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Groupe Dynamite Inc. — Management Reports 2025
Dec 9, 2025
48545_rns_2025-12-09_7de60bc8-0fc9-40eb-b0fe-53195f2db67c.pdf
Management Reports
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GDI | DYNAMITE GARAGE
GROUPE DYNAMITE INC.
Management’s Discussion and Analysis
Third quarter ended November 1, 2025
The following Management’s Discussion and Analysis (“MD&A”) for Groupe Dynamite Inc. is dated December 8, 2025 and provides information concerning our results of operations and financial condition for the 13-week and 39-week periods ended November 1, 2025 and November 2, 2024. The MD&A should be read in conjunction with our unaudited condensed interim consolidated financial statements and the notes for the 13-week and 39-week periods ended November 1, 2025, as well as with the audited consolidated financial statements and the related notes for the year ended February 1, 2025 (the “Annual Financial Statements”). Our Annual Financial Statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”) (“IFRS Accounting Standards”). Our unaudited condensed interim consolidated financial statements for the 13-week and 39-week periods ended November 1, 2025 (the “Interim Financial Statements”) have been prepared in accordance with IAS 34, “Interim Financial Reporting”. Our Interim Financial Statements have been prepared on a basis consistent with the Annual Financial Statements. All amounts in this MD&A are in Canadian dollars unless otherwise indicated. In this MD&A, all references to “GDI”, “Groupe Dynamite”, the “Company”, “we”, “us” or “our” refer to Groupe Dynamite Inc. together with its subsidiaries, on a consolidated basis. Additional information about Groupe Dynamite is available on our website at www.groupedynamite.com.
Our fiscal year ends on the Saturday closest to January 31 of each year. This approach is adopted to ensure operational consistency. It creates variations in the actual closing date each year. All references to “Q3 2025” are to the Company’s 13-week period ended November 1, 2025; “YTD 2025” are to the Company’s 39-week period ended November 1, 2025; “Q3 2024” are to the Company’s 13-week period ended November 2, 2024; “YTD 2024” are to the Company’s 39-week period ended November 2, 2024; “Fiscal 2025” are to the Company’s fiscal year ending January 31, 2026, “Fiscal 2024” are to the Company’s fiscal year ended February 1, 2025; and “Fiscal 2023” are to the Company’s fiscal year ended February 3, 2024.
Cautionary Note regarding Forward-Looking Information
This MD&A contains forward-looking information within the meaning of applicable Canadian securities legislation. Forward-looking information in this MD&A may relate to our future financial outlook and anticipated events or results and may include (without limitation) statements relating to: our business, brand positioning, brand awareness and brand expansions, the expected operational impact of our U.S. distribution center, our ability to continue creating accessible fashion and delivering on-trend products, the planned expansion and optimization of our store footprint and the achievements that can be derived therefrom; dividend payments and our expectations regarding the reinvestment in our business, the return of excess cash to shareholders, our financial performance, financial position and use of liquidity; the remodeling and relocation of existing stores in top-tier locations; the increase in our e-commerce penetration level relative to our total revenue and the growth in our e-commerce business more generally, including the additional investments required in the near term to support e-commerce growth; our future growth rates and growth strategies; and the impact of any tariffs imposed by the United States, Canada and other countries on the Company’s operations and financial position. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding possible future events or circumstances. Forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the
circumstances. Our assumptions underpinning forward-looking information include, but are not limited to, the following: expected short-, medium- and long-term discretionary spending and overall economic trends; successfully maintaining and enhancing our brands; marketing efforts, store renovations and store expansions will be successful and drive our revenue; maintaining our supplier relationships and a steady, cost-effective supply of inventories; successfully managing expenses and driving gross margin improvements; growing our e-commerce business and making headway in our international expansion efforts; successfully retaining key personnel, including our Chief Executive Officer; the absence of material changes to taxes, duties, tariffs and interest rates; the absence of further material disruptions in the international trade; the economy generally; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated, intended or implied.
Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Forward-looking information is also subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Risks and uncertainties are discussed in the "Risk Factors" section of this MD&A and the Company's annual information form for Fiscal 2024 (the "AIF") which is incorporated by reference into this document. A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The risks, uncertainties, opinions, estimates and assumptions referred to elsewhere in this MD&A should be considered carefully by readers. Accordingly, readers should not place undue reliance on forward-looking information. To the extent any forward-looking information in this MD&A constitutes future-oriented financial information or financial outlook, within the meaning of applicable Canadian securities legislation, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlook, as with forward-looking information generally, are based on current assumptions and subject to risks, uncertainties and other factors. Furthermore, the forward-looking information contained in this MD&A represents our expectations as of the date of this MD&A (or as of the date it is otherwise stated to be made) and is subject to change after such date. We disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities legislation. All of the forward-looking information contained in this MD&A is expressly qualified by the foregoing cautionary statements.
Overview
With a luxury-inspired mindset, our vision is to create accessible fashion that inspires style-conscious individuals to feel good in their skin to fulfil our mission: Empowering you to be you, one outfit at a time.
We are a fashion house that operates retail stores and e-commerce platforms under two complementary and spirited banners: Garage and Dynamite. Garage is a casual street-active aesthetic brand that inspires rewriting the rules, breaking boundaries and owning your individuality, because your style should be as limitless as your passions. Dynamite believes that every day is the perfect occasion to look and feel exceptional, outfitting modern women to seamlessly flow between the demands of their day to the energy that fills their night.
We thrive at the intersection of art and science with a luxury-inspired business model. Our left brain: We obsess about taking time out of the supply chain, leading to increasing focus on speed, flexibility and data to effectively "de-risk" the business of fashion – this rigorous approach is what allows us to deliver differentiated outcomes. Our right brain: Creativity drives every aspect of what we do, allowing us to connect with our customers on a deeper level – we focus on creating clothing collections, campaigns, and experiences that foster an emotional connection with our customers.
We have an intense focus on building an emotional connection with our customers that informs our design and merchandising strategy, omnichannel distribution model and marketing strategy. This emotional connection with our customers begins with our muses, Alex and Rachelle, the conceptual inspirations for our design teams. Alex and Rachelle epitomize customers of Garage and Dynamite, respectively, and we embark through them on style journeys that allow us to rapidly address ever-evolving fashion preferences.
Our teams then aim to create must-have, unique and on-trend products for our customers' ever-changing world. Our product assortment includes jeans, pants, fleece, tops, blouses, sweaters, dresses, skirts, and jackets. Both of our brands have their own dedicated and distinctive Merchandising and Design teams. We develop an average of
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125 unique styles per week, drawing inspiration from both historical successes and emerging trends to create fashion must-haves. These branded product teams are supported by Centers of Excellence teams that service both brands, so that we are leveraging their expertise in fabric, fit, and product development sourcing.
We connect with our customers through an aspirational, omnichannel shopping experience that extends across our retail stores, e-commerce platforms, mobile applications and loyalty program. As of November 1, 2025, we operate 176 stores in Canada, with retail locations in all Canadian provinces, and 131 stores in the United States, with retail locations across 39 U.S. states. Our retail store footprint allows us to develop brand-enhancing experiences for our customers, with use of technology and an innovative approach to empowering our store associates to be brand ambassadors and stylists creating an optimized shopping experience for our customers. Our two dedicated e-commerce sites, Garageclothing.com and Dynamiteclothing.com, give us control of the presentation of our brand and relationships with our customers, while providing customers with a seamless omnichannel experience. Our Garage and Dynamite loyalty program and apps further enable us to provide her a fun and personalized experience with access to the latest products, and help drive repeat purchasing behavior.
Our omnichannel distribution model is supported by our nimble design, sourcing and supply chain processes. We have long-term and strategic relationships with suppliers that enable us to secure production capacity and facilitate in-season order placement. We have an accelerated product cycle from fabric production to order fulfillment that allows us to quickly pivot to the latest trends or go deeper on in-season trends. Our flexibility increases our open-to-buy opportunity in a given season, allowing us to test, deploy and react to trends more quickly, more accurately plan inventory, reduce markdowns and minimize fashion risk.
We support our brands with a disciplined and data-driven approach to marketing, utilizing a proprietary attribution model that analyzes and supports efficacy of our marketing spend in real-time and provides insights that inform our longer-term strategy. We deploy a multi-faceted marketing strategy across multiple channels focusing on driving brand awareness and growing the community of Garage and Dynamite customers, with strategic use of social media and influencers, events and partnerships.
Q3 2025 Financial Highlights
- Revenue increased to $363.0 million in Q3 2025 from $258.8 million in Q3 2024, representing an increase of $104.2 million or 40.3%. The increase was driven by several factors reflecting the success of our real estate and marketing strategies such as:
- Comparable store sales growth(1) of 31.6% (28.6% on a constant currency basis) in Q3 2025, over and above comparable store sales growth of 10.1% in Q3 2024;
- Revenue from new stores positively impacted by the opening of 19 gross new stores (8 net new stores) over the last 12-month period (8 gross new stores and no new closures in Q3 2025), with the vast majority of new store locations in the higher-growth U.S. market under the Garage banner;
- Online revenue growth of 43.3% in Q3 2025 compared to Q3 2024, supported by our focus on delivering a seamless omnichannel shopping experience to our customers.
