.

RBC Capital Markets has provided Dollarama Inc. with investment banking services in the past 12 months.

The author is employed by RBC Dominion Securities Inc., a securities broker-dealer with principal offices located in Toronto, Canada.

Explanation of RBC Capital Markets Equity Rating SystemAn analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned toa particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst'ssector average.RatingsTop Pick (TP): Represents best in Outperform category; analyst's best ideas; expected to significantly outperform the sector over 12months; provides best risk-reward ratio; approximately 10% of analyst's recommendations.

Outperform (O): Expected to materially outperform sector average over 12 months.Sector Perform (SP): Returns expected to be in line with sector average over 12 months.Underperform (U): Returns expected to be materially below sector average over 12 months.Risk Qualifiers (any of the following criteria may be present):Average Risk (Avg): Volatility and risk expected to be comparable to sector; average revenue and earnings predictability; nosignificant cash flow/financing concerns over coming 12-24 months; fairly liquid.Above Average Risk (AA): Volatility and risk expected to be above sector; below average revenue and earnings predictability; maynot be suitable for a significant class of individual equity investors; may have negative cash flow; low market cap or float.Speculative (Spec): Risk consistent with venture capital; low public float; potential balance sheet concerns; risk of being delisted.

Distribution of RatingsFor the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories - Buy,Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick/Outperform,Sector Perform and Underperform most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same

because our ratings are determined on a relative basis (as described above).


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Distribution of Ratings

RBC Capital Markets, Equity Research

Investment BankingServ./Past 12 Mos.

Rating Count Percent Count Percent

BUY[TP/O] 609 49.40 192 31.53

HOLD[SP] 557 45.20 133 23.88

SELL[U] 67 5.40 9 13.43

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q215

18

21

24

27

2008 2009 2010

11/19/09I:OP:23

12/11/09OP:25

04/08/10OP:28

Rating and Price Target History for: Dollarama Inc. as of 04-28-2010 (in CAD)

Legend:

TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage; NR: Not Rated;

NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was

removed from a recommended list.

Created by BlueMatrix

References to a Recommended List in the recommendation history chart may include one or more recommended lists or modelportfolios maintained by a business unit of the Wealth Management Division of RBC Capital Markets Corporation. TheseRecommended Lists include the Prime Opportunity List (RL 3), a former list called the Private Client Prime Portfolio (RL 4), thePrime Income List (RL 6), the Guided Portfolio: Large Cap (RL 7), and the Guided Portfolio: Dividend Growth (RL 8). Theabbreviation 'RL On' means the date a security was placed on a Recommended List. The abbreviation 'RL Off' means the date asecurity was removed from a Recommended List.

Conflicts PolicyRBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. Toaccess our current policy, clients should refer tohttps://www.rbccm.com/global/file-414164.pdfor send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower,Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Dissemination of Research and Short-Term Trading CallsRBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, having regardto local time zones in overseas jurisdictions. RBC Capital Markets' equity research is posted to our proprietary websites to ensure

eligible clients receive coverage initiations and changes in ratings, targets and opinions in a timely manner. Additional distributionmay be done by the sales personnel via email, fax or regular mail. Clients may also receive our research via third-party vendors. Pleasecontact your investment advisor or institutional salesperson for more information regarding RBC Capital Markets' research. RBCCapital Markets also provides eligible clients with access to SPARC on the Firm's proprietary INSIGHT website. SPARC containsmarket color and commentary, and may also contain Short-Term Trade Ideas regarding the publicly-traded common equity of subjeccompanies on which the Firm currently provides equity research coverage. SPARC may be accessed via the following hyperlinkwww.rbcinsight.com. A Short-Term Trade Idea reflects the research analyst's directional view regarding the price of the subjectcompany's publicly-traded common equity in the coming days or weeks, based on market and trading events. A Short-Term TradeIdea may differ from the price targets and recommendations in our published research reports reflecting the research analyst's views ofthe longer-term (one year) prospects of the subject company, as a result of the differing time horizons, methodologies and/or otherfactors. Thus, it is possible that a subject company's common equity that is considered a long-term 'sector perform' or even an

https://www.rbccm.com/global/file-414164.pdfhttps://www.rbcinsight.com/https://www.rbcinsight.com/https://www.rbccm.com/global/file-414164.pdf

