Gross margin(1) reached 66.1%, the highest in over 3 years
Our agile, luxury-inspired operating model delivered a record operating income of $120.1 million and record adjusted EBITDA margin(1) of 40.2%, which expanded 650 basis points year over year
Fiscal 2025 guidance raised on comparable store sales growth (25.5% to 27.5%) and adjusted EBITDA margin (35.0% to 37.0%)
U.S. distribution center continues to ramp up, now fulfilling both store and e-commerce channels
One-time $2.30 per share special dividend announcement, consistent with our commitment to enhance long-term shareholder value
MONTRÉAL, Dec. 9, 2025 /CNW/ - Groupe Dynamite Inc. ("Groupe Dynamite" or the "Company") (TSX:GRGD) today reported its financial results for the fiscal year 2025's third quarter ended November 1, 2025.
"I'm incredibly proud of our teams and their relentless pursuit of excellence resulting in another outstanding quarter with adjusted EBITDA margin reaching a record 40.2%, up 650 basis points year over a year. Comparable store sales increased 31.6%, an acceleration from Q2's exceptional 28.6%. With most of our tariff volatility behind us we are pleased to report best-in-class gross margin of 66.1%, our highest level in more than three years. While these results continue to exceed expectations, the initiatives driving brand heat are incredibly intentional. Building on this momentum, we are raising our fiscal 2025 guidance on both comparable sales and adjusted EBITDA margin," said Andrew Lutfy, Chief Executive Officer and Chair of the Board.
"Our teams once again demonstrated the strength of our values-led culture. What we delivered this quarter across product, stores, and digital reflects the intention, discipline, and agility that continue to set us apart. We're well into our journey to elevate and premiumize both brands, and the customer response remains strong. Operationally, our real estate strategy continues to be a core pillar, with 17 gross openings year-to-date positioning us for sustained, high-quality traffic. On digital, we're encouraged by the 40 basis points increase in e-commerce penetration in Q3 2025, as we enhance our platforms to support richer storytelling and more seamless experiences. With a solid foundation, real momentum, and teams who move fast and stay aligned, we enter Q4 confident in our ability to raise performance, strengthen brand experiences, and deepen our community connections," added Stacie Beaver, President and Chief Operating Officer.
"Our profitability and cash flow have exceeded expectations, underscoring the strength of our luxury-inspired operating model and our disciplined execution which mitigates fashion risk," said Jean-Philippe D. Lachance, Chief Financial Officer of Groupe Dynamite. "At this point, we view a $2.30 per share one-time special dividend as an effective way to return capital to shareholders, consistent with our commitment to enhancing long-term shareholder value. Following this distribution, pro forma leverage will be approximately 1.05x, with total pro forma available liquidity of roughly $316.0 million from cash and credit facilities, leaving us in an excellent financial position to support future growth."
Fiscal 2025 Third Quarter Highlights
Revenue increased by 40.3% to $363.0 million in Q3 2025, compared to $258.8 million in Q3 2024.
Comparable store sales growth of 31.6% (28.6% on a constant currency basis(1)) in Q3 2025, over and above comparable store sales growth of 10.1% in Q3 2024.
Retail sales per square foot(1) increased by 24.7% compared to Q3 2024, reaching $889 in Q3 2025.
SG&A increased to $95.8 million in Q3 2025, compared to $80.0 million in Q3 2024, and adjusted SG&A as a percentage of sales(1) decreased by 340 basis points to 25.9% from 29.3% over the same period in Q3 2024.
Operating income increased by 90.3% to $120.1 million in Q3 2025, compared to $63.1 million in Q3 2024.
Adjusted EBITDA(1) increased by 67.5% to $146.1 million in Q3 2025, representing an adjusted EBITDA margin of 40.2%, compared to 33.7% for the same period in Q3 2024.
Diluted net earnings per share increased to $0.71 in Q3 2025, compared to $0.38 in Q3 2024 and adjusted diluted net earnings per share (1) increased by 75.6% to $0.72 in Q3 2025, compared to $0.41 in Q3 2024.
Real estate activity for Q3 2025 includes:
Opening of 8 gross new stores in the United States under the Garage banner
No store closures
Renovation or relocation of 4 stores: 1 in the United States under the Garage banner and 3 in Canada under both banners.
Ratios and Recent Developments
Inventory turnover (1) improved to 6.88x in Q3 2025, compared to 6.09x in Q3 2024.
Net leverage ratio (1) was 0.45x in Q3 2025, down from 1.41x in Q3 2024.
Return on assets ("ROA") (1) improved to 27.2% in Q3 2025, compared to 23.8% in Q3 2024.
