Groupe Dynamite Inc Aktie

Good morning, ladies and gentlemen, and welcome to Groupe Dynamite's Second Quarter Fiscal 2026 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] On today's call are Andrew Lutfy, Chief Executive Officer and Chair of the Board; Stacie Beaver, President and Chief Operating Officer; and JP 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 at groupedynamite.com 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 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.

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 6 consecutive years, we have progressively improved key brand and financial metrics across the business. That's not luck. There's no such thing as 6 years of overnight success. And importantly, that performance has continued through very different economic environments, 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 a 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 is another proof point in a 6-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 6 years ago and even 2 years ago. We have elevated every customer touch point, the product, the confection, 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-wise. 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 L.A.-inspired lifestyle and activewear brand. That stronger positioning has also changed where the assortment resonates most. Climate and culture influence demand. Our real estate is equally important. Canada has nearly 6x the store density per capita of the U.S. 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. The U.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. That gives us continued confidence in GARAGE U.S.'s runway, not to mention the U.K. 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 6 years, brand elevation over promotion, investment-grade real estate over growth at any cost, scarcity and agility over excess inventory and the 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 6 years getting better and still has a ways to go. And with that, I will hand it over to Stacie.

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 assortment. 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. Our U.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. This quarter, sales per square foot reached 1,056, up 28.9% year-over-year. That productivity matters because our strategy is not simply to operate more stores. It is to operate better stores in better locations, generating greater productivity. We opened 7 stores during the quarter across the U.S. and U.K. Early results from the U.K. openings of Bluewater Center 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.

Turning to digital. E-commerce sales increased 31.5% 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 road map 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 9 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 creating more valuable relationship with the customer. As we enter the second half, our priorities are clear: stay close to the customer, move quickly on products, increase the productivity of every customer touch point 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. Thank you.

Thank you, Stacie, and good morning, everyone. Total revenue for the second quarter increased by 29.8% to $423.6 million. Brick-and-mortar comparable store sales grew 10.3% or 12.3% on a constant currency basis. That compares with a 28.6% increase in Q2 last year, and on a 2-year basis is a stack of 38.9%, up from 35.6% in the first quarter. We also had meaningful contributions from stores opened over the past year, including three locations in the U.K. and continued momentum across both banners. By geography, revenue in the United States increased 52.2% to $271.6 million. Canada was $145.1 million, down 1.9% on a fleet that is 13 stores smaller.

For the first half of the year, Canada is up 2.1%. The U.K. contributed $6.9 million in revenue in the quarter. Our Canadian business is mature. The United States is earlier in its penetration and the U.K. earlier still. So we expect brick-and-mortar growth to come primarily from the United States and in due course from the U.K. 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.

Moving to digital. Top line growth was also supported by online revenue, which increased by 31.5% to $61.4 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 1 to 1.5 percentage points of online penetration a year toward that 25% goal. On a trailing 12-month basis, penetration moved from 17.5% to 18.5%. Turning to profitability. Gross profit increased by 40.5% to $291.6 million. Gross margin expanded 520 basis points to 68.8%. That figure excludes the $9.4 million 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. Gross margin also benefited from our disciplined initial markup, a pricing strategy that carries limited reliance on markdowns, and logistics efficiency from our U.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. Inventory turned 7.72x in the quarter against 7.25x last year. We chased more than half our receipts in season. That is how we read demand and react inside a quarter. On expenses, SG&A increased 21.8% to $106.8 million from $87.7 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, adjusted SG&A decreased 210 basis points to 24.6% from 26.7%. That is operating leverage with revenue scaling faster than SG&A.

Moving down the P&L, operating income increased 60.5% to $156.2 million. Adjusted EBITDA increased 55.9% to $187.9 million and adjusted EBITDA margin of 44.3%, 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. Net earnings increased 77.5% to $113.4 million. Adjusted net earnings increased 68.1% to $108.9 million. Adjusted diluted earnings per share increased 68.7% from $0.57 to $0.96. Turning to cash flow and the balance sheet. Free cash flow was $109.5 million against $72.6 million last year. From a balance sheet perspective, net leverage was 0.89x. We ended with $31.9 million of cash and $312 million available under our credit facilities. We repaid in full the $20 million drawn at the end of the first quarter and extended our credit agreement by 2 years to May 2030. From a capital efficiency perspective, return on assets reached 38.9% from 24.1% last year. Return on capital employed increased to 73.5% from 45% in the same quarter last year.

Turning to capital allocation. During the quarter, we repurchased 993,605 shares under our NCIB at an average price of $63.50 for approximately $63.1 million. The framework has not changed. Capital expenditure comes first because the fleet and the platform earned our highest returns. Beyond that, we have been consistent buyers of our own stock, and we remain so. Looking ahead to the remainder of fiscal 2026, we are raising total revenue growth guidance to a range of 25% to 27% from 22% to 25%. We are also raising the bottom of our brick-and-mortar comparable sales range by 1 point to a range of 12% to 14%. New store performance is what moved the revenue guidance. Those openings are not in the comparable base, which is why the revenue range moved more than the comparable sales range. We raised the bottom of the comparable sales range on the continued shift of the network toward our best locations as well as passage of time with half the year now behind us. As a reminder, on the second half, the brick-and-mortar comparable sales range implies 9.5% to 13% growth over last year.

We are happy with how the third quarter has started. We exited Q2 slightly stronger than we began it, and we continue to run around that level today. The updated annual outlook we established today balances the dynamics of continuing momentum in the business with the toughest comparison of our year, which are immediately in front of us. From a real estate perspective, we now provide guidance independently of closures. We continue to expect 24 to 26 openings in fiscal 2026, including 5 total in the U.K. The cadence of openings is weighted toward the back half of 2026. Openings and closures are not symmetrical. A store closure has effectively no impact on our EPS. Even several closures together are immaterial. A new store is roughly 4 to 5x the revenue of 1 week close and the profitability gap is wider still. We have established a target of 350 stores by the end of 2028 across both banners.

Our total addressable market is slightly much larger. Looking at GARAGE specifically, we have 96 stores in Canada and 139 in the U.S. The United States market is more than 8x the size of Canada by population. We believe there is significant opportunity beyond 2028 to grow our store footprint in the U.S. and internationally. From a margin perspective, we are increasing our adjusted EBITDA margin outlook to a range of 39.5% to 40.5% from 38.5% to 39.5%. This increase comes from three drivers. First, gross margin concentrated in the first half; second, continued SG&A leverage as we scale revenue; and third, greater efficiency from our U.S. distribution center, which is now fully ramped. Once again, we are not including the recovery of tariff refund claims in adjusted EBITDA. As we move into the back half of the year, we have now lapped the tariff impacts that affected the first half of last year. That comparison alone accounts for most of the expansion you saw in Q2. The back half is a clean comparable period. We expect gross margin ahead of last year, again, but by a much smaller amount and against a cleaner comparison.

In closing, this quarter is a story about the strength and durability of our financial profile. We raised guidance across revenue, brick-and-mortar comps and margin today, and we did it without leaning on any one-off items. The tariff refund recovery sits outside of our adjusted results entirely. Taken together, expanding margins, strong cash generation and a healthy balance sheet give us a financial profile that funds its own growth. Those margins are structural rather than cyclical and they continue to expand as we scale. That is the foundation we build the next several years on. With that, I'll turn it back to the operator to now take questions from the financial analysts.

Thank you. [Operator Instructions] Your first question comes from Irene Nattel with RBC Capital Markets.

The topic du jour everywhere is same-store sales. Can you talk about what you're seeing in terms of customer behavior? I think you mentioned that traffic was up across the board. So what you're seeing in terms of product demand, traffic counts, pricing and where or if you're seeing any kind of weakness or deceleration.

Irene, it's Andrew. So yes, very good question, great question. Listen, and there's a lot in there. So let me endeavor to unpack this a little. What we're seeing is probably a bit of a tale of two cities. In this case here, I guess, it's a tale of 2 countries. You've got the U.S. economy that's really, really, really strong. The Canadian economy is definitely a lot softer and why it's softer. I think most of us appreciate why it's softer and the data is the data, right? Like GDP growth is pretty anemic. It hasn't really budged per capita GDP real growth hasn't changed in 20 years. And I think it's actually gone negative recently. So the Canadian and -- Canadians are anxious.

On the South of the border really, you've got an economy that's firing on all cylinders. Unemployment is low. Personal indebtedness is low, wage growth is high. And then you've got a brand, you've got our GARAGE brand, let's say, that has really pivoted over the last couple of years. And as we keep premiumizing, if you will, or elevating the brand and the brand's equity and including the assortments, right, which incidentally we're moving in our more expensive product as we get into like activewear and whatnot.

So a combination of the evolution of the brand as also extrapolated into the even the store footprint that we have in the U.S., where 85% of our stores are sitting in these investment grade, high quality, high-volume assets. It's just really I guess we're seeing a big difference between the 2 countries. So to pinpoint exactly where and why, I don't, I can't tell you with great precision, but I think all these factors go into play. Evolution of the brand, the real estate strategy, right, you have 6x the store density, if you will, in Canada relative to the U.S. So, in the U.S., it's a much higher quality real estate portfolio. And consequently, we're dealing with a K-shaped consumer down there at the top end of a K-shaped consumer who is probably more resilient in a more resilient economy. So not sure it fully answers, but it's ultimately what we're seeing.

That's really helpful, Andrew. And just sort of as a follow-up, if I may. Obviously, we're seeing a very impressive gap between that same-store sales number and the total revenue number. How should we be thinking about the magnitude of that gap on a go-forward basis?

Irene, this is JP. Thank you for the question. So you are correct in that in Q2, there was a noticeable gap -- and obviously, this is the impact of new stores that are performing incredibly well. So if you look at our comps for Q2 on a constant currency basis, at 12.3% versus the total revenue that was up almost 30%. That gap is almost 18 points. There is a little bit of it coming from a better e-com penetration rate, but the majority of that gap truly comes from store openings that were open in the past year, not only in the past quarter because that's a year-over-year number, and that cohort in the last year has performed incredibly well. So we are happy with the performance of those new stores. And in fact, that's why we were comfortable this morning, raising the full year revenue guide by 2 to 3 percentage points. So really, the new stores are doing well. We're happy to see that, and we believe that will continue for the next quarters in front of us.

Your next question comes from Chris Li with Desjardins.

My first question is, if I take the low end of your revised full year comp sales guidance, it would imply a continuing acceleration on a 2-year stack basis to around 40% to 41% in the second half. Is that correct? And then if so, what is your confidence in achieving this despite all the ongoing macro uncertainties out there?

Chris. So you are correct. Effectively, the lower end of the range on an annual basis, the 12%. So maybe if I take the whole range for a second, so the brick-and-mortar comp range is now 12% to 14%, which is -- which means that by difference, the back half is 9.5% to 13%. Now if you look at it on a 2-year stack basis, that will give you 40% at the lower end of the range and 44% at the top end of the range. And I think what is important here to note is that we feel good about this range. We are very comfortable with that range, which is why we've increased it this morning. And effectively, also you are right, pretty much every point here points to an acceleration versus Q2, which was also an acceleration versus Q1. So again, the business is not getting harder the compare is getting harder as Q3 and Q4 last year were two of the best quarters in the history of this company. So we feel comfortable with the guide. And yes, your math is correct.

Okay. That's helpful. And my follow-up is, I'm sorry if you disclosed this already, but can you share with us the breakdown in same-store sales between AUR and traffic this quarter?

Chris, I'll take that one. So AUR, as it has been over the last few years, is most of the work. While we have clearly stated in the past that we're targeting 2x inflation, I want to be very clear with all of you that, that's the output. The input is not taking a $20 top and charging $22 next year. The input is coming from an AUR strategy focused on brand elevation across three metrics, which Andrew has touched on, but I'll follow-up with. One, product mix, so our positioning of off-duty and on-duty that enable a bear top to move from $26 to a $45 retail when it shifts to a performance fabric with technical capabilities. AUR isn't just a higher ticket. It's elevating what we're actually offering and our merchant and design teams know that we are not creating anything that anyone needs. We are creating things that people want.

The second thing is our geography. So geography, as you guys know, we've mentioned we charge the same price in Canada and the U.S. So as both gentlemen have spoken to, our success in the U.S. just by penetration alone, we pick up AUR. Third is our real estate strategy. So as Andrew likes to mention, the smallest house on the nicest street. This is where actual units matter more than the actual transaction. Our order value rose and units are orders per price per unit rose -- I said that backwards, sorry. Generally, what I'm trying to say is if price is an issue, the units are going to fall first and price and units are rising. So we continue to believe in this 2x inflation as a strategy, but know that is not actually the action we're taking is the three inputs I just mentioned.

Your next question comes from George Doumet with Ventum Financial.

Congrats on the quarter. I think you mentioned early in the quarter, the assortment was pivoted towards newness. I was hoping to get a little bit more color on that. And JP, I believe you mentioned the markdown rate is at 5%. I just want to confirm that number. Maybe you can tell us a little bit what that number was last year? And perhaps, what's embedded in the guide for an exit rate this year?

Yes. So Stacie will start with newness and then I'll take the Markdown question.

So newness is a factor we're hedging really hardly on. We're watching it as a leading indicator. Again, as I just mentioned, we can't keep taking up retails if we don't invest in that quality and the offering that we're serving up to the customer. So we're paying close attention to what culturally or watching what the customer is telling her. And again, we're trying to create an emotion of a want that she can't pass it up when she walks in the store. there's too many options out there competitively on needs, which is why we're trying to focus or create one. So with that, the team is very focused. And with it, if we can turn faster, create those wants, that AUR can come with it.

On the markdown question, that's correct. Our markdown rate has remained at or around 5%, which was also consistent with the past couple of quarters. And in terms of what's being baked in, in our forecast, we effectively assume will remain at or around these levels, could be a point to the left could be a point to the right, but broadly speaking, we assume status quo.

As a quick follow-up, I was hoping to get a little bit an update on denim. I know it was a pressure point last quarter. Maybe if you can just give us -- let us know how that's trending and maybe as we exit the year.

Yes. I'll mention it because I think my takeaway was wrong or what I said was inferred wrong. Denim is downplayed in our assortment mix as we talk about shifting more to an athleisure lifestyle in both on-duty and off-duty. So off-duty for us is based around fleece bottom outfitting. Think of her going to and from campus, to and from the gym. On-duty is more technical. She can actually work out in it. It supports, it holds in all the right spots. So we have purposely downgraded our denim contribution to the business, and it's coming in as we planned it to. But as we've mentioned in the past, and Andrew just opened with, Canada and the U.S. are in different spots on expectations.

The U.S. is picking up what we're putting down in on-duty and off-duty because they have no expectation or a new brand and they're absorbing it. In Canada, denim is hurting a bit because we used to be like the general store up here. You could buy jeans and a plaid shirt, you could buy a dress to a homecoming event, like we used to carry everything and we're in some very remote locations where we are the only game in town. But when you go to the U.S. and you have to compete, you need a point of view on your customer and your assortment. And as we've narrowed that and doubled down on this athleisure assortment, it is working in the States very aggressively. They're adapting to it. We're taking market share, and we like where we're positioned. In Canada, we need to work on that repositioning and that's where you'll see a little bit of a degradation on denim.

Your next question comes from Michael Glen with Raymond James.

I just want to go back to these -- to the strength you're seeing in the new store openings should -- what should we anticipate as these new stores go into the comp base? Will they continue? Are you seeing a leveling off or trending lower on the new stores as they mature a little bit? What are you seeing in terms of, say, a 2-year or 3-year trend?

