Earnings call transcript: Groupe Dynamite Q4 2025 beats expectations

Groupe Dynamite Inc. (GRGD) reported its fourth-quarter earnings for 2025, surpassing market expectations with an earnings per share (EPS) of $0.33, compared to the forecasted $0.26. The company also reported revenue of $271.8 million, reflecting a 13.1% year-over-year increase. Following these results, the company’s stock surged by 10.79% to $12.83 in pre-market trading, highlighting positive investor sentiment. According to InvestingPro analysis, the stock appears overvalued at current levels, despite its market capitalization of $908.8 million.

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Key Takeaways

• Groupe Dynamite’s EPS exceeded expectations by 26.9%.
• Total revenue rose by 13.1% year-over-year, driven by strong sales in key product categories.
• The company plans significant expansion in both Canadian and international markets.
• A new U.S. distribution center is set to open in July, enhancing operational efficiency.

Company Performance

Groupe Dynamite demonstrated robust performance in Q4 2025, with significant growth in both revenue and profitability. The company’s strategic focus on product innovation and market expansion contributed to its success. The Garage and Dynamite brands showed strong momentum, particularly in fleece, knit tops, and denim categories. This performance is noteworthy against a backdrop of competitive pressures in the retail sector.

Financial Highlights

• Revenue: $271.8 million, up 13.1% year-over-year
• Earnings per share: $0.33, up from the forecasted $0.26
• Gross profit: $160.3 million, up 13.3%
• Gross margin: 59%, up 10 basis points
• Adjusted EBITDA: $79.5 million, up 17%
• Free cash flow: $55.3 million, up from $41.9 million

Earnings vs. Forecast

Groupe Dynamite’s actual EPS of $0.33 exceeded the forecast of $0.26 by 26.9%, marking a significant positive surprise for investors. This performance reflects the company’s effective cost management and strong sales growth, particularly in its core product lines.

Market Reaction

The stock price of Groupe Dynamite increased by 10.79% in pre-market trading, reaching $12.83. This surge reflects investor confidence in the company’s strong financial performance and optimistic future outlook. While the stock has fallen significantly over the past three months, InvestingPro data shows the RSI indicates oversold conditions, potentially suggesting a technical bounce. The stock’s 52-week trading range spans from $7.47 to $15.49.

Outlook & Guidance

Looking forward, Groupe Dynamite plans to continue its expansion with the launch of its Dynamite 3.0 concept stores and entry into the UK market in 2026. The company projects an adjusted EBITDA margin of 30.3-32.3% and anticipates capital expenditures of $95-105 million. A share buyback program has also been initiated to enhance shareholder value. InvestingPro rates the company’s overall financial health as "GOOD," with particularly strong scores in profitability metrics.

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Executive Commentary

CEO Andrew Letfie emphasized the company’s strategic agility, stating, "Agility wins." This sentiment is echoed by President and COO Stacy Beaver, who highlighted the company’s community-building efforts, saying, "We’re building more than brands. We’re building communities."

Risks and Challenges

• Supply Chain Management: Potential disruptions could impact inventory levels and delivery timelines.
• Market Saturation: Expansion efforts must be carefully managed to avoid over-saturation in key markets.
• Macroeconomic Pressures: Inflation and changing consumer spending patterns may affect future profitability.
• Tariff Implications: Ongoing concerns about tariffs, particularly related to China, could impact sourcing costs.

Q&A

During the earnings call, analysts raised questions about the company’s ability to maintain margins amidst rising costs. Executives addressed these concerns by highlighting their flexible supply chain and strategic pricing power, reinforcing confidence in Groupe Dynamite’s ability to navigate economic challenges.

Full transcript - Groupe Dynamite Inc (GRGD) Q4 2024:

Conference Operator: morning, ladies and gentlemen, and welcome to the Group Dynamite Fourth Quarter and Fiscal twenty twenty four Results Conference Call. At this time, all lines are in a listen only mode and the conference is being recorded. Following the presentation, we will conduct a question and answer session. And I would like to turn the conference over to Alex Limousani, Manager, Investor Relations and Corporate Finance at Group Dynamite. Please go ahead, sir.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite: Thank you and good morning everyone. Joining me on the call are Andrew Letfie, 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 and full fiscal year ended 02/01/2025. The press release and related disclosure documents are available in the investors section of our corporate website at groupdynamite.com and on CEDAR 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.

Before we begin I would like to refer you to slide two of our Q4 twenty twenty four investor presentation also available in the investors section of our website for a 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 Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Thank you Alex and good morning everyone. This concludes Q4 earnings call. To begin with, I’d like to call out how proud I am of our brands and how we showed up in 2024, gaining market share, deepening customer connection, and proving that agility isn’t a tactic, but it’s our mindset, and the results speak for themselves. We sell emotion. Each of our brand’s touch points is designed to make customers feel something each time they interact with us.

This year we’ve elevated our communities and advocates to embed our brands more deeply into our customer lives and culture. We partnered not only with our customers’ favourite influencers across each of the brands, but we’ve also empowered our store associates to champion our brands in their own communities and on social media. Our associates are greatest and most authentic brand ambassadors, bringing the energy of our stores to life across platforms like TikTok and Instagram. These efforts are also serving as an important driver to our success in building strong brand equity and market leadership. In 2024, we lean to what we do best, operating with agility.

