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

This morning, Groupe Dynamite released its financial results for the 13-week period ended May 2nd, 2026. The press release and related disclosure documents are available in the Investors section of our corporate website at groupedynamite.com and on SEDAR+.

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

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

Thank you, Alex, and good morning, everyone. I appreciate you taking the time to join us today.

As I reflect on our first quarter results, what stands out is not simply the strength of the quarter, but the trajectory of the business and the progress we've made over many years. Groupe Dynamite is a stronger, more capable organization with a proven ability to scale, enter new markets, and drive profitable growth.

The first quarter reflects that progress. Comparable store sales increased 22.6%, gross margin reached its highest level in 4 years, and adjusted EBITDA margin expanded to 36.8%, up 730 basis points year over year.

Importantly, this follows a record 2025 and demonstrates that our growth is not coming at the expense of profitability; we continue to drive both simultaneously. Looking at the second quarter to date, we're pleased to see comparable store sales tracking in the +9% CAD or 11% in constant currency, supported by continued strength in the US, while we remain mindful of the broader macroeconomic environment.

We are encouraged with the momentum across the organization. These results are the product of strategic decisions we have made consistently over many years.

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

The United States continues to be, and will remain, an important growth engine. We now operate across 41 states, and recent openings in markets such as Las Vegas and Hawaii have expanded our reach to both local and international customers.

We have also successfully entered the United Kingdom through Garage. Oxford Street was more than a store opening; it validated that our brands and operating model can travel internationally.

It reinforced our belief that the capabilities we have built over the past 5 decades can resonate well beyond our home market. What underpins this success is a highly differentiated operating model.

As we often say, we strive to take the fashion risk out of fashion. Agility remains one of our core competitive advantages.

In an industry where trends shift rapidly and consumer preferences evolve continuously, speed matters. It is also one of the reasons we have chosen not to pursue a wholesale model.

Maintaining direct proximity to the customer allows us to move faster, react sooner, and preserve the agility that differentiates us. That agility has enabled us to protect margins, manage inventory effectively, and capitalize on opportunities as they emerge.

Garage continues to connect with customers through authenticity, speed, and cultural relevance. It continues to gain market share across North America and now internationally.

Dynamite continues to strengthen its position through compelling product, disciplined execution, and greater on-brand lifestyle engagement. Together, our brands serve distinct customers while benefiting from a shared operating platform that enhances efficiency, scalability, and profitability.

Equally important is the culture that supports our performance. Our shared success program reinforces an ownership mindset throughout the organization.

When employees think and act like owners, decision-making improves, accountability increases, and performance follows. Today, more than 7,200 colleagues, many of which shareholders, contribute to our success across North America and the United Kingdom.

Their commitment, discipline, and entrepreneurial mindset remain key competitive advantages. Looking ahead, our priorities remain clear: we will continue investing in our brands, high-return store growth, digital capabilities, talent development, and, of course, technology.

These investments are about building a stronger, more resilient business that can continue to outperform over the long term. Our brands are healthy, our balance sheet is strong, our teams are executing at a high level, and we believe the opportunities ahead are among the most compelling in our company's history.

We enter the balance of fiscal 2026 with confidence and a clear focus on creating long-term value for shareholders. With that, I'll turn it over to Stacie.

Thank you, Andrew, and good morning, everyone. Q1 was a strong start to fiscal 2026 and came in ahead of our expectations.

Across both Garage and Dynamite, customers responded positively to our assortments, our marketing, and the consistency of the experience we are delivering across channels. At the core of our performance is our ability to remain agile in a dynamic environment.

Our competitive advantage continues to be our ability to read and react to our business quite rapidly. By leveraging our supply chain and closely monitoring customer demand, we are able to make informed decisions in real time, chase into winning styles, and manage inventory with discipline.

This agility is further supported by our US distribution center as it approaches full ramp-up, improving speed, efficiency, and service levels across our growing US business while providing additional scale to support future growth. Our physical fleet continues to be a significant driver of growth and customer acquisition.

This quarter, our premium real estate, localized execution, and a compelling in-store experience drove exceptional productivity across the fleet. Sales per square foot reached $1,001, representing an increase of 32.4% compared to last year.

