Following the Walmart /Dollarama Play book In Mexico

PESORAMA (PESO – TSXv)

 

 

QUICK FACTS

Trading Symbols: PESO
Share Price Today: $0.54
Shares Outstanding: 206.2 million
Market Capitalization: $111 million
Cash: $10.1 million
Debt: $21 million
Enterprise Value: $122 million

 

BRINGING
THE DOLLAR STORE MODEL
DOWN SOUTH

 

This company and its stock has been very active for the last 12 months, growing VERY fast—opening many stores–and raising A LOT of equity along the way. The question for investors now is…when can all these stores create enough cash flow to stop raising equity every few months?

As soon as that happens, I think the stock can have a big run. But I have no idea when that will happen. Even with the recent $21 million convertible debenture, the answer isn’t clear.

I am not long PesoRama—but I am watching. Here’s our report:

The idea for PesoRama came from a surprisingly mundane moment. Rahim Bhaloo, who would go on to found the company, was in Mexico with his wife. She asked him to pick up a gift bag for a birthday party they were attending.

Two hours and countless bodegas later, he came home empty handed.
Bhaloo was baffled. How could Mexico, a country of 130 million people, not have did something that was in virtually every mall in Canada – a dollar store.

Canada has 1,700 Dollarama stores. There are over 2,000-dollar stores. Mexico had no equivalent.

Bhaloo saw the opportunity. From that seed came PesoRama, which launched its first store in Mexico City in 2019.

Today PesoRama have 39 stores across Mexico. And their pace of new store openings is accelerating.

The company just raised $21 million by selling convertible debentures. That money will be earmarked to add even more locations to the docket.

FILLING A big pair of shoes

While the financing is going to juice growth, PesoRama’s store count is ALREADY up 9 from the beginning of this year.

The plan is to expand by 30 stores in 2026 alone. Thatwould put them at 60 by year end.

If they can accomplish that, that would be 100% growth in a 12-month period.

This is the sort of growth that gets investor attention. And based on their addressable market, they are only skimming the surface.

Mexico is a big country—with 113 million people. Compare that to Canada at 40 million. Canada has about 2,000 stores between the two big dollar-store players, Dollar Tree and Dollarama. There are probably another 100 stores operated on an independent basis.

Mexico has a lot less. It should have many more.

Bhaloo has estimated that the dollar store opportunity in Mexico is 8x larger than the opportunity in Canada. Mexico’s population could support as many as 14,000 stores.

With no market leader in the pure dollar store category, the competition comes from variety and discount stores, from convenience stores and from large mass merchants like Walmart.

The closest competition is Waldos Dolar Mart De Mexico, which operates 800 of their stores in Mexico. But Waldos isn’t a true dollar-store. They have low-priced offerings, but also offer higher-priced items and clothing.
Dollarama may soon become competition. They entered Mexico in the last few months with Dollarcity.

But that’s about it. No incumbents and what few competitors there are don’t really fit the same space. The blue-sky opportunity here is clear and it is enormous.

The long-term plan at PesoRama is to expand to 640+ stores in the next five years.

Even that would be capturing just 5% of what the market could support.
With such a big untapped market, PesoRama really becomes a story about execution. That starts with mimicking the success of the dollar stores up north.

 

THE STORES

PesoRama operates their chain of owned retail stores under the Joi Dollar Plus banner.

The concept is simple. Anyone familiar with the dollar stores in Canada and the United States will recognize it.

Sell merchandise at select fixed price points up to 100 pesos (CAD$8.15/US$5.75). Have recognizable items alongside private label brands. Stock the shelves with simple gadgets, disposables and hardware that people need every day.

Source: April 10 Press Release of 35th Store Opening, NE of Mexico City

About 65% of revenue comes from housewares, kitchen accessories, hardware and electronics, pet, party supplies, craft and stationery supplies.

Another 30% comes from consumable products, which include paper products, cleaning supplies and chemicals, party disposables, grocery and beverage products including confectionery, soft drinks, water, snack foods, packaged convenience foods and other basic grocery product
The final 5% is seasonal products for seasonal: Christmas, Easter, Halloween and Mexican holidays like Dia de los Muertos and Dia de Nuestra Senora de Guadalupe.

These stores are smaller than Walmart’s and other mass merchants, clocking in at about 5,000 square feet on average (these bigger general stores can be 30,000 to 250,000 square feet). The 10 stores that PesoRama has opened so far in 2026 have ranged from just under 4,000 square feet to just under 8,000 square feet.

The stores opened so far are almost entirely located in Mexico City.
That is intentional. Keeping the stores close together allows PesoRama to use a hub and spoke for distribution. PesoRama has a 50,000 square foot distribution center located in Mexico City. The warehousing and distribution can support as many as 75 stores. It is what gives PesoRama the capacity to maintain the rate of 2 to 3 new stores per month as they have been.

