Earnings call transcript: Groupe Dynamite Q1 2025 sees strong revenue growth

Investing.com

Published Jun 17, 2025 11:33AM ET

 Earnings call transcript: Groupe Dynamite Q1 2025 sees strong revenue growth

Groupe Dynamite Inc. reported robust financial results for the first quarter of fiscal year 2025, with a 20% year-over-year increase in total revenue, reaching $226.7 million. The company's stock surged 16.29% in pre-market trading, reflecting investor optimism. This performance was driven by strong online sales and comparable store sales growth. The company maintains impressive gross profit margins of 62.8%, according to InvestingPro data shows the company operates with a moderate debt level and maintains strong cash returns on invested capital of 36%, positioning it well for future growth. The next earnings report is scheduled for June 17, 2025, where investors can expect updates on these metrics and growth initiatives.

Executive Commentary

CEO Andrew Letvi emphasized the company's strategic focus, stating, "We chose to press harder on the gas," highlighting their commitment to growth and market expansion. President and COO Stacy Beaver added, "We believe in editing more than adding," reflecting a focus on refining product offerings.

Risks and Challenges

  • Gross margin pressures due to supply chain constraints and pricing strategies.
  • Potential impacts of tariffs and geopolitical tensions on international operations.
  • Competitive pressures in the discretionary spending segment.
  • Execution risks associated with new market entries, particularly in the UK.

Q&A

During the earnings call, analysts inquired about Groupe Dynamite's tariff mitigation strategies and its real estate acquisition plans. The company detailed its approach to maintaining strong same-store sales and expanding its customer base in the US market.

Overall, Groupe Dynamite's Q1 2025 performance showcases its resilience and strategic agility in a challenging retail environment, with a clear focus on innovation and expansion driving growth.

Full transcript - Groupe Dynamite Inc (GRGD) Q1 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Group Dynamite First Quarter Fiscal twenty twenty five Results Conference Call. At this time, note that all participants are in a listen only mode and the conference is being recorded. Following the presentation, we will conduct a question and answer session. At that time, we ask that you please limit yourself to one question and re queue. And I would like to turn the conference over to Alex Limassane, Manager, Investor Relations and Corporate Finance at Group Dynamite.

Please go ahead, sir.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite: Thank you, and good morning, everyone. Joining me on the call are Andrew Letvi, Chief Executive Officer and Chair of the Board Stacy Beaver, President and Chief Operating Officer and JP Lachance, Chief Financial Officer. This morning, Group Dynamite released its financial results for the thirteen week period ended 05/03/2025. The press release and related disclosure documents are available in the Investors section of our corporate website at groupdynamite.com and on SEDAR plus We will begin the call with short remarks by management followed by a question and answer period with financial analysts only. A replay of this webcast will be available shortly after the conclusion of the call.

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Before we begin, I would like to refer you to slide two of our Q1 twenty twenty five investor presentation also available in the investors section of our website for our full statement on forward looking information and to the presentation's appendix for a reconciliation of non IFRS to IFRS financial measures. I'll now turn the call over to Andrew.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Thanks Alex and good morning everyone. Once again welcome to the Group Dynamite first quarter fiscal twenty twenty five results conference call. Well, it's not every day we get to celebrate our fiftieth birthday, and today we're doing just that. So happy birthday, Garage. You just look better as the years go by.

Remarkably, the first garage opened in 1975. It was just 400 square feet in an obscure shopping center in the East End Of Montreal. Now just for clarity, I was not there at the time. I'm not that old. I joined in 1982 when we had three stores.

Perhaps what's even more remarkable with the arduous process of an IPO squarely behind us, we've been able to focus on the business and delivered some pretty impressive performance in this first quarter, inclusive most importantly of 13% same store sales growth. And that's on top of last year's 16%. What stands out as well is our consistent success around nearly all key metrics as we compare ourselves against our high value peers. Additionally, I'm pleased to report q two has started very strong with comparable sales tangibly ahead of q ones. So how are we doing this?

Let's touch on three points. Number one, agility. Not only agility around supply chains, but leadership. This quarter felt reminiscent of the early days of COVID when supply chains and views around the economy turned upside down. Knowing the vast majority of the apparel industry has limited flexibility due to their direct or indirect wholesale models, which strip away agility resulting in less relevant collections, we actually chose to double down on product development, marketing, and receipts, including at this time reducing by more than 50% our receipts from China into The USA.

This is just yet another example of what I repeatedly call out as one of GDI's superpowers, agility. Number two, a luxury inspired business model. This is where we obsess around building greater emotional equity with our customers. We focus on her, we develop products she obsesses over, and we get creative as to how we communicate this to her. In a luxury inspired business model, the consequence of a job well done is our market leading performance.

And number three, our value led culture. In a world of first who, then what, we are so proud of our entire GDI family in taking accountability and showing up for not only our customers, but all stakeholders in this past quarter. Furthermore, in the spirit of ownership, I'm ecstatic to share that in a few days, we will deploy our shared success program, an initiative in which all our employees will participate directly in the value they help create. All employees will become shareholders, and broadly our teams will hold a piece of this company's future. I have a famous saying, how do you make money?

