Most Canadian investors are aware of Dollarama (TSX: DOL) and its portfolio of over 1,700 stores in every province. Fewer investors may realize that the company also has a growing presence across multiple markets in Latin America. Fewer still may know about its Australian business, which adds another reason to buy Dollarama.
Dollarama’s Australian presence gives the company another opportunity to apply the retail expertise it developed in Canada.
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Dollarama has a foundation in Australia
For those who aren’t familiar with Dollarama’s expansion, the company entered Australia through its July 2025 acquisition of The Reject Shop. Earlier this summer, the Australian network reached 414 stores.
That gives Dollarama a sizable presence to build on without having to establish a national footprint one location at a time. That being said, Dollarama is still tasked with adapting its approach to local shoppers in a new market while simultaneously changing how those stores operate.
That leaves Dollarama with a growth opportunity, but investors should remember that the 414-store network still operates under The Reject Shop banner as the transformation continues.
The opportunity extends beyond opening stores
Dollarama’s longer-term plans target 700 stores in Australia by 2034. That leaves plenty of expansion potential, despite the transformation of the existing network that still needs to happen.
Specifically, Dollarama plans to introduce its imported merchandise, simplify the pricing structure and improve store operations. Long-time shoppers of Dollarama are familiar with the company’s pricing tiers, bundling and vast array of products in its Canadian stores.
Adopting that same system in the Australian market could provide shoppers better value and give them more reasons to return. Dollarama has proposed a multi-year transformation of that network, and it won’t be cheap.
Renovations can interrupt business, and lower-priced merchandise can lead to reduced sales before higher customer traffic offsets that difference.
In other words, the expansion is going to take time before results are tangible.
Dollarcity gives the Australian expansion some credibility
Investors looking to buy Dollarama for that Australian expansion can look to Dollarcity as an example of the company building a discount retailer across different markets.
I mentioned above that Dollarama has a presence in several Latin American markets. The company maintains a majority ownership in the business behind that network.
As of the end of June, the Latin American retailer had 781 stores. Quarterly sales of the business rose 30% year-over-year. Dollarama plans to continue that growth, targeting 1,050 stores by 2031 across its core Latin American markets of Peru, Guatemala, El Salvador and Colombia.
That growth is not factoring in expansion into Mexico.
The Canadian business remains the foundation for that international expansion. In the most recent quarter, Dollarama reported Canadian comparable-store sales growth of 5.4%.
Why I’d buy Dollarama despite the growing pains
Dollarama’s Australian business remains a work in progress. The company expects the segment to report a net loss for fiscal 2027 as it invests in the transformation.
In other words, investors looking to buy Dollarama today need patience.
Another point is valuation. As of the time of writing, Dollarama trades at a P/E ratio of 41, which isn’t cheap. That valuation leaves little room for disappointing earnings.
But despite that valuation, I’d consider a modest position and buy Dollarama as a long-term holding.
The Canadian market supports the business today, and Dollarcity continues to grow. The international blueprint has shown it can work too.
Australia is the next market for that growth. There’s still plenty of room to improve the existing network of stores while adding more.
In my opinion, Dollarama is worth considering for a diversified portfolio focused on long-term growth.