These results reinforce our disciplined real estate strategy. We continue to prioritize high-quality locations where our brands can maximize visibility, productivity, and customer engagement.

During the quarter, we opened 5 new stores, including 3 in the US and 2 in the United Kingdom, more specifically Bluewater centre in Dartford, England, and Oxford Street in downtown London. We remain encouraged by the early response in the UK and continue to see strong customer engagement as we build the business.

These results continue to reinforce our disciplined real estate strategy and confidence in the quality of our pipeline. Turning to digital, e-commerce sales increased 35.7% during the quarter, supported by growth in both traffic and conversion.

This performance reflects investments we have made to improve the online shopping experience, including enhancements to site navigation and functionalities that make it easier for customers to discover and shop our assortments. Looking ahead, we continue to see opportunities to strengthen our digital capabilities.

Our focus remains on creating a more personalized experience for the customer and leveraging AI and technology to improve relevance, engagement, and conversion across all channels. Product remained a key driver of our results this quarter.

Across both brands, customers responded well to our assortments and to the newness we introduced throughout the season. For Garage, our color drops resonated well with the customer and created meaningful brand moments throughout the quarter.

The Garage community continues to grow, supported by strong engagement across our ambassadors, influencers, and other social programs. We are seeing that strategy translate into increased brand awareness and customer engagement across all markets.

At Dynamite, dresses remained a key category driver throughout the quarter, supported by strong product execution and focused marketing initiatives. Our Unfiltered content series featuring Ciara Miller along with targeted customer events helped drive engagement and support traffic to the brand.

These efforts, combined with strong product performance in the category, contributed to the healthy sell-through and continued momentum for the banner. Looking at the quarter overall for GDI, performance was balanced across both stores and digital.

Together, these channels contributed to approximately 19% growth in total transactions. Strong customer demand and our pricing power supported an increase in average unit retail of approximately 15%.

These results demonstrate the strength of our assortments and the value proposition we continue to deliver to our customers. This strong customer response is also reflected in our customer metrics.

We continue to see meaningful expansion of our active customer base year over year by attracting new customers and increasing the retention and frequency among existing customers. As a result, average customer lifetime value increased meaningfully year over year as well as quarter over quarter.

As we look at the remainder of the year, our priorities remain unchanged. We will continue to focus on disciplined execution, delivering compelling products, and investing in the customer experience to drive profitable growth across both brands.

Supported by our agile operating model and the strength of our teams, we believe we are well positioned for fiscal 2026 and beyond. Before I conclude, as always, I want to thank our more than 7,200 field office and head office associates.

Their commitment, agility, and passion are what makes these results possible. Every day, they bring our brands to life for our customers and continue to differentiate us in the marketplace.

I'm incredibly grateful for their contributions and proud of what we've accomplished together this quarter. With that, I will turn it over to JP to walk through the financial results.

Thank you, Stacie, and good morning, everyone. Total revenue for Q1 2026 increased by 37% to $310.6 million, driven by comparable store sales growth of 22.6% or 24.7% on a constant currency basis, contributions from new store openings including 2 locations in the UK, and continued momentum across both banners.

Staying on the top line, online revenue increased by 35.7% to $50.6 million, reflecting continued strength in our digital channel and balanced growth across stores and e-commerce. Gross profit for Q1 increased by 48.8% to $209.3 million, with gross margin expanding by an impressive 530 basis points to 67.4%, the highest level in 4 years.

This performance was mainly driven by lower tariffs compared to last year, as well as by controlled merchandise cost increases, lower markdowns, and the continued strength of our pricing strategy. Turning to expenses, SG&A for Q1 2026 increased to $102.2 million compared to $74.7 million in Q1 2025.

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

Moving down the P&L, operating income increased by 80.1% to $79.8 million. Adjusted EBITDA increased by 71.3% to $114.4 million, representing an adjusted EBITDA margin of 36.8%, up by an impressive 730 basis points year over year.

The margin expansion was driven by 530 basis points of gross margin expansion and 190 basis points of adjusted SG&A leverage, underscoring the strength and scalability of our luxury-inspired business model. Net earnings increased by 89.4% to $51.7 million, supported by higher revenue and margin expansion, partially offset by higher SG&A and depreciation and amortization.