Mike. So historically, when we open up a new store it starts off really, really strong. And then it continues to be strong. So we are not one of these retailers where we'll start at say, 80% of performance and work our way to 100%. In fact, the first month is usually incredibly strong. So as those stores eventually join the comp base, we are very excited by the dollar contribution that those stores are bringing because those are top-tier assets. However, if you look at the comp or the gain year-over-year in percentage terms, it's very healthy. Don't get me wrong, but the rest of the network is also healthy. So in terms of contribution to the comp in percentage points, it's not going to hurt us, let me be very clear, but it's not going to add a lot of points to it either. It's really on the dollar side of things where these stores make a noticeable difference.

Okay. And then just on gross margin through the back half of the year, I know that we're dealing with a lot of the tariff noise. But in a normal year, would your gross margin increase sequentially from Q2 to Q3? I'm just trying to understand what that cadence looks like on a relative basis.

Yes, I'm happy to speak to that as well. So last year, in Q1 and Q2, tariffs were very topical, and we talked about that, which is why in Q1 and Q2 of this year, our gross margin year-over-year is up 520 basis points. So as we get to Q3, we're now on a level playing field. So the comparison is clean and it's a real comparable base. To illustrate what I'm saying, if you look at our LTM gross margin rate, at the end of Q2, we are at 66.3%. Effectively, that rate is Q3 and Q4 of last year and Q1 and Q2 of this year. And as such, that number of 66.3% is not impacted by last year's crazy tariffs in the first half. That is a clean comparable base to start with. Back to my earlier comments in the opening remarks, we believe there is further room for expansion in Q3 and Q4.

However, the magnitude will be far smaller than what you've seen because we no longer get the benefit of comping those tariffs. What we're going to get in Q3 and Q4 are the benefits of our U.S. DC on logistics and that is expected to be incremental to the gross margin. So starting from your 66.3 LTM, which is a good, solid, clean base, we expect to grow that a little bit with passage of time, but certainly not with the same magnitude that you've seen in the first half of this year.

Your next question comes from Brian Morrison with TD Cowen.

Andrew, I think at the beginning of the call, you said that the AUR has doubled since its certain time frame. I didn't get that. But then Stacie highlighted product mix and U.S. parity and higher U.S. mix to justify some of that. And at the beginning of the call, you said this reflects brand building and improved brand strength. I'm just wondering, has this resulted in any changes to your consumer profile, the average age to GARAGE customer?

Yes. Great question. And yes, it Yes. Yes. It's all changed. Yes. So what we spoke about or what I spoke about earlier was basically doubling in the AUR over the last 6 years. JP is looking at me. Yes. And if you think about where the brand was 6 years ago, I mean, our target customer was our target market, our muse, if you will, she was 16 years old. And mathematically, we would land the best customer best markets, probably land around 14 years old. Today, our muse is 24 years old, and mathematically, we land at about 22.5 years old. So for sure, the customer has aged up from 14 to 22. So the customer's aged up even the end use, again, Stacie mentioned, I mean we used to be a denim and applied shirt and homecoming dress and that's kind of like what you could expect at a GARAGE 6 years ago. And today, you're wearing our proudly wearing our booty shorts and support tops, bra-support tops into an active wear class, the yoga class, Pilates class, kickboxing class and furthermore, we're dressing you in the right lifestyle to get you to and from that class. So the brand has evolved completely. The customer's evolved completely, the real estate and the real estate strategy has evolved completely. And this investment-grade real estate that we always talk about, I mean, it takes courage, right? Like to do a store in SoHo, these are big, big rents are Oxford between New Bond Street and Regent. These are big commitments, you're playing with the world's best brands. So you need to be at that level, and that's really what we've been quarter after quarter. That's what we keep doing is elevating that brand. And I know you're not asking, but I'd like to follow up even to Irene's question is what's really, really important, I do mention in my opening comments, we run a pull model inventory model. What that really means is we're not playing God planning and allocating and where we send the inventory. We actually don't. We send a very small percentage of the inventory sprinkle it all over the place. And then we basically let the customer and ultimately, the demand coming out of those store locations dictate where the inventory is going to go. So when you have a store and as you think about these amazing assets that we're opening up in the U.S., right? And again, we are only 1/6 as penetrated in the U.S. as we are in Canada, let's not even talk about the U.K. that's overperforming. These assets are pulling hard on the inventory, and we like engineered scarcity because I hate inventory. So as we keep pulling on this inventory, unfortunately, that store in Sudbury, Ontario, in tertiary parking, nothing in Sudbury may ultimately pay the price, right? And so this is all part of a very deliberate and strategic evolution of the brand. And at the end of the day, if you look at our 6-year stock of numbers, it's continuous improvement in every single metric. And quite frankly, I like it. I like this idea of running a more science-based engineered business that has greater predictability and resiliency. Sorry about that.

No, that's [indiscernible]. I mean I was kind of curious if you've seen yet that age difference at Sudbury...

Okay. And then...

Sorry, Stacie.

She was just agreeing...

It was intentional. Yes, it was targeted.

That customer has aged up roughly about years and it's a much bigger addressable market and that's strategically why we chose to go there.

Yes. Yes. Okay, follow-up, just in terms of the retail sales per store, I see the runway and growth in the U.S., but they look to be double or more of that in Canada, 40% or so is currency, and I understand the optimized real estate footprint. Can you provide to us what the average size four walls in the U.S. or average size square foot U.S. is relative to Canada?

I'm afraid, no, I'm afraid we won't go into these details, Brian, but I can say that certainly, U.S. stores versus Canadian stores are on average are far more profitable. And when we look at new store openings these days, they're also accretive to the chain average, and those are in U.S. dollars. So certainly, we noticed the impact of those openings in the U.S. market.

Your next question comes from Stephen MacLeod with BMO Capital Markets.

Lots of color on the call so far. I just wanted to ask about just sort of some of the fuel inflation that we're seeing and have been seeing and how that impacts guidance or how that's considered in the guidance? And whether you have more exposure to that factor just given your high level of inventory turns?

So yes, certainly, the dynamics we're seeing around fuel inflation are considered into our guidance. So we are very much mindful of the situation out there, and we have taken conservative assumptions in our guidance to make sure that it reflects the current market conditions. So yes, this is a cost that we need to be thoughtful about. And you're absolutely right, we do turn our inventory very, very fast. And as such, this cost would impact us sooner than later in the P&L. And yes, we have reflected it in our guidance.

Okay. That's great. And then just on the store mix Tier 1 to 3 versus Tier 4 to 5, you gave an updated number, Andrew, on kind of how that breaks down right now. I'm just curious, when you think about the tiers 4 to 5 becoming closer to 100% of the store mix of the network mix. How do you -- what's the cadence of that growth?

Yes, Steve, I can take that question. So as it stands today, in terms of stores, 57% of our stores are in Tiers 1, 2 and 3, which we believe to be investment grade. However, if you look at it in dollars, that percentage gets you to 72%. If you look at our target, which is 350 stores by the end of fiscal 2028, we assume that 70% stores versus 57% today will be in investment-grade locations. And as such, the dollars percentage will also go up. So I think if you're thinking about it this way, moving from 57% to 70% in 2.5 years from today, I'd say you'd be in the right ZIP code.

Right. Okay. That's great.

Your next question comes from Vishal Shreedhar with National Bank.

I wanted more perspective on the Canada assortment change and the customer reaction. In particular, since Q1, did you rotate the assortment back to the more traditional assortment? Or is the intent to elevate the Canadian assortment along the lines of what you've done in the U.S.? And secondarily, did the Canada performance on a same-store basis, does that stabilize in Q2? And should we expect those trends to recover in Q3? Or do you expect some delays to persist in Canada?

Regarding the second part, JP, why don't you take the second part, and I'll take the first part.

Sure. So on the Canada same-store, as you know, Vishal, we do not disclose comps by geography nor by banner. In Andrew's opening statements, we did say that Canada in totality was down 2% with 13 fewer stores. And as such, Canada same-store performance was, call it, flattish. Now we won't give you a Q3 to date number on that metric, and we'll refer you to our annual guidance on comps, which again has been increased this morning from 12% to 14%. On the Canada mix, I'll leave it to Andrew to answer that question.

Yes. So listen, so go back to -- to answer your question very clearly, no, there's really no change in the strategy. There's only one strategy and there's always only been one strategy for all countries. So there is no change there. And listen, this is a brand that is deliberately in transition, and this transition has been taking place over the last 6 years. And every quarter, we keep nudging it up and nudging it up and nudging it up and nudging it up. And so what that means is if you think what we call casual Street, which would have been denim sweaters, woven shirts and so on and so forth, 6 years ago, order of magnitude that could have represented 70% of sales and planned as such, today, it might be I don't know, 15% of sales or something like that. And every quarter, if we keep planning it down and down and down and down because ultimately, that is not where culture is going.

That is not where premium brands are going, and that's not the white space that we want to address in the athleisure and activewear market. So there will be, I guess, the good news is, there's not much left to trim from that assortment. But what I would say is I think the bigger thing at play is the pull model. Again, we have engineered scarcity, right? We intentionally buy not enough inventory. So what ends up happening is those stores, you think about an Oxford Street, right, like a locomotive store, SoHo or any of these soon we're going to be opening on Fifth Avenue, right? These are high profile, high premium top of the K-shaped economy type of customer.

They pull hard on the inventory. And unfortunately, Canada at times ends up paying the price. So -- and I'll just put out there, not all Tier 5 do the same volume, right? Like this whole tier thing is ultimately based on a very rigid set of standards, none of them actually have to do with sales, right? It's more about is there luxury or isn't it? Is there public transportation or subways or aren't there? So -- so I would venture to say a Tier 5 in Canada performs far less than the Tier 5 in the U.S.A. So this is really the whole model at work. But at the end of the day, I would just -- again, look at our 6-year performance, look at our growing EBITDA margin, look at our growing margin, look at our same-store sales that keep growing. And listen, you -- we firmly advocate this strategy and are excited to keep on the same path.

Your next question comes from Adrienne Yih with Barclays.

It's Michael Vu for Adrienne. So first, Stacie, thanks for all the color around the e-commerce channel. That was super helpful. And I know it's a pretty important piece of the overall story out there. So I guess with that said, as you continue investing behind the digital platform to achieve that long-term e-com penetration goal, where are you seeing the biggest opportunities to improve the customer experience and further strengthen that omnichannel model in general? And then I guess along with that, are you seeing any kind of changes or differences or resonance with the online shopping by geography versus another?

Yes, on online, you guys, we've thrown out there our goal is over time to hit a 25% penetration. It's not a date we've so not to hit it, but it's a ratio we're trying to move. It moved 20 basis points year-over-year for Q2. You also should just know that Q2 is our lowest penetration and Q4 ends up being higher. So when you're looking at penetration, you need to look at it year-over-year but also quarter-over-quarter. We still know we have tremendous run room here on e-comm. The thing that holds us back is a positive, it's a bigger denominator in the stores being so strong. So the ratio moves slowly because the stores grow just as much.

They grew 30% this quarter overall and e-comm grew 31%. So it's hard to move that penetration number, but we're not targeted on it. Things are moving the needle here, as you just asked was headless commerce. So we launched that on our app, and we opened the U.K. with it on their website. It launches this month in North America. So we're excited about that, removing some of the friction points and how we're moving the customer through the journey. And we're really excited that Henry Spear joined us this month as a Chief Customer Officer. He's clear his mandate is personalization, removing friction and lifetime customer value, not just on digital, but that omnichannel customer. So we're excited about the growth of digital.

Great. And then as a follow-up, so as we're approaching holiday, how are you thinking about inventories, promotion, pricing, customer demand? And then like what are you accounting for in the back half of the year related to the overall apparel environment and how you're thinking about that?

I can take that. Again, regardless of the quarter, we're always looking to watch what the customer signals are, what's going on culturally and create a product that is exciting. We know she comes out in Q4 because there's generic reasons that needs to shop, whether it's a holiday party, a company party, there are so many activities that women need to dress for that we call it a moment in time where she's coming out. We need to be top of mind. So we're working on that in Q3 to grow our customer base. So we have more people to contact into Q4. But in most times, as Andrew just told you, he hates inventory. Q4 is no different. He holds that across all 4 quarters but also we also hate promotions. So again, we're putting all of our efforts into what is new, what is exciting, what is she going to want and when she wants something price really doesn't matter, and when she doesn't want something, also price doesn't matter, which is why we don't play the POS or the up and down game or try to drive revenue off of markdowns.

Your next question comes from Martin Landry with Stifel.

Congrats on your results. I want to touch on the gross margin. They were extremely high this quarter, near 69%. I'm just trying to understand at what point do you think, okay, we're comfortable with these margins, the rest of the increase we want to pass on to our customer in the form of more value in our products. Because I got to think that at some point, when your margins are growing that much, is there a risk that the customer sees less value in your products?

Martin. Listen, I think it was Stacie actually who mentioned, part of this is also mix, right? As we do less business in Canada as a percent of the whole and more business in the U.S.A. and even the U.K. and U.K. being modeled after the U.S.A., right? You're naturally going to see expansion in margin. It's just math, right? So that's part of the story. The other part of the story is this. As I mentioned in my opening remarks, 20 -- roughly about 28% of our revenue came out of what I would call investment-grade assets that might address an upper top quartile consumer in terms of discretionary income. Today, it's 72% and every quarter keeps going up. 80-20 rule life will probably be at 80% at a certain point.

So you've got the smallest house on the best street. You've got a mixed conversation between the countries taking place. So it is not as egregious as it would seem from a customer standpoint. And I'll remind you, our competitors are actually, I've been warned not to mention who our competitors are, so I won't mention the competitors. But you could think of best-in-class North American activewear athleisure brands out there, right? Those are our competitors. And their prices are anywhere from 50% to 250% more expensive than us. So even if they raise their prices at the rate of inflation, right? I don't see them compressing on margins. So as they keep raising the prices at the rate of inflation, and if we raise at twice the rate of inflation, it could take like 25 to 50 years to actually catch up to them. So I'm very comfortable with the strategy, and I hope that answers your question.

Yes, it does. And maybe just as a follow-up, you've increased shipping to international destinations and some more countries this quarter. Just how many countries do you ship now internationally? And is there further room to open up other countries in the near future?

Yes. So I'll answer that. We've opened up shipping to 9 additional countries across Europe and Australia. We're reading this to see where the demand is for a further road map for brick-and-mortar to open up down the road. But yes, we will also open up digitally first as we go down this path. But first and foremost, these first 9 locations are off to a pretty good start and very telling who's resonating or who has already a strong awareness of the brand.

Okay. So 9 countries, plus Canada, U.S., U.K. so available in 12 countries right now. Is that correct?

Yes. I'd have to check my U.K., Europe mapping there, but yes.

Your next question is from Mauricio Serna with UBS.

Just was wondering on the Q2 comp sales performance, I guess it implies an acceleration versus what you were seeing quarter-to-date. Could you elaborate on what drove that acceleration like traffic, AUR, conversion, and so forth? And then quarter-to-date, like how should we think about that plan? Like is it still like -- is it fair to say like a low double-digit is the quarter-to-date at this point?

Yes, I'll start, which I addressed in my opening comments, but Q2 did pick up each month of the quarter. Again, we identified early on or even coming out of the tail end of Q1, that there was an opportunity for more newness. So if you guys are watching garage closely, you can see the color drops work very well for us. I also called out that the green color that we dropped was an actual customer request that came through our social channels. So we are looking for things that we're resonating, but we probably were missing a little newness as we were depending on color of similar items to keep going. So there was a strong injection at the beginning of Q2 to drive more newness and that really resulted in top line sales. So we know the momentum we're on there, and we're excited by it. And JP is going to take the second part of your question.

