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  "docSlug": "ecb6f6c63e11",
  "documentTitle": "Dollarama Inc. (DOL)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2018-10-31 00:00:00",
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  "pageNumber": 21,
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  "notes": "Includes a line chart showing wage growth vs inflation and a bar chart showing EBITDA margin sensitivity to labor cost hikes.",
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      "kind": "callout",
      "text": "With labor costs representing about 10% of Dollarama revenue, profitability is materially sensitive to changes in this item. If labor costs were 10% higher in FY 2018, EBITDA margins would have been slashed by 80 bps. Labor cost expansion of this magnitude would be significant, but is not necessarily out of the question within 2-3 years.",
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      "kind": "callout",
      "text": "12% weighted average minimum wage growth across Canada, driven by 20.7% hikes in Ontario. Average minimum wages could very realistically continue to grow at high single-digit rates through the next ~2 years if planned hikes are enacted.",
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      "kind": "callout",
      "text": "If labor costs were 10% higher in FY 2018, EBITDA margins would have been slashed by 80 bps.",
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      "text": "EBITDA Margin Sensitivity to Labor Cost Hikes",
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      "kind": "chart",
      "text": "Minimum Wage Growth Consistently Ahead of Inflation, and Accelerating Rapidly",
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      "text": "EBITDA margin: 80 bps",
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      "kind": "paragraph",
      "text": "Canada has seen fairly consistent minimum wage hikes since 2000, and minimum wage growth has outpaced inflation in all but three years since the beginning of the millennium. Dollarama has been able to manage minimum wage hikes and maintain impressive margins since going public in 2009. Note, however, that minimum wage growth from 2009-17 was comparatively mild relative to the prior half-decade. Accelerating minimum wage growth through the near term will test management's ability to insulate margins from rising labor costs.",
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      "kind": "paragraph",
      "text": "Management states that the vast majority of employees make more than minimum wage. Nonetheless, minimum wage hikes of 10-20% in Canada's most populous provinces could put material upward pressure on labor costs – particularly if these hikes spread to Quebec, where Dollarama's distribution center and all of its warehouses are located. Management includes a risk factor to this effect in its MD&A.",
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      "kind": "title",
      "text": "Minimum Wage Growth Historically High And Accelerating Rapidly",
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