- Retail sales per square foot(1) reached $889 at the end of Q3 2025 compared to $713 at the end of Q3 2024, representing an increase of 24.7%.
- Gross profit increased to $240.0 million in Q3 2025 from $162.9 million in Q3 2024 and gross margin(1) increased to 66.1% from 63.0% over this same period.
- Operating income increased to $120.1 million in Q3 2025 from $63.1 million in Q3 2024.
- Adjusted EBITDA(1) increased to $146.1 million in Q3 2025 from $87.2 million in Q3 2024, resulting in adjusted EBITDA margin(1) of 40.2% from 33.7% in Q3 2024. This performance results from the combination of both a 310 basis points improvement in gross margin and a reduction of 340 basis points in adjusted SG&A as a percentage of sales(1).
- Net earnings increased to $81.5 million in Q3 2025 from $40.4 million in Q3 2024, representing an increase of $41.1 million or 101.7%. Adjusted net earnings(1) increased to $83.0 million in Q3 2025 from $43.7 million in Q3 2024, representing an increase of $39.3 million or 89.9%.
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- Inventory turnover(1) ratio was 6.88x at the end of Q3 2025 compared to 6.09x at the end Q3 2024, reflecting the effectiveness of our market-leading inventory management system and contributing to lower markdown levels.
- Return on assets ratio ("ROA")(1) increased to 27.2% at the end of Q3 2025, up from 23.8% at the end of Q3 2024. This improvement in the ROA was driven by growth in adjusted net earnings over the last 12-month period, only partially offset by an increase in average total assets.
- Net leverage ratio(1) improved to 0.45x in Q3 2025 compared to 1.41x in Q3 2024. This improvement is due to the increase in adjusted EBITDA, coupled with the repayment of all of our outstanding commitments under the credit facilities, which has more than offset the increase in lease liabilities.
Note:
(1) Refer to "Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics" in this MD&A for further details concerning these measures, including definitions and reconciliations of each non-IFRS financial measure to the relevant reported IFRS financial measure. Non-IFRS financial measures and non-IFRS ratios do not have a standardized meaning under IFRS Accounting Standards, which are used to prepare the Company's financial statements, and might not be comparable to similar financial measures presented by other entities.
Outlook
A discussion of management's expectations as to the Company's outlook for Fiscal 2025 is contained in the Company's press release dated December 9, 2025 under the heading "Outlook". The press release is available on SEDAR+ at www.sedarplus.ca and on the Company's website at www.groupedynamite.com.
Recent Event
On December 8, 2025, the Board of Directors declared a one-time special cash dividend to shareholders in the amount of $2.30 per share on its subordinate voting shares and multiple voting shares (the "Special Dividend"). The Special Dividend will be paid on December 29, 2025 to shareholders of record at the close of business on December 19, 2025. The Special Dividend will be paid with available cash. On October 22, 2025, the Company established a Special Committee of independent directors to assist the Board of Directors in the ongoing deployment of its capital allocation strategy, and the Special Committee determined that the Special Dividend is in the best interest of the Company and an appropriate use of these funds. The Special Dividend is designated as an eligible dividend for the purpose of the Income Tax Act (Canada) and any similar provincial legislation.
Summary of Factors Affecting our Performance
We believe that our performance and future success depend on a number of factors that present significant opportunities for us. These factors are also subject to a number of inherent risks and challenges. For a detailed description of risk factors associated with the Company, refer to the "Risk Factors" section of this MD&A and of the AIF, which is incorporated by reference into this MD&A.
Brands
Our two complementary and spirited banners have been conceived and developed throughout multiple decades with distinct brand positioning in both age and lifestyle that we believe strike the right emotional chord with our target customers. Our multi-brand strategy drives product differentiation, assortment flexibility and a natural progression through our muses, Alex and Rachelle.
Strengthening and growing our brands is critical to our continued success. Any loss of brand appeal may adversely affect our business and financial results. We structure our business to strengthen and grow our brands through, among others, our (i) dedicated concept, design, merchandising and planning and marketing teams focused on creating distinct on-trend products, supported by our multidisciplinary teams, (ii) nimble design, sourcing and supply
chain process, (iii) expansion and optimization of our store network in North America, (iv) plans to grow our e-commerce capabilities and (v) omnichannel go-to-market platform.
On-Trend Products and our Design, Sourcing and Supply Chain Process
We employ a strategic, luxury-inspired operating model that positions our brands to optimize pricing with limited reliance on markdowns. We aim to deliver must-have, on-trend products that inspire deep emotional reactions for our customers' ever-changing world.
We buy initial quantities of merchandise that allow us to quickly gauge customer demand and follow up with larger orders when proven successful, allowing us to increase sales while reducing inventory risk. Approximately 56% of the purchasing decisions are made after a season begins, allowing us to respond to trends in real-time, either buying further into a trend or pivoting, while we optimize our inventory, resulting in fewer markdowns and exhibiting brand health and relevance.
As of Fiscal 2024, we have over 45 suppliers across more than 100 factories providing us with the flexibility to source high-quality materials and products at competitive costs. Our production cycle's efficiency is underpinned by familiarity with key suppliers—over 80% of whom have been partners for more than 8 years—along with periodic quality control and refreshment of suppliers. Across this network of suppliers, the majority of our production volumes are sourced from China, with additional contributions from Bangladesh and Cambodia. Additionally, based on our strong supplier relationships, we are able to reserve production capacity prior to purchase order placement, which ensures that we have dedicated production lines supporting our agile business model and reducing supply chain risk.
Expansion and Optimization of our Store Network in North America
Our business is heavily dependent on the revenue from our stores. We believe we have a significant opportunity to continue growing and optimizing our store network across North America. Underpinning the success of our retail sales growth is the strategic placement of our locations in accordance with our store-level matrix strategy, under which we focus on opening new stores in top-tier locations (as qualified by premium co-tenants, peripheral concession and entertainment options, high visibility and high consumer traffic, among other factors). According to our standards, most assets in the shopping center universe fall within tiers 4 and 5. Only a small percentage falls within tiers 1, 2 and 3.
For the 12-month period ended November 1, 2025, our stores (which occupy approximately 3,700 square feet on average) produced retail sales per square foot of approximately $889. In addition to opening new stores, we have generated attractive returns on capital by optimizing our existing stores through carefully considered and accretive store remodels and relocations. We aim to selectively expand, remodel and/or relocate up to 10 to 15 existing stores per year in top-tier locations. Through expanding our store footprint and optimizing our existing store base, we believe we can enhance our aesthetic, improve our in-store assortment, increase scale, drive comparable store sales growth and enhance company-wide operating margins.
Plans to Grow our e-Commerce Capabilities
Since pivoting to an omnichannel model in 2019, our e-commerce business has grown to represent approximately 18% of total revenue for the 12-month period ended November 1, 2025. Although we foresee the need for additional investments in the near term to support e-commerce growth, we expect these investments to remain within the levels experienced in the last year or two, with no substantial increases foreseeable – we believe there is a significant opportunity to grow our e-commerce business, and we are currently targeting a long-term e-commerce penetration level of approximately 25% of our total revenue.
Omnichannel Go-to-Market Platform
We leverage both our physical store base and e-commerce sites to create an omnichannel customer experience with an integrated platform that allows our customers to transition seamlessly across channels and maintain a curated and personalized shopping experience. Our omnichannel platform also meaningfully reduces markdown occurrences and leads to low obsolescence through the use of an algorithm powered by our proprietary business intelligence, referred to as the Brain. The Brain identifies optimal inventory to fulfill e-commerce orders and improves customer service by seamlessly integrating online and offline retail channels. We are thus able to operate closer to an asset-light model that reduces warehouse expenses, drives a lead time advantage and increases overall assortment flexibility.
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Foreign Exchange
For the last 12 months ended November 1, 2025, almost half of our revenue is denominated in Canadian dollars while a significant portion of our cost of goods sold is denominated in U.S. dollars, which exposes us to fluctuations in foreign currency exchange rates. Future fluctuations in the exchange rate of the Canadian dollar versus the U.S. dollar could materially affect our gross margins and operating results.
Seasonality
The apparel sector operates on a seasonal basis, with a higher proportion of revenue and operating income being realized in the third and fourth quarters of the fiscal year, coinciding with key shopping periods such as back-to-school and the holiday season. Additionally, our working capital demands escalate prior to the introduction of new seasonal lines, due to launching new seasons and acquiring new inventory. The following table is a breakdown of the quarterly distribution of annual revenue for Fiscal 2024 and Fiscal 2023:
| Annual Revenue | For the fiscal years ended | |
|---|---|---|
| February 1, 2025 | February 3, 2024 | |
| % | % | |
| First fiscal quarter | 20 | 19 |
| Second fiscal quarter | 25 | 23 |
| Third fiscal quarter | 27 | 28 |
| Fourth fiscal quarter | 28 | 30 |
| Fiscal year total | 100% | 100% |
The impact of revenue from the 53rd week for Fiscal 2023 on the quarterly distribution is minimal.