Over 50% of our buys were made in season and today over 30% of our receipts go from purchase order to distribution center in under eight weeks. This kind of agility keeps us fashion relevant, minimizing risk, virtually eliminating markdowns, and contributing to an inventory turnover of over 8.5 times in fiscal twenty twenty four. ’20 ’20 ’4 was also the year we stepped into the public spotlight. Becoming a public company was a defining chapter. And while the process came with its share of distractions, we stayed true to our commitments.

We delivered on we said we would and in many ways, many areas we outperformed with excellence across channels, categories and markets. As we prepare to celebrate our fiftieth anniversary later this year, we’re not just looking back, we’re looking ahead with clarity and purpose. This milestone honors our creative DNA, our relentless pursuit of innovation, and most importantly, the loyalty and passion of the customers we serve every day and those of tomorrow. Let’s get into the Q4 performance highlights. We achieved total revenue growth of 13.1% driven primarily by strong comps and new store openings.

Excluding the fourteenth week of last year, total revenue grew by an impressive 18.8%. Gross profit increased by 13.3% with gross margin expanding by 10 basis points compared to fourth quarter of last year, reaching 59% of sales, mainly due to lower occupancy costs as a percentage of sales. Adjusted EBITDA grew by 17% year over year, reaching $79,000,000 demonstrating strong operational leverage. Further down the P and L, adjusted net earnings increased by 23.6% compared to the same period last year, while adjusted diluted earnings per share rose by 18.3%. This morning we also announced a board approved normal course issuer bid authorizing the repurchase of approximately 1,300,000 subordinated voting shares.

This is a clear signal of our belief in the long term value we’re building and our commitment to disciplined capital allocation. Finally, we’re mindful of the macro uncertainty from consumer shifts to global volatility. We remain confident in our ability to deliver strong results. For the first nine weeks of our Q1, up to and including April 5, comps are up approximately 6%. And importantly this momentum isn’t coming at the expense of IMU which have remained strong.

Bottom line, agility wins. Our brands are resonating and our teams are more energized than ever to deliver on strong growth. With that, I’ll turn it over to Stacy to share more about how we’re showing up and how we’re standing out.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Thank you, Andrew, and good morning, everyone. This past year was all about impact. Our teams didn’t just execute, they raised the bar. What fueled our success wasn’t just product or platform, it was culture. We showed up with relevance and, more importantly, with intention and authenticity.

Let’s start with performance. Comp store sales growth in Q4 reached 9.5%, above 9.8% from last year. This resulted in a two year stack of 19.3% improvement. These results were anchored in the right product at the right time, powered by our premier store network in high impact locations. Retail sales per square foot for fiscal twenty twenty four grew by approximately 19%, reaching $734 up from $619 in fiscal twenty twenty three.

This reflects how our stores continue to serve as vibrant, profitable brand beacons. We managed our footprint with discipline, opening two new tier one garage stores in The U. S. While closing three locations, one Dynamite store in The U. S.

And two garage stores in Canada. Additionally, we relocated our Roosevelt Field Garage store to a flagship caliber space, which now spans 6,000 square feet and is already exceeding expectations. On digital, our ecom business outpaced brick and mortar growth, up 18.4% in Q4, excluding the fourteenth week from last year. This growth is fueled by our commitment to delivering an aspirational, seamless omnichannel experience that meets her wherever she is. Over the next twelve months, we’ll also double down on customer personalization with a big focus on our long term target of increasing e commerce penetration to 25% and strengthening connections across all channels.

Moving into our brand stories for 2024. Garage continued to own its space with consumers off duty, active, and always relevant. The momentum in fleece has been exceptional, and our fashion forward drops in knit tops and denim continue to deliver. Our customer is building her wardrobe around us, and we’re responding in real time with strategic in season buys, minimal markdowns that protect margin, and drive full price sell through. Dynamite leaned into its DNA, denim and dresses, and won the holiday season with elevated styles that pushed price points and exceeded expectations.

The success of our new Dynamite concept store here in Montreal at Royal Mount, which we call Dynamite three point zero, is clear as demonstrated by our shoppers’ engagement and store success. Customer user generated content from this new concept store accounts for almost 90% of all store generated content from customers. He’s loving the brand’s fresh and elevated new feel that was inspired with a luxury mindset. We are looking forward to gaining more momentum in opening three more reimagined Dynamite three point zero locations in Canada this year. Marketing has also played a pivotal role in strengthening our customer connections in 2024.

As Andrew mentioned, we have accelerated activating our community through employee ambassadors and deepening real life connections, which have been key to driving brand awareness and engagement. The reality is we’re building more than brands. We’re building communities. Looking ahead, 2025 will be a defining year for how we tell our brand stories. We’re focused on creating moments that not only engage but stick, driving connection, conversation, and long term loyalty.

Our loyalty program will become a true experience platform, offering exclusive drops, early access, and curated events that reward our customers not just for what they spend but for how they engage with our brands. Together, these elements will fuel brand heat and set us up to own a bigger share of the conversation in 2025. On the growth front, we’re laying the groundwork for our U. K. Expansion in 2026.