BUMPS ALONG THE ROAD

PesoRama went public in 2022 with a reverse take over transaction.

At that time, they expected 50 stores by 2023 and 500 stores by 2027.

Let me stop here. They didn’t make the 50-store goal. They have some work ahead of them in the next year and a half to make the 500.

That is to say, the trajectory so far hasn’t been entirely smooth. And maybe we should take some of the forward guidance on store growth with a grain of salt.

To their credit, PesoRama has not stood still. They made the shift in 2022 from single price point to multi-price point – giving more flexibility to charge higher amounts for some products. And in March 2024 Erica Fattore resigned as CEO and Abdulmajeed Bawazeer resigned as CSO. While this appears to be a parting of ways on good terms as both executives stayed on in some capacity thereafter, it also likely signifies that Bhaloo was not entirely happy with the direction and wanted more input. He has been the CEO ever since.

Bhaloo must realize that this is a model that is going to succeed with scale. The goal here is clearly to expand, expand, expand.

But that doesn’t come cheap. In order to grow, PesoRama has had to raise a lot of money. In the last year, PesoRama has done four capital raises, including a convertible debenture they completed in the last month.
The first three of these raises were done at very low share prices, which means they came with a lot of dilution.

In July 2025 Pesorama offered equity at 15c that included a warrant at 30c to raise $6.8 million.

They did a second offering in November to raise $5 million at 25c which included a half warrant at 40c.

They did another offering in April 2026 for $10.1 million, selling 28.7 million shares at 35c. These included one half warrants at 50c.

Their most recent raise was the largest – $21 million of convertible debentures. These debentures will pay 9% and are convertible at a 91c stock price. The proceeds were used to pay off their senior debt.

All these raises have led to a lot of shares and warrants.

By my count, there are about 88 million warrants priced in the money today.

Source: PesoRama AIF

That is in addition to 206 million shares. The convertible debenture would lead to 23 million more shares if fully converted. There are also 12 million options priced between 23c and 25c.

What insider ownership there is of these shares is largely from Bhaloo. He holds about 10 million shares, or about 5% of the company, and has options to purchase another 5 million shares.

IS GROWTH OUTPACING DILUTION?

There is one big question here – is the growth profitable?

PesoRama is clearly in growth mode. They are increasing the number of stores that they have at a fast pace. Thatpace is accelerating and will only accelerate further with the recent $21 million raise.

But is that growth A. outpacing dilution, and B. creating operating leverage and with it, improved profitability.

So far thedilution has been winning out.

Source: Company Filings

The share count has doubled year-over-year. The above chart does not include the convertible, which is out-of-the-money at the current price.

It all adds up to a big rise in the share count.

Yet so far, we are only just beginning to see the impact of all this cash (and the store openings it has funded) on the top line.

Source: Company Filings

If you keep opening new stores, that top-line is bound to grow. The bigger question is whether that growth is profitable.

With the company growing store count so quickly, determining the profitability of mature stores is tough. New stores are going to underperform as they gain a footing and that can mask the profitability of the rest.

If our focus is the profitability of Pesorama as a whole, the picture is mixed.

 

Source: Company Filings

So far we aren’t seeing the increased scale lead to margin growth. The trend for the last 3 quarters has been going in the wrong direction.

What we need are same-store-sales. This is when a company provides data on sales, and ideally profitability, for stores that have been open at least a year.

PesoRama was providing quarterly same-store-sales updates until Q4, when they only provided the comp for full-year sales. In Q1 2026 they didn’t provide a number.

Source: Company Filings

I don’t know why PesoRama stopped providing this information. It would be helpful if they did.

WHAT HAPPENS NEXT?

PesoRama has raised a lot of money over the last few months.
I doubt that all of it was voluntary. With their year-end financial results in June, PesoRama gave the following disclosure:

Source: Audited Annual Financial Statements

The disclosure says that PesoRama was no longer in compliance with the revolving credit covenants.

PesoRama received waivers for Q4 2025 and Q1 2026. Rather than going back for more waivers, the company decided to raise cash via the convertible and pay down the debt.

They disclosed that this was the use of funds in this June 26th disclosure:

Source: Company Material Change Report

With this latest capital raise earmarked to pay off debt, that leaves the $10 million PesoRama raised in April for growth. Which should be more than enough to fund growth for next 12 months. PesoRama only used $4 million of cash through all of 2025.

But is their growth profitable? That is the part I am less sure of.

All this leaves me not knowing what to do with PesoRama. It’s a growth story – and the market loves growth stories. But the market is also going to focus on profitability and whether they can outgrow the share count.

And to determine if that’s the case or not, we are going to need more time.

DISCLOSURE– I HAVE NO POSITION