A Garage clothing store in Toronto in December, 2025.Sammy Kogan/The Globe and Mail
Groupe Dynamite Inc. GRGD-T chief executive officer Andrew Lutfy is chuffed to bits with the response from British shoppers who are “obsessed” with its Garage stores – and the U.K. launch is giving the Montreal-based retailer confidence for expansion to more markets around the world.
“For sure, this is a great proxy for further global growth,” Mr. Lutfy said during a conference call to discuss the company’s fourth-quarter financial results. The first two U.K. Garage locations – which opened last weekend and marked the retailer’s first bricks-and-mortar expansion beyond North America – were the best store openings in Groupe Dynamite history, he added.
“I’m not used to instant success. Usually, we suffer in all our endeavours; we’re just tenacious and we grind through and achieve success eventually,” Mr. Lutfy said.
Groupe Dynamite clothing brand Garage expands overseas with first U.K. locations
Groupe Dynamite is targeting five more store openings in Britain this year, along with continued expansion in the U.S. In total, the company expects to open 24 to 26 new locations this year, while closing roughly 14 stores – many of which are profitable but “not profitable enough,” according to the CEO.
As shoppers increasingly take their fashion cues from social media and style becomes more globalized, Mr. Lutfy said that he sees potential for continued growth.
“There are a lot of other markets that are similar to the U.K.,” he said. “The world is a much smaller place today.”
On Wednesday, Groupe Dynamite beat analysts’ expectations for revenue and profit growth as it reported that its fourth-quarter profits more than doubled compared with the same period last year.
The company reported net earnings of $79.4-million or 69 cents per diluted share in the quarter ended Jan. 31, up from $31-million or 28 cents per diluted share in the prior year. That exceeded analysts’ expectations of $77.1-million, according to consensus estimates from S&P Capital IQ.
Revenue grew to $394.2-million in the quarter, up 45 per cent compared with the prior year. Online revenue grew by 63.3 per cent, to $100.6-million.
Comparable store sales – an important metric that tracks sales growth at stores open for more than a year and strips out the effect of new store openings – increased by 30.4 per cent in the fourth quarter.
Groupe Dynamite has been managing the level of inventory it holds, adjusting its pricing strategy and cutting down on the number of products it sells on markdowns. Those factors contributed to improved profits: In the fourth quarter, its gross profit margin grew to 63 per cent, a new record for the company.
For the year ahead, the company is forecasting comparable sales growth of 11 to 14 per cent, and total revenue growth between 22 and 25 per cent.
Groupe Dynamite’s stock price closed down about 1 per cent on the Toronto Stock Exchange on Wednesday, after the earnings report.
As the retailer expands its store footprint, Groupe Dynamite is focusing on “investment-grade” locations, which represent roughly the top 10 per cent of shopping malls in the market, Mr. Lutfy said.
There is significant competition for those store locations among retailers; the company has sold itself to landlords as a “top-quartile performer” that will drive traffic to their malls, Mr. Lutfy said, and that strong sales performance has helped Groupe Dynamite to secure some lease deals. The company has estimated that continuing to open more premium locations will lead to improved store traffic.
While the Dynamite store chain is growing, the “vast majority of the business” is Garage, and that brand will account for the bulk of the store growth, he said.
Retailers have been cautioning that they are seeing costs rise as the war in the Middle East has constrained oil shipments and pushed up fuel prices. However, so far, the impact has been manageable, Mr. Lutfy said.
“At this point it’s really nominal, and we’re in a position to address it,” he said. “And I’m not saying absorb it; address it.”