The answer is with money. That all starts with learning how to save money and then invest money. GDI has been an incredible investment for me, and I'm thrilled to be able to open it up to our people. Just a few last points. This morning, I'm thrilled to be releasing our inaugural ESG report.

As the GDI story evolves over the years, so will our positive impacts on society and the environment. Also, we're weeks away from opening our new USA distribution center, which will further enhance value to our customers and stakeholders alike. As we are an inventory light business model, this is purely about enhancing speed to market and efficiency around cost. And finally, our expansion into The UK remains firmly on track for 2026. We're fully excited by what we believe to be an important void in the marketplace for Garage and can't wait to meet our British Alex's.

With that, I will turn it over to Stacy to share more about how we're showing up and standing out. Stacy.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Thank you, Andrew, and good morning, everyone. Q1 was a strong quarter. What stood out most was how we moved from vision to execution with intention. We saw our ideas come to life across the business, and, more importantly, they resonated with customers. Whether in store or online, the experience felt consistent, intentional, and on brand, and that's exactly where we want to be.

Let's begin with our stores. In Q1, sales per square foot reached seven fifty six, up 16% year over year. This growth was driven by strong product performance and continued improvements to the in store experience where we're making it easier for her to shop and feel connected to the brand. In The United States, we opened a new garage store in Brea Mall and relocated our Topanga store to a stronger, more prominent corridor of the mall center. Both moves were data driven and aimed at getting the brand in front of more customers with better visibility and traffic.

In Canada, renovations at our garage locations in Square 1 and Conestoga introduced a cleaner, more elevated store layout. Each update was made with our customer in mind. From how she navigates the space to what catches her eye, we transformed the space so it feels easier, more inspiring, and more aligned with the brand. But transformation isn't just the physical space. It's also in our teams.

Turnover is down, engagement is up, and it shows. Our associates are more confident, more connected to the product, and better equipped to serve our customers. They're not just selling, they're bringing the brand to life. You could feel this energy at our annual GBI Sales Gala a few weeks ago. It's one of my favorite nights of the year.

Every year, we fly in top performers from across North America to our head office here in Montreal. It's a week to celebrate our field teams, but more importantly, a chance for them to see behind the scenes, connect with the head office, and align on the why behind everything we're doing. Now I'll speak to digital. Rev and app continue to be growth drivers, but more than that, they're where we tell our story. Our customer often starts her journey online browsing the site, scrolling our socials, or using the app to plan her store visits.

In fact, a recent insider survey reported that the vast majority of our customers do in fact preshop online. With that in mind, in Q1, we prioritized creative disruption. We revamped our homepages, simplified navigation, and made big strides in personalization, so every interaction feels easier, more intuitive and more tailored to her. Finally, our loyalty program continues to build momentum with stronger engagement and a more experience driven offering. It's less about chasing rewards and more about building community.

Now, if we deep dive into each brand, I'll start with Dynamite. Dynamite isn't just evolving, it's leveling up, and our Royal Mount store here in Montreal is leading the way. It's become a key driver of engagement, generating more than 90% of our user generated content. It's more than a flagship. It's a proof of concept for where the brand is positioning itself.

As we look ahead, we have elevated our marketing and merchandising leadership and put the right structure in place across the Dynamite team to enable stronger internal alignment, accountability, and a renewed focus that sets us up for success. From a product standpoint, we're making good progress in categories we want to be known for. Notably dresses was the big feature for our brand moments and marketing activations this quarter. Creatively, our first day of spring campaign where dresses took the center struck the right tone, and our customer responded not just to the look but to how it made her feel. Now on the Garage side.

In Q1, Garage delivered products and marketing that felt bold, personal, and true to who we are. The standout was Tomato Puree, a capsule collection built around a single color and activated across every channel. From our standout campaign imagery to a cooking class with influencer Father Kells to a heels workshop with Madison Pettis, each touchpoint told a cohesive story. It landed with our customer, driving both strong engagement and sales. Furthermore, our off duty product continues to outperform.

What started as a casual capsule has become a go to in her wardrobe, with fleece and knit leading the way. The look is relaxed but confident and it's resonating. As always, our teams stay close to the customer, reacting to trends in real time and making quick, informed calls. That speed and agility is what keeps us relevant. Behind the scenes, our Garage Ambassador program continues to grow with passion and purpose.

What began with store associates has expanded. Last quarter, we broadened the program's impact by welcoming our most loyal customers into the Garage Social Club. This is the umbrella term we use to define how we unite associates, influencers, and customers under one community. It's our way of building an authentic network of insiders who live and breathe the brand. To conclude on Garage, the results are strong, but more importantly, they show she's connecting with what we're putting out there, the product, the messaging, and how we're showing up.

Now, as our teams bring the brands to life, we're just as focused on meeting the customer in real time where she's at because speed matters. That's why the opening of our U. S. Distribution center is such a big deal. It's not just an ops upgrade.