Return on capital employed ("ROCE") (1) reached 50.5% in Q3 2025, compared to 43.3% in Q3 2024.
During the quarter, the Company repurchased 123,800 shares at an average price of $63.11 for a total of approximately $7.8 million.
Following the end of the quarter, on December 8, 2025, the Board of Directors declared a one-time special cash dividend of $2.30 per share on its subordinate voting shares and multiple voting shares.
________
Notes:
(1)
Refer to "Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics" section of this press release for further details concerning these measures including definitions and reconciliations of each non-IFRS financial measure to the relevant reported IFRS financial measure. Non-IFRS financial measures and non-IFRS ratios do not have a standardized meaning under IFRSÒ Accounting Standards, as issued by the International Accounting Standards Board (IASB) ("IFRS Accounting Standards") which are used to prepare the Company's financial statements and might not be comparable to similar financial measures presented by other entities.
(2)
Pro forma leverage is calculated as total net debt divided by trailing 12-month adjusted EBITDA, adjusted to reflect the one-time special dividend of $2.30 per share as if it had been paid on November 1, 2025, the end of Q3 2025.
(3)
All references to "Q2 2025" are to the Company's 13-week period ended August 2, 2025, to "Q3 2025" are to the Company's 13-week period ended November 1, 2025; to "Q3 2024" are to the Company's 13-week period ended November 2, 2024: to "Fiscal 2025" are to the Company's fiscal year ending January 31, 2026; to "Fiscal 2024" are to the Company's fiscal year ended February 1, 2025.
Outlook
The table below outlines the Company's revised financial annual guidance ranges for Fiscal 2025 replacing our previously disclosed guidance:
Revised Fiscal 2025 Guidance
Prior Fiscal 2025 Guidance
Real estate activity
18 to 20 gross new store openings
8 to 9 net new store openings
18 to 20 gross new store openings
8 to 9 net new store openings
Comparable store sales growth
↑ 25.5% to 27.5%
17.0% to 19.0%
Adjusted EBITDA margin
↑ 35.0% to 37.0%
32.0% to 33.5%
CAPEX
↓ $85.0 to $95.0 million
$95.0 to $105.0 million
Our achievement of these targets is subject to several risks and uncertainties, including the following:(1)
Adverse effects from future policy or legislative changes, tariffs (in addition to those currently in place) that may be imposed by the United States, or retaliatory tariffs from other countries and the United States.
Failing to successfully locate our stores in suitable locations and any impairment of a store location, including any decrease in customer traffic.
Failing to negotiate lease agreements for the store pipeline for Fiscal 2025, along with the risk of delays in construction activities beyond our control, and substantial increases in occupancy costs.
Failing to complete the renovations and relocations scheduled for Fiscal 2025, which is expected to be between approximately 10 to 15, including 3 DYN 3.0 store concepts in Canada.
Headwinds of $4 to $5 million in incremental public company costs, or a 40 basis points impact on adjusted EBITDA margin, which is included in the outlook table above.
Achieving guidance numbers of comparable store sales or retail sales per square foot.
Disruption of our strategic relationships with suppliers, impairing open-to-buy visibility.
Failing to optimize merchandise, anticipate and respond to constantly changing consumer demands and fashion trends.
Failing to protect and enhance our brands.
Failing to attract new customers, or retain existing customers, or to maintain or increase sales to those customers.
Failing to actively manage product margins, including the implementation of effective pricing strategies.
Obstacles to the ongoing implementation of in-store productivity initiatives and the achievement of cost savings intended to improve operating expenses.
Any material disruption in our information technology systems and e-commerce business.
The occurrence of unusually adverse weather, particularly during peak seasons.
Adverse changes in the general economic conditions and consumer spending in Canada, the United States and other parts of the world.
________
Note:
(1)
The guidance ranges included in this section are forward-looking statements within the meaning of applicable securities laws, are based on assumptions that we believe to be reasonable, are subject to several risks and uncertainties, and should be read in conjunction with the "Forward-Looking Statements" section of this press release, which outlines such assumptions and describes certain of such risks.
Recent events
On December 8, 2025, the Board of Directors declared a one-time special cash dividend to shareholders of $2.30 per share on its subordinate voting shares and multiple voting shares. This dividend is payable on December 29, 2025 to shareholders of record at the close of business on December 19, 2025. This dividend is designated as an eligible dividend for the purpose of the Income Tax Act (Canada) and any similar provincial legislation.
Third Quarter Fiscal 2025 Financial Results
Revenue
Total revenue for Q3 2025 increased by $104.2 million or 40.3% compared to Q3 2024. This growth was primarily due to a 31.6% increase in comparable store sales and contributions from new stores. Online revenue for Q3 2025 was $63.2 million, representing an increase of $19.1 million or 43.3% compared to Q3 2024.