Yes. So I guess the second part of your question was on Q3 to date. So look, I think what we're comfortable seeing here is that Q3 to date is off to a good start. We are happy with how Q3 is going so far. That is reflected in the full year guidance that we gave you this morning, 12% to 14%, which was increased as far as we'll go at this time.

Your next question comes from John Keypour with Goldman Sachs.

Knowing that you guys won't disaggregate comp by geography, I'm just curious if you could size the magnitude of the closures in Canada. Let's just ignore the renovations and relocations. Just wondering what like the actual sales drop from those from those closed stores was?

Yes. Thank you for the question, John. So look, we will not break that down, unfortunately. What I'm comfortable saying though, is that store closures are financially speaking, immaterial to the P&L, to the bottom line, to the earnings per share. The overall revenue of stores that we closed versus stores that we open, the magnitude is very large. Think of it as 4 to 5x, sometimes even larger. And as such, when we close 13 stores in Canada in the last 12 months, the impact on revenue is negligible and the impact on earnings per share is virtually nil. And that's as far as I can go this morning. But hopefully, that gives you good color on the fact that store closures are really not impactful to our earnings per share.

Your next question comes from John Zamparo with Scotiabank.

I'll keep it to one question because I see we're past the hour. I wanted to come back to the U.S. DC and I wonder if you can say broadly, JP, what that contributed to margin expansion in the quarter. I think it was up over 500 basis points on a gross margin basis. I wonder if you can give a sense of what the U.S. DC is contributing and are U.S. DC sales or margins on those close to in line with those?

So in Q2, year-over-year, the gross margin expanded by 520 basis points. So I would say there's three drivers here. The first one is by far the biggest one and more than half of it. So that would be the tariffs that we faced last year. So that is, by far, the biggest. And then the other two factors would be IMU expansion through a stronger AUR, which we have talked about in earlier responses on this call. And the third factor would be your U.S. DC. So I don't think we'll give you a hard number in terms of the contribution, but it would be a very small fraction of the 520 basis points, and it would be factor #3 in the pecking order.

There are no further questions at this time. I will now turn the call over to Andrew Lutfy for closing remarks.

Thank you, and thank you, everyone. I appreciate everyone's time. So listen, I just want to take a step back and if I can maybe close out and given a lot of thought over the last couple of months as to the reaction to some of the earnings and some of the comments. And sometimes, we kind of get like locked up in front of a tree and we don't see the forest anymore. And so I just want to close out and really talk about how strategic we are, and ultimately, the forest. 6 years ago, we made a deliberate decision to evolve the brand and strategically chose to address a customer -- acknowledge a K-shaped economy, address the customer that is a global customer in the top quartile, if you will, in terms of disposable income. And in an athleisure world that is gaining market share.

It is a tide that is rising, right? So we made these deliberate choices. We also, as a result, deliberately over the last 8 years or 6 years deliberately shut down tons of stores and invested more importantly, in these high-profile global locations with amazing success, amazing success. And at the same time, like I do like predictability and to me, science and engineering and creating like rigorous processes support that. I don't like inventory. Inventory comes with fashion risk, right? Because more inventory you have, the more further out, you've made a commitment. And honestly, it's hard to predict fashion a year or 2 years out. As Stacie mentioned, we had an early feedback on green. The customer wanted green, and it was like, you know what, that makes a lot of sense. We were able to act on that in a couple of months.

So we run a full model that creates scarcity. We, by design, want to have as much in-season flexibility and open-to-buy as possible. And as we fill the pipe, right, based on information based on knowledge, leveraging AI, AI predictability. I got to tell you like 9 out of the 10 times we're right. So listen, strategically positioned in terms of a customer, the economy, disposable income, global brands with a strong science-based engineered solutions. So very comfortable about the business and very excited as to where we're going to be not in the next quarter, but where we're going to be in 3 years from now, 5 years from now and 7 years from now. That's ultimately my obsession. I've been doing this for 40-odd years. So 3 to 5 years seems near term. So with that, again, thank you so much, and leave it at this. Have a wonderful day.

Thank you.

Thank you.

Ladies and gentlemen, this concludes the conference call for today. We thank you -- please disconnect your lines.

[Interpreted] Good afternoon, ladies and gentlemen, and welcome to the Annual Meeting of Shareholders of Groupe Dynamite, Inc. My name is Andrew Lutfy, and I'm the Chair of the Board of Directors and the Chief Executive Officer of the company, and I will preside over this meeting as Chair. I have with me here this afternoon with Stacie Beaver, President and Chief Operating Officer; Jean-Philippe Lachance, Chief Financial Officer; and Christian Roy, Senior Vice President, Legal Affairs and Corporate Secretary.

Please note that this meeting is being translated simultaneously, and you may select your preferred language at the right of your screen. Also attending this afternoon's meeting are each of our Director Nominees as well as Isabelle Brodeur from Deloitte LLP, the Corporation's Auditors.

With the consent of the meeting. I will now hand over the floor to my colleague and Corporate Secretary of the Corporation, Christian Roy, who will guide us through the legal and formal aspects of this meeting.

[Interpreted] Please allow me to briefly explain the format of today's meeting. We will first deal with administrative matters and then proceed with the official business of the meeting, namely the presentation of the Financial Statements, the Election of Directors, and the Reappointment of the Auditor. Once the formal portion of this meeting is concluded, we will hold a Management Presentation followed by a question period.

The agenda of the meeting covers all business to be transacted at the meeting, namely, first of all, to receive our Audited Consolidated Financial Statements as at and for the fiscal year ended January 31, 2026, together with the notes thereto, and the Auditor's Report thereon. For further details, please see the Presentation of Financial Statements in our Circular dated May 6, 2026. Secondly, to elect the directors of the company for the ensuing year. For further details, please see the Election of Directors in our Circular dated May 6, 2026.

And thirdly, to re-appoint Deloitte as our independent auditor until the next Annual Meeting of Shareholders and to authorize the Board of Directors to set its remuneration. For further details, please see Reappointment of Auditor in our Circular dated May 6, 2026. I now declare the Annual Meeting of Shareholders of Groupe Dynamite open. In order to expedite the formal portion of this meeting, I will, on behalf of the Chair of the Board, move and second all motions in my capacity as a shareholder of Groupe Dynamite.

Unless there are any objections, Martine Gauthier and Teresa De Luca of Computershare, which is the registrar and transfer agent of Groupe Dynamite will collectively act as scrutineers for this meeting. We would like -- that this meeting to be conducted officially, effectively, and I would ask your cooperation in this regard. Instructions on how to ask questions and the voting procedure will appear on your screen. As with any technology, unexpected glitches may occur, but our service providers for this platform at Lumi are very experienced at running this type of meeting and will help us out.

Please note that only registered shareholders as of May 1, 2026, on the record date of this meeting or proxy holders who are registered with our Transfer Agent and who have obtained a control number prior to this meeting may participate, ask questions, and vote at the meeting. All other persons may attend the meeting as guests. Registered shareholders and proxy holders who wish to communicate with members of our management team in attendance today or who wish to ask any question may do so by using the Questions tab in the virtual meeting platform.

Questions may be submitted in writing during the meeting. Please also indicate to which member of our management team attending today you wish to direct your question. In order to respond to as many questions as possible, shareholders and proxy holders are asked to be brief and concise and to address only one topic per question. Questions from multiple shareholders on the same topic or that are otherwise related will be grouped, summarized, and answered together.

We will not respond to questions that have already been answered or that are redundant, repetitive, and unrelated to the company's business or to the items on the agenda of the Meeting. The company will also not respond to any questions concerning non-public information about the company, or that are related to personal grievances, or that are otherwise offensive to third parties. Today's votes will be conducted by a poll.

Each Subordinate Voting Share entitles the holder to 1 vote and each Multiple Voting Share entitles the holder to 10 votes on each item of business identified in the Notice of Meeting. Shareholders who have voted in advance of the Meeting do not need to complete the ballot or take any further steps to cast their votes unless they wish to change their vote. If you do vote by ballot today at today's meeting, then that will automatically revoke your prior vote or any prior proxy granted.

On behalf of the Board, I would like to wish -- I would like to thank all those shareholders who have submitted their proxies in advance of this Meeting and to those in attendance today. The final voting results will be released after the Meeting in accordance with applicable laws and stock exchange requirements, and will be available under our profile on SEDAR+.

Mr. Chair, I'd like to advise you that the Notice of Meeting and the Form of Proxy were mailed by shareholders on or about May 12, 2026, together with the company's audited consolidated financial statements for fiscal 2025 ended January 31, 2026, and the related Management's Discussion and Analysis to shareholders who requested them. Service of the documents was certified by Computershare. Additional copies of these documents are also available on our website or under our profile on SEDAR+.

Therefore, unless there are any objections, I will dispense with the reading of the Notice of Meeting. A copy of the Notice of Meeting and of the Proof of Service will be appended to the minutes of the meeting. Scrutineers have provided a report on attendance showing that the requisite quorum of shareholders present or represented by proxy has been reached and that, according to the meeting -- accordingly, the meeting is duly constituted for the transaction of business.

The Scrutineers' Report on Attendance will be appended to the minutes before the meeting. Before proceeding with the meeting and any subsequent discussion about the future of Groupe Dynamite, as Senior Vice President, Legal Affairs and Corporate Secretary, I wish to remind you that some information discussed here today, whether in the context of a presentation or in response to questions, may constitute forward-looking information. I therefore ask that you refer to the 2 relevant slides that will appear on your screen.

The first item of business is the presentation of the company's Consolidated Financial Statements as presented by Deloitte, the company's auditor for the fiscal year ended January 31, 2026, together with the Auditor's Report thereon, a copy of which was mailed to each registered or beneficial shareholder who registered as so. Our financial statements are available on the company's website or under our profile on SEDAR+. I now submit for receipt the audited Consolidated Financial Statements for Groupe Dynamite as at the end of the fiscal year ended January 31, 2026, together with the notes thereto and the Auditor's Report thereon, and I move that the reading of the Auditor's Report be dispensed with.

The next item of business is the election of directors. As indicated in the Circular, the Board of Directors has determined to set at 8 the number of directors to be elected today. Each nominee's biography is included in the Circular made available to our shareholders. The company's nominees being Andrew Lutfy, Chris Arsenault, Hollie S. Castro, Linda Drysdale, Peter Iliopoulos, Andy Janowski, Marie-Josee Lamothe, and Angelic Vendette will hold office until the close of the next Annual Meeting of Shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the company.

Each nominee has expressed their willingness to serve as a director of the company. I move that each of these individuals be elected to the Board of Directors of the company until the close of the next Annual Meeting of Shareholders or until a successor is duly elected or appointed. As there are no other nominations, I move and second a motion to elect directors. Are there any questions on this motion from registered shareholders or proxy holders present.

As a reminder, if you have any questions regarding the motion on the nomination of each of the directors, please enter it now. We have not received any questions on this motion. If questions on this motion are received subsequently, they will be addressed at the end of the meeting. I would now like to move on to the next item of business. The next item of business is the reappointment of Deloitte as Auditor of the company until the next Annual Meeting of Shareholders, or until a successor is appointed, and the authorization of the Board to set the Auditor's remuneration.

As indicated in the Circular prepared in connection with this meeting, the Board of Directors recommends to cast the votes represented by proxy at the meeting for the reappointment of Deloitte as Auditor. I move and second the motion that Deloitte be appointed as Auditor of the company and that the Board of Directors be authorized to set the Auditor's remuneration. As a reminder, if you have any questions regarding the motion on the appointment of our Auditor, please enter it now. We have not received any questions on this motion. If there are questions received subsequently, they will be addressed at the end of this meeting.

We will now vote by way of a single electronic ballot. I remind you that items of business are: one, the election of directors; two, the reappointment of Deloitte as independent auditor until the next Annual Meeting of Shareholders and the authorization of the Board of Directors to set its remuneration. You will now be asked to vote on each item of business. We invite you to cast your votes by going to the voting page. Once there, please first press the For or Against button next to the name of each Director Nominee, then press For or Withhold next to the resolution to reappoint Deloitte as independent auditor of the company.

We now give registered shareholders and proxy holders approximately 1 minute to complete their electronic ballot. Once the electronic vote is completed, the voting page will disappear and your votes will automatically be recorded.

[Voting]

Thank you for your patience. This concludes the business of the meeting. The polls for all items of business are now closed. I'm now pleased to announce that according to the preliminary report presented by scrutineers, which is based on the proxies received prior to the meeting, all director nominees have been elected and the reappointment of Deloitte as Auditor of the Company has been approved, and the Board has been authorized to set their remuneration.

The details of the final voting results for each individual director and the reappointment of the Auditor will be set out in a Press Release and in the Voting Results filed in accordance with applicable laws as well as on SEDAR+ on the Company -- and on the Company's website. Legal formalities are now completed. So it is, therefore, time to close the meeting and move on to the Management Presentations. I therefore declare the meeting officially closed.

And I now turn the floor over to members of management in attendance, starting with our Chair of the Board of Directors and Chief Executive Officer, Andrew Lutfy, followed by our President and Chief Operating Officer, Stacie Beaver; and concluding with our Chief Financial Officer, Jean-Philippe D. Lachance, who will make a brief presentation, after which we will give registered shareholders and proxy holders a brief opportunity to ask questions.

Andrew, I will now turn the floor over to you.

[Interpreted] Thank you, Christian. Welcome to the Groupe Dynamite Annual General Meeting. I appreciate you taking the time to join us today. As I reflect on our first quarter results, what stands out is not simply the strength of the quarter, but the trajectory of the business and the progress we've made over many years. Groupe Dynamite is a stronger, more capable organization with a proven ability to scale, enter new markets and drive profitable growth. The first quarter reflects that progress. Comparable store sales increased 22.6%. Gross margin reached its highest level in 4 years, and adjusted EBITDA margin expanded to 36.8%, up 730 basis points year-over-year.

Importantly, this follows a record 2025 and demonstrates that our growth is not coming at the expense of profitability. We continue to drive both simultaneously. Looking at the second quarter to date, we're pleased to see comparable store sales tracking in the plus 9% CAD, or 11% in constant currency, supported by continuing strength in the U.S. While we remain mindful of the broader macroeconomic environment, we are encouraged with the momentum across the organization. These results are the product of strategic decisions we have made consistently over many years.

We have invested in brand elevation rather than promotions, top-tier assets rather than pursuing growth at any cost, agility rather than bureaucracy and people rather than organizational complexity. At the same time, we have remained disciplined in capital allocation, focusing on investments that generate attractive returns and strengthen the long-term earnings power of the business. The United States continues to be and will remain an important growth engine.

We now operate across 41 states, and recent openings in markets such as Las Vegas and Hawaii have expanded our reach to both local and international customers. We have also successfully entered the United Kingdom through GARAGE. Oxford Street was more than a store opening; it validated that our brands and operating model can travel internationally. It reinforced our belief that the capabilities we have built over the past 5 decades can resonate well beyond our home market. What underpins this success is a highly differentiated operating model.

As we often say, we strive to take the fashion risk out of fashion. Agility remains one of our core competitive advantages in an industry where trends shift rapidly and consumer preferences evolve continuously, speed matters. It is also one of the reasons we have chosen not to pursue a wholesale model. Maintaining direct proximity to the customer allows us to move faster, react sooner, and preserve the agility that differentiates us. That agility has enabled us to protect margins, manage inventory effectively, and capitalize on opportunities as they emerge.

