Groupe Dynamite raises full-year revenue growth guidance

On Thursday, Groupe Dynamite (TSX: GRGD ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

S. and significant contributions from new store openings. 5%, indicating confidence in continued strong performance despite macroeconomic uncertainties. Strategic initiatives include brand premiumization, a focus on high-quality real estate, a pull inventory model that maximizes productivity, and expansion into new international markets through digital and physical store openings.

5% on a trailing twelve-month basis. Management emphasized the importance of a culture-led organization, highlighting the role of their people in maintaining agility and resilience, and noted that customer engagement and lifetime value are increasing. Full Transcript OPERATOR Good morning, ladies and gentlemen, and welcome to Groupe Dynamite's second quarter fiscal 2026 results conference call. At this time, all lines are in listen-only mode, and the conference is being recorded.

Following management's prepared remarks, there will be a question-and-answer session with financial analysts. If at any time during the call you require immediate assistance, please press star zero for the operator. P. Lachance, Chief Financial Officer.

This morning, Groupe Dynamite released its financial results for the 13-week period ended August 1, 2026. The press release and related disclosure documents are available in the Investors section of the Company's website and on SEDAR+. A replay of the webcast will be available shortly after the conclusion of the call. Before management begins, please refer to Slide 2 of the Q2 2026 Investor Presentation for the Company's full statement on forward-looking information and to the Appendix for a reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures.

The call will now be turned over to the Chief Executive Officer and Chair of the Board, Andrew Lutfy. Please go ahead. Andrew Lutfy, Chief Executive Officer and Chair of the Board Good morning, everyone, and thank you for joining us. Q2 was another strong quarter for Groupe Dynamite.

We grew sales, expanded profitability, increased earnings and free cash flow, and raised all three guidance metrics. But more important than any single quarter is the trajectory behind it. For six consecutive years, we have progressively improved key brand and financial metrics across the business. That's not luck.

There's no such thing as six years of overnight success, and importantly, that performance has continued through very different economic conditions, supply chain disruptions, tariffs, geopolitical uncertainty, and rapidly changing consumer behavior. That gives us increasing confidence that what we are seeing is not simply a period of strong performance. It's the result of a business model that has been deliberately built, tested, and refined over many years. Our luxury-inspired business model is working, and the premiumization of our brands is strengthening.

As we enter the second half, we will lap two of the strongest quarters in our history. We knew that when we built the plan. So I see Q2 as another proof point in a six-year progression and further validation that our model and our brands continue to strengthen. When we talk about our luxury-inspired business model, it starts with the deliberate premiumization of our brands.

Garage and Dynamite are fundamentally two different brands than they were six years ago and even two years ago. We have elevated every customer touchpoint: the product, the construction, the categories we compete in, the real estate, and ultimately the entire brand experience. Our AUR has roughly doubled since 2019, and we're not charging twice as much for the same white T-shirt. We have built a more elevated proposition, and our brand has followed.

That is the difference between raising prices and building brand equity, which creates real pricing power. And that power comes from the emotional equity we have built through an obsession with understanding our customer and staying culturally relevant. Another important part of the model is inventory. We view inventory as capital allocation.

We intentionally operate lean and engineer scarcity into the model. In fashion, having too much of the wrong product is far more expensive than occasionally having too little of the right product. But scarcity alone isn't enough. We operate a pull inventory model.

Then we let the customer decide where that inventory goes. Our highest-productivity stores pull the hardest against global inventory because that is where demand and full-price sell-through are strongest. Our objective isn't to maximize inventory in every store. It's to maximize the productivity and gross margin dollars network-wide.

That drives stronger full-price selling, fewer markdowns, faster inventory turns, and greater agility. That is how we take the fashion risk out of fashion. Real estate is another part of that same equation. Our philosophy is simple: the smallest house on the best street.