Weather
Extreme weather conditions in the areas in which our stores are located could adversely affect our business and financial results. For example, frequent or unusually heavy snowfall, ice storms, rainstorms, or other extreme weather conditions over a prolonged period could make it difficult for our customers to travel to our stores and thereby reduce our revenue and profitability. This is potentially mitigated by our customers' ability to buy our products through dynamiteclothing.com and garageclothing.com. Our business is also susceptible to unseasonable weather conditions. For example, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of our inventory incompatible with those unseasonable conditions, which could adversely affect sales of these seasonal items.
Competition
Our business is affected by our competition. We operate in the North American women's apparel industry, where we compete with a diverse group of specialty apparel retailers, department stores, affordable retailers, athletic retailers and other manufacturers and retailers of branded apparel. Market participants compete on, among other attributes, the location of stores, the breadth, style, quality, price and availability of merchandise, the level of customer service and brand recognition. We believe that we successfully compete on the basis of several factors, including our retail stores and digital experiences under two complementary and spirited banners, our ability to create must-have, highly relevant and on-trend products that inspire deep emotional reaction and our customer-centric marketing strategy.
Global, Social, Economic and Political Events and Other Disruptions
We are aware of the risks arising from social, economic, and political instability, including geopolitical tensions, regulatory changes, market volatility, and challenges in international trade and the tax environment (such as tariffs, quotas, customs, and other restrictions). These factors may impact consumer spending, international travel, credit markets, logistics, and foreign exchange in certain countries and travel corridors. We are actively monitoring these ongoing issues and their effects on our business. Regarding the U.S. tariffs currently in place, we are confident that our strategies are well-positioned to help mitigate any potential impact, while remaining flexible as the situation evolves. The Company has strengthened existing tools and developed new ones to effectively navigate the recent tariff developments. We continue to monitor the situation closely and adapt as needed, all while maintaining our focus on executing our strategic initiatives and delivering competitive results.
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Components of our Results of Operations
Revenue
Revenue reflects retail and online sales, less returns and discounts, under the Dynamite and Garage brands across Canada and the United States.
The Company recognizes revenue when control of the goods or services has been transferred to a customer, which, for retail sales, occurs at a point in time when the sale is made to the customer, and for online sales, at the date of delivery to the customer. Revenue is measured at the fair value of consideration to which the Company expects to be entitled, including (i) variable consideration, if any, to the extent it is highly probable that a significant reversal will not occur, and (ii) shipping fees. Revenue is measured net of discounts and an estimated allowance for returns. Reported sales exclude sales taxes.
Gift cards sold are accounted for as deferred revenue and revenue is recognized when gift cards are redeemed for merchandise. The Company estimates gift card breakage to the extent permissible under local laws, and recognizes revenue in proportion to actual gift card redemptions.
The Company has a loyalty points program that gives rise to a separate performance obligation, as it provides a material right to the customer. The transaction price is allocated between the loyalty points and the goods on which the awards were earned based on their relative stand-alone selling prices, taking into consideration the estimated redemption percentage. Loyalty points and awards granted under the customer loyalty awards program are recorded as deferred revenue until the loyalty points and awards are redeemed by the customer.
The Company grants rights of return on goods sold to customers. Revenue is reduced by the amount of expected returns, which is determined based on historical patterns of returns, and a related refund liability is recorded within accounts payable and accrued expenses.
Cost of sales
Cost of sales includes the cost of inventories purchased, shipping and transportation costs, warehousing, distribution costs, credit card fees and the variable and short-term occupancy costs that are excluded from the lease liabilities.
Since the Company purchases goods in currencies other than the Canadian dollar, our cost of sales is affected by fluctuations in foreign currencies against the Canadian dollar. We mainly import merchandise from suppliers in China, Bangladesh and Cambodia with U.S. dollars. Therefore, our cost of sales is impacted indirectly by the fluctuation of the Chinese Renminbi, the Bangladeshi Taka and Cambodian Riel against the U.S. dollar and directly by the fluctuation of the U.S. dollar against the Canadian dollar.
We, from time to time, use foreign exchange forward contracts to hedge some of our exposure to changes in the value of the U.S. dollar against the Canadian dollar, usually for a period of three to six months ahead, while leveraging natural hedge opportunities given our U.S. operations. However, we do not hedge our exposure to changes in the value of the Chinese Renminbi, Bangladeshi Taka and Cambodian Riel against the U.S. dollar.
Gross profit
Gross profit reflects our revenue, less cost of sales.
Selling, general and administrative expenses
Selling, general and administrative expenses (or "SG&A") include store labour costs, which vary with our sales volume, as well as fixed costs such as store maintenance, corporate and field salaries and benefits, administrative office costs, professional fees, and other related expenses. Our store labour costs are affected by the statutory minimum wage, which is lower than our average store hourly wage rate. However, a significant rise in the minimum wage would increase our payroll costs unless we can improve our store productivity.
Depreciation and amortization
Depreciation and amortization represent the systematic allocation of the cost of the Company's tangible and intangible assets over their respective useful lives. Depreciation is charged on property, plant, and equipment, including
capitalized leases classified as right-of-use assets, while amortization is recorded on intangible assets, such as software.
Net financing costs
Net financing costs primarily consist of interest expense on short-term and long-term lease liabilities and Company's borrowings. These costs also include the amortization of deferred financing charges, interest income from cash and promissory note, and gains or losses on derivative financial instruments.
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Selected Financial Information
| | 13-week
periods ended | | 39-week
periods ended | |
| --- | --- | --- | --- | --- |
| In thousands of Canadian dollars, except per
share data and retail sales per square foot | November 1,
2025 | November 2,
2024 | November 1,
2025 | November 2,
2024 |
| | $ | $ | $ | $ |
| Revenue | 362,970 | 258,772 | 916,051 | 686,760 |
| Cost of sales | 122,926 | 95,845 | 327,815 | 245,477 |
| Gross profit | 240,044 | 162,927 | 588,236 | 441,283 |
| Operating expenses | | | | |
| Selling, general and administrative expenses | 95,818 | 80,030 | 258,178 | 226,134 |
| Depreciation and amortization | 24,294 | 20,027 | 68,230 | 54,509 |
| Foreign exchange (gain) loss | (182) | (182) | 136 | (844) |
| Total operating expenses | 119,930 | 99,875 | 326,544 | 279,799 |
| Operating income | 120,114 | 63,052 | 261,692 | 161,484 |
| Net financing costs | 5,604 | 5,982 | 19,647 | 17,716 |
| Earnings before income taxes | 114,510 | 57,070 | 242,045 | 143,768 |
| Income taxes | 33,005 | 16,630 | 69,319 | 39,034 |
| Net earnings | 81,505 | 40,440 | 172,726 | 104,734 |
| Net earnings per share(3) | | | | |
| Basic | $0.75 | $0.38 | $1.60 | $0.97 |
| Diluted | $0.71 | $0.38 | $1.51 | $0.97 |
| Additional financial measures | | | | |
| Retail revenue | 299,740 | 214,682 | 768,824 | 576,572 |
| Comparable store sales growth(1) | 31.6% | 10.1% | 25.4% | 13.4% |
| Retail sales per square foot(1) | $889 | $713 | $889 | $713 |
| Adjusted EBITDA(1) | 146,085 | 87,198 | 333,458 | 223,802 |
| Adjusted net earnings(1) | 83,017 | 43,706 | 176,168 | 111,200 |
| Adjusted net earnings per share(1)(3) | | | | |
| Basic | $0.77 | $0.41 | $1.63 | $1.03 |
| Diluted | $0.72 | $0.41 | $1.54 | $1.03 |
| Gross margin(1) | 66.1% | 63.0% | 64.2% | 64.3% |
| SG&A as a percentage of sales(1) | 26.4% | 30.9% | 28.2% | 32.9% |
| Adjusted SG&A as a percentage of sales(1) | 25.9% | 29.3% | 27.8% | 31.8% |
| Adjusted EBITDA margin(1) | 40.2% | 33.7% | 36.4% | 32.6% |
| Ratios and other metrics: | | | | |
| ROA(1) | 27.2% | 23.8% | 27.2% | 23.8% |
| ROCE(1) | 50.5% | 43.3% | 50.5% | 43.3% |
| Net leverage ratio(1) | 0.45 | 1.41 | 0.45 | 1.41 |
| Free cash flow(1) | 119,494 | 42,193 | 233,736 | 108,398 |
| Inventory turnover(1) | 6.88 | 6.09 | 6.88 | 6.09 |
| CAPEX(1) | 26,908 | 17,826 | 59,130 | 50,681 |
| Number of stores(2) | 307 | 299 | 307 | 299 |
| In thousands of Canadian dollars | As at | ||
|---|---|---|---|
| Nov 1, 2025 | Feb 1, 2025 | Feb 3, 2024 | |
| $ | $ | $ | |
| Cash | 253,823 | 74,195 | 8,135 |
| Inventories | 66,610 | 44,952 | 38,627 |
| Total current assets | 382,378 | 161,568 | 83,458 |
| Property and equipment | 155,814 | 107,465 | 65,419 |
| Right-of-use assets | 380,205 | 330,105 | 246,240 |
| Total assets | 936,818 | 618,637 | 516,476 |
| Long-term portion of long- term debt | - | - | 145,100 |
| Long-term portion of lease liabilities | 404,111 | 340,102 | 240,301 |
| Total non-current liabilities | 406,984 | 340,102 | 388,901 |
| Total liabilities | 630,245 | 477,323 | 511,548 |
| Total shareholders’ equity | 306,573 | 141,314 | 4,928 |
| Total debt(1) | 437,629 | 372,581 | 433,275 |
| Net debt(1) | 183,806 | 298,386 | 425,140 |
Notes:
(1) Refer to "Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics" section of this MD&A for further details concerning these measures including definitions and reconciliations of each non-IFRS financial measure to the relevant reported IFRS financial measure. Non-IFRS financial measures and non-IFRS ratios do not have a standardized meaning under IFRS Accounting Standards, which are used to prepare the Company's financial statements and might not be comparable to similar financial measures presented by other entities.