We’re confident our proven model of trend driven, emotionally resonant, and omnichannel by design will translate with our consumer in that market. We are also thrilled to be expanding our shipping capabilities and customer service. We’ve recently entered into a warehousing agreement with a third party logistics provider. They will offer warehousing and distribution services within The US with minimal capital expenditure required. The DC is set to go live in the second half of twenty twenty five, significantly improving operational efficiency, reducing lead times to stores and customers, and enhancing overall customer satisfaction.

2025 is already here, and we’re already off and running. I am invigorated by the team’s passion to continue to strive for innovation and push boundaries. We are focused on moving fast, showing up big, and staying true to ourselves and our customers. With that, I’ll hand it over to JP for a detailed review of our financials.

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 the fourth quarter of twenty twenty four increased by $31,500,000 or 13.1% to $271,800,000 Excluding the fourteenth week of Q4 twenty twenty three, total revenue increased by 18.8%. Most of the increase is attributable to retail revenue, which grew by $24,100,000 in Q4, or 12.9% over the equivalent quarter of last year. This increase was driven by comparable store sales growth of 9.5% for the quarter, as well as contribution from new stores.

Online revenue grew by 13.6%, reaching $61,600,000 for the quarter, despite one less week this year versus last year’s Q4. Gross profit for the fourth quarter of twenty twenty four increased by $18,800,000 or 13.3%, reaching $160,300,000 which resulted in gross margin expanding by 10 basis points to 59% from 58.9% over the same period. This improvement is mainly due to lower occupancy costs as a percentage of sales. Selling, general, and admin expenses for the fourth quarter of twenty twenty four increased by $12,700,000 or 17% to $87,000,000 compared to the fourth quarter of twenty twenty three. This increase was primarily driven by the company’s growing scale and activities, leading to a $5,200,000 increase in wages, salaries, and employee benefits, along with a $3,200,000 increase in selling and marketing expenses as both revenue and operations expand.

Additionally, in Q4 twenty twenty four, admin costs were negatively affected by $3,700,000 in professional fees associated with the IPO, as well as an incremental $1,900,000 expense on stock based compensation due to the revaluation of the fair value of the options following the change in expiry term. Operating income increased by $2,200,000 or 4.6% to reach $50,700,000 in Q4 twenty twenty four compared to $48,500,000 in Q4 twenty twenty three. Similarly, adjusted EBITDA increased by $11,600,000 or 17% to reach $79,500,000 in Q4 twenty twenty four compared to $67,900,000 in Q4 twenty twenty three. The adjusted EBITDA margin improved to 29.2% in Q4 twenty twenty four compared to 28.3% in the same period last year. This 90 basis point improvement is primarily attributed to adjusted SG and A as a percentage of sales, which decreased to 29.6% from 30.5% last year, reflecting the benefits of operating leverage and effective cost control.

Net earnings increased by $2,400,000 or 8.5% to reach $31,000,000 in Q4 twenty twenty four compared to $28,600,000 in Q4 twenty twenty three. This growth is mainly attributed to higher revenue, partially offset by higher SG and A. Adjusted net earnings for Q4 twenty twenty four increased by $7,000,000 or 23.6% to reach $36,600,000 compared to $29,600,000 in Q4 twenty twenty three. Moving to free cash flow generated for the quarter, it was 55,300,000.0 up from $41,900,000 in Q4 twenty twenty three. While operational cash flow remained strong, the company mainly benefited from lower CapEx, which decreased from $28,900,000 in Q4 twenty twenty three to $12,600,000 in Q4 twenty twenty four.

The company’s net leverage ratio was reduced in half to 0.98x compared to 1.96x last year. This improvement is due to the increase in adjusted EBITDA, coupled with the repayment of all of our outstanding borrowings under the credit facilities, which has more than offset the increase in lease liabilities. At the end of fiscal twenty twenty four, the company had over $74,000,000 in cash and $312,000,000 available under credit facilities, providing flexibility to drive growth, invest in strategic initiatives, and manage market volatility. For the last twelve months ending Feb one, twenty twenty five, our return on assets ratio expanded to 26% versus 17.9% for the same period last year and our return on capital employed ratio reached an impressive 47.4%, marking a significant improvement from 35.3 for the same period last year, highlighting the effectiveness of our recent strategies and investments. As we look toward fiscal year twenty twenty five, we acknowledge the current market uncertainties, particularly with the consumer space.

However, we remain confident in our ability to capitalize on these conditions to expand our market share. We offer affordable options that deliver great value, making us a compelling choice within the consumer sector. Based on this, here is our guidance for fiscal twenty twenty five: We are reaffirming our plan to open 18 to 20 new stores, all under the Garage banner and all in The US Tier one, two, or three locations. Additionally, we anticipate strategically closing nine to 10 locations, mostly in Tier four and Tier five locations across Canada. Lastly, we expect 10 to 15 relocations and renovations during the year.

We continue to aim for three fifty total locations by the end of fiscal twenty twenty eight, up from two ninety eight at the end of fiscal twenty twenty four. Comparable store sales growth is projected to be between 56.5% for the year, mainly driven by our AUR strategy while continuing to provide compelling value to our customers. Adjusted EBITDA margin is projected to be between 30.332.3%, driven primarily by operating leverage, despite the inclusion of 4,000,000 to $5,000,000 of incremental public company costs compared to fiscal twenty twenty four. Our top priority continues to be reinvesting in the business to drive long term growth. CapEx for the year are projected to range between $95,000,000 and 105,000,000 reflecting our strategic investments in store openings, store relocations and renovations, and technology.

