GROUPE DYNAMITE REPORTS STRONG SECOND QUARTER FISCAL 2026 RESULTS AS BRAND HEAT AND TOP-TIER LOCATIONS CONTINUE TO DRIVE GROWTH
GROUPE DYNAMITE REPORTS STRONG SECOND QUARTER FISCAL 2026 RESULTS AS BRAND HEAT AND TOP-TIER LOCATIONS CONTINUE TO DRIVE GROWTH |
| [10-September-2026] |
MONTRÉAL, Sept. 10, 2026 /CNW/ -- Groupe Dynamite Inc. ("Groupe Dynamite" or the "Company") (TSX: GRGD) today reported its financial results for the fiscal year 2026's second quarter ended August 1, 2026.
"Our second quarter results demonstrate the strength of our luxury-inspired operating model and our ability to continue delivering profitable growth. Comparable store sales grew 10.3%, total revenue increased 29.8%, gross margin expanded to 68.8% and adjusted EBITDA margin reached 44.3%, in all cases excluding the impact of duty refunds. The continued expansion of gross margin and adjusted EBITDA demonstrates that the economics of our model are strengthening as we scale. We have built highly coveted global brands with exceptional unit economics, disciplined inventory management and attractive returns on capital, supported by a growth engine we have engineered over decades that continues to generate profitable growth. We remain focused on creating long-term value as we scale Groupe Dynamite with discipline," said Andrew Lutfy, Chief Executive Officer and Chair of the Board. "Q2 demonstrated the agility of our operating model and the strength of our execution. Combined with strong brand heat across GARAGE and DYNAMITE, this helped us build momentum throughout the quarter and deliver strong sales performance. Early in the quarter, we identified an opportunity to accelerate newness within our assortments, and the speed of our luxury-inspired model allowed us to respond quickly and make targeted in-season adjustments. This enabled us to deliver products that resonated strongly with our customers and reinforced their connection with our brands. That customer response is translating into increasing productivity across our store network, with sales per square foot continuing to improve as we optimize our fleet and elevate the in-store experience. At the same time, we are strengthening the infrastructure supporting our growth, with our U.S. distribution center delivering greater efficiency as we scale. We continue to expand our presence across the United States and internationally, including the UK, and are extending our reach through shipping to nine additional countries," added Stacie Beaver, President and Chief Operating Officer. Fiscal 2026 Second Quarter Highlights
Ratios and Recent Developments
Outlook The table below outlines the Company's revised financial annual guidance ranges for Fiscal 2026 replacing our previously disclosed guidance:
Our achievement of these targets is subject to several risks and uncertainties, including the following:(1)
Recent events On September 9, 2026, the Second Amended and Restated Credit Agreement was further amended, extending the maturity date by two years to May 10, 2030. Second Quarter Fiscal 2026 Financial Results Revenue Total revenue for Q2 2026 increased by $97.2 million or 29.8% compared to Q2 2025. This growth was due to a 10.3% increase in comparable store sales (12.3% on a constant currency basis) and contributions from new stores. Online revenue for Q2 2026 was $61.4 million, representing an increase of $14.7 million or 31.5% compared to Q2 2025. Cost of sales and gross profit Gross profit for Q2 2026 increased by $84.1 million or 40.5% compared to Q2 2025, with gross margin increasing by 520 basis points to 68.8%. This increase is attributable to the 29.8% revenue growth compared to the relatively lower increase in cost of sales of 11.1% which is due to lower tariffs, controlled merchandise cost increases and lower logistics costs. Selling, general and administrative expenses SG&A for Q2 2026 increased by $19.1 million or 21.8% compared to Q2 2025. This increase was primarily driven by the Company's growing scale and activities, leading to a $11.7 million increase in wages and salaries, including share-based compensation and their related benefits. Selling and marketing expenses increased by $4.8 million compared to Q2 2025, due to higher investment to support business growth. Administrative expenses also increased by $2.6 million compared to Q2 2025, reflecting higher operating costs, particularly related to investments in information technology and software. As a percentage of sales, SG&A decreased by 170 basis points from 26.9% in Q2 2025 to 25.2% in Q2 2026. Operating income and adjusted EBITDA Operating income for Q2 2026 increased by $58.9 million or 60.5% to reach $156.2 million compared to $97.3 million in Q2 2025. Similarly, adjusted EBITDA for Q2 2026 increased by $67.4 million or 55.9% to reach $187.9 million compared to $120.5 million in Q2 2025. The adjusted EBITDA margin improved by 740 basis points to 44.3% compared to 36.9% in Q2 2025. This performance results from the combination of both a 520 basis points improvement in gross margin and a reduction of 210 