(2) Number of stores is as at end of period.
(3) Net earnings per share and Adjusted net earnings per share are calculated after giving the effect, on a retrospective basis, to the share consolidation that occurred in connection with the pre-closing reorganization on November 20, 2024 (the "Share Consolidation").
Results of Operations
Summary of changes in our store portfolio
For the 39-week period ended November 1, 2025, we opened 17 new stores in the United States under the Garage retail banner. We also strategically closed 8 locations, and 11 stores were renovated or re-located to a more advantageous location. For the 39-week period ended November 2, 2024, we opened 18 new stores, completed 9 strategic store closures and 3 stores were renovated or re-located.
The following table presents a summary of changes in our store portfolio per banner:
| As of and for the 39-week periods ended | ||||||
|---|---|---|---|---|---|---|
| November 1, 2025 | November 2, 2024 | |||||
| Canada | USA | Total | Canada | USA | Total | |
| Stores at the beginning of the period | ||||||
| Garage | 102 | 111 | 213 | 107 | 95 | 202 |
| Dynamite | 81 | 4 | 85 | 83 | 5 | 88 |
| 183 | 115 | 298 | 190 | 100 | 290 | |
| Store openings | ||||||
| Garage | - | 17 | 17 | 2 | 15 | 17 |
| Dynamite | - | - | - | 1 | - | 1 |
| - | 17 | 17 | 3 | 15 | 18 | |
| Store closures | ||||||
| Garage | (2) | - | (2) | (5) | (1) | (6) |
| Dynamite | (5) | (1) | (6) | (3) | - | (3) |
| (7) | (1) | (8) | (8) | (1) | (9) | |
| Stores at the end of the period | 176 | 131 | 307 | 185 | 114 | 299 |
| Store renovations and relocations | ||||||
| Garage | 5 | 4 | 9 | - | 3 | 3 |
| Dynamite | 2 | - | 2 | - | - | - |
| 7 | 4 | 11 | - | 3 | 3 |
Results of operations for the 13-week and 39-week periods ended November 1, 2025 and November 2, 2024
Revenue
Total revenue for the 13-week period ended November 1, 2025 increased by $104.2 million or 40.3% compared to the 13-week period ended November 2, 2024. The majority of the increase is attributable to retail revenue, which increased by $85.0 million or 39.6% over the 13-week period ended November 2, 2024. This growth was primarily due to a 31.6% (28.6% on a constant currency basis) increase in comparable store sales and the contribution from new stores. Online revenue for the 13-week period ended November 1, 2025 increased to $63.2 million from $44.1 million compared to the 13-week period ended November 2, 2024, representing an increase of $19.1 million or 43.3%.
Total revenue for the 39-week period ended November 1, 2025 increased by $229.3 million or 33.4% compared to the 39-week period ended November 2, 2024. The majority of the increase is attributable to retail revenue, which increased by $192.2 million or 33.3% over the 39-week period ended November 2, 2024. This increase was driven by comparable store sales growth of 25.4% (22.6% on a constant currency basis) and revenue from new stores. Online revenue for the 39-week period ended November 1, 2025 increased to $147.2 million from $110.2 million compared to the 39-week period ended November 2, 2024, representing an increase of $37.0 million or 33.6%.
Cost of sales and gross profit
Gross profit for the 13-week period ending November 1, 2025, increased by $77.1 million, or 47.3%, compared to the 13-week period ending November 2, 2024. Gross margin increased by 310 basis points to 66.1%. This increase is attributable to the 40.3% revenue growth compared to the relatively lower increase in cost of sales of 28.3% which is due to controlled merchandise cost increases, lower outbound freight costs and lower markdowns.
Gross profit for the 39-week period ended November 1, 2025 increased by $146.9 million or 33.3% compared to the 39-week period ended November 2, 2024. Gross margin declined by 10 basis points to 64.2%, reflecting the impact of additional tariffs, partly offset by our mitigation efforts and our pricing strategy.
Selling, general and administrative expenses
SG&A for the 13-week period ending November 1, 2025, increased by $15.8 million, or 19.8%, compared to the 13-week period ending November 2, 2024. This increase was primarily driven by the Company's growing scale and activities, leading to an $11.7 million increase in wages, salaries, and employee benefits. Additionally, during Fiscal 2025, the Company strategically increased its marketing investment by launching more initiatives aimed at driving brand awareness, resulting in a $3.3 million increase in selling and marketing expenses compared to Q3 2024. Administrative costs increased by $0.7 million due to higher operating expenses to support growth projects and new public company requirements, more than offsetting the $3.2 million in IPO-related professional fees incurred last year. As a percentage of sales, SG&A decreased by 450 basis points from 30.9% in Q3 2024 to 26.4% in Q3 2025.
SG&A for the 39-week period ended November 1, 2025 increased by $32.1 million, or 14.2% compared to the 39-week period ended November 2, 2024. This increase was primarily due to a $22.2 million increase in wages, salaries, and employee benefits, driven by higher labour costs as revenue grew and a larger proportion of stores were opened in the U.S., where labour tends to be more expensive than in Canada. Selling and marketing expenses also increased by $10.1 million due to higher investment to support business growth.
Depreciation and amortization
Depreciation and amortization for the 13-week period ended November 1, 2025 increased by $4.3 million or 21.5% compared to the 13-week period ended November 2, 2024. Most of this increase is attributable to depreciation of property, plant and equipment and right-of-use assets, which increased by $3.8 million or 20.7%, driven by a higher value of store leases capitalized under right-of-use assets and increased depreciation from investments in leasehold improvements in Q3 2025 compared to Q3 2024.
Depreciation and amortization for the 39-week period ended November 1, 2025 increased by $13.7 million or 25.1% compared to the 39-week period ended November 2, 2024. Most of this increase is attributable to depreciation of property, plant and equipment and right-of-use assets, which increased by $11.2 million or 21.8%, driven by a higher value of store leases capitalized under right-of-use assets and increased depreciation from investments in leasehold improvements in YTD 2025 compared to YTD 2024.
Net financing costs
Net financing costs for the 13-week period ended November 1, 2025 decreased by $0.4 million or 6.7% compared to the 13-week period ended November 2, 2024. This reflects a $1.3 million decrease in finance expense, partially offset by a $0.9 million decrease in finance income. The lower interest expense was driven by the repayment of all of the outstanding borrowings on the credit facilities, partly offset by higher interest on lease liabilities. The decrease in interest revenue was a result of the repayment of the promissory note receivable from the parent company, partly offset by higher interest revenues from increased cash balances.
Net financing costs for the 39-week period ended November 1, 2025 increased by $1.9 million or 10.7% compared to the 39-week period ended November 2, 2024. This increase is due to a decrease in finance income of $5.4 million partially offset by a $3.4 million decrease in finance expense. This is mainly the result of the Company using the proceeds from the promissory note receivable from a parent company in the amount of $110.0 million to reduce its outstanding balance on the credit facilities.
Operating income and adjusted EBITDA
Operating income for the 13-week period ended November 1, 2025 increased by $57.0 million or 90.3% to reach $120.1 million in Q3 2025 compared to $63.1 million in Q3 2024. Similarly, adjusted EBITDA for the 13-week period ended November 1, 2025 increased by $58.9 million or 67.5% to reach $146.1 million in Q3 2025 compared to $87.2 million in Q3 2024. The adjusted EBITDA margin improved to 40.2% compared to 33.7% in Q3 2024. This performance results from the combination of both a 310 basis points improvement in gross margin and a reduction of
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340 basis points in adjusted SG&A as a percentage of sales, which decreased to 25.9% in Q3 2025 from 29.3% in Q3 2024.
Operating income for the 39-week period ended November 1, 2025 increased by $100.2 million or 62.0% to reach $261.7 million in YTD 2025 compared to $161.5 million in YTD 2024. Similarly, adjusted EBITDA for the 39-week period ended November 1, 2025 increased by $109.7 million or 49.0% to reach $333.5 million in YTD 2025 compared to $223.8 million in YTD 2024. The adjusted EBITDA margin improved to 36.4% in YTD 2025 compared to 32.6% in YTD 2024 mainly due to adjusted SG&A as a percentage of sales, which decreased to 27.8% in YTD 2025 from 31.8% in YTD 2024.