With the remaining cash after these investments, we will seek to repurchase shares through our new Board approved share buyback program, subject to TSX approval, when appropriate, in a manner consistent with maintaining a disciplined capital structure. We believe this program sends a clear signal of our confidence in the company’s fundamentals and our commitment to creating long term shareholder value. With that, I’ll pass it over to Andrew for his closing remarks.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Thank you, JP and Stacy. In conclusion, the world is moving fast, but at the end of the day, all that matters is our customers, Our ability to empathize with her, our community, and the markets allows us to take market share. This past year has proven just how resilient, loyal, and energized our customer base is and just how agile and focused our teams are in delivering for her no matter the backdrop. As I reflect on this first year of what I call group dynamite season three, one thing is clear. We’re just getting started.

We’ve laid the foundation, the vision is sharp, and the engine is humming. With bold, creative, sharp execution, and a relentless commitment to innovation and cultural relevance, we are uniquely positioned to grow with intention, with purpose, and with impact. Thank you for joining us today. This concludes our formal remarks, and I’ll now pass it over to the operator for the q and a with financial panelists.

Conference Operator: Thank you, sir. First, we will hear from Martijn Landry at Stifel. Please go ahead.

Martijn Landry, Analyst, Stifel: Hi, good morning, everyone, and congrats on your results. My first question pertains to your guidance. You’re guiding for an EBITDA margin of 30.3% to 32.3%, which at the midpoint is essentially stable year over year and that’s despite significant tariffs imposed on China by The U. S. So I was wondering if you could discuss a little bit how you expect to keep your EBITDA margin more or less stable year over year despite these large tariffs?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Hey, Matt, thanks for the question and good morning. Good morning, everyone. Yes, so it’s so funny, needless to say, I think this was probably one of the bigger questions, tariffs, how do we prep for this and so on and so forth. Listen, what I would say is this, it’s let me start with leadership, right? And I’ll take a step back.

We’ve only been public for about a little over four months, right? And we were one of the few companies I think we were the only notable company to go public in the last two years. And at the end of the day, I would say, yes, maybe you like the brands and the business and so on and so forth, they’re compelling numbers. But the investors invested in leadership and management, right? And we said all along that we have a very agile model.

We are agile as leaders. Our business model is agile. It shows up in the inventory turns. Shows up in a lot of other places. So ultimately, how do we actually get there and how do we deliver on the performance?

Listen, we have the ability to shift production for which we have, but that’s not even the full answer. So without getting really into the very specifics as to how we’re going to do it, and by the way, that playbook does seem to change these days on the daily, certainly on the weekly, I’ll just come back to some of the key notable things. Again, agile, you know, strong, strategic, agile leadership. Same leaders, nothing has changed. Number two, really strong brands that our customers love.

That has not changed. We sell emotion. We have pricing power, and it has not been a secret through the roadshow. We basically disclosed that we had raised our prices over successively through the years at a rate much faster than the rate of inflation. I don’t think that’s going it’s not that I don’t think, I know that’s not going to change anytime soon.

So our intention is to raise prices at least at twice the rate of inflation. So that’s not changing. We have a premier, premier, premier high quality real estate portfolio that we’ve invested dearly in over the last six years. Really, really, really strong, ambitious and aggressive growth, which we plan on continuing. And these assets that we invest in, these locations that we invest in, these are like tier one, two, three, what I call, what we call investment grade real estate opportunities.

And what does it mean by that? Often enough, are flanked by either luxury, aspirational luxury, they have massive footfall, there’s a flight to quality. These assets are gaining market share, great proxies for future growth. So and an amazing opportunity even for as you think about, let’s say, our brands operating in these environments, often enough we are probably the lower priced brands in those environments, so it’s an amazing opportunity for us to deliver greater value and consequently increase prices, or even an amazing opportunity in these more turbulent times for customers who might be a bit more impacted financially to trade down. Listen, again, I come back to this agile leadership, a long answer short question, but ultimately, our absolute commitment is to deliver on top line growth, on taking up market share and delivering on bottom line performance, and that we will do.

Martijn Landry, Analyst, Stifel: Okay. Maybe just a follow-up to that, you know, would it be possible to do a bridge from from last year to your EBITDA margin guidance this year so that we can get maybe a better we can maybe better quantify all the moving parts?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes. I’m going to hand that one

: to JP. Yes. Good morning, Matti, and good morning, everyone. Thank you for the question. Obviously, in these volatile times where the rules of the game seem to change on a daily basis, I don’t think it would be right or responsible to provide more granularity because again, the rules of the game continue to change.

What we are comfortable saying, however, is we have some initiatives that are part of adjusted EBITDA margin that actually do help us on a year over year basis. One of those, and we’ve talked about that in the past, is the introduction of the USDC later this year. And we’ve talked in the past about the fact that this will be gross margin accretive. So that is something that definitely does help us. And then, of course, with the level of same store sales and with the growth that we’re expecting, there will also be, this year, some leveraging benefits in the business, just like you’ve noticed in fiscal year twenty twenty four.