GARAGE continues to connect with customers through authenticity, speed, and cultural relevance. It continues to gain market share across North America and now internationally. DYNAMITE continues to strengthen its position through compelling product, disciplined execution, and greater on-brand lifestyle engagement. Together, our brands serve distinct customers while benefiting from a shared operating platform that enhances efficiency, scalability, and profitability.

Equally important is the culture that supports our performance. Our Shared Success Program reinforces an ownership-mindset throughout the organization. When employees think and act like owners, decision-making improves, accountability increases, and performance follows. Today, more than 7,200 colleagues, many of which shareholders contribute to our success across North America and the United Kingdom. Their commitment, discipline, and entrepreneurial mindset remain key competitive advantages.

Looking ahead, our priorities remain clear. We will continue investing in our brands, high-return store growth, digital capabilities, talent development, and, of course, technology. These investments are about building a stronger, more resilient business that can continue to outperform over the long term. Our brands are healthy. Our balance sheet is strong. Our teams are executing at a high level, and we believe the opportunities ahead are among the most compelling in our company's history. We enter the balance of Fiscal 2026 with confidence and a clear focus on creating long-term value for shareholders.

With that, I'll turn it over to Stacie.

[Interpreted] Thank you, Andrew, and good afternoon. Fiscal 2025 was a strong year for the business and one we're really proud of. We entered the fiscal year focused on elevating how the brand shows up across every touchpoint, and we're seeing that translate into the performance across both GARAGE and DYNAMITE. We stayed focused in our approach, aligning product, storytelling, and the customer experience across digital and stores. When those elements combined together, we see a clear response from the customer, and that's what drove the business this year.

Before getting into each part of the business, I want to highlight the strength of our operating model. As you know, one of our key strengths is the agility of our supply chain, which allows us to read the business in real-time and react quickly to buy closer to demand and to adjust our inventory in-season. That flexibility allows us to reduce risk, stay relevant, and move with the customer as trends evolve. You see that reflected in our results with inventory turns reaching 9.85x this year.

Now turning to our stores. Our store network continues to be the primary engine of new customer acquisition, and growth. For the full year, we achieved $952 in sales per square foot. This productivity reflects our disciplined real estate strategy as we continue to prioritize higher-quality locations where footfall is stronger and our brands sit alongside premium and luxury peers. The U.S. remains a key growth driver for us with 20 stores opened this year in high-quality locations that maximize our visibility.

Examples including Somerset Collection in Troy, Michigan, which opened in May and Oakbrook Center in Chicago, which opened in December. At the same time, we renovated and relocated 13 stores within existing malls, upgrading them into higher-quality spaces. This included a relocated GARAGE and a new Dynamite 3.0 concept at West Edmonton Mall in Alberta, along with 2 additional Dynamite 3.0 locations at Promenades St-Bruno and Carrefour Laval here in Quebec.

On the digital side, we're pleased to see e-commerce grow 44.2% in fiscal 2025 with penetration reaching nearly 19%. This performance was supported by continued investments in our platform and capabilities, including the rollout of our headless architecture on mobile app, a new refreshed navigation on web, and progress on personalization across multiple touchpoints, all improving speed, flexibility, and the overall customer experience.

At the same time, we see meaningful opportunities ahead as we continue to scale. This includes continuing leveraging AI to drive more personalized experience and conversion, further integrating the community and socials into this experience and building on the early momentum we're seeing from our U.K. store launch. Over the long-term, we remain focused on increasing e-commerce penetration towards 25% of total sales as digital continues to play a central role in how we tell our brand story and engage with our customers. Another key fiscal 2025 initiative to highlight is our U.S. distribution center.

We continue to ramp up in line with our plans, strengthening service levels for our U.S. customers while also adding important redundancy to our supply chain. From a brand perspective, we truly raised the bar this year in generating what we call brand heat. More specifically, we stayed close to culture and our community to create hyper-relevant products and campaigns. For GARAGE, this includes our Sour Cherry color drop and Perky Plum drop, which featured influencer Hallie Batchelder, among others throughout the year.

Our community-led storytelling reached new heights with the Midnight Blue, Teal Tease, and Mint Julep color drops. These drops and brand moments drove significant top-of-funnel reach and reinforcing our fleece category as a top volume driver. This resulted in us more than doubling our media impressions for the full year. This momentum translated into strong customer growth, with our total active customer base up meaningfully to last year, driven by both strong new customers and returning customers, both in frequency and in spend, increasing double digits year-over-year.

For DYNAMITE, our Hotel Dynamite campaign featuring Elsa has firmly positioned the brand as a destination for holiday dressing, particularly in dresses. This campaign resonated strongly with customers, reinforcing our authority in social lifewear and contributing to strong engagement and sell-through. The growth in our brands reflects the discipline and focus across our teams. We exit the year with a proven and improved playbook and the confidence to continue scaling our impact and deepening our customer relationships.

As we look ahead to 2026, we're focused on execution and continued elevation of our brands across every touchpoint. As Andrew mentioned, the dedication of our teams grounded in our core values is what drives these results. I want to echo his gratitude to our 7,200 plus field associates, and our head office teams for their agility and passion. They are the embodiment of our culture, and their commitment is our greatest competitive edge. With the foundation we've built, we are poised to take our performance even higher.

With that, I'll turn it over to JP to walk through the financials.

[Interpreted] Thank you very much. Thank you for being here with us today. Fiscal 2025 was a record year for Groupe Dynamite, demonstrating the strength and scalability of our luxury-inspired business model. We delivered exceptional growth across revenues, profitability, and returns while continuing to invest in our brands and our operating platform. Total revenue increased 36.7% to $1.31 billion, driven by comparable store sales growth of 26.7% on top of the 12.3% in fiscal 2024 and the contribution from new stores.

Online revenues grew 44.2% to hit $247.8 million, reaching approximately 19% of total revenues. Over 4 years, the revenue -- total revenue has compounded at approximately 20% CAGR from $628 million in fiscal 2021. When it comes to our real estate strategy, this continued to deliver. We opened 20 new GARAGE stores in the U.S., strategically closed 11 locations, and renovated, or relocated 13 stores to end the year with 307 stores. Profitability also strengthened meaningfully.

Gross margin expanded 100 basis points to hit 63.8%, supported by pricing discipline, lower markdowns, and inventory management. Operating income increased 78% to hit $377.7 million, while adjusted EBITDA increased 57.6% to hit $477.9 million. Adjusted EBITDA margin expanded 490 basis points to 36.5%, driven by gross-margin expansion and meaningful SG&A leverage as we scale the business, positioning our profitability profile alongside some of the world's leading luxury houses.

Returns and cash flows remain strong. Return on Assets at 36.2%, Return on Capital Employed at 70.3% and Free Cash Flow more than doubled at $335 million, supporting continued investments in growth, primarily across our store network and digital capacities. Now looking to Q1 fiscal 2026, momentum has remained strong. Total revenues reached $310.6 million, up 37%, driven by 22.6% comparable-store sales growth and contributions from 5 new stores. Online revenues grew 35.7% to reach $50.6 million.

Gross margin reached a record 67.4%, up 530 basis points and Adjusted SG&A improved 190 basis points as a percentage of sales. Adjusted EBITDA margin reached 36.8%, up 730 basis points, reflecting continued operating leverage. When it comes to capital allocation, our top priority remains investing to strengthen our scale -- strengthen and scale rather our omnichannel platform, opening stores in high-quality locations, optimizing existing stores and building our digital and operational capacities. At the same time, we remain disciplined in returning excess capital to shareholders.

During fiscal 2025, we repurchased 883,100 shares for approximately $34.7 million under our NCIB program at an average price of $39.28. Furthermore, we paid out a one-time special dividend of $2.30 per share in Q4 fiscal 2025, reflecting our commitment to disciplined capital stewardship. Together, our disciplined investment framework, balanced shareholder return strategy, and prudent capital structure continue to place us in good position for the long term and for value creation. When it comes to our outlook for fiscal 2026, we expect another year of strong growth and margin expansion.

We are guiding for comparable store sales growth between 11% and 14% alongside total revenue growth between 22% and 25%. From a real estate perspective, we are reiterating our expectation to open 24 to 26 gross new stores, including 5 locations in the U.K. However, we're revising our net new store additions downwardly to approximately 8 to 10 from our previous expectation of 10 to 12. This revision reflects the acceleration of 2 planned closures as we continue to optimize our fleet and focus on higher-growth areas.

From a profitability standpoint, we increased our adjusted EBITDA margin outlook from our initial range of 37.75% to 39.25% to a revised range of 38.25% to 39.50%, by gross margin strength, SG&A leverage and efficiencies from the ramp-up of our U.S. distribution center. Capital expenditures are expected to range between $100 million and $110 million, primarily supporting new store openings, store optimization initiatives and further investment in our digital and operational infrastructure. While the macroeconomic environment remains dynamic, our agile model, disciplined inventory management, and open-to-buy strategy positions us well to execute.

In conclusion, a brief look at the key levers driving our continued growth will take place now. First, driving comparable store sales through brand elevation, pricing optimization, and store productivity. Second, disciplined store expansion, particularly GARAGE in Tier 1 to Tier 3 in U.S. locations, targeting 350 stores by fiscal 2028, with potential upside given the strong productivity trends. Third, e-commerce, currently approximately at 19% of revenues with a long-term target of approximately 25%, supported by continuous investment in our digital and omnichannel capacities.

And finally, we are expanding our international reach. Fiscal 2026 marked the launch of GARAGE in the U.K. through both e-commerce and our first 2 retail stores near London and on Oxford Street, which rank as 2 of the best store openings in the company's history. We will remain focused on scaling the business thoughtfully and profitably over time. Together, these levers continue to position Groupe Dynamite process to scale profitably and deliver long-term value.

On that, I will turn the floor over to Christian for the question period. Thank you.

[Interpreted] We will now be thrilled to take questions from duly registered shareholders and proxy holders. As a reminder, comments and questions may be entered in the Questions tab of the platform.

This is now the end of our question-and-answer session. I will turn the floor over to Andrew for the conclusions. Thank you.

[Interpreted] This is now the end of our Annual Meeting of Shareholders for Groupe Dynamite. On behalf of the Board of Directors and the management team, I would like to thank you for participating in our Annual Meeting of Shareholders here today. We are extremely grateful for the work and dedication of our employees, the confidence of our shareholders, and the support of all of our stakeholders. Thank you for joining us for our virtual Annual Meeting, and we look forward to seeing you again next year.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning, ladies and gentlemen, and welcome to the Groupe Dynamite First Quarter Fiscal 2026 Results Conference Call. [Operator Instructions]

And I would like to turn the conference over to Alex Limosani, Manager, Investor Relations and Corporate Finance at Groupe Dynamite. Please go ahead.

Thank you, and good morning, everyone. Joining me on the call are Andrew Lutfy, Chief Executive Officer and Chair of the Board; Stacie Beaver, President and Chief Operating Officer; and JP Lachance, Chief Financial Officer. This morning, Groupe Dynamite released its financial results for the 13-week period ended May 2, 2026. The press release and related disclosure documents are available in the Investors section of our corporate website at groupedynamite.com and on SEDAR+. We will begin the call with short remarks by management, followed by a question-and-answer period with financial analysts only. A replay of this webcast will be available shortly after the conclusion of the call.

Before we begin, I would like to refer you to Slide 2 of our Q1 2026 investor presentation, also available in the Investors section of our website for a full statement on forward-looking information and to the presentation's appendix for a reconciliation of non-IFRS to IFRS financial measures.

I will now turn the call over to Andrew.

Thank you, Alex, and good morning, everyone. I appreciate you taking the time to join us today. As I reflect on our first quarter results, what stands out is not simply the strength of the quarter, but the trajectory of the business and the progress we've made over many years. Groupe Dynamite is a stronger, more capable organization with a proven ability to scale, enter new markets and drive profitable growth. The first quarter reflects that progress. Comparable store sales increased 22.6%. Gross margin reached its highest level in 4 years and adjusted EBITDA margin expanded to 36.8%, up 730 basis points year-over-year. Importantly, this follows a record 2025 and demonstrates that our growth is not coming at the expense of profitability. We continue to drive both simultaneously.

Looking at the second quarter to date, we're pleased to see comparable store sales tracking in the plus 9% CAD or 11% in constant currency, supported by continuing strength in the U.S., while we remain mindful of the broader macroeconomic, and we are encouraged with the momentum across the organization. These results are the product of strategic decisions we have made consistently over many years. We have invested in brand elevation rather than promotions, top-tier assets rather than pursuing growth at any cost, agility rather than bureaucracy and people rather than organizational complexity. At the same time, we have remained disciplined in capital allocation, focusing on investments that generate attractive returns and strengthen the long-term earnings power of the business.

The United States continues to be and will remain an important growth engine. We now operate across 41 states and recent openings in markets such as Las Vegas and Hawaii have expanded our reach to both local and international customers. We have also successfully entered the United Kingdom through Garage. Oxford Street was more than a store opening. It validated that our brand and operating model can travel internationally. It reinforced our belief that the capabilities we have built over the past 5 decades can resonate well beyond our home markets. What underpins this success is a highly differentiated operating model. As we often say, we strive to take the fashion risk out of fashion.

Agility remains one of our core competitive advantages in an industry where trends shift rapidly and consumer preferences evolve continuously, speed matters. It is also one of the reasons we have chosen not to pursue a wholesale model. Maintaining direct proximity to the customer allows us to move faster, react sooner and preserve the agility that differentiates us. That agility has enabled us to protect margins, manage inventory effectively and capitalize on opportunities as they emerge. Garage continues to connect with customers through authenticity, speed and cultural relevance. It continues to gain market share across North America and now internationally. Dynamite continues to strengthen its position through compelling product, disciplined execution and greater on-brand lifestyle engagement. Together, our brands serve distinct customers while benefiting from a shared operating platform that enhances efficiency, scalability and profitability.

Equally important is the culture that supports our performance. Our shared success program reinforces an ownership mindset throughout the organization. When employees think and act like owners, decision-making improves, accountability increases and performance follows. Today, more than 7,200 colleagues, many of which shareholders contribute to our success across North America and the United Kingdom. Their commitment, discipline and entrepreneurial mindset remain key competitive advantages. Looking ahead, our priorities remain clear. We will continue investing in our brands, high-return store growth, digital capabilities, talent development and, of course, technology. These investments are about building a stronger, more resilient business that can continue to outperform over the long term. Our brands are healthy. Our balance sheet is strong. Our teams are executing at a high level, and we believe the opportunities ahead are among the most compelling in our company's history. We enter the balance of fiscal 2026 with confidence and a clear focus on creating long-term value for shareholders.

With that, I'll turn it over to Stacie.

Thank you, Andrew, and good morning, everyone. Q1 was a strong start to fiscal 2026 and came in ahead of our expectations. Across both GARAGE and DYNAMITE, customers responded positively to our assortments, our marketing and the consistency of the experience we are delivering across channels. At the core of our performance is our ability to remain agile in a dynamic environment. Our competitive advantage continues to be our ability to read and react to our business quite rapidly. By leveraging our supply chain and closely monitoring customer demand, we are able to make informed decisions in real time, chase into winning styles and manage inventory with discipline. This agility is further supported by our U.S. distribution center as it approaches full ramp-up, improving speed, efficiency and service levels across our growing U.S. business while providing additional scale to support future growth.

Our physical fleet continues to be a significant driver of growth and customer acquisition. This quarter, our premium real estate, localized execution and a compelling in-store experience drove exceptional productivity across the fleet. Sales per square foot reached $1,001, representing an increase of 32.4% compared to last year. These results reinforce our disciplined real estate strategy. We continue to prioritize high-quality locations where our brands can maximize visibility, productivity and customer engagement. During the quarter, we opened 5 new stores, including 3 in the U.S. and 2 in the United Kingdom, more specifically, Bluewater Center in Dartford, England and Oxford Street in Downtown London. We remain encouraged by the early response in the U.K. and continue to see strong customer engagement as we build the business. These results continue to reinforce our disciplined real estate strategy and confidence in the quality of our pipeline.