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'underperform' might be a short-term buying opportunity as a result of temporary selling pressure in the market; conversely, a subjectcompany's common equity rated a long-term 'outperform' could be considered susceptible to a short-term downward price correction.Short-Term Trade Ideas are not ratings, nor are they part of any ratings system, and the Firm generally does not intend, nor undertakesany obligation, to maintain or update Short-Term Trade Ideas. Securities and Short-Term Trade Ideas discussed in SPARC may not besuitable for all investors and have not been tailored to individual investor circumstances and objectives, and investors should maketheir own independent decisions regarding any securities or strategies discussed herein.

Analyst Certification

All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of thesubject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly oindirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

DisclaimerRBC Capital Markets is the business name used by certain subsidiaries of Royal Bank of Canada, including RBC Dominion Securities Inc., RBC Capital MarketsCorporation, Royal Bank of Canada Europe Limited and Royal Bank of Canada - Sydney Branch. The information contained in this report has been compiled by RBCCapital Markets from sources believed to be reliable, but no representation or warranty, express or implied, is made by Royal Bank of Canada, RBC Capital Markets, itsaffiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute RBC Capital Marketsjudgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Nothing in this reporconstitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and has been preparedwithout regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this report may not besuitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. Thisreport is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteedand a loss of original capital may occur. RBC Capital Markets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, whichincludes profits attributable to investment banking revenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own law

regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, the securitiesdiscussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act asecurities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in thatjurisdiction. To the full extent permitted by law neither RBC Capital Markets nor any of its affiliates, nor any other person, accepts any liability whatsoever for anydirect or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copiedby any means without the prior consent of RBC Capital Markets.

Additional information is available on request.

To U.S. Residents:This publication has been approved by RBC Capital Markets Corporation (member FINRA, NYSE), which is a U.S. registered broker-dealer and which acceptsresponsibility for this report and its dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting in a brokeror dealer capacity and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, should contact and placorders with RBC Capital Markets Corporation.To Canadian Residents:This publication has been approved by RBC Dominion Securities Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Institution inOntario, an Accredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) and tha

wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBC DominionSecurities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.To U.K. Residents:This publication has been approved by Royal Bank of Canada Europe Limited ('RBCEL') which is authorized and regulated by Financial ServicesAuthority ('FSA'), inconnection with its distribution in the United Kingdom. This material is not for general distribution in the United Kingdom to retail clients, as defined under the rules othe FSA. However, targeted distribution may be made to selected retail clients of RBC and its affiliates. RBCEL accepts responsibility for this report and itdissemination in the United Kingdom.To Persons Receiving This Advice in Australia:This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been preparedfor general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting onthis material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition opossible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product andconsider that document before making any decision about whether to acquire the product.To Hong Kong Residents:This publication is distributed in Hong Kong by RBC Investment Services (Asia) Limited and RBC Investment Management (Asia) Limited, licensed corporationsunder the Securities and Futures Ordinance or, by Royal Bank of Canada, Hong Kong Branch, a registered institution under the Securities and Futures Ordinance. Thismaterial has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of any recipient. Hong Kong personswishing to obtain further information on any of the securities mentioned in this publication should contact RBC Investment Services (Asia) Limited, RBC Investment

Management (Asia) Limited or Royal Bank of Canada, Hong Kong Branch at 17/Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong (telephone numberis 2848-1388).To Singapore Residents:This publication is distributed in Singapore by RBC (Singapore Branch) and RBC (Asia) Limited, registered entities granted offshore bank status by the MonetaryAuthority of Singapore. This material has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of anyrecipient. You are advised to seek independent advice from a financial adviser before purchasing any product. If you do not obtain independent advice, you shouldconsider whether the product is suitable for you. Past performance is not indicative of future performance.

Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.Copyright RBC Capital Markets Corporation 2010 - Member SIPC

Copyright RBC Dominion Securities Inc. 2010 - Member CIPFCopyright Royal Bank of Canada Europe Limited 2010

Copyright Royal Bank of Canada 2010All rights reserved


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