Groupe Dynamite Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Martin Landry - Stifel - Analyst : Hi, good morning, everyone, and congrats on your results. My first question pertains to your guidance. You're guiding for an EBITDA margin of 30.3% to 32.3%, which at the midpoint is essentially stable year over year and that's despite significant tariffs imposed on China by the US. So I was wondering if you could discuss a little bit how you expect to keep your EBITDA margin more or less stable year over year despite these large tariffs?

Question: Martin Landry - Stifel - Analyst : Okay. Maybe just a follow-up to that. Would it be possible to do a bridge from last year to your EBITDA margin guidance this year so that we can get maybe a better -- maybe better quantify all the moving parts?

Question: Martin Landry - Stifel - Analyst : Okay. Thank you for the color, and best of luck.

Question: Irene Nattel - RBC Capital Markets - Analyst : Good morning, everyone. Just continuing with what I suspect will be a theme on the call. So you used the word agile, and clearly, as we went through the IPO process, the agility of your supply chain, of your business model is something that seem to be a competitive strength. Most of your relationships as we understand it have been in China. Obviously, China is now the most impacted. So can you walk us through how you are continuing to be agile here and where you are right now in terms of your -- do you think that you can continue to use this sort of, let's call it, just in time or very rapid turnaround formula in an environment where things are changing so quickly and there's so much pivoting involved? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 2:30PM, GRGD.TO - Q4 2024 Groupe Dynamite Inc Earnings Call

Question: Irene Nattel - RBC Capital Markets - Analyst : And just switching a little bit to that demand side of the equation. Certainly, your commentary around same-store sales growth quarter to date indicates that you haven't seen much, if any, change in demand, but can you speak to whether just nature of product categories, anything that we can hang our hats on around the consumer response to the spring summer offering such as spring summer is in Canada at this time of year?

Question: Vishal Shreedhar - National Bank Financial - Analyst : With respect to the same-store sales guidance that you provided and your comments that pricing will be one of the tools and you anticipate it being twice the level of the industry inflation. With the tariffs that are currently known, don't you anticipate that to be higher than -- don't you anticipate the pricing requirements to be higher than the level of the same-store sales growth guidance that you've given at this point? And if so, is the implication that units will and traffic will decline in the year ahead?

Question: Brian Morrison - TD Cowen - Analyst : I echo my congratulations on the results. Andrew, maybe you can square up a couple of things here. So how quickly can you fix your production? And maybe square up how you said it could become the minority coming from China? Where would you shift this to as it's fluid with tariffs and whether it be Vietnam, Cambodia, Bangladesh? And I guess how many weeks of inventory have you in the US that are currently not subject to tariffs?

Question: Brian Morrison - TD Cowen - Analyst : One question with three parts.

Question: Brian Morrison - TD Cowen - Analyst : I just want to know how quickly can you shift it?

Question: Brian Morrison - TD Cowen - Analyst : Well, it's a --

Question: Brian Morrison - TD Cowen - Analyst : And then the final part of that question. Sorry to put it into parts. But how many weeks of inventory do you have that not subject to tariffs for the US right now?

Question: Stephen Macleod - BMO Capital Markets - Analyst : I'll just shift gears just a little bit away from tariffs but not totally. Just wondering if you can give a little bit of color just around the incremental news on your US DC and sort of how you see that unfolding in terms of it going live and then how that is expected to impact your distribution efficiencies going forward.

Question: Luke Hannan - Canaccord Genuity - Analyst : Congratulations on your results. One question, I promise, but it is two parts, two quick parts. The first part is on the CapEx, I just want to confirm, is it still roughly $2 million or less per store that you're targeting as far as average investments? And then secondly, can you help frame up for us what's your rough sense of the square footage growth that you'll get for the year ahead when we include the net new openings as well as some of the relocations?

Question: Brooke Roach - Goldman Sachs - Analyst : I was hoping you could speak to your playbook that you would utilize should the macro environment worsen. Andrew, what levers can you pull to drive stronger sales? And would you consider a more muted pricing strategy if traffic should worsen? And then for JP, how should we be thinking about the fixed versus variable component to your margin structure? And what levers could you pull to maintain margins if top line traffic were to worsen, particularly in the United States? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 2:30PM, GRGD.TO - Q4 2024 Groupe Dynamite Inc Earnings Call

Question: Adrienne Yih - Barclays - Analyst : Let me add my congratulations. What a great way to come out of the box for the holiday. Andrew, I wanted to ask you sort of more on a philosophical standpoint. Your model is so inventory advantaged to chase, right, to chase kind of demand. So I guess my question is twofold, a clarification on when would you raise prices? Would you want to be a follower to see what other people do and therefore still maintain that value, therefore gaining market share, or are you kind of preemptively kind of moving toward this price increase? And just to clar clarify, what does two times inflation mean? Is that core inflation in the US or is that kind of what you see in the apparel sector? And then for JP. A quick question on are you actually buying right now with that 10% China in place? And we've seen other companies I mean rapidly move out of China within like a quarter and move double digit into other places because they're using Lianfeng or whomever. Is that within your grasp as well?

Question: Adrienne Yih - Barclays - Analyst : Sorry about that.

Question: Adrienne Yih - Barclays - Analyst : Yeah, totally makes sense. The second part was just -- well, no, actually you've encompassed it in your answer. The second part was for JP. It was the ability to shift sourcing in real time. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 2:30PM, GRGD.TO - Q4 2024 Groupe Dynamite Inc Earnings Call

Question: Adrienne Yih - Barclays - Analyst : Best of luck.

Question: John Zamparo - Scotiabank - Analyst : Thank you. Good morning. I wanted to follow-up on the supply chain comments from earlier. When you talk about shifting supply, is that referring to finding new suppliers in those different countries or having your existing suppliers move their operations? Just broadly, given how fluid this situation is, what's the willingness or desire from the suppliers you're speaking to redomicile or invest outside of China? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 2:30PM, GRGD.TO - Q4 2024 Groupe Dynamite Inc Earnings Call

Question: John Zamparo - Scotiabank - Analyst : Thank you very much.