Achieved a four-year high gross margin1 of 67.4%, an increase of 530 bps
Expanded adjusted EBITDA margin1 to 36.8%, underscoring our luxury-inspired business model
Continued successful expansion with new stores outperforming expectations
Raised adjusted EBITDA margin guidance for Fiscal 2026 to 38.25%–39.50%
MONTRÉAL, June 16, 2026 /CNW/ - Groupe Dynamite Inc. ("Groupe Dynamite" or the "Company") (TSX:GRGD) today reported its financial results for the fiscal year 2026's first quarter ended May 2, 2026.
"Our first quarter results demonstrate the strength of our operating model and our ability to deliver profitable growth. Comparable store sales increased 22.6%, gross margin reached a four-year high, and adjusted EBITDA margin expanded to 36.8% of revenue, positioning ourselves alongside the world's most profitable fashion houses. We continue to strive to remain a highly productive specialty retailer with strong brands, exceptional unit economics, disciplined inventory management, attractive returns on capital, and a growth engine we have built over decades that continues to scale profitably," said Andrew Lutfy, Chief Executive Officer and Chair of the Board.
"Q1 was a strong start to fiscal 2026. Across both GARAGE and DYNAMITE, customers responded positively to our assortments, marketing campaigns and the consistency of the experience we deliver across channels. Our real estate strategy continues to be a significant driver of growth, customer acquisition and profitability. By opening new locations in premium centers, optimizing our fleet and delivering a compelling in-store experience, we continue to drive significant productivity improvements across our store network. Most importantly, we continue to see strong customer engagement across both brands, reflected in growth in our active customer base and increasing customer lifetime value," added Stacie Beaver, President and Chief Operating Officer.
Fiscal 2026 First Quarter Highlights
Revenue increased by 37.0% to $310.6 million in Q1 20262, compared to $226.7 million in Q1 20252.
Comparable store sales growth of 22.6% (24.7% on a constant currency basis(1)) in Q1 2026, over and above comparable store sales growth of 13.0% in Q1 2025.
Retail sales per square foot(1) increased by 32.4% compared to Q1 2025, reaching $1,001 in Q1 2026.
Gross margin expanded by 530 basis points to 67.4% in Q1 2026 compared to 62.1% in Q1 2025.
SG&A increased to $102.2 million in Q1 2026, compared to $74.7 million in Q1 2025, and adjusted SG&A as a percentage of sales(1) decreased by 190 basis points to 30.5% from 32.4% over the same period in Q1 2025.
Operating income increased by 80.1% to $79.8 million in Q1 2026, compared to $44.3 million in Q1 2025.
Adjusted EBITDA(1) increased by 71.3% to $114.4 million in Q1 2026, representing an adjusted EBITDA margin of 36.8%, compared to 29.5% for the same period in Q1 2025.
Diluted net earnings per share increased to $0.45 in Q1 2026, compared to $0.24 in Q1 2025 and adjusted diluted net earnings per share (1) increased by 100.0% to $0.50 in Q1 2026, compared to $0.25 in Q1 2025.
Real estate activity for Q1 2026 includes:
Opening of 5 gross new stores: 3 in the United States and 2 in the United Kingdom, both under the Garage banner.
5 store closures: 4 in Canada under the Dynamite banner and 1 in the United States under the Garage banner.
Renovation or relocation of stores: 3 in Canada under the Garage banner.
Ratios and Recent Developments
Inventory turnover (1) improved to 9.69x in Q1 2026, compared to 8.50x in Q1 2025.
Net leverage ratio (1) was 1.01x in Q1 2026, up from 0.92x in Q1 2025.
Return on assets ("ROA") (1) improved to 38.6% in Q1 2026, compared to 23.8% in Q1 2025.
Return on capital employed ("ROCE") (1) reached 74.4% in Q1 2026, compared to 44.5% in Q1 2025.
During the quarter, the Company repurchased 1,011,200 shares at an average price of $88.83 for a total of approximately $89.8 million.
_________
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 IFRS 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)
All references to "Q1 2026" are to the Company's 13-week period ended May 2, 2026, to "Q1 2025" are to the Company's 13-week period ended May 3, 2025; to "Fiscal 2026" are to the Company's fiscal year ending January 30, 2027: to "Fiscal 2025" are to the Company's fiscal year ended January 31, 2026.
Outlook
The table below outlines the Company's revised financial annual guidance ranges for Fiscal 2026 replacing our previously disclosed guidance:
Revised Fiscal 2026 Guidance
Prior Fiscal 2026 Guidance
Real estate activity
24 to 26 gross new store openings
↓ 8 to 10 net new store openings
24 to 26 gross new store openings
10 to 12 net new store openings
Comparable store sales growth
11.0% to 14.0%
11.0% to 14.0%
Total revenue growth
22.0% to 25.0%
22.0% to 25.0%
Adjusted EBITDA margin
↑ 38.25% to 39.50%
37.75% to 39.25%
CAPEX
$100.0 to $110.0 million
$100.0 to $110.0 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 2026, along with the risk of delays in construction activities beyond our control, and substantial increases in occupancy costs.