So that’s also helpful. And again, there was a disclosure also in the press release where we said that there will be an incremental 4,000,000 to $5,000,000 headwind in fiscal year twenty twenty five as we became a public company, which we did not have to incur in fiscal year twenty twenty four because we were private for three quarters of the year and we have to offset that. And again, that is included in our guidance. So at this point in time, I think that the fact that we’re comfortable giving guidance on which we are confident as a management team already goes a long way. But when it comes to providing clarity between GM and adjusted SG and A as an example, I think this is something that we should consider doing in due course, but it would be premature today.

Ultimately, what we’re comfortable saying is that we will get there. We simply don’t know fully just yet what we’re solving for, so this is a prudent approach that we’ve chosen to take.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: But that much being said, I’m just going to add, I mean, we do know what we’re solving for here. I think what JP is referring to is, listen, you don’t know what’s happening in terms of, let’s say, duties and tariffs and so on and so forth. God knows how it all escalates and who knows where we are in a month from now. But that much being said, every single order that we have written, we have 100% confidence on that we will be respecting our own internal targets, which ultimately manifest and lead to the guidance that we’ve provided for. So yes, I just want to clarify that.

Martijn Landry, Analyst, Stifel: Okay, thank you for the color and best of luck.

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

Conference Operator: Next question will be from Irene Nattel at RBC. Please go ahead.

Irene Nattel, Analyst, RBC: Good morning, everyone. Just continuing with what I suspect will be will be a

: theme on the call. So

Irene Nattel, Analyst, RBC: you you you used the word agile, and clearly, as we went through the IPO process, the agility, of your supply chain of your business model is something that seem to be a competitive strength. Most of your relationships as we understand it have been in China. Obviously, China is now the most impacted. So can you walk us through how you are continuing to be to be agile here and, you know, and where you are right now in terms of your like, do you do you think that you can continue to use this sort of, let’s call it just in time or very rapid turnaround formula in an environment where things are changing so quickly and there’s so much pivoting involved?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Sure, I’ll take that. Good morning, Irene. Thank you for the question. Yes, the answer is yes. Agility wins, agility wins, agility wins.

I think that’s going to be the theme of today’s call. Listen, so in so far as yes, so for sure, the majority of our sourcing was out of China. And I will say that in very, very, very short order, it will be the minority of our sourcing. Now that much being said, every single order that we place, every single order, we’re almost starting from scratch, right? And ultimately, it’s about delivering the right value, right?

And so even believe it or not, even with tariffs where they are right here, right now as at today, there are many items where the best value still is out of China, right? And we have flexibility with suppliers, we have flexibility through the supply chain, so you could still end up underwriting a Chinese sourced order at this point. But that much being said, would probably have me more concerned than the actual tariff regime that we are in right here right now is more the geopolitical uncertainty and what escalation may happen, which is not a GRGD problem. I think it’s just it’s a global problem. Being well diversified, being able to pivot as quickly as we are, which we’d always said, we deal with, suppliers that have the distributed networks.

It’s not that they have a given factory, they actually have distributed networks that also mitigate country risk. So we’re taking advantage of that. But as a leader, I’m almost a little more concerned as to what how does this escalation play out and let’s plan for the worst and hope for the best, and we feel very comfortable as to where we’re going. But in broad strokes, yes, the agility, the speed to market, all that good stuff, we don’t see any material impact whatsoever. So that’s kind of good news.

Stacy, you want to add to that?

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Yeah, hi Irene, good morning. I would just add again the agility but also our speed to market. So as we spoke to in the past, delivering almost 80% of our goods in under fifteen weeks. To Andrew’s point, we’re presenting or pitching new complete orders for June right now. We’re not trying to take what we have and move it because of a tariff situation.

So we’re going into it headstrong with all confidence. I will say the product and sourcing team have been amazing over the last three weeks of volatility. That agility will continue and I think we will make our way through this unchartered times coming out on the positive end.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Think we’ll actually be I think here’s an opportunity for us to actually take market share because with this uncertainty in the market and consumer sentiment being what it is, it actually impacts fashion, believe it or not. It actually plays out in fashion. And our ability to actually respond from a fashion perspective, think is going to work out very, very well.

Irene Nattel, Analyst, RBC: That’s really helpful. Thank you. And just switching a little bit to that demand side of the equation. Certainly, your commentary around same store sales growth quarter to date indicates that you haven’t seen much, if any change in demand. But can you speak to whether just nature product categories, anything that we can hang our hats on around the consumer response to the spring summer offerings such as spring summer is in Canada at this time of year?

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Yeah, I’ll take that Irene. Again, thanks for the question. I would say yes, we typically set spring just like this year in December. So we’ve gotten very strong reads as to what, is performing and what is not. Categories that are really excelling right now continue to be fleece in the garage brand.

Their knit business is also very strong as well as denim. So we always liked the second quarter because we got a lot of small test reads in Q1, so that we can double down in Q2. Very positive reaction to the fashion the teams put out there, so very excited for the quarter to come. And on the dynamite front, again very strong Q4 in the holiday season, comping positive above last year, and that dress momentum that we won, again, we’re thinking we’re taking market share there has continued into Q1, very strong performance in dresses and in denim.