It's a game changer. The new DC will cut shipping times, improve service levels, and reduce last mile costs. It also enables smarter inventory placement, faster replenishment, and stronger sell through. More importantly, it means when our customer shops with us, she gets exactly what she wants when she wants it. That's the experience our teams deliver every day, and it's a promise we're excited to bring to The U.

K. When we open our first store there next year. With that, I'll hand it over to JP for a deeper dive into the numbers, and thank you all.

JP Lachance, Chief Financial Officer, Group Dynamite: Thank you, Stacy, and good morning, everyone. I will now walk you through our financial results. Total revenue for Q1 twenty twenty five increased by 20% to 226,700,000.0 driven by strong retail performance. This growth was driven by an acceleration in comparable store sales growth of 13%, along with contributions from new stores. Notably, this marks our tenth consecutive quarter of positive comparable store sales growth with the average of those ten quarters at almost 10%.

Excluding the COVID period, comps have been positive in the last nineteen of twenty quarters, reflecting the impact of the key structural pivots initiated at the start of fiscal year twenty nineteen. Online revenue saw accelerated growth of 21.2%, reaching $37,300,000 capturing a larger share of total revenue compared to last year. Gross profit for Q1 rose by 16.6% to $140,700,000 with gross margin declining by 180 basis points to 62.1%, reflecting the impact of additional tariffs, partly offset by our mitigation efforts. With significantly faster inventory turnover than our peers, we're seeing the impact of these cost pressures earlier. Adjusted SG and A expenses for Q1 twenty twenty five increased by 12.4% to $73,500,000 compared to Q1 twenty twenty four.

This increase was primarily driven by the company's growing scale and activities, resulting in an increase in wages, salaries, and employee benefits, along with an increase in selling and marketing expenses as both revenue and operations expanded. As a percentage of sales, adjusted SG and A improved by two twenty basis points compared to Q1 twenty twenty four, demonstrating our ability to manage costs with discipline. Operating income grew by 16.2% to $44,300,000 Adjusted EBITDA rose 19.8% to $66,800,000 with adjusted EBITDA margin remaining stable year over year at 29.5%, a strong result, particularly given the global uncertainty. Net earnings reached $27,300,000 in Q1 twenty twenty five compared to $23,900,000 in Q1 twenty twenty four. This growth is mainly attributed to higher revenue, partially offset by higher SG and A.

Adjusted net earnings increased by 14.5% to $28,400,000 Looking at the cash flow statement. Free cash flow increased by 13.8% to $41,600,000 in Q1 twenty twenty five, reflecting stronger cash generation compared to Q1 twenty twenty four. Net leverage improved to 0.92 turns compared to 1.79 turns in Q1 twenty twenty four, reflecting higher adjusted EBITDA despite increased lease liabilities. We ended Q1 with over $106,000,000 in cash and $312,000,000 available under our credit facilities. As part of our capital return strategy, we repurchased 168,900 shares in Q1 under our NCIB program at an average price of $13.74 totaling 2,300,000 which represents 13% of the program.

We remain confident in the long term fundamentals of Group Dynamite and believe that continuing share repurchases, especially at these levels, presents strong value and that is why we were also active early in Q2. On return on assets, trailing twelve months rose to 23.8% compared to 20% in Q1 twenty twenty four, and return on capital employed rose to an impressive 44.5%, up from 37.4%, highlighting our capital efficiency and strategic execution. As we look ahead to the remainder of fiscal twenty twenty five, we are raising by two fifty basis points our full year comparable store sales growth guidance to a range of 7.5 to 9%, up from our prior range of 5% to 6.5%. This reflects the strength of our year to date performance and continued momentum in both traffic and basket size. All other guidance elements, including store openings, adjusted EBITDA margin, and capital expenditure, remain unchanged.

We'll continue to track performance closely and adjust with discipline as needed. While we're encouraged by our strong performance year to date, we remain prudent in our outlook for the remainder of the year given continued uncertainty around trade related cost pressures, particularly as they relate to gross margin as a percentage of sales. Q2 is expected to be our most challenging quarter on this front, thinking about year over year comparisons. Last year's Q2 gross margin rate of 66% was elevated by favorable timing and lower occupancy costs, creating a tough year over year comparison. This year, for Q2, elevated tariff costs are weighing on margin as a percentage of sales impacts that may prove temporary but could persist, depending on how trade conditions evolve.

Our faster inventory turnover means these cost pressures are reflected in our P and L more quickly. The recent 145% US imposed tariffs on China impacted the final weeks of Q1 and are also affecting the early part of Q2. As a result, gross margin pressure is particularly acute in the first part of Q2. As in Q1, we anticipate that SG and A leverage in Q2 will help offset, at least partially, gross margin softness. Importantly, these Q2 specific pressures were fully anticipated and are reflected in our full year adjusted EBITDA margin guidance, which remains unchanged, between 30.332.3% of sales.

