GROUPE DYNAMITE RAISES GUIDANCE ON EXCEPTIONAL Q2 PERFORMANCE

• 28.6% comparable store sales growth⁽¹⁾ in Q2 2025 resulting in 43.3% 2-year stack
• Fiscal 2025 guidance raised on comparable store sales growth (17.0% to 19.0%) and adjusted EBITDA margin⁽¹⁾ (32.0% to 33.5%)
• 63.6% gross margin, highest in the past four quarters despite tariff headwinds, reinforcing our luxury-inspired operating model
• Disciplined execution drives 550-bps adjusted SG&A⁽¹⁾ improvement
• Advancing UK expansion with 5 leases signed; recent North American openings outperforming

MONTRÉAL, Sept. 10, 2025 /CNW/ – Groupe Dynamite Inc. (“Groupe Dynamite” or the “Company”) (TSX:GRGD) today reported its financial results for the fiscal year 2025’s second quarter ended August 2, 2025. 

“We delivered an exceptional quarter. Comparable store sales grew 28.6%, driving a 43.3% two-year stack. This performance was fueled largely by higher traffic, attributable to strong brand heat and an important increase in media brand impressions. We’ve raised our 2025 guidance on both revenue and profitability, reflecting disciplined execution, operational agility and a luxury-inspired model that consistently outperforms. Gross margin reached 63.6%, the highest in the past four quarters. Even in a cautious consumer environment, our positioning around affordable indulgences continues to put a smile on our customers’ faces,” said Andrew Lutfy, Chief Executive Officer and Chair of the Board. 

“This quarter, our teams executed with precision and delivered strong results. North American openings are exceeding expectations, and our UK expansion is progressing with five new leases signed. Every function of the business, from product to marketing to our store teams, is aligned and driving performance. That alignment is fueling stronger brand experiences and deeper connections with our customers and community. With this momentum, we are positioned to elevate our performance across every market we serve,” added Stacie Beaver, President and Chief Operating Officer.

Fiscal 2025 Second Quarter Highlights

• Revenue increased by 36.5% to $326.4 million in Q2 2025, compared to $239.1 million in Q2 2024.
• Comparable store sales growth of 28.6% (25.7% on a constant currency basis) in Q2 2025, over and above comparable store sales growth of 14.7% in Q2 2024.
• Retail sales per square foot⁽¹⁾ increased by 18.1% compared to Q2 2024, reaching $820 in Q2 2025.
• SG&A increased to $87.7 million in Q2 2025, compared to $79.9 million in Q2 2024, and adjusted SG&A as a percentage of sales⁽¹⁾ decreased by 550 basis points to 26.7% from 32.2% over the same period in Q2 2024.
• Operating income increased by 61.4% to $97.3 million in Q2 2025, compared to $60.3 million in Q2 2024.
• Adjusted EBITDA⁽¹⁾ increased by 49.1% to $120.5 million in Q2 2025, representing an adjusted EBITDA margin of 36.9%, compared to 33.8% for the same period in Q2 2024.
• Diluted net earnings per share increased to $0.56 in Q2 2025, compared to $0.38 in Q2 2024 and adjusted diluted net earnings per share ⁽¹⁾ increased by 43.4% to $0.57 in Q2 2025, compared to $0.40 in Q2 2024.
• Real estate activity for Q2 2025 includes:
  • Opening of 8 gross new stores in the United States under the Garage banner
  • Closure of 6 stores in Canada, 4 under the Dynamite banner and 2 under the Garage banner
  • Renovation or relocation of 4 stores: 2 in the United States under the Garage banner and 2 in Canada under both banners.

Ratios and Recent Developments

• Inventory turnover ⁽¹⁾ improved to 7.25x in Q2 2025, compared to 6.12x in Q2 2024.
• Net leverage ratio ⁽¹⁾ was 0.79x in Q2 2025, down from 1.59x in Q2 2024.
• Return on assets (“ROA”) ⁽¹⁾ improved to 24.1% in Q2 2025, compared to 22.8% in Q2 2024.
• Return on capital employed (“ROCE”) ⁽¹⁾ reached 45.0% in Q2 2025, compared to 41.9% in Q2 2024.
• During the quarter, the Company repurchased 355,300 shares at an average price of $19.70 for a total of approximately $7.0 million.

Outlook

The table below outlines the Company’s revised financial annual guidance ranges for Fiscal 2025 replacing our previously disclosed guidance:

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 point 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.

Second Quarter Fiscal 2025 Financial Results

Revenue

Total revenue for Q2 2025 increased by $87.3 million or 36.5% compared to Q2 2024. This growth was primarily due to a 28.6% increase in comparable store sales and contributions from new stores. Online revenue for Q2 2025 was $46.7 million, representing an increase of $11.3 million or 31.9% compared to Q2 2024.

Cost of sales and gross profit

Gross profit for Q2 2025 increased by $49.8 million or 31.6% compared to Q2 2024, with gross margin⁽¹⁾ declining by 240 basis points to 63.6%, reflecting the impact of additional tariffs, partly offset by our mitigation efforts. Occupancy costs were also higher, as variable rent expenses increased with more stores exceeding their break points because of strong sales performance, while prior year expenses were lower due to the timing of expenses.

SG&A and Adjusted SG&A as a percentage of sales

SG&A for Q2 2025 increased by $7.8 million or 9.8% compared to Q2 2024. This increase was primarily driven by the Company’s growing scale and activities, leading to a $7.2 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 $3.6 million increase in selling and marketing expenses compared to Q2 2024. Administrative costs decreased by $3.1 million, as last year was negatively impacted by $1.9 million of professional fees related to the IPO. As a percentage of sales, SG&A decreased by 650 basis points, from 33.4% in Q2 2024 to 26.9% in Q2 2025. 

Operating income and adjusted EBITDA

Operating income for Q2 2025 increased by $37.0 million or 61.4% to reach $97.3 million in Q2 2025 compared to $60.3 million in Q2 2024. Similarly, adjusted EBITDA for Q2 2025 increased by $39.7 million or 49.1% to reach $120.5 million compared to $80.8 million in Q2 2024. The adjusted EBITDA margin improved to 36.9% compared to 33.8% in Q2 2024, despite a decrease in gross margin. This is largely due to a reduction in adjusted SG&A as a percentage of sales, which decreased to 26.7% in Q2 2025 from 32.2% in Q2 2024. The 550 basis points improvement reflects the benefits of operating leverage as well as effective cost management.

Net earnings and adjusted net earnings

Net earnings for Q2 2025 increased by $23.5 million or 58.2% compared to Q2 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 Q2 2025 increased by $22.1 million or 51.8% compared to Q2 2024.

Working capital

For Q2 2025, we have maintained a strong inventory turnover ratio of 7.25x, compared to 6.12x for Q2 2024, with current assets of $259.7 million (including $151.2 million in cash) and current liabilities of $179.6 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 $72.6 million in Q2 2025, up from $29.6 million in Q2 2024, reflecting stronger net earnings and lower CAPEX.

Net leverage ratio

The Company’s net leverage ratio decreased to 0.79x compared to 1.59x 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 Q2 2025, the Company has over $151.2 million in cash and $312.0 million available under credit facilities, providing flexibility to drive growth, invest in strategic initiatives and manage market volatility.

Return metrics

ROA of 24.1% for Q2 2025 has increased from the ROA of 22.8% for Q2 2024. This improvement indicates a significant boost in the Company’s ability to leverage its assets more effectively than in previous periods.

For Q2 2025, our ROCE reached 45.0%, compared to 41.9% in Q2 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.

Selected Financial Information

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