Conference Operator: Thanks so much.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: I would also add to that Irene. What’s interesting is and I saw some notes and many analysts are talking about consumer discretionary taking a hit, consumers are under pressure, there’s anxiety out there and so on and so forth, which I agree with, I agree with and I agree with. But as we think about this consumer discretionary, right, think of it as two bookends, right? At one end, on your left bookend is a jet ski, a car, your furniture, your I don’t know, whatever you call it, big ticket items that often require risk, maybe at times require debt financing and so on and so forth. At the complete other end of consumer discretionary is apparel.

Apparel is maybe a single digit as a percent contribution to consumer discretionary, a single digit, maybe 6%, seven %, right? And in these recessionary times, often enough, acute $30 top that puts a big smile on your face is sometimes just what it takes to get you through the week. So that’s the area we trade in, in consumer discretionary. And consequently, I got to tell you, I actually do like these times. I don’t have an issue with it.

As a matter of fact, we see it as an opportunity to take market share, right? The red lipstick phenomenon.

: I totally get it. Thank you.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Thanks.

Conference Operator: Thank you. Ladies and gentlemen, at this time we ask that out of consideration to other callers on the line today to please limit yourself to one question at a time. Thank you. Next question will be from Vishal Fadar at National Bank. Please go ahead.

Vishal Fadar, Analyst, National Bank: Hi, thanks for taking my questions. With respect to the same store sales guidance that you provided and your comments that pricing will be one of the tools and you anticipate it being twice the level of the industry inflation. With the tariffs that are currently known, don’t you anticipate that to be higher than don’t you anticipate the pricing requirements to be higher than the level of the same store sales growth guidance that you’ve given at this point? And if so, is the implication that units will and traffic will decline in the year ahead?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, hi, good question. Listen, again, sure, there’s no if ands or buts, right? These tariffs, should they prove to be sticky in The U. S. And I’m going to say, it’s actually even more than The U.

S, it’s actually globally. These end up they really disrupt supply chains, right? And so consequently, they are inflationary. And so I believe that there will be broad based inflation, so if we raise twice the rate of inflation, who knows where that ultimately goes. This is listen, I’m not sure, but I can tell you right here, right now, we have been raising our prices as we have historically.

We’re still seeing growth in traffic. I think that you can accomplish both.

Vishal Fadar, Analyst, National Bank: Thank you.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: I mean, it’s about taking market share ultimately.

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

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Thanks very much and I echo my congratulations on the results. Andrew, maybe you can square up a couple of things here. So how quickly can you fix your production and maybe square up how you said it could become the minority coming from China. Where would you ship this to as it’s fluid with tariffs and whether it be Vietnam, Cambodia, Bangladesh? And I guess how many weeks of inventory have you in The U.

S. That are currently not subject to tariffs?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: That’s a lot of questions in one.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Question with three parts.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, one question with three parts. Okay. What was the first one? I just want

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite0: to know how quickly can you shift it?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, so in every day we’re writing orders, so every day we’re writing it, I would say probably Stacy spoke about the majority being under fifteen weeks, but I’ll say around these times, would say that it could be at least a third of our orders are sub eight weeks, right? So we’re putting out orders today, right? And again, we’re dealing with distributed network. So we are it’s happening real time, real time where we’re moving from one country another. So it’s very, very fluid and it’s very immediate.

And then so far as the tariffs are just part of the equation, right? There’s a lot that goes into figuring out value beyond tariffs, right, including the actual costs, right? And what does the vendor want to do or not do, right? There’s a lot of variables that kind of go into getting to a landed U. S.

Price, right? But yes. Sorry, what was the second part?

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite0: It’s a clue.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Are we going? Country? Yeah. So Bangladesh, Cambodia, Vietnam, in that order.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite0: Okay. And then the final part of that question, sorry to put it into parts, but how many weeks of inventory do you have that are not subject to tariffs for The U. S. Right now?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes, I don’t I mean, we’re not I don’t think we’re going to get into that. But listen, I mean, not much, not that much at the end of the day. I mean, in that we turn our inventory as stated 8.5 times a year, you can work the math backwards. We don’t have that much.

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

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

Conference Operator: Next question will be from Stephen MacLeod at BMO Capital Markets. Please go ahead.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Thank you. Good morning, everyone. Thanks for all the great color. I’ll shift gears just a little bit away from tariffs, but not totally. Just wondering if you can give a little bit of color just around, the incremental news on USDC and, sort of how you see that unfolding in terms of it going live and how that is expected to impact your distribution efficiencies going forward.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Good morning. Yeah, I’ll take that really quickly. We are working as we’ve spoken in past to open a USDC towards the July year. We know it will help us with speed to consumer and then also just our ability to have inventory in The U. S.

We can leverage the difference of sailing between one country to another.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: I’d also add to that. But there’s just listen, part it is just also mitigating risk, right? As most of you probably know, we only have one distribution center for Group Dynamite is located here in Montreal. Having a distribution center in The U. S.

Allows for, call it, redundancy, no different than you would have computer redundancy. So we would have distribution redundancy. We would be able to ship from either DC across the border. So The U. S.

DC would be able to ship to Canada and the Canadian DC obviously as it currently does would ship into The U. So that’s really nice in the spirit of mitigating risk, geopolitical things that might be going on or that might happen. And of course, there’s advantages. There’s even advantages, again, even in terms of efficiency on the sourcing of inventory, right? So it’s just all what it is.