Today, our investment-grade real estate—Tier 1 through 3—represents approximately 72% of sales. In 2017, it was roughly 28. Our highest-quality stores don't simply generate greater volumes. They turn inventory materially faster than our lower-tier locations.

So as we shift more sales towards investment-grade real estate, we aren't simply improving the quality of our stores. We are improving the productivity of the entire business. Over time, that creates a higher-quality network and continuously raises the performance standards across the portfolio. It's a positive flywheel effect.

Canada and the United States represent different stages of the same story, shaped by Garage's significant evolution. Historically a denim- and woven-led casual brand, Garage has become a highly coveted, LA-inspired lifestyle and activewear brand. That stronger positioning has also changed where the assortment resonates most. Climate and culture influence demand, but real estate is equally important.

, with a greater share of its mature fleet outside the investment-grade locations we increasingly prioritize. Our strongest performance is concentrated in premium markets where the customer and the brand and the real estate are best aligned. Our pull inventory model reinforces that dynamic by directing product towards the strongest demand and full-price sell-through. S.

presents a very different opportunity: substantially lower penetration, significant investment-grade real estate white space, and a customer and climate that align well with Garage's evolved proposition. Our opportunity is to scale that success with discipline, opening the right stores in the right markets and directing inventory towards the strongest demand. 's runway, not to mention the UK. Ultimately, none of this is possible without our people.

Our people are our true superpower. We are a genuinely culture-led organization. And that culture is revealed most clearly when conditions become difficult. In moments of uncertainty or disruption, our people draw on shared values such as ownership, empathy, curiosity, and passion to move with urgency, support one another, and find creative solutions.

These values are not words on a wall. They shape how we think, act, and lead. That is the foundation of our resilience. And because so many of our people are also shareholders, that ownership mindset is deeply authentic.

People think and act like owners because they are owners. A combination of culture, ownership, and talent is extraordinary and quite impossible to replicate. It is not simply our competitive advantage; it is the force that will continue to carry Groupe Dynamite forward. When I step back from Q2, the message is simple.

We have made deliberate choices for six years: brand elevation over promotion; investment-grade real estate over growth at any cost; scarcity and agility over excess inventory; and a culture of ownership over bureaucracy. Those choices are working. Our brands are stronger, our network is more productive, our inventory turns faster, our economics continue to improve, and our runway remains significant. Q2 is another proof point.

Our luxury-inspired business model is working. We're looking at a company that has spent six years getting better and still has a ways to go. And with that, I will hand it over to Stacie. Stacie Beaver, President and COO Thank you, Andrew, and good morning, everyone.

Andrew spoke about the strength of the model. What I want to focus on is how that model translated into execution in Q2. The story of the quarter was our ability to see, respond, and execute quickly. We entered Q2 with an opportunity to bring greater newness into our assortments.

We recognized it early, acted decisively, and used the speed of our operating model to adjust product in season. The response was clear. Sales strengthened throughout the quarter, and we exited Q2 with good momentum. That is an important distinction about Groupe Dynamite.

We don't have to make every decision months in advance and hope the customer agrees with us. We stay close to her, read the signals, and move. Our advantage is not simply speed; it is speed with precision. And increasingly, we have the infrastructure to support that speed at greater scale.

S. distribution center is reducing last-mile friction and strengthening our ability to move inventory closer to where demand is strongest. Turning to stores, our physical fleet remains one of our most powerful customer acquisition vehicles and the fullest expression of our brands. 9% year over year.

That productivity matters because our strategy is not simply to operate more stores; it is to operate better stores and better locations, generating greater productivity. S. and UK. Early results from the UK openings of Bluewater Centre and Oxford Street are very encouraging, and we are already applying what we are learning to inventory allocation and localized marketing.

That is how we intend to scale internationally: learn quickly, localize intelligently, and maintain the discipline that has driven our North American success. 5% in Q2, supported by healthy growth in both traffic and conversion. But we see digital as much more than another transaction channel. It is increasingly the connective tissue of our customer experience.