Assuming tariffs remain where they're at today, we expect gross margin as a percentage of sales to look healthier on a year over year basis beginning in Q3, supported by our new US distribution center. This facility is expected to reduce freight costs, benefit gross margins, and address supply chain inefficiencies tied to operating from a single Canadian DC. While near term headwinds remain fluid, we're confident in our ability to navigate with agility and execute with discipline to deliver long term value as our business is built to thrive through volatility. With that, I'll pass it over to Andrew for his closing remarks.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Thanks, Stacy and GP. So closing out, the Q1 results speak for themselves. We've proven our luxury inspired business model, which is agile in all senses, resonates with customers, driving consistent results even in a challenging market. With strong momentum thus far in q two, the teams are excited to keep delivering on point relevant collections to our valued Alex and Rachel. Thank you for joining us.

This concludes our formal remarks. I will now turn it over to the operator for the q and a session with our financial analysts.

Conference Operator: Thank you, sir. Ladies and gentlemen, as stated earlier, we do ask that you please limit yourself to one question in consideration of other callers on the line in time allotted today. Once you've asked your questions, you may re queue. If you do have any questions at this time, please press star followed by one on your touchtone phone. You will hear a prompt acknowledging your request.

And should you wish to decline from the polling process, please press star followed by 2. And if using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. First, we will hear from Stephen MacLeod at BMO Capital Markets. Please go ahead, Stephen.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Thank you. Good morning, everyone, and nice to see the strong comps in Q1, so congrats. Just for my one question, just wanted to sort of go a bit higher level and talk a bit about the macro backdrop. Obviously, very fluid as you noted in your prepared remarks, but just curious kind of what you're seeing on the consumer, maybe both your consumer as well as the consumer landscape more broadly and sort of

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: how you see that evolving going forward?

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, I'll take that. It's Sandra speaking. Hey, Steven. Thanks for the question and good morning everyone. So listen, in so far as the consumer from our vantage point, listen, we're seeing a consumer that is looking for some instant gratification.

I think there's a lot of heaviness out there and it is certainly taxing on what I would call consumer discretionary. It's important to think about this consumer discretionary with like bookends. And at one end, you've got like boats and RVs and your basement renovation and all these things that require debt. And then at the other end of the spectrum, you've got a Martini or a Q Top, we trade at the other end. So the minority of consumer discretionary would be what the area the segment that we trade in.

And so listen, so while people are holding back on the bigger ticket items, they're certainly indulging in instant gratifications. And you think about our product, which you can for the price of a martini in a nice restaurant, could buy a cute top and feel great and wear it over and over again. So we're seeing a customer that's looking for moments of joy and happiness and we are affordable affordable indulgence and so listen, we're that's kind of like what we're seeing. And I think to the extent that inflation stays high, interest rates will probably stay a bit higher longer, cost of debt is going to stay higher. And so I would imagine that this environment should prevail for probably for a good part of the year.

I don't think in our case, because we turn so quickly, we pulled forward any and all of these impacts of tariffs and so the impacts are pulled forward. Our prices have increased a bit earlier than perhaps others. So yes, I don't know, my sense is I think our area, our segment should remain reasonably decent for a while.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: That's great. Thanks, Andrew.

Conference Operator: Thank you. Next question will be from Irene Nattel at RBC Capital Markets. Please go ahead, Irene.

Irene Nattel, Analyst, RBC Capital Markets: Thanks, and and good morning, everyone. Just sticking with with sort of the big picture, type of questions. You know, you you've used the words on the call agility, flexibility quite a bit. So can we just come at this from a little bit of a different perspective? If we think about your supply chain and your logistics and agility as a competitive advantage, where do you think you are versus your competitors?

How does this help you navigate through this period? And how should we be thinking about how it plays out through the rest of the year and into next year as the DC opens? Or sorry, in the summer and next year as the DC opens?

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Good morning Irene, it's Stacy and I'll take this question. Thank you for the question. We do believe in our agile and flexible supply chain. We know it enables us to deliver quickly and it was on full display in Q1. From where we ended 2024 to where we are today, we've reduced by over 50% our receipts coming from China into The US.

So we've been able to mitigate our tariffs with fresh orders, vendor support, and country mix. To your point on competitive advantage, we think we have an advantage of how closely we're buying in because we are placing fresh orders, enabling our teams to negotiate upfront with well known tariffs in their face versus trying to hold orders or having orders be displaced into a new factory or country. So we think we're well equipped for whatever comes our way. Again, we don't just speak agility, we actually live it, but we're not targeting a percentage for China. We are constantly balancing time, cost, and ease to bring the best value to the brand.

I hope that answers your question.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite: It does.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Thank you.

Conference Operator: Thank you. Next question will be from Martin Landry at Stifel. Please go ahead, Martin.

Martin Landry, Analyst, Stifel: Hi. Good morning, everyone. Congrats on your great results. GP, I would like to dig in a little bit in the gross margin fluctuation. It eroded by 180 basis point.