It’s a lot more efficient, and I’ll say, fiscally efficient, if you will, to import directly into The USA versus how we currently do it through Canada, right? And also so there’s some opportunities, if you will, that we will end up taking advantage of that we’re not going to like, you know, kind of articulate line item by line item by line item, ultimately all together giving us the confidence in the guidance.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite1: That’s great. Thanks so much.

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

Conference Operator: Question will be from Luke Hannan at Canaccord. Please go ahead.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite1: Thanks. Good morning and congratulations on your results. One question, I promise, but it is two parts, two quick parts. The first part is on the CapEx, I just want to confirm, is it still roughly $2,000,000 or less per store that you’re targeting as far as average investments? And then secondly, can you help frame up for us what’s your rough sense of the square footage growth that you’ll get for the year ahead when we include the net new openings as well as some of the relocations?

: Yes, that’s a very good question. Thank you for the question. So the first question, the answer is yes. There is no meaningful change to the average CapEx requirement per new store opening. So given that all fiscal twenty twenty five store openings will be garage locations in The U.

S, if you were to use approximately US1 million dollars per store for each new store opening, I think you would be in the right ZIP code. And then on the second part of the question, as we think about the 18 to 20 gross new openings this year, they should all be, in terms of square footage aligned with the average of the chain, so somewhere between say 507,000 square feet on average. And then the nine to 10 closures that we’re actually guiding to would be around the same thing in terms of square footage, talking generally of course. And then the 10 to 15 relocations or renovations, most of those would not have a meaningful impact on square footage. The only exception will be the three new Dynamite three point zero locations, which will have a bigger square footage than what they have today.

So a small impact, but nothing meaningful from a full GDI consolidated standpoint. I hope that answers your question properly.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite1: It does. Thank you very much.

: You’re welcome.

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

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite2: Good morning, and thank you for taking our question. I was hoping you could speak to your playbook that you would utilize should the macro environment worsen. Andrew, what levers can you pull to drive stronger sales? And would you consider a more muted pricing strategy if traffic should worsen? And then for J.

P, how should we be thinking about the fixed versus variable component to your margin structure? And what levers could you pull to maintain margins if top line traffic were to worsen, particularly in The United States?

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes. So what levers can we pull? I mean, there’s lots of levers in terms of mitigating of costs, right? Like we’ve set the business up to grow. And so consequently, we’re running a pretty expensive business in terms of cost structure, SG and A.

So of course, there’s always opportunity on the cost side, lots of opportunity there as a matter of fact. But honestly, that’s we’re focused on the mid and the long term and ultimately we’re going to grow this puppy. In so far as listen, I would say, we have way more we’re trading in the best assets, right? 90% our earnings are coming from what I call investment grade shopping centers that have been opened, including those who that have been opened over the last five years. We’re so well positioned from a real estate standpoint.

And there’s this continued flight to quality. So this is not going to abate anytime soon. Like there’s some often enough, we’re compared to, I don’t know, some other players that have hundreds and hundreds of stores and kind of like legacy retailers. They don’t operate in our environments. They’re operating in what we call tier five environments that are losing market share, right?

So we’re in these environments that are taking market share, where footfall is growing, maybe it’ll slow down, arguably maybe these consumers are not going to be spending on the bigger ticket discretionary items and honestly, they may not go on that trip and they may just go to the mall, I don’t know, or go do a little retail therapy and buy a cute red top and so on and so forth. So I just really as far as I’m concerned, what we can control is our product, our product development, we need to respond to the consumer where she is today, make her happy, surprise and delight her, and that’s where our opportunity is. And with that,

: we take market share. We see it. We drop in a collection that’s super emotional and they’ll sell four times what we thought and we could drop in a collection that’s not so emotional and sell half of what we thought. So our lever is doubling down on innovation, design and agility, kind of what we’ve been doing, just double down on it. And to answer the second part of your question, as we think about our cost base, a very large majority of our costs, particularly in the post IFRS world, if you look at EBITDA, which is obviously a very key metric, the very vast majority costs are variable and we control them in a very tight manner.

So I’ll give you a couple of examples. Store labor. Obviously, labor is driven by sales and we are very agile in the way we work with our associates and stores to make sure that we have the right amount of hours with the projected sales. So very agile and that’s obviously a key component of SG and A. The same goes with our product cost, which is obviously another significant element.

It’s directly driven to revenue. And then you’ve got items like freight or marketing, which we typically work as a percentage of sales with very small variances allowed. So ultimately, what I’m trying to say is we have a very high degree of comfort and confidence in terms of how we manage our variable costs, which are definitely the lion’s share of our costs above EBITDA in this post IFRS world.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite2: Great. Thanks so much. I’ll pass it

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: on. Next

Conference Operator: question will be from Adrienne Yih at Barclays. Please go ahead.

: Good morning. Let me add my congratulations. What a great way to come out of the box for the holiday. Andrew, I wanted to ask you more on a philosophical standpoint. Your model is so inventory advantaged to to chase demand.

So I guess my question is twofold. Clarification on when would you raise prices? Would you want to be a follower to see what other people do and therefore still maintain that value, therefore gaining market share? Or are you kind of preemptively kind of moving toward this price increase? And just to clarify, what is two times inflation mean?