Turning to digital. E-commerce sales increased 35.7% during the quarter, supported by growth in both traffic and conversion. This performance reflects the investments we have made to improve the online shopping experience, including enhancements to site navigation and functionalities that make it easier for customers to discover and shop our assortments. Looking ahead, we continue to see opportunities to strengthen our digital capabilities. Our focus remains on creating a more personalized experience for the customer and leveraging AI and technology to improve relevance, engagement and conversion across all channels. Products remained a key driver of our results this quarter. Across both brands, customers responded well to our assortments and to the newness we introduced throughout the season.

For GARAGE, our color drops resonated well with the customer and created meaningful brand moments throughout the quarter. The GARAGE community continues to grow, supported by strong engagement across our ambassadors, influencers and other social programs. We are seeing that strategy translate into increased brand awareness and customer engagement across all markets. At Dynamite, dresses remained a key category driver throughout the quarter, supported by strong product execution and focused marketing initiatives. Our unfiltered content series featuring Sierra Miller, along with targeted customer events helped drive engagement and support traffic to the brand. These efforts, combined with strong product performance in the category contributed to the healthy sell-through and continued momentum for the banner.

Looking at the quarter overall for GDI, performance was balanced across both stores and digital. Together, these channels contributed to approximately 19% growth in total transactions. Strong customer demand and our pricing power supported an increase in average unit retail of approximately 15%. These results demonstrate the strength of our assortments and the value proposition we continue to deliver to our customers. This strong customer response is also reflected in our customer metrics. We continue to see meaningful expansion of our active customer base year-over-year by attracting new customers and increasing the retention and frequency among existing customers. As a result, average customer lifetime value increased meaningfully year-over-year as well as quarter-over-quarter.

As we look at the remainder of the year, our priorities remain unchanged. We will continue to focus on disciplined execution, delivering compelling products and investing in the customer experience to drive profitable growth across both brands. Supported by our agile operating model and the strength of our teams, we believe we are well positioned for fiscal 2026 and beyond. Before I conclude, as always, I want to thank our more than 7,200 field office and head office associates. Their commitment, agility and passion are what makes these results possible. Every day, they bring our brands to life for our customers and continue to differentiate us in the marketplace. I'm incredibly grateful for their contributions and proud of what we've accomplished together this quarter.

With that, I will turn it over to JP to walk through the financial results.

Thank you, Stacie, and good morning, everyone. Total revenue for Q1 2026 increased by 37% to $310.6 million, driven by comparable store sales growth of 22.6% or 24.7% on a constant currency basis, contributions from new store openings, including 2 locations in the U.K. and continued momentum across both banners. Staying on the top line, online revenue increased by 35.7% to $50.6 million, reflecting continued strength in our digital channel and balanced growth across stores and e-commerce. Gross profit for Q1 increased by 48.8% to $209.3 million, with gross margin expanding by an impressive 530 basis points to 67.4%, the highest level in 4 years. This performance was mainly driven by lower tariffs compared to last year as well as by controlled merchandise cost increases, lower markdowns and the continued strength of our pricing strategy.

Turning to expenses. SG&A for Q1 2026 increased to $102.2 million compared to $74.7 million in Q1 2025. This increase was primarily driven by the company's growing scale and activities, including higher wages and salaries, selling and marketing investments and incremental operating costs to support our growth initiatives, including the U.K. launch and continued investment in IT and software. As a percentage of sales, adjusted SG&A decreased by 190 basis points to 30.5% compared to 32.4% last year, demonstrating operating leverage as revenue scaled.

Moving down the P&L. Operating income increased by 80.1% to $79.8 million. Adjusted EBITDA increased by 71.3% to $114.4 million, representing an adjusted EBITDA margin of 36.8%, up by an impressive 730 basis points year-over-year. The margin expansion was driven by 530 basis points of gross margin expansion and 190 basis points of adjusted SG&A leverage, underscoring the strength and scalability of our luxury-inspired business model. Net earnings increased by 89.4% to $51.7 million, supported by higher revenue and margin expansion, partially offset by higher SG&A and depreciation and amortization. Adjusted net earnings increased by 101.8% to $57.3 million and adjusted diluted EPS increased by 100% from $0.25 per share to $0.50 per share in Q1 of 2026.

Turning to cash flow. We generated free cash flow of approximately $4 million in Q1, reflecting the timing impact of significantly higher tax payments during the quarter versus prior year, while we continue to invest in the business, including new stores, store optimization, digital and operational infrastructure. From a balance sheet perspective, we returned capital while maintaining significant financial flexibility. Our net leverage ratio was 1.01x at quarter end, and we ended Q1 with approximately $292 million available under our credit facilities, providing flexibility to continue investing in growth, manage market volatility and return excess capital to shareholders when appropriate. We also continue to deliver strong capital efficiency. Return on assets reached 38.6% compared to 23.8% last year, reflecting improved profitability and more effective use of our asset base. Return on capital employed increased to 74.4% compared to 44.5% in the prior year, highlighting the strength of our model and our disciplined approach to deploying capital.

Turning to capital allocation. During Q1, we repurchased 461,200 shares under our NCIB for a total of approximately $38.6 million. In addition, we completed an approximately $51 million repurchase for cancellation from our principal shareholder in connection with the previously announced secondary offering. We view both actions as disciplined capital allocation decisions consistent with our focus on returning capital to shareholders while maintaining flexibility to fund our growth initiatives and deploy capital toward high-return opportunities.

Looking ahead to the remainder of fiscal 2026, our strong Q1 performance gives us confidence in the full year outlook, while we remain balanced in our approach given the dynamic macro environment. We are reiterating our comparable store sales growth guidance of 11% to 14% as well as our total revenue growth guidance of 22% to 25%. Q1 performance reinforces our confidence in the year, while our unchanged top line outlook reflects a disciplined planning approach and continued focus on consistent execution. From a real estate perspective, we continue to expect 24 to 26 gross new store openings in fiscal 2026, including 5 locations in the U.K. We are revising our expected net new store openings to approximately 8 to 10, reflecting the acceleration of 2 planned closures tied to fleet optimization. This is consistent with our disciplined capital allocation approach and our focus on deploying capital toward the highest return opportunities. We remain focused on upgrading the quality of our fleet, investing in higher-growth markets and prioritizing locations where we see the strongest long-term revenue and return potential.

From a margin perspective, we are increasing our adjusted EBITDA margin outlook to a range of 38.25% to 39.5%, compared to our prior range of 37.75% to 39.25%, mainly due to the strength of our gross margin in Q1. This represents a 50 basis point increase to the low end of the range and a 25 basis point increase to the high end of the range. This revised outlook reflects 3 key drivers. First, we expect gross margin strength primarily in the first half of the year, including Q1 and Q2, supported by IMU expansion, our pricing strategy, disciplined inventory management and more importantly, lower tariff pressure compared to last year. Second, we expect SG&A leverage to contribute throughout the year as we scale revenue while managing costs with discipline. Third, we expect incremental efficiencies from the ramp-up of our U.S. distribution center as the facility continues to support our growth and improve operational efficiency.

Turning to capital expenditures. We continue to expect CapEx of $100 million to $110 million for fiscal 2026. CapEx remains our top capital allocation priority with most of this envelope directed toward growth initiatives, including new store openings, store optimization and continued investment in digital and operational infrastructure. While the macro environment remains dynamic, our focus on middle and higher-income consumers, accessible price points and strong brand positioning leave us well positioned within consumer discretionary. Our operating model is built to navigate uncertainty supported by disciplined inventory management and our open-to-buy chase-driven approach with over 50% of inventory dollars left open to read and react. We remain focused on advancing our brand elevation initiatives, investing in our platform and executing with discipline.

With that, I'll turn the call over to the operator to open the line for questions from our financial analysts.

[Operator Instructions] First, we will hear from Brian Morrison at TD Cowen.

JP, maybe we can just talk on the color on same-store sales growth trends throughout Q1. You did say 28% growth through the first 2 months. So maybe walk us through that. And then what you've seen in Q2 to date? I know you -- I think you said 9% growth, 11% constant currency. Can you maybe just walk through that as well and provide comfort in the high single-digit rate that's implied through guidance for the remainder of the year, please?

Brian, it's Stacie. I'll take the question. So Q1, we put up a plus 22.6% in the [ 28% ] you're referencing is what we called out the first 8 weeks of the quarter. To be noted, we were ahead of Easter at the time. So Easter had happened, but we haven't lagged against it, which I think is a [indiscernible] in the industry. So we're still very excited about the 22.6% we put up. When I look at Q2, we've called out the 9%. What I want you guys to know is that the 2-year stack from '26 on Q1 would be 35.6%, and we're still seeing growth in that 2-year stack as we go into Q2. So again, still optimistic.

And sorry, can you just give us some comfort on why you see high single-digit rates being maintained with the stronger comps that you're going through in the back half of the year?

Yes. I think we're still seeing great customer reaction. Our customer active base is up. Our frequency is up, so acquisition and frequency is up. So she's coming back more, she's spending more. Her lifetime value is more to us. So we still think the customer is resonating with what we're putting out there.

I was just going to say your comment on 15% AUR during the quarter. Do you feel that you still have ability to take prices or IMUs or lower promo? Or do you feel you have the ability to take this higher?

Yes. I think we still believe in our pricing power. I think we're putting the quality back into or elevating the brands in general, and she's resonating with it. Our UPT is not changing and her lifetime value with us is growing.

Next question will be from Irene Nattel at RBC.

Just to continue beating the same-store sales force. In order to get to the higher end of your guide for the year, you would need to see an acceleration in the 2-year stack as we move through. Can you walk us through what you think the drivers might be that would end up with, let's say, that 11% versus the 14% or consistent versus a step-up in the 2-year stack?

Yes. I think there's a lot of conversation around the comps. I just want to call out the total sales being at plus 37% for the quarter. Again, we're opening aggressively. We're seeing the U.S. perform exceptionally well. You guys can see the difference between Canada and the U.S. So that's where that comp number could be compressed, but the overall sales on new stores are outperforming as well as the U.S. seems to be extremely strong right now and maintaining from where we left or exited '25.

And then just a follow-up. When you look across the offering, can you talk about where you're seeing some strong sell-through on a category basis, where there might be a little bit of softness, if there is any, and I know we hate to use weather, but what role weather may have played because I don't know about anybody else, but it was a long time coming on spring/summer this year.

Yes, it definitely was sitting up here in Montreal. But yes, category-wise, not that different from what I've spoken to in the past. I'll start with Dynamite, significantly driven off of dresses, which is a key category we want to stand behind. But I would also say the tops business in total has picked up for that brand and is resonating really well. And then they did a good job on hitting on a couple of key items that seem to be very trend apparent, i.e., the Anorak jacket and the Capri. And then for Dynamite -- I'm sorry, for GARAGE, also consistent in their fleece category, continues to perform, and we believe we're taking market share in that off-duty as we call it, or even on duty, introducing more activewear she can actually work out in.

So big key items there would be consistently you guys have seen our sweet cami, but also the booty short and then everything fleece grounded.

The only category I would say is soft because it's soft across both. So when we see that I tend to think it's a macro element is denim, and there's just not much new in that category right now. So denim shorts is picking up with the weather, but as a trend, we're not seeing much in long-leg denim right now from either side. Other than that, everything looks very strong.

[Operator Instructions] Next will be Stephen MacLeod at BMO Capital Markets.

I just had a question about the store outlook for 2026. I know you referenced it in your prepared remarks around the net new openings. But is that -- the net new openings being down year-over-year -- not down year-over-year, but down relative to previous guidance. Is that something you expect to continue into the next fiscal year? Or is that just isolated to this year specifically?

Steve, thank you for the question. So you are correct. We've added 2 store closures to our guidance compared to prior quarter. Those 2 stores were actually on our list for closures. We simply decided to accelerate those. So those 2 closures would have happened next year. They've simply been pulled forward to this year as we continue to optimize our network. Now to be clear, those 2 stores were profitable. They simply were not profitable enough to our standards. So we've decided to do the right thing for our business and close those 2 stores a little bit sooner than expected.

So this year, that brings your total amount of closures for the guidance to 16 closures which is certainly on the high side. So as we continue to optimize our network in the next couple of years, you should expect this number to be lower. And as a result of that, our net new additions should be higher than the 8 to 10 we're calling out this year as we're taking the opportunity this year to really optimize the network. Does that answer the question well?

Next question will be from Adrienne Yih at Barclays.

So on the -- JP, on the gross margin, I mean you materially beat expectations in your first quarter. I think the last time annual guidance was for the couple of hundred basis points of total EBITDA expansion, half of it would come from GM. It looks like you handily kind of beat that in the first quarter. So can you help us with what happened in 2Q and then kind of shaping for the back half of the year? And then, Andrew, could you just talk about sort of your target household income, she is a very kind of higher upper end. We're not seeing any impact sort of in this kind of cohort, $100,000 and up thus far, seems pretty resilient. Any thoughts on kind of like your cohort and the resiliency in that spend?

Adrienne, so I'll start with the first part of your question. So you are correct in that gross margin was very, very strong in Q1. It was actually stronger than we had internally planned. So we're very pleased with the performance of our gross margin. To give you a little bit more color on the gross margin for Q1, our IMUs were very strong. Certainly, the tariff situation year-on-year was more favorable, which certainly that part we knew. And also our markdown rate was a little bit lower than expected. So these 3 things together really contributed to a healthy gross margin rate in Q1, and it is that strength in our gross margin in Q1 that actually had us revised the full year outlook on adjusted EBITDA margin.

So if I take the midpoint of the range, we've basically increased our EBITDA margin range by, call it, 40 basis points compared to prior guidance. And I would attribute the whole 40 basis points to the strength of the gross margin. So in prior earnings calls, again, taking the midpoint of the range, we were looking for 200 basis points improvement year-on-year. And I did say half of it would be coming from GM and half of it from SG&A. Well, in this case here, I would attribute the extra 40 basis points to gross margin alone. So SG&A continues to be very healthy and where we want it to be, but the gross margin is really surprising us to the upside in Q1. And I'll leave the second part of the question to Andrew.

And that was regarding the health of the customer, if I'm not mistaken?

Yes.

Listen, we're not seeing any issues with the customer. Listen, our historically low markdown rate has gotten even lower. So there's certainly no -- there doesn't seem to be any pushback in terms of pricing, supply demand, all that kind of stuff. Listen, we're -- I very much believe in this K-shaped economy. And that top 20% of consumers is still seemingly in a good place, still in a good place in terms of disposable income. The U.S. is definitely on fire. SpaceX is now bigger than Canada in terms of market cap. So Elon Musk is the new Spain.

Yes. So no, from our vantage point, the customer is still in really good shape. And listen, I mean, I still look at the 2-year stack and feel very, very, very good about where we are. And the performance of our new stores, I mean, it's great. We opened new stores, and there's lineups that go literally around the block and through the shopping center. The customers are just ecstatic to see us and these new stores keep overperforming in these new markets. So it's really great.

Next question will be from Mark Petrie at CIBC.

Just a follow-up actually on the topic of pricing. And just curious about any color about how that gets absorbed or reacted to across regions. Just curious if you've seen any different reaction to price increases, particularly in Canada, just given maybe a longer legacy with the brand.