basis points in adjusted SG&A as a percentage of sales, which decreased to 24.6% in Q2 2026 from 26.7% in Q2 2025. Net earnings and adjusted net earnings Net earnings for Q2 2026 increased by $49.5 million or 77.5% compared to Q2 2025. This growth was mainly driven by higher revenue, which led to increased gross profit, partially offset by higher SG&A and increased depreciation and amortization. Net earnings also benefited from a $9.4 million recovery of tariff refund claims related to International Emergency Economic Powers Act ("IEEPA") tariff refunds under U.S. Customs and Border Protection's ("CBP") refund process. Adjusted net earnings(1) for Q2 2026, which exclude the after-tax impact of the $9.4 million recovery related to tariff refund claims, increased by $44.1 million or 68.1% compared to Q2 2025. Working capital As of August 1, 2026, we have maintained a strong inventory turnover ratio of 7.72x, compared to 7.25x as of August 2, 2025, with current assets of $203.5 million (including $31.9 million in cash) and current liabilities of $287.7 million. Inventory continues to be minimized through agile product development and strategic sourcing, driven by our high open-to-buy ratio. Free cash flow Free cash flow for Q2 2026 increased by $36.9 million to $109.5 million, up from $72.6 million in Q2 2025. This increase was due to higher net earnings, partially offset by a $15.6 million increase in CAPEX. Net leverage ratio The Company's net leverage ratio increased to 0.89x compared to 0.79x last year. This increase is primarily due to higher net debt, partially offset by higher adjusted EBITDA. At the end of Q2 2026, the Company has approximately $31.9 million in cash and a $312.0 million credit facility, providing flexibility to drive growth, invest in strategic initiatives, manage market volatility and return excess cash to shareholders. Return metrics ROA of 38.9% for Q2 2026 has increased from the ROA of 24.1% for Q2 2025. This improvement indicates a significant boost in the Company's ability to leverage its assets more effectively than in previous periods. For Q2 2026, our ROCE reached 73.5%, compared to 45.0% in Q2 2025, highlighting the effectiveness of our recent strategies and investments. The slower growth of average capital employed compared to adjusted operating income reflects strong capital utilization, enabling the generation of operating income.
Selected Financial Information
Second quarter results conference call Groupe Dynamite will hold a conference call to discuss its Q2 2026 results today, September 10, 2026, at 10:30 a.m. (ET), followed by a question-and-answer period for financial analysts. Other interested parties may participate in the call on a listen-only basis via live audio webcast, accessible through the "Events & Presentations" tab on Groupe Dynamite's website at https://investors.groupedynamite.com/. About Groupe Dynamite Inc. Groupe Dynamite Inc. (TSX: GRGD) is a growth-oriented company striving for excellence in the fashion industry. Operating retail stores and digital experiences under two complementary and spirited banners—GARAGE and DYNAMITE—we offer a wide range of women's fashion apparel, catering to the needs of Generation Z and Millennials. With a growing international presence, we operate across Canada and the United States, and more recently expanded into the United Kingdom, advancing our global footprint. With leading key operating metrics and a commitment to innovation and disciplined execution, we are proud to continue our ambitious growth plans. Guided by our mission, "Empowering YOU to be YOU", we are a values-led, inclusive organization committed to inspiring confidence and self-expression. Proudly rooted in the chic and vibrant city of Montréal, our culture, values and distinct brands position us to shape the future of fashion while attracting and inspiring the next generation of leaders and creators. Our ownership-mentality and entrepreneurial mindset is reflected in our Shared Success Program, through which all our 7,200 employees have ownership exposure. This alignment of interests and values fosters collaboration, fuels innovation, and creates meaningful long-term value for our team and stakeholders alike. Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics This press release makes reference to certain non-IFRS measures, including non-IFRS financial measures, non-IFRS ratios, supplementary financial measures and certain retail industry metrics. These measures are not recognized measures under IFRS Accounting Standards and do not have a standardized meaning prescribed by IFRS Accounting Standards and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS Accounting Standards measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS Accounting Standards. In this press release, we use non-IFRS financial measures including "EBITDA", "adjusted EBITDA", "adjusted EBITDA (after rent equivalent expense)", "free cash flow", "adjusted net earnings" and "adjusted net earnings per share" and non-IFRS ratios including "EBITDA margin", "adjusted