Cost of sales and gross profit
Gross profit for Q3 2025 increased by $77.1 million or 47.3% compared to Q3 2024, with gross margin increasing by 310 basis points to 66.1%. This increase is attributable to the 40.3% revenue growth compared to the relatively lower increase in cost of sales of 28.3% which is due to controlled merchandise cost increases, lower outbound freight costs and lower markdowns.
SG&A and Adjusted SG&A as a percentage of sales
SG&A for Q3 2025 increased by $15.8 million or 19.8% compared to Q3 2024. This increase was primarily driven by the Company's growing scale and activities, leading to an $11.7 million increase in wages, salaries, and employee benefits. Additionally, during Fiscal 2025, the Company strategically increased its marketing investment by launching more initiatives aimed at driving brand awareness, resulting in a $3.3 million increase in selling and marketing expenses compared to Q3 2024. Administrative costs increased by $0.7 million due to higher operating expenses to support growth projects and new public company requirements, more than offsetting the $3.2 million in IPO-related professional fees incurred last year. As a percentage of sales, SG&A decreased by 450 basis points from 30.9% in Q3 2024 to 26.4% in Q3 2025.
Operating income and adjusted EBITDA
Operating income for Q3 2025 increased by $57.0 million or 90.3% to reach $120.1 million in Q3 2025 compared to $63.1 million in Q3 2024. Similarly, adjusted EBITDA for Q3 2025 increased by $58.9 million or 67.5% to reach $146.1 million compared to $87.2 million in Q3 2024. The adjusted EBITDA margin improved to 40.2% compared to 33.7% in Q3 2024. This performance results from the combination of both a 310 basis points improvement in gross margin and a reduction of 340 basis points in adjusted SG&A as a percentage of sales, which decreased to 25.9% in Q3 2025 from 29.3% in Q3 2024.
Net earnings and adjusted net earnings
Net earnings for Q3 2025 increased by $41.1 million or 101.7% compared to Q3 2024. 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. Adjusted net earnings(1) for Q3 2025 increased by $39.3 million or 89.9% compared to Q3 2024.
Working capital
For Q3 2025, we have maintained a strong inventory turnover ratio of 6.88x, compared to 6.09x for Q3 2024, with current assets of $382.4 million (including $253.8 million in cash) and current liabilities of $223.3 million. Inventory continues to be minimized through agile product development and strategic sourcing, driven by our high open-to-buy ratio.
Free cash flow
The Company reported robust free cash flow(1), achieving $119.5 million in Q3 2025, up from $42.2 million in Q3 2024, reflecting stronger net earnings partly offset by a $9.1 million increase in CAPEX.
Net leverage ratio
The Company's net leverage ratio decreased to 0.45x compared to 1.41x last year. This improvement is due to the increase in adjusted EBITDA and the resulting increase in cash balance, along with the repayment of all of the outstanding borrowings under the credit facilities. These factors have more than offset the increase in lease liabilities and allowed the Company to reduce leverage significantly. At the end of Q3 2025, the Company has over $253.8 million in cash and $312.0 million available under credit facilities, providing flexibility to drive growth, invest in strategic initiatives, manage market volatility and return excess cash to shareholders.
Return metrics
ROA of 27.2% for Q3 2025 has increased from the ROA of 23.8% for Q3 2024. This improvement indicates a significant boost in the Company's ability to leverage its assets more effectively than in previous periods.
For Q3 2025, our ROCE reached 50.5%, compared to 43.3% in Q3 2024, 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.
__________
Note:
(1)
Refer to "Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics" section of this press release for further details concerning these measures including definitions and reconciliations of each non-IFRS financial measure to the relevant reported IFRS financial measure. Non-IFRS financial measures and non-IFRS ratios do not have a standardized meaning under IFRS Accounting Standards, which are used to prepare the Company's financial statements and might not be comparable to similar financial measures presented by other entities.
Selected Financial Information
13-week periods ended
39-week periods ended
In thousands of Canadian dollars, except per share data and retail sales per square foot
November 1,2025
November 2,2024
November 1,2025
November 2,2024
$
$
$
$
Revenue
362,970
258,772
916,051
686,760
Cost of sales
122,926
95,845
327,815
245,477
Gross profit
240,044
162,927
588,236
441,283
Operating expenses
Selling, general and administrative expenses
95,818
80,030
258,178
226,134
Depreciation and amortization
24,294
20,027
68,230
54,509
Foreign exchange (gain) loss
(182)
(182)
136
(844)
Total operating expenses
119,930
99,875