Net earnings
Net earnings for the 13-week period ended November 1, 2025 increased by $41.1 million or 101.7% compared to the 13-week period ended November 2, 2024. This growth was mainly driven by higher revenue, which led to increased gross profit, partially offset by higher SG&A and increased depreciation and amortization.
Net earnings for the 39-week period ended November 1, 2025 increased by $68.0 million or 64.9% compared to the 39-week period ended November 2, 2024. This growth was mainly driven by higher revenue, which led to increased gross profit, partially offset by higher SG&A and increased depreciation and amortization.
Analysis of cash flows for the 39-week periods ended November 1, 2025 and November 2, 2024
The following table presents cash balances, cash flows from operating, investing and financing activities:
| In thousands of Canadian dollars | 39-week periods ended | |
|---|---|---|
| November 1, 2025 | November 2, 2024 | |
| $ | $ | |
| Cash – beginning of period | 74,195 | 8,135 |
| Operating activities | 292,866 | 159,079 |
| Investing activities | (59,130) | (50,681) |
| Financing activities | (54,058) | (101,872) |
| Effect of foreign exchange rate changes on cash | (50) | (2,103) |
| Net increase in cash | 179,628 | 4,423 |
| Cash – end of period | 253,823 | 12,558 |
Operating activities
For the 39-week period ended November 1, 2025, cash generated from operating activities was $292.9 million compared to $159.1 million for the 39-week period ended November 2, 2024. The increase was mainly driven by higher net earnings for the period and a more favorable impact of changes in non-cash working capital components.
Investing activities
For the 39-week period ended November 1, 2025, cash used in investing activities was $59.1 million compared to cash used of $50.7 million for the 39-week period ended November 2, 2024. This variance is the result of a $8.4 million increase in CAPEX compared to last year.
Financing activities
For the 39-week period ended November 1, 2025, cash used in financing activities was $54.1 million compared to $101.9 million for the 39-week period ended November 2, 2024. This decrease is driven by the net repayment of long-term debt for $72.5 million in YTD 2024, whereas in YTD 2025, there were $10.5 million in repayments of notes payable to parent companies and $17.1 million of share repurchases under our normal course issuer bid ("NCIB") program.
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Liquidity and capital resources
Our capital management strategy is to ensure sufficient liquidity to enable the financing of capital projects, thereby facilitating our growth and maintaining a flexible capital structure that optimizes the cost of capital at an acceptable risk and preserves the ability to meet our financial obligations. The Company defines capital as its credit facilities and shareholders' equity.
We mainly use our funds for operating costs, to finance new stores and renovation projects, debt payments and return capital to shareholders through opportunistic repurchases of shares and one-time special dividend payments using identified surplus liquidity. We believe that our cash generated from operating activities, along with our credit facilities, will be sufficient to finance new store and renovation projects and other investment projects. However, our future operating performance and funding ability will depend on various factors, some of which are beyond our control. We assess investment opportunities as part of our business and may make selective investments to execute our business strategy when we find suitable opportunities. In the past, we have financed any such investments from our cash generated from operating activities and/or our credit facilities.
Working capital
Our liquidity management involves ensuring that we have enough cash to pay our liabilities on time. We do this by tracking our cash flow and comparing our actual results with our budget regularly. Specifically, we have consistently achieved strong inventory turnover and cash conversion. As of the end of Q3 2025, we also have $312.0 million in credit facilities that we can use to support our ongoing working capital needs, not including the impact of letters of credit totalling $10.7 million at quarter end. Our main cash needs are for investing in our store network optimization and geographic expansion. As of November 1, 2025, our current assets were $382.4 million, including cash of $253.8 million, and our current liabilities were $223.3 million. We believe that our existing cash and available credit facilities are enough to cover our current financial obligations. See a summary of our contractual obligations as documented below in this MD&A.
Inventories
Inventory, consisting of finished goods and finished goods that are currently in transit, is stated at the lower of cost and net realizable value. The use of proprietary business intelligence allows us to efficiently allocate inventory and to optimize our omnichannel operating model. We minimize our inventory costs through our agile product development and strategic sourcing capabilities which adjust production output to match demand fluctuations. As a result, we have achieved an inventory turnover ratio of 6.88x as of November 1, 2025, compared to 6.09x as of November 2, 2024, highlighting the effectiveness of our inventory management practices.
Free cash flow
Free cash flow for Q3 2025 increased by $77.3 million to $119.5 million, up from $42.2 million in Q3 2024. This is the reflection of strong cash generated from operating activities, as the Company delivered strong sales.
For the 39-week period ended November 1, 2025 the Company generated free cash flow of $233.7 million, reflecting a robust financial position and an increase of $125.3 million from last year. This year-over-year growth was mainly driven by a $133.8 million increase in cash flow from operations partly offset by a $8.4 million increase in CAPEX.
Credit facilities
The original credit agreement dated November 10, 2022 (the "Original Credit Agreement") was amended and restated on March 25, 2024 (the "Amended and Restated Credit Agreement"), and the maturity date was extended by one year to November 10, 2026. Under the terms of the Amended and Restated Credit Agreement, proceeds from the revolving facility were used to refinance the term facility, such that the total commitments of the revolving facility under the Original Credit Agreement were increased by an amount of $70.0 million, and the total commitments under the term facility were decreased by the same amount. As such, the Company was entitled to borrow up to an aggregate amount of $326.3 million under the terms of the Amended and Restated Credit Agreement. The Amended and Restated Credit Agreement also allowed for an increase of the revolving facility (accordion feature) up to $100.0 million.
On November 20, 2024, the Amended and Restated Credit Agreement was further amended and restated (the "Second Amended and Restated Credit Agreement"). Under the terms of the Second Amended and Restated Credit Agreement, the outstanding balance of the term loan ($86.8 million) was fully repaid by using proceeds from the repayment of the promissory note receivable from a parent company, reducing the term loan borrowings to $nil. The outstanding balance of the revolving credit facility ($7.0 million) was also fully repaid, reducing the borrowings to $nil.
Under the Second Amended and Restated Credit Agreement, the Company can borrow up to an aggregate amount of $312.0 million in the form of a revolving credit facility, with up to $30.0 million of letter of credit availability under the revolving credit facility, and swingline facilities of up to $30.0 million under the revolving credit facility.
On June 16, 2025 the Second Amended and Restated Credit Agreement was further amended, extending the maturity date by 18 months to May 10, 2028.
Funds advanced under the Amended and Restated Credit Agreement bore interest at the Canadian bank prime rate and US bank base rate plus a margin, or at the CORRA rate and SOFR plus a margin (previously bore interest at the Canadian bank prime rate and U.S. bank base rate plus a margin, or at bankers' acceptances rate and CDOR plus a margin). The margin was determined based on a financial ratio. Post June 28, 2024, CDOR rates were no longer being published. As a result, in the second quarter of Fiscal 2024, the Company entered into amendments that included the transition from the CDOR to the CORRA. For the 39-week period ended November 1, 2025, the company had no borrowings under the credit facility. For the 39-week period ended November 2, 2024, the average interest rate was 7.12%.
The credit facilities are secured by first ranking security on all the movable and immovable, present and future assets of the Company, including all cash on hand.
As at November 1, 2025, the Company was compliant with all of its financial ratio requirements.
Net leverage ratio
For the 52-week period ended November 1, 2025, the Company's net leverage ratio decreased to 0.45x compared to 1.41x for the 53-week period ended November 2, 2024. This improvement is primarily due to the increase in adjusted EBITDA and the resulting increase in cash balance, along with the repayment of all of the outstanding borrowings under the credit facilities. These factors have more than offset the increase in lease liabilities and allowed the Company to reduce leverage significantly.
Financial ratios
The ROA of 27.2% for the 52-week period ended November 1, 2025 represents an increase from the ROA of 23.8% for the 53-week period ended November 2, 2024. This suggests that recent investments or operational improvements have been successful in enhancing profitability relative to the asset base.
For the 52-week period ended November 1, 2025, the return on capital employed ratio ("ROCE") was 50.5%, marking an improvement from 43.3% for the 53-week period ended November 2, 2024. This enhanced efficiency highlights the effectiveness of recent strategies and investments. The slower growth of average capital employed compared to adjusted operating income reflects strong capital utilization, enabling the generation of operating income. This positions the Company well to invest in new projects, open additional stores, and pursue other growth opportunities, all while maintaining profitability.