Adjusted net earnings increased by 101.8% to $57.3 million, and adjusted diluted EPS increased by 100% from 25 cents per share to 50 cents per share in Q1 of 2026. Turning to cash flow, we generated free cash flow of approximately $4 million in Q1, reflecting the timing impact of significantly higher tax payments during the quarter versus prior year, while we continued to invest in the business, including new stores, store optimization, digital, and operational infrastructure.

From a balance sheet perspective, we returned capital while maintaining significant financial flexibility. Our net leverage ratio was 1.01x at quarter-end, and we ended Q1 with approximately $292 million available under our credit facilities, providing flexibility to continue investing in growth, manage market volatility, and return excess capital to shareholders when appropriate.

We also continued to deliver strong capital efficiency. Return on assets reached 38.6% compared to 23.8% last year, reflecting improved profitability and more effective use of our asset base.

Return on capital employed increased to 74.4% compared to 44.5% in the prior year, highlighting the strength of our model and our disciplined approach to deploying capital. Turning to capital allocation, during Q1, we repurchased 461,200 shares under our NCIB for a total of approximately $38.6 million.

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

Looking ahead to the remainder of fiscal 2026, our strong Q1 performance gives us confidence in the full-year outlook, while we remain balanced in our approach given the dynamic macro environment. We are reiterating our comparable store sales growth guidance of 11% to 14%, as well as our total revenue growth guidance of 22% to 25%.

Q1 performance reinforces our confidence in the year, while our unchanged top-line outlook reflects a disciplined planning approach and continued focus on consistent execution. From a real estate perspective, we continue to expect 24 to 26 gross new store openings in fiscal 2026, including 5 locations in the UK.

We are revising our expected net new store openings to approximately 8 to 10, reflecting the acceleration of 2 planned closures tied to fleet optimization. This is consistent with our disciplined capital allocation approach and our focus on deploying capital toward the highest-return opportunities.

We remain focused on upgrading the quality of our fleet, investing in higher-growth markets, and prioritizing locations where we see the strongest long-term revenue and return potential. From a margin perspective, we are increasing our adjusted EBITDA margin outlook to a range of 38.25% to 39.5% compared to our prior range of 37.75% to 39.25%, mainly due to the strength of our gross margin in Q1.

This represents a 50 basis points increase to the low end of the range and a 25 basis points increase to the high end of the range. This revised outlook reflects 3 key drivers.

First, we expect gross margin strength primarily in the first half of the year, including Q1 and Q2, supported by IMU expansion, our pricing strategy, disciplined inventory management, and more importantly, lower tariff pressure compared to last year. Second, we expect SG&A leverage to contribute throughout the year as we scale revenue while managing costs with discipline.

Third, we expect incremental efficiencies from the ramp-up of our US distribution center as the facility continues to support our growth and improve operational efficiency. Turning to capital expenditures, we continue to expect capex of $100 to $110 million for fiscal 2026.

Capex remains our top capital allocation priority, with most of this envelope directed toward growth initiatives, including new store openings, store optimization, and continued investment in digital and operational infrastructure. While the macro environment remains dynamic, our focus on middle- and higher-income consumers, accessible price points, and strong brand positioning leave us well positioned within consumer discretionary.

Our operating model is built to navigate uncertainty, supported by disciplined inventory management and our open-to-buy, chase-driven approach with over 50% of inventory dollars left open to read and react. We remain focused on advancing our brand elevation initiatives, investing in our platform, and executing with discipline.

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

Good morning. Thank you very much.

JP, maybe we can just talk on the color of same-store same-store sales growth trends throughout Q1. You did say 28% growth through through the first 2 months, maybe walk us through that.

Then what you've seen in Q2 to date. I know you think I think you said 92 9% growth, 11% constant currency.

Maybe just walk through that as well and provide comfort in the high single-digit rate that's implied through guidance for the remainder of the year, please.

Hi Brian, it's Stacie. I'll take the question.

Q1, we put up a +22.6%. The 28 you're referencing is what we called out the first 8 weeks of the quarter.

To be noted, we were ahead of Easter at the time, Easter had happened, but we hadn't lagged against it, which I think is a known known in the industry. We're still very excited about the 22.6 we put up.