You do mention that tariffs were an impact, but you also did mention that tariffs were impacting only the last week of the quarter. So I assume there's other puts and takes that explain the erosion on a year over year basis. So I was wondering if you could quantify some of the buckets and bridge the gross margin fluctuation on a year over year basis, please?

JP Lachance, Chief Financial Officer, Group Dynamite: For sure. Thank you, Martin, for the question and good morning, everyone. So first of all, I'd like to start with gross profit dollars. I'm happy to confirm that the gross profit dollars were in fact better than our expectations. So we're happy with the GP dollars.

Obviously, we talked about vendor support, country shift and selective price increases as some of the mitigation strategies that we were able to use in Q1. So from a GP dollars perspective, we are satisfied. To answer your question on the gross margin rate, the decline was fully driven by the impact of tariffs, which was material and which was also expected. Ultimately, as we lead this business, what we are mostly focused on is the adjusted EBITDA and the EPS performance. And of course, as you very well know, part of the gross margin decline as a rate was compensated for by the adjusted SG and A benefit that we were able to get.

And part of that comes with the great top line that we've had, and we're certainly very happy with the the comps and the new store revenue that we were able to generate. All this to say really the tariffs were the main impact on the gross margin rate. And if it wasn't for tariffs, we would actually be higher year over year. So very happy with our agility, very happy with the way we handled this. And ultimately, we were able to deliver 20% top line growth and also 20% adjusted EBITDA growth year over year, and that growth is very impressive in these times.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Superb. Thank you for the color.

Conference Operator: Thank you. Thank you. Next question will be from Vishal Shreedhar at National Bank. Please go ahead.

Vishal Shreedhar, Analyst, National Bank: Hi, thanks for taking my questions. As we think about this tariff impact that you indicated in Q1 and Q2 and we reflect on management's previous comments that it would not absorb tariffs and I understand there's a transient impact here. Should we assume that that pressure that you've noted related to tariffs in Q1 and Q2 is transient and therefore next year as we build our base, we should not reflect that in our model and in fact we'll get a gross margin bump next year. Is that a fair assumption based on what management said previously?

JP Lachance, Chief Financial Officer, Group Dynamite: I think Vishal, this is a bit premature and early. Obviously, in due course, we will be introducing guidance for next year. I think at this point, as I've just said to the Martin's question, I think we're really focused on running the business and ensuring we deliver adjusted EBITDA and earnings per share. So I think it's very premature. There's a lot of puts and takes that will need to be considered in due course.

So I would not make that connection as early as we are today in the game.

Vishal Shreedhar, Analyst, National Bank: Okay. And and for the back for the same store sales guidance, given that q one was so strong and q two is continuing so strong, and I understand there's uncertainty. But if if you take if you take the q one and and partway q two trends and assume it's something slightly higher than q one, then it's assuming on the low end, call it, like, four to six and a half percent same store sales growth for the balance of the year, at least according to our calculations, Is that just out of an abundance of caution? Or how should we think about management's anticipated slowdown reflected in the guidance?

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, I'll take that. I mean, that's a great question. I wouldn't call it an abundance of caution, but it is certainly conservative that I would most certainly give you and I think your extrapolation makes absolute sense. So listen, a couple of things. One, we believe that we are winning right here, right now, in part because contrary to maybe other brands and perhaps other retailers, We chose in with this macro uncertainty to kind of like press harder on the gas and we anticipated that there would be voids in the marketplace in terms of emotional relevant collections and so on and so forth as others were maybe holding back and waiting to see what happens.

And because of our agile model, we spend most of our time thinking about what's amazing and what's new and what's going to titillate our customer. So that's exactly what we did. And so that contrast with our peers is leading to our current performance to a certain extent, plus my comments really The consumer really is remaining quite resilient, especially at the right bookend, if you will, of consumer discretionary. But we don't know when we get into Q3, Q4, we're starting a new season, it's fallwinter, right?

And to a certain extent, there's a level of reset, right? So we don't really, really know. So yes, we're being a bit cautious, but I think at this stage in the game, it's probably the right call.

Vishal Shreedhar, Analyst, National Bank: Congrats on the quarter. Thanks.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Thank you. Thank you.

Conference Operator: Next question will be from Brian Morrison at TD Cowen. Please go ahead, Brian.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Thanks very much. I just want to follow-up on that before I ask my question. So on same store sales growth, this 13% is impressive, but nine weeks through the quarter you said you were at 6%. Was that downplayed or was the April just that strong?

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, yes, yes, deductive reasoning there. No, it was not downplayed. Listen, what I will say is momentum did in fact pick up through the quarter, right? And it's continued into Q2, right? So it's even we're tangibly ahead in this Q2 relative to Q1.

So it did pick

Conference Operator: up.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: But part of it was most certainly amplified by the Easter shift, right? Last year Easter would have fallen into that nine week window, whereas this year Easter fell into the remainder the last four weeks. So yes, so I would say two thirds of it is probably the Easter shift or half of it anyways is the Easter shift and then just really the continued momentum through the quarter.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Okay, thanks. So thank you, Andrew. Getting to my next question, but it's more likely for JP. Just looking forward at your U. S.