Contractual obligations
The Company has the following contractual obligations as of November 1, 2025:
| In thousands of Canadian dollars | Total | Less than 1 year | Between 1 and 3 years | Between 3 and 5 years | More than 5 years |
|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | |
| Accounts payable | 131,010 | 131,010 | - | - | - |
| Other long-term liabilities | 2,873 | - | 2,873 | - | - |
| Lease liabilities obligations(1) | 734,096 | 88,161 | 179,370 | 151,403 | 315,162 |
| 867,979 | 219,171 | 182,243 | 151,403 | 315,162 |
Note:
(1) Lease liabilities obligations include interest and principal amounts
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Financial instruments
Our financial assets include cash and receivables that are classified as financial assets at amortized cost. Our financial liabilities, including accounts payable and accrued expenses, notes payable to parent companies and long-term debt are classified as financial liabilities at amortized cost. All derivative financial instruments not designated in a hedge relationship are classified as financial instruments at fair value through profit and loss. When the derivative financial instruments are designated in a hedge relationship, the change in fair value related to the effective portion of the hedge is recognized in other comprehensive income. See note 24 of our Annual Financial Statements for the risks associated with our financial instruments.
Off-balance sheet arrangements
We have no off-balance sheet arrangements. Our commitments, contingencies and guarantees relate to the following:
Commitments
In the normal course of business, the Company granted irrevocable standby letters of credit issued by highly rated financial institutions to various third parties to indemnify them in the event the Company does not perform its contractual obligations. As at November 1, 2025, standby letters of credit outstanding amounted to $10.7 million (US$7.6 million).
Our third-party manufacturers acquire raw materials on our behalf for use in upcoming production in the normal course of business. As of November 1, 2025, we have purchase obligations totaling $12.6 million ($16.2 million as at February 1, 2025), which reflect commitments for fabric expected to be utilized in the next seasons.
Contingencies
In the ordinary course of business, the Company is exposed to various proceedings and claims. The Company assesses the validity of these proceedings and claims. Provisions are made whenever a penalty seems probable and a reliable estimate of the amount can be made. Management believes that any settlement arising from claims will not have a significant effect on the Company's consolidated financial position or overall trends in consolidated results of operations.
Guarantees
Some agreements to which the Company is a party, specifically those related to the leasing of its premises, include indemnification provisions that may require the Company to make payments to a third party for a breach of fundamental representation and warranty terms in the agreements, with respect to matters such as corporate status, title of assets, environmental issues, consents to transfer, employment matters, litigation, taxes payable and other potential material obligations. The maximum potential number of future payments that the Company could be required to make under these indemnification provisions is not reasonably quantifiable, as certain indemnifications are not subject to a monetary limitation. As at November 1, 2025, management does not believe that these indemnification provisions would require any material cash payment by the Company nor insurance coverage, which is estimated by management to be reasonable and sufficient to mitigate the previously mentioned risks.
As many of these guarantees will not be drawn upon, these amounts are not indicative of future cash requirements. No material loss is anticipated by reason of such agreements and guarantees, and no amounts have been accrued in the Company's consolidated financial statements with respect to these guarantees.
The Company indemnifies its directors and officers against claims reasonably incurred and resulting from the performance of their services to the Company, and maintains liability insurance for its directors and officers as well as those of its subsidiaries.
Transactions between related parties
See note 20 to the Interim Financial Statements and note 26 to the Annual Financial Statements for the Company's related party transactions.
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Leases
The Company is party to a lease agreement with AJL 5550 Ferrier Inc. and with 4450329 Canada Inc. for its head office at 5540, 5550 and 5592 Rue Ferrier, Mont-Royal, Québec H4P 1M2, Canada. Regarding its retail operations, the Company is party to a lease agreement with 9224-2239 Québec Inc., 9224-1892 Québec Inc., 4240073 Canada Inc. and 9171-9922 Québec Inc. for the locations at Units L08E-2, L11C and S8L in the Quartier Dix30 shopping centre, Brossard, Québec, Canada, as well as to a lease agreement with Quartier Royalmount Limited Partnership for Units E207 and E209 in the Royalmount shopping centre, Mont-Royal, Québec, Canada.
As at November 1, 2025 the outstanding balance of lease liabilities owed to a company under common control totalled $19.4 million ($21.2 million as at February 1, 2025).
These transactions are recorded at the amount of consideration paid as established and agreed to by the related parties, which approximate market value. The related parties and the parent companies are entities under the control of the Chair and Chief Executive Officer, Andrew Lutfy.
Promissory Notes
On November 19, 2024, in connection with the IPO, the Company increased the stated capital of the Class "A" shares in an aggregate amount of $222.0 million and immediately thereafter decreased the stated capital of the Class "A" shares in an aggregate amount of $16.2 million and returned such capital to certain shareholders by issuing non-interest bearing demand promissory notes. The stated capital increase triggered a tax refund to the Company in an amount equivalent to the principal amount of the Notes payable to parent companies. As at November 1, 2025, the Company has fully repaid the notes payable to parent companies.
New and future accounting standard changes
See note 3 to the Interim Financial Statements for the new accounting policies. See note 4 to the Interim Financial Statements and note 3 to the Annual Financial Statements for a summary of future accounting standard changes.
Significant accounting judgments, estimates, and assumptions
See note 5 to the Interim Financial Statements and note 4 to the Annual Financial Statements for the Company's significant accounting judgments, estimates, and assumptions.
Summary of quarterly results
The following table sets forth selected quarterly statements of operations data for each of the eight fiscal quarters immediately preceding and including the fiscal quarter ended November 1, 2025. The information for each of these quarters has been prepared in accordance with IFRS Accounting Standards and on the same basis as the Annual Financial Statements. These quarterly operating results are not necessarily indicative of our operating results for a full-year or any future period.
| In thousands of Canadian dollars, except per share data | 13-week periods ended | |||||||
|---|---|---|---|---|---|---|---|---|
| Nov 1, 2025 | Aug 2, 2025 | May 3, 2025 | Feb 1, 2025 | Nov 2, 2024 | Aug 3, 2024 | May 4, 2024 | Feb 3, 2024(1) | |
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Revenue | 362,970 | 326,425 | 226,656 | 271,765 | 258,772 | 239,104 | 188,884 | 240,291 |
| Cost of sales | 122,926 | 118,944 | 85,945 | 111,456 | 95,845 | 81,400 | 68,232 | 98,739 |
| Gross profit | 240,044 | 207,481 | 140,711 | 160,309 | 162,927 | 157,704 | 120,652 | 141,552 |
| Selling, general and administrative expenses | 95,818 | 87,669 | 74,691 | 87,027 | 80,030 | 79,871 | 66,233 | 74,365 |
| Depreciation and amortization | 24,294 | 22,637 | 21,299 | 22,250 | 20,027 | 17,728 | 16,754 | 18,430 |
| Foreign exchange (gain) loss | (182) | (80) | 398 | 310 | (182) | (175) | (487) | 254 |
| Operating income | 120,114 | 97,255 | 44,323 | 50,722 | 63,052 | 60,280 | 38,152 | 48,503 |
| Finance expense | 7,497 | 8,285 | 7,397 | 7,791 | 8,755 | 9,297 | 8,566 | 9,748 |
| Finance income | (1,893) | (1,060) | (579) | (894) | (2,773) | (2,766) | (3,363) | (3,014) |
| Net financing costs | 5,604 | 7,225 | 6,818 | 6,897 | 5,982 | 6,531 | 5,203 | 6,734 |
| Earnings before income taxes | 114,510 | 90,030 | 37,505 | 43,825 | 57,070 | 53,749 | 32,949 | 41,769 |
| Income taxes | 33,005 | 26,145 | 10,169 | 12,791 | 16,630 | 13,392 | 9,012 | 13,174 |
| Net earnings | 81,505 | 63,885 | 27,336 | 31,034 | 40,440 | 40,357 | 23,937 | 28,595 |
| Earnings per share(2) | ||||||||
| Basic earnings per share(2) | $ 0.75 | $ 0.59 | $ 0.25 | $ 0.29 | $ 0.38 | $ 0.38 | $ 0.22 | $ 0.27 |
| Diluted earnings per share(2) | $ 0.71 | $ 0.56 | $ 0.24 | $ 0.28 | $ 0.38 | $ 0.38 | $ 0.22 | $ 0.27 |
Notes:
(1) The quarter ended on February 3, 2024, comprises 14 weeks.
(2) Basic and diluted earnings per share are calculated, after giving the effect, on a retrospective basis, to the Share Consolidation
Non-IFRS Measures including Non-IFRS Financial Measures, Non-IFRS Ratios, Supplementary Financial Measures and Retail Industry Metrics
This MD&A makes reference to certain non-IFRS measures, including non-IFRS financial measures, non-IFRS ratios, supplementary financial measures and certain retail industry metrics. These measures are not recognized measures under IFRS Accounting Standards and do not have a standardized meaning prescribed by IFRS Accounting Standards and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS Accounting Standards measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of our financial information reported under IFRS Accounting Standards. We use non-IFRS financial measures including "EBITDA", "adjusted EBITDA", "adjusted EBITDA (after rent equivalent expense)", "free cash flow", "adjusted net earnings" and "adjusted net earnings per share" and non-IFRS ratios including "EBITDA margin", "adjusted EBITDA margin", "adjusted EBITDA (after rent equivalent expense) margin", "adjusted SG&A as a percentage of sales", "comparable store sales", "comparable store sales on a constant currency basis", "return on assets", "return on capital employed" and "net leverage ratio". We also use supplementary financial measures including "inventory turnover", "retail sales per square foot", "gross margin", "operating margin", "SG&A as a percentage of sales" and "CAPEX" and other operating metrics commonly used in the retail industry. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.
