TORONTO, ON – August 4, 2022 – PesoRama Inc. (TSXV: PESO) (“PesoRama” or the “Company“), a Canadian company operating dollar stores in Mexico under the JOi Canadian Stores brand, today announced an update on its business and operating outlook.
Multi-Price Points to Enhance Product Mix and Value
The Company continues to implement its shift from selling items at only one price point to a multi-price sales model. In order to add increased flexibility to the Company’s operating model moving forward and allow for the introduction of new, higher value product offerings, additional price points have and will continue to be introduced. This multi-price model is intended to help the Company overcome certain challenges inherent in its former single price practice. Management of the Company believes that offering new products to its customers at various price points will be welcomed by the Company’s existing and potential new customers and allow PesoRama to better achieve its objective of delivering maximum convenience and value to consumers at very low price points.
Management also expects to continue to grow its private label general merchandise product offerings as it expands its multi price model. Further, the Company’s management believes that the changing assortment of products offered by JOi stores will increase opportunities for the expansion and introduction of new private labels. New private labels are expected to refresh the Company’s store layouts and give customers a better shopping experience.
In conjunction with the implementation of a multi-price model, the Company is in the process of re-branding its JOi stores under the brand “JOi Dollar Plus”, sending a clear message of multi-price assortment.
Store Expansion Strategy
Subject to the availability of the necessary capital resources and other factors, the Company’s goal is to open five store locations per month starting in November 2022, to increase its total number of JOi Dollar Plus stores to 50 by April 2023. The Company’s current real estate pipeline consists of over 40 locations, which include traditional mall locations and stand-alone street front stores.
A Solid Foundation and Platform Designed for Execution
As a key part of the Company’s implementation of its new multi-price model, the Company has focused on making necessary changes and improvements to its in-store operations and inventory/warehouse management systems. The Company plans to continue to invest in these systems and to work with its systems partners to improve its operations. As part of this process, PesoRama expects to focus on further standardizing its processes and increasing its use of available sales data to improve its merchandising and sourcing functions and better optimize its JOi Dollar Plus store product mix.
In what is expected to remain a complex environment, PesoRama is well-positioned to pursue its goal of achieving profitable growth and to deliver on its purpose. The Company is committed to providing Mexican consumers real value and convenient access to a broad range of affordable, everyday items at its JOi Dollar Plus stores.
In the second half of its fiscal year ending on January 31, 2023 (“Fiscal 2023”), the Company expects to benefit from an improved sales environment compared to the same period last year, at which time various COVID-19 restrictions impacting retailers and consumer shopping patterns were in place. Supply chain and other inflationary pressures are expected to continue to be felt more in the remainder of Fiscal 2023. The Company will endeavour to mitigate some of the cost pressures on its gross margin. Selling, general and administrative expenses (SG&A), are expected to benefit from new standardized processes, scaling and better labour productivity.
Based on the above, the Company expects the following for the remainder of Fiscal 2023:
- To open 25 to 30 new stores
- To achieve improved sales per square meter of approximately $37,600 pesos (approximately, $220 Canadian dollars) per square foot
- Gross margin as a percentage of sales to be in the range of 42.0% to 42.9%
These guidance ranges are based on several assumptions, including the following:
- The absence of COVID-related restrictions impacting retailers and consumer shopping patterns
- Store sales growth to pre-COVID-19 levels
- The gradual introduction of additional price points
- The absence of a significant shift in economic and geopolitical conditions or material changes in the retail competitive environment
- The active management of product margins, including through pricing strategies and refreshing some of the product offering
- The number of signed offers to lease and store pipeline for the period and the absence of COVID-related impacts on construction activities in the areas where new store openings are planned
- The implementation and success of new private label general merchandise product offerings
- The continued execution of in-store productivity initiatives and the realization of cost savings and benefits aimed at improving operating expense
- The ability to source sufficient additional capital to fund the cost of planned new stores and capital expenditures, which may not be available to the Company of favourable terms or at all
- The successful execution of the Company’s business strategy, including the rebranding of JOi stores to JOi Dollar Plus stores
Many factors could cause actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. This guidance, including the various underlying assumptions, is forward-looking and should be read in conjunction with the cautionary statement on forward-looking statements below.
About PesoRama Inc.
PesoRama, operating under the JOi Canadian Stores brand, is a Mexican value “dollar plus” store retailer. PesoRama launched operations in 2019 in Mexico City and the surrounding areas targeting high density, high traffic locations. PesoRama’s 20 stores offer consistent merchandise offerings which include items in the following categories: household goods, pet supplies, seasonal products, party supplies, health and beauty, snack food items, confectionery and more.
For further information please contact:
Founder & Executive Chairman
President & Chief Executive Officer
Certain statements in this press release about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely” or “potential” or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.
Forward-looking statements are based on information currently available to management and on estimates and assumptions made by management regarding, among other things, the availability of capital to fund the cost of planned new stores and capital expenditures, general economic and geopolitical conditions and the competitive environment within the retail industry in Mexico, in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including the factors which are discussed in greater detail in the Company’s annual management’s discussion and analysis for fiscal 2022 available on SEDAR at www.sedar.com.
These factors are not intended to represent a complete list of the factors that could affect the Company; however, they should be considered carefully. The purpose of the forward-looking statements is to provide the reader with a description of management’s expectations regarding the Company’s financial performance and may not be appropriate for other purposes. Readers should not place undue reliance on forward- looking statements made herein. Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as at August 4, 2022 and management has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.