Growth plan, I'm just trying to understand The U. S./Canada brick and mortar revenue split a bit better for this quarter. So like if I assume e commerce is evenly split as a percentage of revenue and back that out then sales per store looks to be 65% to 70% higher in The U. S. Clearly FX is going to explain the majority of that but like what's the other 25% of the remainder?

Is it the difference in square footage per store? Is it the lower productivity at Dynamite, better locations in The U. S? Or is e commerce just simply more outsized in The U. S?

JP Lachance, Chief Financial Officer, Group Dynamite: Yes, that's a good question, Brian. So certainly, we are seeing better performance from our locations in The United States and that goes back to our real estate strategy. We definitely have a lot of high quality Tier one, Tier two real estate in The United States. If you look at the recent cohorts of store openings, they've been mostly in The United States And so that's very helpful as we prioritize Tier one, Tier two assets. And there's a very real difference in revenue between a Tier one and a Tier five.

That is material. So when we open in a year 20 ish stores that are very high quality and at the same time close 10 ish stores that are Tier four, Tier five locations, then the simple math gives you a very healthy year over year top line growth. So that is definitely a big part of the delta. So if you're trying to bridge from your comps to your total sales, the real estate strategy is very meaningful in the math, and that is evidenced by a higher proportion of Tier one, Tier two assets in The United States under the Garage banner, which is also outperforming Dynamite, which is the other part of your response.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: And sorry, thank you for that. Is e commerce also is the revenue split equal between Canada and The U. S. Is it fair to say that?

JP Lachance, Chief Financial Officer, Group Dynamite: So the penetration on e commerce simply because our Muses are different, Garage has slightly lower penetration on e commerce than Dynamite and therefore Canada would have an advantage to The U. S. From a penetration perspective simply because of the different banners.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Wow. Okay. Very helpful. Thank you both.

Vishal Shreedhar, Analyst, National Bank: Thank you.

Conference Operator: Next question will be from Luke Hannan at Canaccord Genuity. Please go ahead, Luke.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Thanks. Good morning, everyone. I wanted to ask about the China exposure. You mentioned that receipts were down more than 50%. I'm just curious, is there any more to come there if we think about the coming months?

And then if we take a step back and think longer term, do you still see potential to go back to the sort of production or sourcing exposure that you had previously before all this tariff rhetoric ramped up? Thanks.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Good morning. Yeah, I'll take that as a follow-up to the prior question. As I mentioned as I closed, the final question was about, you know, we're constantly looking every order at that current time, balancing time, cost, and ease for us to get it here. Time is almost more important than cost in our whole chase model. As you guys know, being agile, we're airing in a ton of receipts.

So we're not targeting anything for China. We're looking at every opportunity we have to bring speed and cost to the table. There's no target back to China, but it won't grow back to what it was. It may level out where we're at today. So we'll see how that plays out.

I think it's opened our doors to offshore suppliers. Our teams were ready and able. Again, this was a 2025 initiative. The tariffs just brought it forward with a little bit more passion behind it and emphasis on our moving.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Understood. Thanks so much. Congratulations.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Thank you.

Conference Operator: Next question will be from Adrienne Hee at Barclays. Please go ahead, Adrienne.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite2: Great. Thank you very much, and congratulations on the great quarter. I guess my question is on the pricing increases and the timing of those. It sounds like you're using those kind of as your third lever. I'm not really that aggressive about them, using them more strategically.

So just wondering what your average unit retail looks like kind of in the current quarter and how you think that ramps into the third and fourth quarter? Thank you very much.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Yeah, thanks for the question. I'll take that. So listen, the brand is hot. We have a certain, I guess, level of heat out there where customers are really, really engaged. We've strategically been on this quest over the last six, seven years to pivot out of lower tier real estate into what I call investment grade real estate flanked by luxury or aspirational luxury.

We end up being the smallest house on the nicest street, so to speak. And so with all of that, combined with the brand HEE, we do find ourselves in the enviable position to have pricing power. And so yes, on a quarter over quarter year over year basis, I should say, we actually did raise our AURs by approximately 9%. And now I know through the IPO process roadshow, we had always publicly stated that we wanted to raise at least twice the rate of inflation. So this would be a little bit more.

And yes, this is probably enhanced and amplified as we've looked to mitigate the increase in our costs due to tariffs. So the good news is, check the box, we have pricing power, our strategies are paying off, we have brand heat, both traffic and baskets have increased despite higher AURs.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite2: Fantastic. That's great to hear. Best of luck. Thank you.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Thank you.

Conference Operator: Next question will be from Chris Lee at Desjardins. Please go ahead, Chris.

Vishal Shreedhar, Analyst, National Bank: Hi. Good morning, everyone. Congrats on the strong results. Maybe just a clarification question for JP. In your opening remarks, you mentioned that you expect gross margins to be healthier starting in in q three as you lap the tariff impact and for the benefits from the DC opening.