Yes. Not really. I mean, I would say in so far as pricing or even if you look at markdowns or whatnot, no, we don't see really any regional issues, I must say, happy to report. There seems to be -- listen, it's just -- listen, the Canadian economy is just not as strong as the U.S. economy, and I think it's really more broadly that, but it really doesn't show up in the assortments or the merchandising mix or even promotional activity or other.

Next question will be from Vishal Shreedhar at National Bank Financial.

I wanted to get your perspective on the online growth, still very strong relative to the business, but slower than the prior 2 quarters. Is that seasonality or anniversary-ing stronger growth? Or -- and what e-commerce growth rate should we expect? I know you gave us a penetration rate target, but through the course of the year, as you even anniversary higher growth -- higher growth in that business, what should we expect?

Yes. It's Stacie. Again, I'll take that. We're happy with the year-over-year growth and feel like it's healthy at almost 36%. And it's a split between traffic and conversion. So again, like to see that there's balance there. We think the increased performance is coming from [indiscernible] including how she's navigating the site, the functionality, all things we're working on, but we know we have more opportunity there and shifting more technology towards AI and relevance for her to engage and convert. But happy with the quarter. Last year, we were up 21%. So again, a 2-year stack on digital there is at 57%. What we're actually trying to get is that penetration number going up. So that didn't move in Q1. It held pretty flat. As you guys know, we're trying to chase for that 25% penetration. But we do think through the assortment mix we're going to be offering and the double down on technology and that user experience and her journey in total that we're going to get there. But I was relatively pleased with how Q1 delivered on digital. Does that answer your question, Vishal?

Thank you.

Next question will be from Chris Li at Desjardins.

JP, you did a good job sort of quantifying and calling out the gross margin drivers for the quarter. My question is, as you look into the second half, now once you've lapped the tariffs impact, the other factors you mentioned in terms of lower markdowns and cost management, do you expect those growth to continue to persist? And how should we think about the gross margin rate in the back half of the year?

Chris, thank you for the question. So certainly, we would not expect Q3 and Q4 to show improvement of 530 basis points like we've just delivered in Q1. But again, I think you've hit it on the nail, whereby year-on-year, we have an easier comparison for both Q1 and Q2, especially knowing all the tariff noise that we had to go through last year. So for Q2, we still expect another strong quarter in terms of gross margin as a rate of sales. It might not necessarily be the full 530 basis points year-on-year improvement, but it will be quite healthy.

Moving on to Q3 and Q4 and especially distribution center is now pretty much fully ramped up. That also brings benefits to our P&L. And as a result of that, we do believe Q3 and Q4's gross margin are likely to be higher than prior year as a rate of sales. It will certainly not be the same magnitude as the first half of the year, but we do see a better gross margin year-on-year for H2 as well. So for the whole year, it basically positions us very well to deliver a good number for the full year. But yes, the back half, we also expect some strength in terms of the gross margin as a rate of sales.

Next question will be from Martin Landry at Stifel.

Just want to touch on Canada versus U.S. Your Canadian sales were up 7% year-over-year, a bit of a slower growth than what we've seen in the past quarters. Can you talk a little bit about the 2 brands, DYNAMITE and GARAGE? I think in your opening remarks, you did say that Dynamite performed well, but I'd love to add a little bit more color on that. And any trends you can talk to us about -- in terms of basket versus traffic would be super helpful for Canada?

Yes. I think overall, again, as I mentioned at the beginning, we're excited by the plus 37 comps overall. We're also turning faster if you guys caught the turn this quarter was at 9.69%. So as we look to our allocation of assets, the U.S. always wins there, too, with a more accretive margin. So we're running a little tighter probably in Canada, but it's the traffic piece that's a little slower. But when she's coming in, she's converting. And that's why I go back to the customers responding. There doesn't seem to be a pushback in AUR because obviously, we question that. The transactions being up in both countries and the business being up in both countries leads us to believe it's a demand.

So at the beginning, I'm never allowed to say weather because I can't control it, but we're hoping to see an uptick in the weather [Technical Difficulty] that different in a product category and an AUR pushback. We're not running more markdowns in Canada than the U.S. The businesses are actually in parallel. We're just seeing the U.S. greatly outperform, and that's in comps and aggressively in the new stores.

Next question will be from Michael Glen at Raymond James.

Components of gross margin would you say are inflationary right now? Do you see inflation in product costs? Are you seeing much inflation in freight? Just trying to -- I know there's a lot of positive things happening in gross margin. What's actually a headwind for gross margin right now?

I'm sorry, you cut off a little bit on our side for 2 or 3 seconds. So can I please ask you just to repeat the question quickly?

What components of gross margin or cost of goods sold, whether it be product cost or freight, are you seeing the most inflation on right now?

In terms of rates, I would say where we're seeing the most inflation is probably around the freight component. This being said, as a percentage of total cost of goods sold, this is certainly not the majority. So this inflation piece is certainly something we are comfortable dealing with as part of our ongoing AUR strategy and IMU strategy. So we are seeing a little bit of inflation in certain pockets of the cost of goods sold, but this is nothing that we can't deal with given the magnitude of the impact we're seeing right now. Does that answer your question well, Michael?

So product cost overall just remains stable for you?

Yes. Product cost is remaining stable.

Next question will be from Mauricio Serna at UBS.

Maybe just on the quarter-to-date commentary of 9% comp, could you break that down into AUR and transaction growth? And just could you remind us what's your leverage point on the comp sales, just given your continuous store opening program?

So the 9% quarter-to-date comp that we've provided, AUR certainly is the main driver of that number at the moment, which is similar to what you've seen also in the prior quarter. So I wouldn't say there's a major shift here. The components in terms of their contribution remain aligned with what you've seen. And then on the second part of the question, the leveraging aspect, certainly, as we continue to deliver same-store sales in line with our annual guidance, that definitely creates opportunities for us in terms of getting better as a rate of sales. So certainly, that 9% that we talked about or 11% to 14% for the full year, that is more than enough to provide us with operating leverage at the SG&A level. And I will also remind everyone that the 9% number that we've quoted for Q2 to date, that is in CAD. In constant currency, that would be 11%.

Got it. That's very helpful. And you expect that to continue to be driven by AUR for the remainder of the quarters?

As we think about the full year guidance, 11% to 14%, certainly, AUR will be a key component of that. But as any good retailer would say, traffic and transactions is incredibly important, and that will make an impact on the full year number as well.

Next question will be from Luke Hannan at Canaccord Genuity.

I just wanted to follow up on the AUR conversation. I know part of the strategy in being located in these higher-tier shopping centers was, I guess, helping to sustain the pace of AUR growth that you've had of late. I'm curious to know when it comes to the competitive set that you're seeing in those shopping centers, has the rate of magnitude, I guess, of their price increases or any of their portions of the assortment that might overlap with yours? Has the pace of price increases there changed at all given the geopolitical backdrop?

Sorry. No, I would say, to answer your question on AUR, again, looking at pricing power, not overpricing the product. We're elevating the product. There's a reduction in markdowns. We think the product is also being driven by brand heat, which is also up and the transaction growth at plus 19%. Again, I'm not concerned about the AUR. As far as the competitive set, depending on who you're looking at, we're still well in the mark and ticket for ticket, we're still under most. Again, most of those U.S. retailers are still highly promotional. So their ticket is one thing, their out-the-door price is another. We don't play that high low game. So out the door price we're probably higher to the mix of the real estate where we're going when you compare us to an Alo or Lululemon, those likes we're still, as we like to say, the cheapest house on the nicest block. So we are still feeling very confident about our AUR strategy go forward.

Next question will be from John Zamparo at Scotiabank.

I wanted to ask about your relatively newer vintage of stores specific to the U.S. And I wonder if you can quantify average store sales in year 1 for openings in, say, '24 or '25 or early '26 so far? And what type of growth do you see as those new stores enter year 2?

I'll take that. So -- Well, it's funny you should ask because we were actually just looking at that. And listen, I'm happy to report that whether we look at the more recent vintages or the ones of 2, 3, 4 years ago, they all -- what's incredibly promising is they all have more or less the same on a year-to-date basis, on an annual basis. So the good news is, is the beta volatility from different vintages is incredibly low. They are remarkably similar. So that's great. And even as we look at the 2025 vintages that we've opened up. Now of course, there's only a few that would be lapping this year, they as well are comping up. So I think it stands to reason that this consistency would be true because, listen, you've got a consistent set of eyes, consistent leadership running the real estate strategy. I mean this is an area of responsibility for which I deeply am involved in. So there's consistency in the strategy, in the standards, in the people running the standards. And that discipline is providing consistent results, which is great.

Next question will be from Jon Keypour at Goldman Sachs.

I was just wondering if you guys could size by quarter in 2025, what the tariff impact was to gross margin? And if possible, what the flip side of that benefit was specifically from tariffs in 1Q gross margin this year?

Thanks for the question. We haven't broken it down specifically, but the best color I can give you is the following. If you look at Q1 and Q2's gross margin last year compared to the prior year, you'll see that for the first half last year, gross margin was down 200 basis points year-on-year if memory serves. And then if you look at the second half of the year last year, which had no tariff impact or almost none, then your gross margin as a rate of sales year-on-year was actually the other way around, so up 200 basis points last year. So tariffs are definitely the biggest driver in that significant shift between minus 200 H1 and plus 200 H2. So hopefully, that gives you a good idea of the magnitude of the tariffs that we had to go through in H1 last year, whereby in the second half, there was almost none. Okay. Does that answer your question, Jon?

Yes.

And at this time, we have no other questions registered. Please proceed.

Thank you. Well -- listen, thank you, everyone. I appreciate the call. Listen, I mean, I could feel the energy on the line is certainly a little less enthusiastic than prior calls. But I just want to put it out there. I mean, we're delivering on the guidance. As a matter of fact, we're raising the guidance. We're very comfortable with our numbers. We're very excited with the new store openings and our business. We're very enthused with where we're going digitally and fundamentally, our strategic plans and ambitions. The team is in a good place. And so notwithstanding the mood, which is a little softer on this call, I can promise and assure you we're actually far more excited internally and looking forward to a very strong year. So with that, I thank you, and I wish you all a wonderful day and a wonderful week.

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Groupe Dynamite Fourth Quarter and Fiscal 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] And I would like to turn the conference over to Alex Limosani, Manager, Investor Relations and Corporate Finance at Groupe Dynamite. Please go ahead.

Thank you, and good morning, everyone. Joining me on the call are Andrew Lutfy, Chief Executive Officer and Chair of the Board; Stacie Beaver, President and Chief Operating Officer; and JP Lachance, Chief Financial Officer.

This morning, Groupe Dynamite released its financial results for the 13- and 52-week periods ended January 31, 2026. The press release and related disclosure documents are available in the Investors section of our corporate website at groupedynamite.com and on SEDAR+.

We will begin the call with short remarks by management, followed by a question-and-answer period with financial analysts only. A replay of this webcast will be available shortly after the conclusion of the call.

Before we begin, I would like to refer you to Slide 2 of our Q4 2025 investor presentation, also available in the Investors section of our website for a full statement on forward-looking information and to the presentation's appendix for your reconciliation of non-IFRS to IFRS financial measures. I will now turn the call over to Andrew.

Thanks, Alex, and good morning. I'd like to welcome you, our valued participants. We know your time is precious, so thank you for prioritizing us in your busy schedules. As most of you know, Q4 marks a strong finish to what has been a defining year for Groupe Dynamite. Fiscal '25's performance was nothing short of exceptional. Notwithstanding a great number of challenges, most of which were outside our control, our performance truly exceeded expectations. As we often say, first who, then what. Well, our agile GDI family, living our shared values, proved to be the right whos delivering incredible results, proactively mitigating risk and often enough, turning them into opportunities.

As for the numbers, they speak for themselves. This was both a record Q4 and fiscal year, putting us in a class of our own. Q4's comparable brick-and-mortar sales were up 30.4% and 26.7% for the year. Q4's adjusted EBITDA margin was 36.6%, up a staggering 740 basis points and for the year, 36.5%, up 490 basis points. Q4's gross margin was a healthy 63%, up 400 basis points and 63.8% for the year, up a remarkable 100 basis points. One metric which is near and dear to our hearts, inventory turns, reached an astonishing 9.9x. It's the singular metric that speaks volumes to taking the fashion risk out of fashion. Staying with numbers, we're also pleased to report 8 weeks into Q1, comparable brick-and-mortar sales are up 28%, same-store sales.

But enough of the quantitative in these tumultuous times, what is clear is we are delivering on emotion. The brand heat is real. Alex and Rachel are happy. And speaking of happy, pleased to report our 2 best store openings in GDI's history were recorded most recently with the opening of GARAGE Bluewater and our GARAGE flagship on Oxford Street. These 2 stores joined the U.K. e-commerce platform, which has been live since the beginning of February. It's very early days, but incredibly encouraging to see how obsessed this U.K. Alex is for her GARAGE. And allow me to make a big shout out to the teams who brought this all to life. Congratulations. You should be proud. You guys crushed it.

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So that was what I would call a political message. So now back to our regular programming. So let's talk about ownership culture. Proud to report all employees are shareholders through our shared success program with many also participating in our generous share purchase plan. That equity not only drives engagement, but creates an important alignment of business interest. Effectively, we're all rowing in the same direction. Still on the people front, once again, we've been recognized as one of Canada's top employers for young people and one of Montreal's top employers, 2 distinct awards.

From an investment standpoint, this was another record year of capital investment. Whether the opening of new stores or upgrading and relocating existing ones, we have stayed true to our strategy of investing in top-tier assets while staying disciplined in closing stores, which did not elevate the brand. It's worth noting the vast majority of stores we do close are, in fact, profitable. They're just not profitable enough, and they create burdens on our teams and inventories.

As we look ahead, we remain disciplined and relentless in execution while accelerating innovation at scale, including the continued strategic deployment of AI to drive performance, efficiency and maintain our competitive advantage. We are confident in our ability to sustain clear measurable leadership across the metrics that define performance, which are revenue growth, adjusted EBITDA, return on assets and best-in-class inventory turns, outperforming both our direct and most luxury peers.

With that, let me hand it over to Stacie.

Thank you, Andrew, and good morning, everyone. Fiscal 2025 was a strong year for the business and one we're really proud of. We entered the fiscal year focused on elevating how the brand shows up across every touch point, and we're seeing that translate into the performance across both GARAGE and Dynamite. We stayed focused in our approach, aligning product, storytelling and the customer experience across digital and stores. When those elements combined together, we see a clear response from the customer, and that's what drove the business this year.

Before getting into each part of the business, I want to highlight the strength of our operating model. As you know, one of our key strengths is the agility of our supply chain, which allows us to read the business in real time and react quickly to buy closer to demand and to adjust our inventory in season. That flexibility allows us to reduce risk, stay relevant and move with the customer as trends evolve. You see that reflected in our results with inventory turns reaching 9.85x this year.

Now turning to our stores. Our store network continues to be the primary engine of new customer acquisition and growth. For the full year, we achieved $952 in sales per square foot. This productivity reflects our disciplined real estate strategy as we continue to prioritize higher-quality locations where footfall is stronger and our brands sit alongside premium and luxury peers. The U.S. remains a key growth driver for us with 20 stores opened this year in high-quality locations that maximize our visibility, examples including Somerset Collection in Troy, Michigan, which opened in May; and Oakbrook Center in Chicago, which opened in December.

At the same time, we renovated and relocated 13 stores within existing malls, upgrading them into higher-quality spaces. This included a relocated GARAGE and a new Dynamite 3.0 concept at West Edmonton Mall in Alberta, along with 2 additional Dynamite 3.0 locations at Promenade St. Bruno and Carrefour Laval here in Quebec.