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Supplementary Financial Measures
Sales per square foot and retail sales per square foot
Sales per square foot is calculated as revenue divided by the average total square footage (i.e., retail footprint) of retail stores over the last 12 months, while retail sales per square foot uses revenue from retail stores (i.e., excluding revenue from our online channel) as the numerator. Average total square footage is determined by taking the sum of the last 12 months total square footage and dividing that sum by twelve. Sales per square foot and retail sales per square foot are considered useful supplementary measures as they are commonly used by issuers operating in the retail industry and help evaluate the Company's productivity of retail space.
Gross margin
Gross profit is calculated as total revenue less cost of sales and gross margin is the ratio of gross profit over total revenue. Gross margin is considered a useful supplementary measure as it outlines underlying trends in operating performance and contributes to the comparability of our financial results with that of issuers operating in our industry.
Operating margin
Operating margin is the ratio of operating income over revenue. Operating margin is considered a useful supplementary measure as it outlines underlying trends in operating performance and contributes to the comparability of our financial results with that of issuers operating in our industry.
SG&A as a percentage of sales
SG&A as a percentage of sales is calculated as SG&A over total revenue. SG&A as a percentage of sales is considered a useful supplementary measure as it outlines underlying trends in expenses relative to sales and contributes to the comparability of our financial results with that of issuers operating in our industry.
CAPEX
CAPEX represents the Company's capital investments, calculated as the total of additions to property and equipment combined with additions to intangible assets. This metric is important for readers of financial statements as it provides insights into a company's investment strategy and its commitment to growth.
Inventory turnover
Inventory turnover is the ratio of cost of sales sold over average inventory. Average inventory is determined by taking the sum of the current year's inventory and the inventory from 12 months ago, and then dividing that sum by two. It is considered a useful supplementary financial measure because it provides insight as to the Company's efficiency in converting inventory into revenue and contributes to the comparability of our financial results with that of issuers operating in our industry.
| In thousands of Canadian dollars | 52-week and 53-week periods ended | |
|---|---|---|
| November 1, 2025 | November 2, 2024 | |
| $ | $ | |
| Cost of sales | 439,271 | 344,216 |
| Inventory same period prior year | 61,156 | 51,906 |
| Inventory end of period | 66,610 | 61,156 |
| Average inventory | 63,883 | 56,531 |
| Inventory turnover | 6.88 | 6.09 |
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Non-IFRS Financial Measures and Non-IFRS Ratios
Earnings before interests, taxes, depreciation, amortization ("EBITDA"), adjusted EBITDA and adjusted EBITDA (after rent equivalent expense)
EBITDA is calculated as operating income plus depreciation and amortization. Adjusted EBITDA accounts for other one-time or non-cash items. We consider EBITDA to be a valuable non-IFRS measure in assessing the Company's operating performance. Adjusted EBITDA helps users of the financial statements identify underlying trends by providing a measure of operating performance which excludes non-representative income or expenses, non-cash items, or variations in other items not related to day-to-day operations such as stock-based compensation expense, gains or losses on lease modifications and other professional fees in connection with the IPO. As of Q2 2025, we revised our definition of adjusted EBITDA to exclude gains or losses on lease modifications, and, where applicable, we restated prior-period figures to reflect this change. We believe that the presentation of EBITDA contributes to the comparability of our financial results as it is a measure commonly used by issuers operating in our industry.
Adjusted EBITDA (after rent equivalent expense) is calculated as adjusted EBITDA less a rent equivalent expense equal to the sum of depreciation of right-of-use assets and interest expense on lease liabilities. It is intended to provide users of our financial information with a view of the Company's adjusted EBITDA after the impact of depreciation on our right-of-use asset and interest expense on lease liabilities, principally for the purposes of assisting with comparability of the performance between the Company and that of issuers operating in the same industry with a significant retail footprint.
EBITDA margin, adjusted EBITDA margin and adjusted EBITDA (after rent equivalent expense) margin
The EBITDA margin, adjusted EBITDA margin and adjusted EBITDA (after rent equivalent expense) margin represent EBITDA, adjusted EBITDA and adjusted EBITDA (after rent equivalent expense) as a percentage of revenue.
| In thousands of Canadian dollars | 13-week periods ended | 39-week periods ended | ||
|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Nov 1, 2025 | Nov 2, 2024 | |
| $ | $ | $ | $ | |
| Operating income | 120,114 | 63,052 | 261,692 | 161,484 |
| Depreciation and amortization | 24,294 | 20,027 | 68,230 | 54,509 |
| EBITDA | 144,408 | 83,079 | 329,922 | 215,993 |
| EBITDA margin | 39.8% | 32.1% | 36.0% | 31.5% |
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| In thousands of Canadian dollars | 13-week periods ended | 39-week periods ended | ||
|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Nov 1, 2025 | Nov 2, 2024 | |
| $ | $ | $ | $ | |
| EBITDA | 144,408 | 83,079 | 329,922 | 215,993 |
| Adjustments to EBITDA | ||||
| Stock-based compensation expense(1) | 1,677 | 900 | 3,806 | 2,740 |
| Gain on lease modifications | - | - | (813) | - |
| Professional fees related to the IPO | - | 3,219 | 543 | 5,069 |
| Total adjustments | 1,677 | 4,119 | 3,536 | 7,809 |
| Adjusted EBITDA | 146,085 | 87,198 | 333,458 | 223,802 |
| Adjusted EBITDA margin | 40.2% | 33.7% | 36.4% | 32.6% |
(1) This excludes the expenses related to cash-settled deferred share units granted under the Shared Success Program, as well as those paid in lieu of bonus under the omnibus equity incentive plan (the "Omnibus Plan")..
| In thousands of Canadian dollars | 13-week periods ended | 39-week periods ended | ||
|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Nov 1, 2025 | Nov 2, 2024 | |
| Adjusted EBITDA | 146,085 | 87,198 | 333,458 | 223,802 |
| Depreciation of right-of-use assets | (15,548) | (13,502) | (45,012) | (39,416) |
| Interest expense on lease liabilities | (7,169) | (6,052) | (20,667) | (17,323) |
| Adjusted EBITDA (After Rent Equivalent Expense) | 123,368 | 67,644 | 267,779 | 167,063 |
| Adjusted EBITDA (After Rent Equivalent Expense) margin | 34.0% | 26.1% | 29.2% | 24.3% |
Adjusted SG&A as a percentage of sales
Adjusted SG&A as a percentage of sales is calculated as selling, general and administrative expenses plus or less non-recurring and non-cash items, over total revenue. The adjustments are made to exclude stock-based compensation expense, gains or losses on lease modifications and other professional fees in connection with the IPO. As of Q2 2025, we revised our definition of adjusted SG&A to exclude gains or losses on lease modifications, and, where applicable, we restated prior-period figures to reflect this change. We consider adjusted SG&A as a percentage of sales to be a valuable non-IFRS measure as it contributes to the comparability of our financial results with that of issuers operating in our industry.
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| In thousands of Canadian dollars | 13-week periods ended | 39-week periods ended | ||
|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Nov 1, 2025 | Nov 2, 2024 | |
| $ | $ | $ | $ | |
| SG&A | 95,818 | 80,030 | 258,178 | 226,134 |
| Adjustments to SG&A | ||||
| Stock-based compensation expense(1) | 1,677 | 900 | 3,806 | 2,740 |
| Gain on lease modifications | - | - | (813) | - |
| Professional fees related to the IPO | - | 3,219 | 543 | 5,069 |
| Total adjustments | 1,677 | 4,119 | 3,536 | 7,809 |
| Adjusted SG&A | 94,141 | 75,911 | 254,642 | 218,325 |
| Adjusted SG&A as a percentage of sales | 25.9% | 29.3% | 27.8% | 31.8% |
(1) This excludes the expenses related to cash-settled deferred share units granted under the Shared Success Program, as well as those paid in lieu of bonus under the Omnibus Plan.
Adjusted net earnings
Adjusted net earnings is calculated as net earnings plus or less non-recurring items and their ensuing tax impact, as applicable. The adjustments are made to exclude stock-based compensation expense, gains or losses on lease modifications and other professional fees in connection with the IPO. As of Q2 2025, we revised our definition of adjusted net earnings to exclude gains or losses on lease modifications, and, where applicable, we restated prior-period figures to reflect this change. We consider adjusted net earnings to be a valuable non-IFRS measure as it contributes to the comparability of our financial results with that of issuers operating in our industry.