Just wanna clarify when you say healthier, did did you mean sort of on a year over year basis that that gross margin will be positive or or just more less decline?

JP Lachance, Chief Financial Officer, Group Dynamite: Thank you, Chris, for the for the question. So basically in Q1, as we talked about earlier, it was down year over year. And in my opening remarks, I cautioned around Q2 with the timing and the impact of tariffs early Q2. So this comment was really meant to say that in Q3 and Q4, it will be better than what Q1 and Q2 are showing, but it doesn't necessarily mean that it will be higher year over year. It will simply be better than what Q1 and Q2 would have looked like on a year over year basis.

So that is the GM rate part of your question. But again, I would also echo what I said earlier around the fact that we're very happy with the gross profit dollars, which is what really matters to us, the adjusted EBITDA and the EPS that we deliver. But you should not expect GM percent to be higher in Q3 and Q4. That was not what was meant to be said with that comment.

Vishal Shreedhar, Analyst, National Bank: Okay. That's helpful and all the best. Thank you. Thanks, Chris.

Conference Operator: Next question will be from Brooke Rose at Goldman Sachs. Please go ahead,

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Good morning and thank you for taking our question. Andrew, Stacy, I was hoping you could speak to the new customer acquisition pace that you're seeing in The U. S. Market as you continue to build out the garage fleet. How is the pace of new customer acquisition versus your expectations?

And what do those customers look like as they mature over the course of a couple of years? What has that changed in terms of the typical customer composition? And what are your expectations for the rest of the year? Thank you. Thank you for the question.

Yes, we're really excited about the new customer in The U. S. Acquisition is up. I would say it is in line with our plans, if not a little elevated. We're also seeing, if you guys remember, we launched our loyalty program last year around this time, so we've almost come upon a full year.

Our loyalty numbers are up, and we know with those customers the basket is higher, the frequency is higher, so we're on a very good trajectory there. It kind of speaks to the brand heat that Andrew was speaking of. We've touched in, you know, pushed on marketing this year. It was a muscle I said last year we hadn't really flexed. This year we've really gone after impressions, reach, share of voice, brand heat, however you want to define it, But it's kind of a pyramid impact with influencer at the top who's kind of setting the stage for what's culturally relevant.

And then the ambassador program is working really well for Garage, specifically in The US where she's kind of locally amplifying that message. And then we're excited to bring in those loyalty customers or our best customers to also be engaged in that community because they're probably the most trusted advocates for, a new person starting or looking into a brand. So we're very excited about acquisition strategy and brand marketing in general for the balance of the year. Great. And then just one quick follow-up for JP.

I know a lot of discussion has already been covered on tariffs today, but could you help us quantify the impact that is embedded in your gross profit guidance into the back half of the year on tariffs? Thank you.

JP Lachance, Chief Financial Officer, Group Dynamite: We would prefer not disclosing the exact dollars, Brook, but what I'm happy to say is that the guidance we provided on adjusted EBITDA margin is basically based on the tariffs as we know them today. So 30% China and 10% for the other countries. And if tariffs were to stay at these levels, you should expect us to hit the upper half of the range. But if the situation with tariffs was to deteriorate, then it would be reasonable to assume that the bottom half would be more reasonable. So this is a fluid situation, but again, assuming tariffs where they are today, we believe we'll be able to hit the upper half of the range.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Thank you so much. Best of luck.

Conference Operator: Thank you. Next question will be from John Zamparo at Scotiabank. Please go ahead, John.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Thank you. Good morning. I wonder if you could come back to the same store sales metric for a moment and, in particular, your performance on traffic or transaction count in the quarter and subsequent to it. And I appreciate you're not likely to share specific numbers, but wonder if you could talk directionally or broadly about how you performed on each of those metrics.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Sure. Yes, I'll take that. Yes, listen, I mean, would say it could be close to an even split. And I do know that we I appreciate that we that I called out an increase in our AUR of approximately 9%. That was really at quarter end.

So we didn't necessarily start the quarter that way. That was at quarter end. So when you kind of like blend it through, it ends up being split, I would say, evenly between AUR and traffic on a comp basis,

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Understood. Thank you. Has that changed at all subsequent to the quarter?

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: It's no, not really. It's similar. I mean there's been an acceleration, a tangible acceleration in sales, same store sales that is. And I would say that split remains.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Understood. Thank you very much.

Conference Operator: Thank you. Next question will be from Mark Petrie at CIBC. Please go ahead,

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Yeah. Good morning. I like all my congrats on the quarter. I wanted to ask about the real estate strategy and specifically sort of the dynamics you're seeing between Canada and The US and and how that differs. Obviously, you know, familiar with your overall strategy of high grading, but would you say your access to the sort of tier one, tier two locations has improved more in Canada versus The U.

S. Over the last year or two? And maybe any other contrast you can draw between those two markets?

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Sure. Yes, I'll take that. So listen, so no, would say it's really quite similar, right? But you got to remember Canada is in a different place, right? We're more mature.