On the digital side, we're pleased to see e-commerce grow 44.2% in fiscal 2025 with penetration reaching nearly 19%. This performance was supported by continued investments in our platform and capabilities, including the rollout of our headless architecture on mobile app, a new refresh navigation on web and progress on personalization across multiple touch points, all improving speed, flexibility and the overall customer experience.

At the same time, we see meaningful opportunities ahead as we continue to scale. This includes continuing leveraging AI to drive more personalized experience and conversion, further integrating the community and socials into this experience and building on the early momentum we're seeing from our U.K. store launch. Over the long term, we remain focused on increasing e-commerce penetration towards 25% of total sales as digital continues to play a central role in how we tell our brand story and engage with our customers.

Another key fiscal 2025 initiative to highlight is our U.S. distribution center. We continue to ramp up in line with our plans, strengthening service levels for our U.S. customers while also adding important redundancy to our supply chain. From a brand perspective, we truly raised the bar this year in generating what we call brand heat. More specifically, we stayed close to culture and our community to create hyper-relevant products and campaigns.

This includes our Sour Cherry color drop in July and Perky Plum drop in August, which featured influencer Hallie Batchelder, among others throughout the year. This resulted in us more than doubling our media impressions for the full year. This momentum translated into strong customer growth with our total active customer base up meaningfully to last year, driven by both strong new customers and returning customers both in frequency and in spend, increasing double digits year-over-year.

Now a couple of words on Q4 performance specifically before JP dives into the numbers. Customer demand remains strong, supported by relevant product and clear brand messaging. We saw continued AUR growth with stable unit per transaction, reflecting both product relevance and disciplined pricing. In stores, comparable store sales were up 30.4%, driven by growth in both AUR and traffic with price contributing a slightly larger share.

On digital, sales grew 63.3% in Q4, with penetration reaching 25.5%, driven by higher traffic and conversion as we continue to enhance the customer experience. Furthermore, the heat behind our brands continued to build.

For GARAGE, our community-led storytelling reached new heights with the Midnight Blue, Teal Tease and Mint Julep color drops. These drops and brand moments drove significant top-of-funnel reach and reinforcing our fleece category as a top volume driver.

For Dynamite, Q4 was driven by the strength of our Hotel Dynamite holiday campaign featuring Elsa Hosk, which firmly positioned the brand as a destination for holiday dressing, particularly in dresses. This campaign resonated strongly with customers, reinforcing our authority in social life wear and contributing to strong engagement and sell-through.

The growth in our brands reflects the discipline and focus across our teams. We exit the year with a proven and improved playbook and the confidence to continue scaling our impact and deepening our customer relationships.

As we look ahead to 2026, we're focused on execution and continued elevation of our brands across every touch point. As Andrew mentioned, the dedication of our teams grounded in our core values is what drives these results. I want to echo his gratitude to our 6,000-plus field associates and our head office teams for their agility and passion. They are the embodiment of our culture and their commitment is our greatest competitive edge. With the foundation we've built, we are poised to take our performance even higher.

With that, I'll turn it over to JP to walk through the financials.

Thank you, Stacie, and good morning, everyone. Total revenue for Q4 2025 increased by 45% to $394.2 million, driven by strong retail performance, including comparable store sales growth of 30.4% alongside contributions from new store openings. For the full year, comparable store sales growth landed at 26.7%, consistent with our prior guidance.

Staying on top line, we were very pleased to see online revenue increased 63.3% to $100.6 million with penetration expanding by 280 basis points year-over-year in Q4 to 25.5%. We remain focused on advancing our digital initiatives to support sustained growth and progress towards our medium- to long-term target of 25% online penetration while maintaining or improving the profitability of the e-comm channel.

Gross profit for Q4 increased by 54.9% to $248.3 million with gross margin expanding 400 basis points to a record 63% for the fourth quarter. This performance reflects the strength of our pricing strategy, disciplined inventory management and lower markdowns.

Turning to expenses. SG&A for Q4 2025 increased by 21.6% to $105.8 million, primarily driven by the company's growing scale and activities as well as increased marketing investments to support brand awareness. Administrative expenses declined year-over-year, benefiting from lower IPO-related costs and stock-based compensation versus last year. As a percentage of sales, adjusted SG&A decreased by 340 basis points to 26.2%, reflecting strong operating leverage.

Moving down the P&L. Operating income increased by 128.8% to $116 million. Adjusted EBITDA grew by 81.6% to $144.4 million, representing a margin of 36.6%, up 740 basis points year-over-year, driven by both gross margin expansion and SG&A leverage, underscoring the scalability of our luxury-inspired business model and placing our margins in line with some of the world's leading luxury houses.

For the full year, adjusted EBITDA margin landed at 36.5%, also consistent with our most recent guidance.

Net earnings increased significantly, supported by higher revenue and profitability with adjusted net earnings up more than 120% year-over-year to reach $81.6 million.

Turning to cash flow. We generated strong free cash flow of $101.5 million in Q4, nearly doubling year-over-year, reflecting higher earnings, partially offset by increased capital expenditures. For the full year, we generated free cash flow of $335.2 million, more than doubling year-over-year, while CapEx totaled $85.5 million, also in line with our most recent guidance range.

From a balance sheet perspective, net leverage improved to 0.83 turns, reflecting strong EBITDA growth. We ended the year with over $82 million in cash and $312 million available under our credit facilities, providing significant financial flexibility. We also continue to deliver strong capital efficiency. Return on assets reached 36.2%, up from 26% last year, reflecting improved profitability and more effective use of our asset base.

Return on capital employed increased to an impressive 70.3% compared to 47.4% in the prior year, driven by strong growth in operating income relative to the more measured increase in capital employed. Together, these metrics highlight the strength of our model and our disciplined approach to deploying capital.

Turning to capital allocation. During fiscal 2025, we repurchased approximately 883,000 shares at an average price of $39.28 for a total of $34.7 million. We continue to view share repurchases as an efficient use of capital to return cash to shareholders, and we remain bullish on the underlying fundamentals of GRGD as we continue to execute our strategy with discipline. As of this morning, we have repurchased over 1.2 million shares under the NCIB, representing approximately 94% completion of our 2025-2026 program.

Looking ahead to fiscal 2026, we are introducing guidance reflecting continued strong momentum across the business. From a real estate perspective, we expect to open 24 to 26 gross new stores, including 5 locations in the U.K., representing 10 to 12 net new openings as we expect to close approximately 14 stores during the year. Most of these openings will be under the GARAGE banner in the U.S., where we continue to see significant runway for growth.

We continue to target approximately 350 stores by fiscal 2028 with potential upside as we see strong performance across all regions in which we operate. We expect comparable store sales growth of 11% to 14% and total revenue growth of 22% to 25%. Our comparable store sales outlook reflects strong year-to-date performance, coupled with our strategy of growing AUR at approximately twice the rate of inflation as well as positive traffic trends driven by the continued premiumization of our store portfolio as we believe higher quality real estate will continue to concentrate footfall.

In addition, we expect online revenue to continue outpacing brick-and-mortar growth, while contributions from new store openings further support total revenue growth. From a margin perspective, we expect adjusted EBITDA margin expansion, leading to a range of 37.75% to 39.25%.

As a reminder, the first half of fiscal 2025 was impacted by elevated tariff rates of 145% on imports from China. These major headwinds have fully flowed through our P&L, and given our best-in-class inventory turns which amounted to 9.85 turns for fiscal '25, were no longer impacting our business as of Q3 2025. As a result, the first half of fiscal 2026 presents a more favorable comparison period, supporting our outlook for margin expansion year-over-year. In addition, as our U.S. distribution center ramps towards full capacity, we expect incremental efficiencies to further support margins.

Turning to capital expenditures. We expect CapEx of $100 million to $110 million in fiscal 2026. CapEx remains our top capital allocation priority with most of this envelope directed towards growth initiatives, including new store openings, store optimization and continued investment in our digital platforms. Fiscal 2026 is off to a strong start, and we are confident in our positioning within the consumer discretionary spectrum, supported by an operating model built to navigate uncertainty, anchored in our open-to-buy, chase-driven approach with over 50% of inventory dollars left open to read and react and disciplined inventory management. We remain focused on advancing our brand elevation initiatives supported by disciplined execution and continued investment in our platform.

With that, I'll pass it over to Andrew for closing remarks.

Thank you, both Stacie and JP. Well, enough of us. Let's turn it back to the operator as we are ready to take questions from the financial analysts.

Thank you, Sir. [Operator Instructions] First question will be from Irene Nattel at RBC.

Congratulations on a very strong end and a very strong beginning. So -- and leveraging sort of jumping off of that, we seem to be at yet another period of heightened uncertainty and a lot of discussion around deterioration potentially in the macro backdrop. Andrew, in your opening remarks, you talked about proactively mitigating risks, Stacie talked about adaptability. Can you walk us through how you're thinking about F '26? And as you frame the guidance for this year, how you're thinking about potential scenarios around consumer spending and economic activity?

Thanks for the question. Listen, I mean, we can only control what we control. And I'll take a step back and as we think about what we're -- the segment we're in, we're in the consumer discretionary segment. Consumer discretionary is a big catchall. And at one extreme, you've got consumer discretionary that requires debt like a motor home or a car or a basement renovation or something like that, and furniture. And then at the other end of the spectrum, it's things that kind of like make you happy, instant gratification, whether it's the red lipstick effect or whether it is a martini or whatever, a cute top at GARAGE or Dynamite, it falls within that realm.

So fortunately, we are in the easier, I guess, department, if you will, within consumer discretionary, where really our job and what we ultimately control is emotion. And so to the extent that we keep doubling down on delivering amazing emotion through the brand, through the marketing, through the product, through the collections, through the social engagement, then ultimately, I think we're going to fare well altogether. So again, so I mean, long answer, short question, but I think ultimately, that's what it comes down to.

Next question will be from Stephen MacLeod at BMO Capital Markets.

Just looking at the store network, you're sort of increasing or you're bumping up the net new store adds in 2026. So I'm just wondering if you can give some color around just maybe the thought process behind the acceleration and the timing of store openings through the year, including the U.K.

Steve, thank you for the question. More than happy to do so. So if we break that down a little bit, let's start with North America. So our guidance for North American store openings is 19 to 21 stores in fiscal 2026, which is quite consistent with what we've delivered in fiscal 2025. Please do note that all 19 to 21 stores, those leases are actually signed. Happy to report they're all Tier 1, 2 and 3 locations, and the vast majority are GARAGE locations in the U.S. So we feel really good about that.

And then in addition, which might explain the year-over-year increase in the number, to your point, is 5 U.K. store openings that are planned and included in the fiscal 2026 guidance. Those 5 leases are also all signed, and they're all Tier 1 and Tier 2 locations. So we are certainly very excited about the pipeline here, and that's why you're seeing a year-over-year increase. And when it comes to the pacing part of your question, I would continue to expect the bulk of store openings to be delivered between Q2 and Q3, although there will be some in Q1 and Q4.

Next question will be from Martin Landry at Stifel.

Congrats on your results. I would like to dig into your comparable sales guidance of 11% to 14% growth for this year. It is impressive given you're lapping a strong year. So 2-part question. First, what is your assumption for price increases this year? Is it still twice inflation? And if that's the case, then it implies pretty strong volume growth. So just trying to get a little bit of an understanding of what's -- what kind of growth comes from your relocated stores in that guidance?

Thank you, Martin, for the question. So you are right. Our outlook for comps this year is a range of 11% to 14%. So a few things I would say around that. First of all, and that's aligned with Andrew's opening remarks, 8 weeks into Q1, we're currently sitting at plus 28% on same-store sales. So we certainly need to account for that in the outlook for the full year.

And then to answer the price component of your question, we continue to see AURs raising at approximately twice the rate of inflation. So that certainly explains part of the guidance of 11% to 14%.

And then on the last piece, we continue to believe in positive transaction growth, positive traffic growth year-over-year as a result of the optimization of our real estate network as we continue to open high-quality locations and close certain locations that are, yes, profitable, but not profitable enough. This premiumization of our network really does attract and concentrate footfall, which has to translate into positive comps. So when you add all of these buckets together, that leads us to a guidance for the full year between 11% and 14%.

Next question will be from Mauricio Serna at UBS.

Just on the online business. Seemed pretty strong and it kind of the guidance continues to call out for outperformance versus brick-and-mortar. What is the company doing here to really drive an acceleration of that business? Like what should continue to be the drivers as we look into '26?

And just quickly on the Middle East situation, I mean, I know you don't have exposure to that region. But just in terms of like how could that impact things like your supply chain agility and the margin front, given the rise of oil impacting freight and some of your other costs that are depending on that?

Listen, I'll take the second part, which is, let's say, the Middle East part. Listen, so far, we're seeing certain costs going up, namely at this point, really transport more than anything else as the price of fuel has gone up and also shipping routes have been kind of like dislodged as a result of what's happening in Strait of Hormuz and through the Middle East. So really, it's one big global network shipping. So there's an impact there as well.

Listen, at this point, it's really nominal, and we're totally in a position to address it. And I'm not saying absorb it. I'm saying address it. And insofar -- but listen, I mean, the longer this Middle East situation, war, I'll call it a war, the longer this Middle East war persists, obviously, the greater the impact is going to be.

But at this point, again, we're agile. I think you kind of lived our saga through Liberation Day and tariffs and so on and so forth last year, and we were quite resilient. So this is actually far more manageable situation. And I'm very confident in leadership team -- leadership team in being able to mitigate and deal with it. Regarding e-commerce, Stacie, do you want to take that?

Yes. Thank you, Mauricio, and we want to thank you for initiating coverage on us. So I guess we'll let you have 2 questions. But the first one on e-com is, yes, e-com is outpacing brick-and-mortar. That is our expectation go forward. We have put a lot of investment in around the platform capabilities that we've included headless in our architects on the app. We've refreshed the navigation in the web, and we're working on personalization across all touch points.

All of our efforts are focused on improving speed, flexibility and most importantly, the customer experience. So we're excited to go into '26 to really leverage AI and see what we can do with that customer with our long term, as we've mentioned to you guys to try to get to that 25% penetration. As strong as the comps are, we should expect and we do continue to see e-comm outpace that brick-and-mortar number.

Next question will be from Brian Morrison at TD Cowen.

Can you hear me?

Yes.

Andrew, I'm standing right in front of 321 Oxford right now. And the store traffic, it looks incredible. It looks like a potential fire hazard. Can you just walk through the steps that you took to seed this market? And I know it's early days, but what that might suggest to you about other European markets?

That's hysterical. And having just been there over the weekend or last weekend for the opening, I could well imagine what you're seeing. Yes, it's -- listen, the store open -- well, I mean, we opened 2 stores, as you guys know, in the U.K., we opened Bluewater Mall, which is a suburban -- great suburban asset, I would say, slightly northeast from Piccadilly Circus in London as well as 321 Oxford, which is between New Bond Street and Regent, a fantastic location.

Listen, these 2 stores are the 2 best store openings in GRGD's history. Like that's a lot of stores that we've opened and closed and opened. I mean, I could probably count a 1,000 store openings over time. These 2 are the 2 best. So really, really excited about that. Both Oxford and Bluewater, similar yet different kind of customer. One is more urban, one is more suburban.

We've always said that, that customer reminds us of a Northeast U.S.A. customer, but just happens to be in the U.K. And I think we've been proven right. The demand is really, really, really strong for the brand, for our products. Reception has been amazing. And I think it's a great proxy for the U.K. I'm not used to, I would say, instant success. Usually, we suffer in all our endeavors. We're just tenacious, and we grind our way through and achieve success. Ultimately, this one feels a little unexpected.