In addition to adjusted net earnings, we may present certain metrics and ratios with respect to adjusted net earnings including but not limited to adjusted net earnings per share. Adjusted net earnings per share are calculated, after giving the effect, on a retrospective basis, to the Share Consolidation.
| In thousands of Canadian dollars, except per share data | 13-week periods ended | 39-week periods ended | ||
|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Nov 1, 2025 | Nov 2, 2024 | |
| $ | $ | $ | $ | |
| Net earnings | 81,505 | 40,440 | 172,726 | 104,734 |
| Adjustments to net earnings | ||||
| Stock-based compensation expense(1) | 1,677 | 900 | 3,806 | 2,740 |
| Gain on lease modifications | - | - | (813) | - |
| Professional fees related to the IPO | - | 3,219 | 543 | 5,069 |
| Income tax (recovery) expense on taxable items above | (165) | (853) | (94) | (1,343) |
| Total adjustments | 1,512 | 3,266 | 3,442 | 6,466 |
| Adjusted net earnings | 83,017 | 43,706 | 176,168 | 111,200 |
| Adjusted net earnings per share | ||||
| Basic | $0.77 | $0.41 | $1.63 | $1.03 |
| Diluted | $0.72 | $0.41 | $1.54 | $1.03 |
(1) This excludes the expenses related to cash-settled deferred share units granted under the Shared Success Program, as well as those paid in lieu of bonus under the Omnibus Plan.
Comparable store sales represent sales of retail stores relative to sales for the same period in the prior fiscal year calculated using budgeted exchange rates. When expressed in constant currency, this metric is adjusted to remove the impact of foreign exchange fluctuations. It provides insight on the performance of our portfolio of retail stores, hence on the success of our real estate strategy. We believe that the presentation of the comparable store sales metric contributes to the comparability of our performance with that of issuers operating in our industry. Stores must be open for at least 12 months and must not have been subject to any significant change in square footage to be comparable. A significant change in square footage means an increase or decrease by 20% of the total square footage.
| In thousands of Canadian dollars | 13-week periods ended | 39-week periods ended | ||||
|---|---|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Variance | Nov 1, 2025 | Nov 2, 2024 | Variance | |
| Retail revenue | 299,740 | 214,682 | 39.6% | 768,824 | 576,572 | 33.3% |
| Comparable store sales on a constant currency basis | 28.6% | 22.6% | ||||
| Foreign currency exchange impact | 3.0% | 2.8% | ||||
| Comparable store sales | 31.6% | 25.4% | ||||
| Non-comparable store sales and others | 8.0% | 7.9% |
Return on assets or ROA is the ratio of adjusted net earnings over average total assets and is a non-IFRS ratio. Average total assets is determined by taking the sum of the current year's total assets and the total assets from twelve months ago, and then dividing that sum by two. It is considered a useful non-IFRS ratio because it provides insight as to the Company's productive use of its assets and contributes to the comparability of our financial results with that of issuers operating in our industry.
| In thousands of Canadian dollars | 52-week and 53-week periods ended | |
|---|---|---|
| November 1, 2025 | November 2, 2024 | |
| $ | $ | |
| Adjusted net earnings | 212,721 | 140,777 |
| Average total assets | 780,801 | 591,475 |
| Return on assets | 27.2% | 23.8% |
Return on capital employed or ROCE is the ratio of (i) the result of adjusted EBITDA reduced by depreciation and amortization over (ii) average capital employed, and is a non-IFRS ratio. Average capital employed is determined by taking the sum of the current year's total capital employed and the total capital employed from twelve months ago, and then dividing that sum by two. We calculate the capital employed by subtracting total current liabilities, excluding the short-term portion of long-term debt and lease liabilities, from total assets. It is considered a useful non-IFRS ratio because it provides insight as to the degree to which the Company's capital investments contribute to its profitability and contributes to the comparability of our financial results with that of issuers operating in our industry.
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| In thousands of Canadian dollars | 52-week and 53-week periods ended | |
|---|---|---|
| November 1, 2025 | November 2, 2024 | |
| $ | $ | |
| Adjusted EBITDA | 412,923 | 291,717 |
| Depreciation and amortization | (90,480) | (72,939) |
| Adjusted EBITDA reduced by depreciation and amortization | 322,443 | 218,778 |
| Capital employed | ||
| Average total Assets | 780,801 | 591,475 |
| - Average total current liabilities | (183,840) | (138,120) |
| + Average short-term portion of long-term debt | 9,882 | 19,797 |
| + Average short-term portion of lease liabilities | 31,362 | 32,068 |
| Average total capital employed | 638,205 | 505,220 |
| Return on capital employed | 50.5% | 43.3% |
Free cash flow is calculated as cash flow generated from (used in) operating activities less cash used on the additions to property, equipment and intangible assets. We consider free cash flow to be a valuable non-IFRS financial measure as it provides users of the financial statements an indicator of our ability to generate cash to support future growth, debt repayment and potential distributions to shareholders.
| In thousands of Canadian dollars | 13-week periods ended | 39-week periods ended | ||
|---|---|---|---|---|
| Nov 1, 2025 | Nov 2, 2024 | Nov 1, 2025 | Nov 2, 2024 | |
| $ | $ | $ | $ | |
| Cash from operating activities | 146,402 | 60,019 | 292,866 | 159,079 |
| Additions to property and equipment | (24,688) | (15,424) | (51,862) | (44,079) |
| Additions to intangible assets | (2,220) | (2,402) | (7,268) | (6,602) |
| Free cash flow | 119,494 | 42,193 | 233,736 | 108,398 |
Net leverage ratio is the ratio of net debt, which is calculated as long-term debt (including current portion) plus lease liabilities (including current portion) less cash, over adjusted EBITDA. We consider net leverage ratio to be a valuable non-IFRS ratio as it is an indicator of the Company's ability to meet financial obligations and contributes to the comparability of our financial results with that of issuers operating in our industry.
| In thousands of Canadian dollars | 52-week and 53-week periods ended | |
|---|---|---|
| November 1, 2025 | November 2, 2024 | |
| Net debt | $ | $ |
| Long-term debt including current portion | - | 92,987 |
| Lease liabilities including current portion | 437,629 | 331,218 |
| - Cash | (253,823) | (12,558) |
| Total net debt | 183,806 | 411,647 |
| Adjusted EBITDA | 412,923 | 291,717 |
| Net leverage ratio | 0.45 | 1.41 |
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Risk Factors
We believe that achieving our goal of driving long-term sustainable growth and creating stakeholder value depends on a variety of factors. While these factors present significant opportunities for our business, they also bring important challenges. The risks and uncertainties we face include, but are not limited to, those discussed in the "Financial Risk Management" section of our Annual Financial Statements, as well as other risk factors. These risks encompass, but are not limited to, the following categories: economic conditions, merchandise offerings, brand and image, technology risks, human resources, store locations, growth strategy, and competition.
For a detailed description of risk factors associated with the Company, refer to the "Risk Factors" section of the Company's AIF, which is available on SEDAR+ at www.sedarplus.ca.
Disclosure Controls & Procedures and Internal Control Over Financial Reporting
The Company's Chief Executive Officer and Chief Financial Officer have designed disclosure controls and procedures ("DC&P"), or caused DC&P to be designed under their supervision, to provide reasonable assurance that material information relating to the Company is made known to them by others, and that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by the Company under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation. The Company's Chief Executive Officer and Chief Financial Officer have also designed internal controls over financial reporting ("ICFR"), or caused ICFR to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
There were no changes in the Company's ICFR that occurred during the period beginning on August 3, 2025 and ended on November 1, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR.
Normal course issuer bid
On April 14, 2025, the Company approved a NCIB, authorizing the purchase of approximately 1.3 million subordinate voting shares, representing approximately 10% of the public float, over the course of twelve months commencing on or around April 17, 2025, and ending at the latest on April 16, 2026. All subordinate voting shares repurchased under the NCIB will be cancelled upon their repurchase.
During the 39-week period ended November 1, 2025, the Company repurchased 648,000 subordinate voting shares for cancellation under the NCIB at an average price of $26.44 per subordinate voting share for total cash consideration of approximately $17.1 million.
On April 21, 2025, the Company entered into an automatic share purchase plan ("ASPP") to facilitate repurchases of subordinate voting shares under its NCIB. Under the ASPP, the Company's broker may purchase subordinate voting shares from the effective date of the ASPP until the termination of the ASPP. All purchases of subordinate voting shares made under the ASPP will be included in determining the number of subordinate voting shares purchased under the NCIB. The ASPP will terminate when the NCIB expires, unless terminated earlier in accordance with the terms of the ASPP.
Current Share Information
The Company's authorized share capital consists of (i) an unlimited number of subordinate voting shares, (ii) an unlimited number of multiple voting shares and (iii) an unlimited number of preferred shares, of which 15,708,723 subordinate voting shares, 92,615,622 multiple voting shares, and no preferred shares were issued and outstanding as of November 1, 2025. All of the issued and outstanding multiple voting shares are held or controlled, directly or indirectly, by Andrew Lutfy.
As of November 1, 2025, an aggregate of 6,992,028 options, 270,548 restricted share units and 245,725 deferred share units to acquire subordinate voting shares are outstanding.
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Additional Information
Additional information relating to the Company, including Company's AIF, is available on SEDAR+ at www.sedarplus.ca. The Company's subordinate voting shares are listed for trading on the TSX under the symbol "GRGD".