Our roadmap is focused on greater personalization, removing friction, stronger social integration, and extending our brands to customers well beyond our physical footprint. We recently expanded shipping to nine additional countries across Europe and Australia, meaningfully increasing our global reach. And with Henry Spear joining as Chief Customer Officer, we now have dedicated leadership focused on personalization, friction, and increasing customer lifetime value. Now to the most important driver of our business: product.

Our teams are staying extremely close to culture and, equally importantly, to the customer signals that tell us where to move next. At Garage, our off-duty lifestyle continues to perform strongly. Our Wild Tempo campaign with Honey Balenciaga generated significant brand heat, while our Green Envy drop was a great example of the model working in real time. Our community asked for it, our teams listened, and we responded.

At Dynamite, Q2 delivered strong momentum led by dresses and supported by culturally relevant brand activations. From inserting Dynamite into the Montreal Grand Prix conversation to an influencer self-shot campaign in the South of France, we continue to elevate how and where the brand shows up. The objective is not simply awareness; it is to translate brand heat into product demand, full-price selling, and stronger customer relationships. And that brings me to the customer.

Across the business, transactions grew in both stores and online. Our active customer base continued to expand year over year, supported by stronger retention and increasing value per customer. And importantly, as customers engage with us across channels, we are seeing growth in their average customer lifetime value. That is ultimately what omnichannel should do: not simply move a transaction from one channel to another, but create a more valuable relationship with the customer.

As we enter the second half, our priorities are clear: stay close to the customer, move quickly on product, increase the productivity of every customer touchpoint, and scale without compromising the discipline that got us here. We have strong momentum, increasingly productive stores, a growing digital business, and significant white space ahead of us. But none of that happens without our people. I want to thank our field associates and our head office employees.

Your ownership, curiosity, agility, and passion are what allow us to operate at this pace and bring Garage and Dynamite to life every day. With that, I'll turn it over to JP to walk you through the financial results. Andrew Lutfy, Chief Executive Officer and Chair of the Board Thank you, thank you Stacie, and good morning everyone. 6 million.

3% on a constant currency basis. 6% in the first quarter. We also had meaningful contributions from stores opened over the past year, including three locations in the UK, and continued momentum across both banners. 6 million.

9% on a fleet that is 13 stores smaller. 1%. 9 million in revenue in the quarter. Our Canadian business is mature.

The United States is earlier in its penetration and the UK earlier still. So we expect brick and mortar growth to come primarily from the United States and, in due course, from the UK. That is purposeful. Those are the markets where we are investing, where we are opening stores, where our most profitable stores sit, and where we are building momentum.

4 million, reflecting continued strength in the channel with balanced growth across both stores and e-commerce. As a reminder, our long-term target for online revenue is 25% of total revenue. As we continue to generate momentum in brick and mortar and from new stores, online penetration has to grow faster still. We aim to add roughly one to one and a half percentage points of online penetration a year toward that 25% goal.

5%. 6 million. 8%. 4 million dollar recovery of tariff refund claims, which appears as its own line on the P&L.

Most of that improvement is the lapping of the elevated tariffs that hit the first half of last year. S. distribution center. Taken together, those are structural advantages rather than cyclical ones.

Markdowns stayed at historically low levels. Roughly 95% of gross sales go at full price. 25 times last year. We chased more than half our receipts in season.

That is how we read demand and react. 7 million. Wages and salaries were most of the increase. Selling and marketing rose to support growth.

Admin costs rose on IT and software as a percentage of sales. 7%. That is operating leverage with revenue scaling faster than SG&A. 2 million.

3%, our highest since we began reporting under IFRS. That is an improvement of 740 basis points, underscoring the strength and scalability of our luxury-inspired business model. That strength flowed through to earnings. 4 million.

9 million. 96. 6 million last year. 89 times.

9 million of cash and 312 million available under our credit facilities.