EBITDA margin", "adjusted EBITDA (after rent equivalent expense) margin", "adjusted SG&A as a percentage of sales", "comparable store sales on a constant currency basis", "return on assets", "return on capital employed" and "net leverage ratio". We also use supplementary financial measures including "comparable store sales", "inventory turnover", "retail sales per square foot", "gross margin", "SG&A as a percentage of sales", "CAPEX" and other operating metrics commonly used in the retail industry. Additional details for these non-IFRS and other financial measures, which are incorporated by reference herein, can be found in our Management's Discussion & Analysis for Q2 2026 under the section "Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics", which is posted on our website at https://groupedynamite.com/, and filed on SEDAR+ at www.sedarplus.ca. Reconciliations for each non-IFRS financial measure to the most directly comparable IFRS Accounting Standards measures are provided below. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. Non-IFRS Financial Measures and Non-IFRS Ratios Earnings before interests, taxes, depreciation, amortization ("EBITDA"), adjusted EBITDA and adjusted EBITDA (after rent equivalent expense) EBITDA margin, adjusted EBITDA margin and adjusted EBITDA (after rent equivalent expense) margin
Net leverage ratio
Forward-Looking Statements This press release contains forward-looking information within the meaning of applicable Canadian securities legislation. Forward-looking information in this press release may relate to our future financial outlook (including our revised guidance for Fiscal 2026) and anticipated events or results and may include (without limitation) statements relating to: our ability to raise performance and enhance long-term shareholder value, strengthen brand experiences and positioning, raise brand awareness, and deepen our community connections; the continued ramp-up of our U.S. distribution center and its expected operational impact; our ability to continue creating accessible fashion and delivering on-trend products; the planned expansion and optimization of our store footprint and the achievements that can be derived therefrom; our expectations regarding the reinvestment in our business, the return of excess cash to shareholders, our financial performance, financial position and use of liquidity; and our future growth rates and growth strategies. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding possible future events or circumstances. Forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Our assumptions underpinning forward-looking information include, but are not limited to, the following: expected short-, medium- and long-term discretionary spending and overall economic trends; successfully maintaining and enhancing our brands; marketing efforts, store renovations and store expansions will be successful and drive our revenue; maintaining our supplier relationships and a steady, cost-effective supply of inventories; successfully managing expenses and driving gross margin improvements; growing our e-commerce business and making headway in our international expansion efforts; successfully retaining key personnel including our Chief Executive Officer; the absence of material changes to taxes, duties, tariffs and interest rates; the absence of further material disruptions in the international trade; the economy generally; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated, intended or implied. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Forward-looking information is also subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Risks and uncertainties are discussed in the "Risk Factors" section of the Company's annual information form for Fiscal 2025 (the "AIF") which is incorporated by reference into this document. A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The risks, uncertainties, opinions, estimates and assumptions referred to elsewhere in this press release should be considered carefully by readers. Accordingly, readers should not place undue reliance on forward-looking information. To the extent any forward-looking information in this press release constitutes future-oriented financial information or financial outlook, within the meaning of applicable Canadian securities legislation, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlook, as with forward-looking information generally, are based on current assumptions and subject to risks, uncertainties and other factors. Furthermore, the forward-looking information contained in this press release represents our expectations as of the date of this press release (or as of the date it is otherwise stated to be made) and is subject to change after such date. We disclaim any intention, obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities legislation. All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements. 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Company Codes: Toronto:GRGD | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
