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Groupe Dynamite stores see no spending pullback

Groupe Dynamite (TSX:GRGD)

Numbers for its first quarter of 2025.

Profit: $27.3 million (up from $23.9 million a year ago)
Sales: $226.7 million (up from $188.9 million)

Groupe Dynamite Inc.’s CEO says tariffs aren’t blunting the appeal of a new cute top.

While Andrew Lutfy has seen some customers forgoing big-ticket purchases like boats, RVs and basement renovations as countries levy increasing duties, he says that pullback isn’t carrying over to its Dynamite or Garage stores.

The women’s fashion retailer is instead seeing shoppers looking for “some instant gratification” amid all the “heaviness out there.”

“For the price of a martini in a nice restaurant, you could buy a cute top and feel great and wear it over and over again, so we’re seeing a customer that’s looking for moments of joy and happiness and we are an affordable indulgence,” Lutfy told analysts on a conference call on Tuesday, June 17.

He said he expects that trend to continue, especially if interest rates, debt levels and prices remain high because of the tariff war U.S. President Donald Trump has sparked with Canada and several countries known for manufacturing clothing.

Groupe Dynamite shares were up nearly 15% or $2.40 at $18.91 on the Toronto Stock Exchange on Tuesday after it reported its latest financial results and raised its guidance for comparable store sales for the year.

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The company said it earned a first-quarter profit of $27.3 million or $0.24 per diluted share, up from $23.9 million or $0.22 per diluted share a year ago.

On an adjusted basis, Groupe Dynamite earned $0.25 per diluted share in its quarter ended May 3, up from an adjusted profit of $0.23 per diluted share a year ago.

Revenue totalled $226.7 million, up from $188.9 million, while comparable store sales rose 13%.

In its outlook, Groupe Dynamite said it now expects comparable store sales growth for its full year between 7.5% and 9%, up from earlier guidance for between 5% and 6.5%.

RBC Capital Markets analyst Irene Nattel pointed out that such numbers were ahead of forecasts, meaning the business was “starting the year with a bang.”

The results reflect the work Groupe Dynamite has done to shift its supply chain away from China—one of Trump’s top tariff targets—and set the stage for a further brand expansion.

The company, which is celebrating its 50th anniversary, will expand into the United Kingdom next year and is weeks away from opening a new U.S. distribution centre. The facility will cut shipping times, improve service levels, reduce costs and help the business better manage and replenish its inventory, president and chief operating officer Stacie Beaver said.

“More importantly, it means when our customer shops with us, she gets exactly what she wants when she wants it,” she said. “That’s the experience our teams deliver every day and it’s a promise we’re excited to bring to the U.K. when we open our first store there next year.”

Back home, she said the company has been renovating its Garage stores to introduce “a cleaner, more elevated” store layout.

The latest to get a revamp are Square One and Conestoga Mall in Ontario. Their renovations and others are boosting worker satisfaction, Beaver said. “Turnover is down, engagement is up, and it shows,” she said. “Our associates are more confident, more connected to the product, and better equipped to serve our customers.”

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Empire Co. reports Q4 profit is up, raises dividend

Empire Co. (TSX:EMP.A)

Numbers for its fourth quarter of 2024.

Profit: $173 million (up from $149 million a year ago)
Sales: $7.64 billion (up from $7.41 billion)

Empire’s profit and sales are up, and price inflation is “very stable”

Empire Co. Ltd.’s top executive said the company’s price inflation remained stable during its latest quarter and that he expects the trend to continue, as the grocery retailer reported its latest financial results.

The company, which operates Sobeys and Safeway, among other banners, reported Thursday, June 19, that its fourth-quarter profit and sales rose compared with a year ago. It also announced it will now pay a quarterly dividend of $0.22 per share, up from $0.20.

Empire president and CEO Michael Medline said the company’s internal inflation calculations during the quarter was “way under” food inflation in the consumer price index.

“Let me be crystal clear, we are not seeing inflation in our business outside of historical norms, and Empire’s price inflation has remained very stable,” Medline told a conference call with financial analysts to discuss the company’s latest results.

The latest Statistics Canada inflation data for the month of April showed food purchased from stores rose 3.8% year-over-year, a faster pace than headline inflation, which was 1.7%.

Going forward, Medline said, food inflation is expected to remain in line with long-term averages. “Over the last 25 years, CPI’s food inflation purchased from stores has averaged 3%. While there may be some ups and downs, we believe this trend will hold,” he said. “All to say, we are unable to reconcile what we are hearing or reading about inflation in the media, in food, or from some in the industry, to what we’re actually experiencing.”

Medline said the company’s approach to managing the effect of tariffs included buying more local products, leveraging supply sources outside of the U.S. and having “tough discussions with suppliers” regarding cost increases stemming from the border levies.

He said the trend of Canadians favouring domestic products continued during its fiscal fourth quarter, adding that he believes “much of this behaviour is becoming sticky.”

“It doesn’t take a lot of people changing behaviour to make a real difference in retail, especially in the grocery business. And there are people who have changed their behaviours, (who) will not go back. And we’re doing our utmost to make them very happy in our banners,” he said.

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Empire has been working to shift its supply chain to favour domestic producers as shoppers gravitate toward Canadian-made products in retaliation against U.S. President Donald Trump’s tariffs and annexation threats.

“It is clear that our customers are voting with their wallets as our sales of Canadian products continue to rise,” Medline said.

Additionally, he noted Empire’s sourcing of U.S. products has “continued to drop,” a trend he expects to continue heading into the growing season for Canadian produce.

Empire said it earned a profit attributable to owners of the company of $173 million or $0.74 per diluted share for the quarter ended May 3. The result was up from a profit of $149 million or $0.61 per diluted share a year ago.

Sales for the quarter totalled $7.64 billion, up from $7.41 billion in the same quarter last year.

Same-store rose 3% as same-store sales for fuel fell 7.8% driven by lower prices due to the removal of the government carbon tax. Food same-store sales rose 3.8%.

On an adjusted basis, Empire says it earned $0.74 per diluted share in its latest quarter, up from an adjusted profit of $0.63 per diluted share a year ago.

The company also said it’s on track with its plan to renovate around 20% to 25% of its store network between the 2024 and 2026 fiscal years.

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