Is that core inflation in The US or is that kind of what you see in the apparel sector? Thank you very much. And then for JP, a quick question on, are you actually buying right now with that 10% China in place? And we’ve seen other companies rapidly move out of China within like a quarter and move double digit into other places because they’re using Lianfeng or whomever. Is that within your grasp as well?

Thank you.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yeah, timing. Okay, so regarding thanks for the question. I like that these one questions with like so many parts. Sorry

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite0: about that.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: Yes. No worries. All good, all good, all good. So listen, so with regard to pricing, I’m like quite frankly, I don’t want to sound cocky or anything like that or unempathetic or whatnot. But ultimately, listen, we kind of beat by our own drummers and we’ve kind of always done our own thing.

You’ll remember in the prospectus, we had we rose our prices increased by 12% CAGR, I think over a four year strength. That was way, way above inflation. I don’t even know what the multiple was over inflation or apparel inflation. So we kind of like to do our own thing. And that’s because, listen, we really do drive this luxury inspired business model.

When I think about this business, I’m really thinking about I’m thinking about like the best in class. I’m thinking about Intitex. I’m thinking about the luxury players and call it that artful balance between art and science, right? Into Texas fantastic engineers, derisk fashion, that’s what we do. And listen from a marketing playbook, you’ve got to admire what the luxury players do.

So we play at that intersection. And so consequently, yes, that gives us currency to keep raising prices at a rate that’s faster inflation. If I had to say, if I had to pick a target, I’d probably say our subset call it apparel inflation. So twice the rate of the apparel inflation, right? Not necessarily core.

And then the second part was sorry, what was the second part? Just address the Good, good, good, good. Does that answer your question? Does that make sense?

: Yeah, totally makes sense. The second part was just well, no, actually, you’ve encompassed it in your answer. The second part was for JP. It was the ability to shift sourcing in real time.

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Yeah, I’ll take that. But yes, our ability to move, as Andrew said, we’re writing orders daily. We’re looking at the best case scenario with what’s handed to us as far as the current status of tariffs, what that might be. But still writing today for June.

Andrew Letfie, Chief Executive Officer and Chair of the Board, Group Dynamite: I would just add to that, this idea of inflation and like what’s going to be, listen, I mean, are all like you think about, let’s say global logistics, supply chains and all that kind of stuff. If you recall, like in COVID, like what happened, right? So there was like all these disruptions, right, to supply chain because countries shut down, they reopened, this one was this, that one that. And so what was the ramification as a result of like just imbalance to supply demand, prices went up. We had inflation and it took a long time to work that inflation through.

I got to tell you, I think that’s what’s going to be again. So this idea of systemic inflation that’s going to like last for a minute or for a year or it’s like a little short term bump, like I don’t see it. I mean you think about like, I don’t know, you think about 90% of like toys at Christmas, Barbie, think Barbie and Ken are manufactured in China. Like how do you move that amount of production to other countries? They need to have capacity to be able to handle it.

And even if they did handle it, supply demand imbalance being what it is, no different than in our world, I don’t know if the price is going to be the same. So invariably, as a result of all this supply chain disruption, right, will see broad based inflation at least in merchandise that is produced offshore regardless of the country. And yes, I mean and quite frankly, I don’t mind inflation. Often enough, say inflation is your friend, especially if you’re sitting with hard assets. I think public equities are hard assets.

So I actually don’t mind these volatile times. I don’t mind inflation and being agile and it creates opportunity. And we outclass all our we follow our certain peer group, what we call our best our these higher growth peers that operate in USA and Canada, there’s like three of them that we track and we outperform all three. So I think it’s an amazing opportunity to continue our leadership role even against these peers. Hopefully the multiple will show up one day, but

: Very helpful. That’s what was.

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

Conference Operator: question will be from John Zamparo at Scotiabank. Please go ahead.

Alex Limousani, Manager, Investor Relations and Corporate Finance, Group Dynamite0: I wanted to follow-up on the supply chain comments from earlier. When you talk about shifting supply, is that referring to finding new suppliers in those different countries or having your existing suppliers move their operations? Just broadly given how fluid this situation is, what’s the willingness or desire from the suppliers you’re speaking to to redomicile or invest outside of China?

Stacy Beaver, President and Chief Operating Officer, Group Dynamite: Yeah, low risk. We would say 80 is existing suppliers, 20% we may have to find new. But if you guys recall in our prior conversations, we have long standing tenured relationships with our vendors, they’ve been very supportive over this time period. Renegotiating also shifting out of China into Bangladesh, out of China into Cambodia, wherever it may make the most sense for the garment. So no, think again that’s why I say I think we’re solving a different problem than most because one, our vendors can shift for us and this wasn’t like a new project we started this month.

It was always on the path to de risk our penetration into China. It just got escalated, but the path was underway. And then secondly, as we’re placing orders so close in, we can you know, go to a new vendor with a brand new order and renegotiate or negotiate from scratch versus trying to resource fabric, trim some materials to make the garment.

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

Conference Operator: And at this time, ladies and gentlemen, we have no further questions registered, which brings us to the end of today’s conference. Thank you for attending. You may now disconnect your lines. Have a good day.

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