And -- but listen, I think it's great for the U.K. But listen, there's a lot of other markets that are similar to the U.K., and the world is a much smaller place today. Everyone is getting their information, their fashion cues and whatnot from similar communities and perhaps even people. And so yes, the world is a really small place.

So it will be -- for sure, this is a great proxy for further global growth. But I think it's early days to figure out where we go. And the nice thing about an Oxford Street is it is a bit of a melting pot of the world, and we're going to come to appreciate where we over-index and with what customers we will over-index with and it might be a good little proxy.

And thanks for visiting. I am sure there's a lineup for the fitting rooms going all the way up to stairs. I could almost see it.

Next question will be from Vishal Shreedhar at National Bank.

Following on along a question that's been asked earlier, just on the economic backdrop and the difficulty on setting guidance given all the uncertainty. I was wondering if you could just walk us through your thinking on when you set the guidance and what would be the difference between, call it, the top end and the low end? And what would the major factors be in your mind?

Yes. Listen, thanks for the question. Always wonderful chatting with you. I would say you opened with like given the difficulties in the macro environment and how that connects to providing guidance, actually, there is no connected tissue between those 2. I'll be just very frank. Again, we're within that consumer discretionary realm where as long as interest rates are slightly higher where they are today and inflation seems to be reasonably real and there's angst in this world, we actually do better.

So I mean, that's actually a good tailwind for us. And so I mean, that's kind of like the way we see it. And we don't -- so -- and we don't -- and again, these are things that are really beyond our control. So we don't even -- we really don't weigh on that as we think of our plan. And listen, I'll pass it to JP to get a little deeper in this.

Yes. Thanks, Andrew. Vishal. So further to what Andrew just said, obviously, if you're referring to the EBITDA margin guidance, there is a range of, say, 150 basis points, but we need to appreciate that a full year is a long period of time, 12 months. And also, obviously, the sales are a very important factor. So as we start with this initial guidance for fiscal '26, I think it's reasonable to have a bit of a range, especially on comps and total revenue growth, and that will certainly impact your range for adjusted EBITDA margin. So that's nothing different than the approach we would have taken last year. And with passage of time this year, you can expect us to refine our guidance as we know more when Q1 and Q2 become actuals and so on and so forth.

Next question is from Michael Glen at Raymond James.

I'm just hoping that you can maybe parse the expansion you're expecting on both your gross margin line and SG&A leverage. Obviously, last year was a massive year for SG&A leverage. Are you expecting that to slow down this year? I'm just trying to figure out what you're contemplating for the guide.

Mike, thanks for the question. So starting illustratively with the midpoint of the range, which would be for an EBITDA -- adjusted EBITDA margin of 38.5%, that effectively means a 200 basis points year-over-year improvement as we've landed at 36.5% this year. So if you take the midpoint, that again, gives you an increase of 200 basis points. I would say high level and illustratively, I would probably split that half and half between gross margin and SG&A.

So let's look at those 2 in details. On the gross margin side for that "100 basis points improvement," I think we continue to see a path for healthier IMUs year-over-year. Certainly, the high tariffs early last year, that is tailwind for us this year as that is no longer the case. And of course, there's also the whole supply chain and USDC ramping up. And those 3 benefits are somewhat offset by the whole oil and freight situation. So for us, those are the key drivers. The biggest 2, again, probably room for IMU expansion and the lack of significant tariffs this year versus last year.

On the SG&A side of things, so call that the other 100 basis points improvement or so, there's really a lot of opportunity for operating leverage. When you guide towards revenue growth of 22% to 25%, that is very healthy. And I think there's a very real path for us to leverage on some of these fixed costs. So yes, of course, we do have productivity initiatives, but the bulk of that, say, 100 basis points is really operating leverage. I hope that answers the question properly.

Next question is from Chris Li at Desjardins.

Congrats on a strong quarter. I know you already have a very strong inventory system -- management system already, but can you share with us what other initiatives you might be working on to further enhance the inventory productivity to continue to support your strong comp store sales outlook?

I mean, Chris, we turned it 10x last year, so I think we're pretty efficient on that. But I would say the teams are very agile and all the conversations coming up of we control what we can control. I think you guys should feel comfort in that we are working with as much diligence as we have to deliver the results in 2025. And because of our operating model and how close we are in, even if we hit a hiccup, be it the tariff, be it the war, be it transportation, it's very near and dear. So it's very close. So typically, by the time we're placing the order, we know what we're up against.

Meaning right now, I haven't placed all of my goods for even Q2, but I know if there's going to be a freight delay or an increase due to oil, all the questions that you've asked, I'm not -- probably like most of my peers, already sitting on order that is going to be hit with the extra cost. I'm going to face it like right at the beginning when I'm still negotiating.

So I think even hiccups or hurdles that we have because of our operating model and because of our chase structure, we're buying so close in, we hit those things right away, and we're able to adjust with the strategy probably better than our peers. But as far as more inventory efficiency, I'm going to try to hold this at the 10. I would question -- Andrew hates inventory, which is how we get here. But at some point, you're missing opportunity of sales if we're turning too much faster than that 10.

I would just add to that, Chris. I would add to that. Part of it is also just math, right? As we keep closing Tier 5 stores or, let's say, low productivity stores and keep opening and investing in high productivity stores, just mathematically, the numbers kind of get better. And that's part of the bridge. I can't tell you what part of the bridge, but that's part of the bridge as to how we move from where we were last year in terms of turns to this year's 9.985 or something like that or 9.85.

So part of it is just, honestly, extrapolation in the math. And I made that comment in my comments, in my remarks that, listen, we're closing -- I'd say like call me a liar for a store or to, but all stores that we close are profitable, but they're just not profitable enough, and they're not -- they're hoarding assets, inventory assets, right? Like those -- the stock turns in those stores are much worse than what we're investing into. So just pure mathematical extrapolation supports the higher -- directionally supports the higher stock turns, the better stock turns.

Next question will be from Adrienne Yih at Barclays.

Absolutely stellar performance. So I want to just say great start to the year. My question is on brand awareness. As you open stores often, we see sort of the digital lift in the kind of 5-mile radius, 10-mile radius. So can you talk to us about the progression from a year ago or more than a year ago at IPO?

What do brand awareness look like in the U.S.? And as you've opened these store assets, how much better has that gotten? And then when you launched in U.K., what do you do to seed the market, if anything? Or is it sort of you're just in this very virtuous cycle of opening stores, generate brand awareness and then drive the comp?

Yes. Thank you for the question. A loaded one there, so I'll just make sure I cover all of it. But I'll actually start with the U.K. because your latest part of the question was seeding. And as we've called out, those were our 2 best store openings ever. There was a lot of focus on how we're entering that market. I will shoutout our PR firm and our landlords for such support in our entry into the market.

Also, our marketing team did an excellent job. I think we know who we were specifically targeting and giving the right girls in each location from nano influencers all the way up to macro influencers. We started in the country about a month before Bluewater opened, which was like mid-Feb. We had our first in-real life moment where the consumer could come in and have a feel of the brand. We had what we were calling a refresh station on London Fashion Week.

So they could come in, get a power shot, get an IV drip, whatever, but more importantly, it was around coming in to interact with the contents, the fabrics, see the brand in real life, meet some of our ambassadors and our marketing team, and it was open to the press. So it was very strong.

And then that built up over the month with a heavy seeding of product. We are very proud of a TikTok that went viral. The girl literally was like all I keep seeing is GARAGE, which was kind of our mandate to that team. So we're excited when we opened Bluewater, which is a mall, as Andrew mentioned, in suburb. We had people in line the night before at 7 p.m. to shop the opening the next day at 10 a.m.

So you might ask why wouldn't you just go online, but it was the brand excitement and it was great to be a part of. It was an electric environment, and it lasted all weekend. We had a line in both stores the full weekend that we were open from Friday to Sunday. So we know the brand excitement is there, and we're hoping to capitalize on it.

We're also going to hindsight what we did there because true to form, we don't actually do that much of an intensive deep dive into a U.S. store opening. I think we take for granted that we're down there. So is there opportunity there. But both the U.K. and U.S. openings are led by social first. Our social team is really doing a great job of getting the word out there. And when we ask people online how have you heard about the brand, it's typically social leaning heavy into TikTok there.

So excited about what we have in both 3 more openings in the U.K. and the U.S. openings to come this year. I think there's some strong brand heat to drive the momentum of those openings to try to see if we can emulate what we just did at Bluewater and Oxford. I hope that answers your question.

Next question will be from Mark Petrie at CIBC.

I actually wanted to continue on that same topic of marketing, and you guys have talked about some of the investments and adjustments that you made in 2025. And obviously, you're getting extraordinary payoffs from those. And clearly, the U.K. is off to an excellent start. I'm just curious how you're sort of thinking about that into '26? Adjustments, tweaks, if you think you're still at the right level? Again, obviously, you're getting excellent returns. So is there an opportunity to even potentially accelerate the marketing investment further in order to support the stellar top line?

Yes. I think our challenge, first and foremost, is typically to optimize. So we still have some opportunity to shift buckets. As I just said, social is working really well, influencer really working very well, our ambassador program is working very well. So some of the traditional like paid formats are slowing down for us. So shifting and optimizing buckets, we're trying to maintain a healthy budgeted percent of sales, and we're looking at every ROAS that comes in across everything we're doing and being agile in shifting those buckets just as close in as we do the product.

So I would say the win for marketing going into 2026 is it's even tighter aligned to the product teams. So showing up with a more 360 storytelling and launch, that will give us more creams and a stronger ROAS into '26, but excited about the future of the marketing team.

Does that adjust at all just based on the content that comes from the stores? Like do you expect that to be a bigger part of what you're doing or smaller? Sorry, I'm squeaking in a follow-up.

I caught that. It's okay. I would say probably growing. But in general, I think our biggest excitement for '26 is how we're going to use that customer journey and start personalizing more. So if we can get AI up and running on more fronts, get the UGC customer content more useful, that's where we're trying to leverage. But I will, since you snuck in a question, I'll give you another stat, that frequency is up, and our AOV is up.

So just know that she's shopping more, and the AUR, we could say, is being driven in the AOV, but our UPT is flat. So overall, we're driving a very healthy lifetime value customer. So that's our initiative from the product team, the marketing team is to keep the heat on and keep her wanting to come back for more.

Next question will be from Luke Hannan at Canaccord Genuity.

I wanted to ask a question just on longer-term square footage growth. I appreciate it's very, very, very early days in the U.K., but it sounds like everything is very much tracking ahead of expectations there, and you're on track to open 5 more stores this year. What can you share, if anything, on the pipeline for fiscal '27 and how that's filling out?

And then secondarily, when we think about Dynamite, it sounds like the conversions are going well there. When should we expect to hear a little bit more on what the strategy could look like there?

Listen, so regarding the U.K. in '27, I don't want to -- I'd rather not get into it. I mean, listen, suffice it to say, we look at the U.K. as a really wonderful opportunity. It's larger than Canada, feels like Canada, smells like Canada, smells like the Northeast U.S.A. in a good way, maybe better. So there's lots of opportunity, and we're -- listen, we're talking to a lot of people, but there's nothing, I think, that we're prepared to talk to really disclose of and on at this point.

And insofar as Dynamite, I would say the same thing. I mean, listen, we're -- the vast majority of the business is GARAGE, right? Like we got to keep our eyes on this one, right? And so I would say there is a -- I won't say disproportionate, but there is a commensurate amount of energy, emphasis and if you will, going into GARAGE right here right now because that's where we're getting the better bang for the buck.

That much being said, we're very happy with the Dynamite performance. It is up. We don't segment, but it's growing. And yes, I mean, we're still bullish on it. The stores look great. I think the stores look great. The marketing is looking better than ever. The customer seems to be really happy, but we're not really prepared to talk about anything in '27 and beyond.

Next question is from Jon Keypour at Goldman Sachs.

Mine is on the '26 comp guide being 11% to 14%. I think after 3Q, you guys gave us a kind of rough sketch of what '26 -- 2026 might look like. I think you guys, correct me if I'm wrong, guided to a comp of high single digit. So obviously, that's a step-up to some degree. I'm just wondering, is that improvement in the guide driven by what you've seen quarter-to-date in 1Q? Is it driven by expectations for the back half? Or I guess, just exactly what is generating that upside?

Sure. Thank you for the question. Certainly, the vast majority of the difference has to do with the Q1 to-date performance at plus 28%. When we provided the high single-digit color back in December, truthfully, we were not expecting to do 28% comp for Feb and March or at least the first 8 weeks into Q1. So that definitely had an impact, which is the bulk of the increase from the high single digit to the current range of 11% to 14%. And I don't know that we've changed anything massively for the rest of the year. So that really is the bulk of it.

Next question will be from John Zamparo at Scotiabank.

I wanted to ask about the real estate side of the business. And as you see continued strength in same-store sales and higher average volumes from recent openings, is the quality of opportunities in the pipeline roughly the same as what it's been? And are some sites that maybe were even previously unattainable, are those now becoming potential stores you could open?

I would say, listen, it's -- the macro trends, right, that we've observed for the last 8 years still persist, meaning flight to quality. So you're really seeing those better assets, what we call in "GRGD language, investment-grade assets," which represents maybe 10% of the shopping center universe. We're seeing these assets still growing, still taking market share, gaining revenue and so on and so forth, and we still are very long in that. And so we're still investing in those assets.

Listen, I mean, we're not the only ones who figured that one out. So there is a lot of competition, a lot of competition on any opportunity that ever becomes available. So rarely are we the only player out there knocking on that landlord's door for that particular premises. There's probably 10 or 20 other players knocking on our door. Now -- so it's as challenging as ever before.

One of the big benefits, I guess, of GRGD where we are here today is our sales performance is such that we are what the landlords often call a top quartile performer. And if they've got a piece of -- if they've got a location that is currently being occupied by a bottom quartile performer and their lease is up and they can remerchandise or they can take the premises back, well, their preference would be to actually lease it to a top quartile. So there might be 20 people knocking on their door. Not all of them are top quartile performers. As a matter of fact, not that many are. So that certainly is a big advantage, right, for us.

So our -- so despite the fact that times are really challenging, our performance and our brand heat and the traffic that we drive into their asset make it such that we become a desirable option for that landlord. So we're still seeing opportunities. We're still seeing deals being public and having public -- it's so funny. We -- now we're dealing with a new landlord community that we don't really know.

In Europe, for example, in the U.K., so many of them don't really know us. And so we provided a one-page cheat sheet. And we benchmark ourselves in some of the key critical metrics. I mentioned that actually in my opening remarks, whether it's revenue, adjusted EBITDA, ROA or inventory turns, we are literally the best performer in each of those 4 metrics of all our peers.

And so much so that I said -- because we keep saying we've got a luxury business operating model. I said, well, why don't we benchmark ourselves to the luxury players. And we're literally -- we beat all the luxury players, saving except for Hermes, in adjusted EBITDA. So with that information, those landlords -- that really is meaningful for those landlords, and that helps us often enough get across the finish line and secure that real estate. I hope that answers your question, but...

It does.

At this time, we have no other questions registered. Please proceed.

Perfect. Well, thank you so much, everyone, and I wish you all a wonderful day, and we're super excited for the year to come. The brand is hot. There's great enthusiasm. The teams -- I mean, we didn't really talk about people and teams so much, but let me tell you, our teams are all fired up. As you know, they are all shareholders. We're all rolling in the same direction. It makes JP, Stacie and my life a little bit easier. And that's it. Thank you, and have a wonderful week.

Thank you.

Thank you, everyone.

Happy Easter for those of you who are Passover.

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines. Enjoy the rest of your day.