We are in every Tier one So it's more mature. So what's happening more in Canada is either repositioning, remodeling or relocating, I mean, kind of change, but it is a more mature situation. In The U. S, there's no if, answer, but with the brand heat over the years and really our listen, we've I think we've had 19 out of 19 out of the last 20 quarters have had positive comps and probably even a bit more acute, if you will, in The U. S.

And our partners down there and our landlords recognize that. So between the brand heat, between the fact that we're non promotional, again, like we didn't talk about markdowns, but our markdowns are similar on a year over year basis, but we're running at mid single digit, which is unheard of in this industry. The landlords love us because we're getting there, the brand value, holding high keeping the equity high, attracting full price customers with strong disposable income. So they're excited with us and we are getting access to better locations and more opportunities. So that's really wonderful.

And listen, there are situations where maybe three, four years ago landlords really didn't to talk to us for XYZ reason and today they see the value and they're welcoming us and we're getting Choice Real Estate, great deals, fair deals, won't say great deals. They're not inexpensive by any means, but they are fair deals. And but I'll go a step further and we didn't really touch on The UK thus far, but as you know, we're busy out in The UK. That's going to be our newest international market, which will be opening in 2026. And I'm going to tell you the landlords over there are welcoming us with open arms.

They're really, really, really excited. I think there's a little cachet that we're Canadian, we're Montreal, we feel a bit more Euro, whatever. In any event, we're really pleased with the reception that we've been getting and they're really, really thrilled to have us. And so we've been we're securing some pretty good real estate and we're excited about the prospects in The UK.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Okay, thanks for that. And I appreciate that you are getting fair deals in The U. S, that seems reasonable, but is it also fair to say that the terms on those deals are more favorable now than they might have been say two years ago just given the brand heat?

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: No. Because at the end of the day, if you think about these landlords at the end of the day, like everyone else, they've got their budgets they need to achieve and they got to hit their targets, right? How they get there, maybe they get a little less from one and get a little more from another, but in the end, they're accountable to deliver on their performance. The biggest difference is there's a little scarcity, right? There's like there's no new asset, if you will, throughout North America, except for Royal Mount, little plug, plug.

And so there is no new supply in the marketplace. And there are quite a few brands that are doing well. And even at that, there might be 30% of any shopping centers real estate that could be maybe desirable for us, maybe even a bit less. So it's a small subset of real estate in a small subset of an industry that would work and consequently supply and demand has made it such that there are fair deals. They're not any less favorable financially than they've ever been.

I think where we count ourselves fortunate is that we're able to actually secure it because odds are for every location that becomes potentially available, there's probably 20 bidders. So to be able to secure a location against 19 others is quite formidable and speaks volume of the brand.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Understood. Appreciate the color and all the best.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Thank you.

Conference Operator: And our last question is a follow-up from Martijn Landry. Please go ahead.

Martin Landry, Analyst, Stifel: Hi. Thank you for the follow-up. Yes. I just wanted to dig a little bit in the product portfolio. Stacy, in your opening remarks, you talked about off duty products getting good traction.

I believe that is sweat fleece. I was just wondering if you could give us a little bit more color on that. You know, I mean, do you have more SKUs than last year? How much more traction is that category getting for you? And is this more garage or I and I believe it is garage so just a little bit more color on that category would be great.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Yeah for garage it's a lifestyle that we reference as off duty so it encompasses fleece, a lot of knits. Our knit category is really outperforming this year. Fleece as well and then an extension into activewear. Overall, there's not additional CCs. They're just more productive and better CCs.

So the team's done a really good job of nailing which items to go after. We believe in editing more than adding. It's better to get fewer things right than just let her choose. So as a brand, we believe that editing is strong, tell her what she's looking for. We use the reference.

No one's looking for a new iPhone until iPhone 20 comes out and everyone has to have it. We think we have the cache as a brand to dictate what those trends are and so we've narrowed down the assortment, focused in on those top items. Specifically for garage, their top 10 items are driving a significant portion of their assortment right now.

Alex Limassane, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Super. Thank you.

Conference Operator: Thank you. And at this time, we have no other questions registered. Please proceed.

Andrew Letvi, Chief Executive Officer and Chair of the Board, Group Dynamite: Well, listen, thank you everyone. I really appreciate the colors the colors the questions, the color of the commentary. And listen, I think I would maybe conclude with this. An IPO process is really, really, really tough. And I don't think we really appreciated how taxing the journey was, right, until you've kind of gone through it and now we're on the other side of it being public is actually not that hard.

Actually, I quite enjoy it for what it's worth. But the actual journey itself really is quite arduous. And I'm going to say that the three months was really taxing on management and it's really exciting that to have management focused on operating opposed to roadshows and all the other stuff, IFRS conversion and all that good stuff. So anyway, it's great to be back into driving the business, creating value and I think that's part of what's behind also our performance, right? So that's it.

Anyway, so listen, thank you very much for the questions. Really appreciate the commentary. And with that, wish you all on behalf of team GDI a wonderful day. Thank you, operator, as well. Thank you.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Thank you.

Conference Operator: Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

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