Failing to successfully open and operate new stores in the United Kingdom.
Failing to complete the renovations and relocations scheduled for Fiscal 2026, which is expected to be between approximately 10 to 15.
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 and are subject to several risks and uncertainties, including the risks and uncertainties set forth above as well as those incorporated by reference in the "Forward-Looking Statements" section of this press release.
Recent events
On April 27, 2026, the Company announced the closing of a repurchase for cancellation of 550,000 subordinate voting shares from 4370368 Canada Inc., a company controlled by Mr. Andrew Lutfy, at a price of $93.00 per subordinate voting share, for total consideration of approximately $51.0 million pursuant to an exemption order (the "exemption order") granted by the Autorité des marchés financiers (the "repurchase"). The repurchase was made at a discount to the prevailing market price of the subordinate voting shares in accordance with the exemption order. The repurchase was made outside the facilities of the TSX, as permitted under the normal course issuer bid ("NCIB").
On April 27, 2026, the Company announced the closing of a secondary offering by 4370368 Canada Inc. of 2,700,000 subordinate voting shares at an offering price of $93.00 per subordinate voting share for aggregate gross proceeds to 4370368 Canada Inc. of approximately $251.0 million (the "offering"). The offering was made by a syndicate of underwriters led by BMO Capital Markets on a bought deal basis, pursuant to a short form base shelf prospectus dated April 20, 2026 and a prospectus supplement dated April 22, 2026. The subordinate voting shares were also offered by way of a private placement in the United States. The Company did not receive any proceeds from the offering.
First Quarter Fiscal 2026 Financial Results
Revenue
Total revenue for Q1 2026 increased by $83.9 million or 37.0% compared to Q1 2025. This growth was primarily due to a 22.6% increase in comparable store sales and contributions from new stores. Online revenue for Q1 2026 was $50.6 million, representing an increase of $13.3 million or 35.7% compared to Q1 2025.
Cost of sales and gross profit
Gross profit for Q1 2026 increased by $68.6 million or 48.8% compared to Q1 2025, with gross margin increasing by 530 basis points to 67.4%. This increase is attributable to the 37.0% revenue growth compared to the relatively lower increase in cost of sales of 17.9% which is due to lower tariffs, controlled merchandise cost increases and lower markdowns.
Selling, general and administrative expenses
SG&A for Q1 2026 increased by $27.5 million or 36.8% compared to Q1 2025. This increase was primarily driven by the Company's growing scale and activities, leading to a $18.6 million increase in wages and salaries, including share-based compensation and their related benefits. Additionally, during Q1 2026, the Company selling and marketing expenses increased by $6.5 million compared to Q1 2025, mainly due to strategic investments made to support the Company's entry into the UK market, as well as differences in the timing of selling and marketing activities compared to the prior year. Administrative expenses also increased by $2.3 million compared to Q1 2025, reflecting higher operating costs incurred to support growth initiatives, particularly investments in information technology and software. As a percentage of sales, SG&A decreased by 10 basis points from 33.0% in Q1 2025 to 32.9% in Q1 2026.
Operating income and adjusted EBITDA
Operating income for Q1 2026 increased by $35.5 million or 80.1% to reach $79.8 million compared to $44.3 million in Q1 2025. Similarly, adjusted EBITDA for Q1 2026 increased by $47.6 million or 71.3% to reach $114.4 million compared to $66.8 million in Q1 2025. The adjusted EBITDA margin improved by 730 basis points to 36.8% compared to 29.5% in Q1 2025. This performance results from the combination of both a 530 basis points improvement in gross margin and a reduction of 190 basis points in adjusted SG&A as a percentage of sales, which decreased to 30.5% in Q1 2026 from 32.4% in Q1 2025.
Net earnings and adjusted net earnings
Net earnings for Q1 2026 increased by $24.4 million or 89.4% compared to Q1 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. Adjusted net earnings(1) for Q1 2026 increased by $28.9 million or 101.8% compared to Q1 2025.
Working capital
As of May 2, 2026, we have maintained a strong inventory turnover ratio of 9.69x, compared to 8.50x as of May 3, 2025, with current assets of $147.0 million (including $8.7 million in cash) and current liabilities of $237.2 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 Q1 2026 decreased by $37.6 million to $4.0 million, down from $41.6 million in Q1 2025. This is the reflection of lower cash from operating activities driven by significantly higher tax payments.
Net leverage ratio
The Company's net leverage ratio increased to 1.01x compared to 0.92x last year. This increase is primarily due to higher lease liabilities and lower cash balances, partially offset by higher adjusted EBITDA. At the end of Q1 2026, the Company has approximately $8.7 million in cash and $292.0 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 38.6% for Q1 2026 has increased from the ROA of 23.8% for Q1 2025. This improvement indicates a significant boost in the Company's ability to leverage its assets more effectively than in previous periods.
For Q1 2026, our ROCE reached 74.4%, compared to 44.5% in Q1 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.
_______________
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 ...