When I look at Q2, we've called out the 9. What I want you guys to know is that the 2-year stack from 26 on Q1 would be a 35.6%, and we're still seeing growth in that 2-year stack as we go into Q2.

Again, still optimistic.

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

I think we're still seeing great customer reaction. Our customer active base is up.

Our frequency is up. Acquisition and frequency is up, she's coming back more, she's spending more, her lifetime value is more to us.

We still think the customer is resonating with what we're putting out there. Again, noting the

comments about

Oh, sorry, go ahead.

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

Do you feel you have the ability to take this higher?

I think we still believe in our pricing power. I think we're putting the quality back in to or elevating the brands in general, and she's resonating with it.

Our UPT is not changing, and her lifetime value with us is growing.

Thank you.

Thanks. Just to continue beating the same-store sales horse, in order to get to the higher end of your guide for the year, you would need to see an acceleration in the 2-year stack as we move through.

Can you walk us through what you think the drivers might be that would end up with, let's say, that 11% versus a 14% or consistent versus a step-up in the 2-year stack?

There you go. I think there's a lot of conversation around the comps.

I just want to call out the total sales being at +37 for the quarter. Again, we're opening aggressively.

We're seeing the US perform exceptionally well. You guys can see the difference between Canada and the US, so that's where that comp number could be compressed, but the overall sales, our new stores are outperforming as well as the US seems to be extremely strong right now and maintaining from where we left or exited 25.

Thanks, Stacie. Then just a follow-up.

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

It definitely was, sitting up here in Montreal. Category-wise, not that different from what I've spoken to in the past.

I'll start with Dynamite, significantly driven off of dresses, which is a key category we want to stand behind. I would also say the tops business in total has picked up for that brand and is resonating really well.

Then they did a good job on hitting on a couple key items that seem to be very trend apparent, i.e., the anorak jacket and the capri. Then for Garage, also consistent in their fleece category continues to perform, and we believe we're taking market share in that off-duty, as we call it, or even on-duty, introducing more activewear she can actually work out in.

Big key items there would be, consistently you guys have seen our sleek cami, but also the booty short, and then everything fleece-grounded. The only category I would say is soft cuz it's soft across both, when we see that, I tend to think it's a macro element, is denim.

There's just not much new in that category right now, denim shorts is picking up with the weather, but as a trend, we're not seeing much in long-leg denim right now from either side. Other than that, everything looks very strong.

Thanks, Stacie.

Thank you. Thank you.

Good morning. I I I just had a question about the the the store outlook for 2026.

I know you referenced it in your in your prepared remarks around the net new openings. Is that the net new openings being down year over year rela- not down year over year, but down relative to previous guidance, is that something you expect to continue into the next fiscal year, or is that just isolated to this year specifically?

Good morning, Stephen. Thank you for the question.

You are correct. We've added 2 store closures to our guidance compared to prior quarter.

Those 2 stores were actually on our list for closures. We've simply decided to accelerate those, those 2 closures would have happened next year.

They've simply been pulled forward to this year as we continue to optimize our network. Now, to be clear, those 2 stores were profitable.

They simply were not profitable enough to our standards, we've decided to do the right thing for our business and close those 2 stores a little bit sooner than expected. This year, that brings your total amount of closures per the guidance to 16 closures, which is certainly on the high side.

As we continue to optimize our network, in the next couple of years, you should expect this number to be lower, and as a result of that, our net new addition should be higher than the 8 to 10 we're calling out this year, as we're taking the opportunity this year to really optimize the network. That answer the question well?

Yes, thank you.

You're very welcome.

Great. Good morning, and thank you for taking my question.

JP, on the gross margin, you materially beat expectations in your first quarter. I think the last time, annual guidance was for the couple hundred basis points of total EBITDA expansion, half of it would come from GM.

It looks like you handily kind of beat that in the first quarter. Can you help us with what happens in 2Q and then kind of shaping for the back half of the year?

Then, Andrew, could you just talk about sort of your target household income? She's in very kind of higher upper end.

We're not seeing any impact sort of in this kind of cohort, $100k and up thus far. Seems pretty resilient.

Any thoughts on kind of your cohort and the resiliency in that spend? Thank you.

Hi, good morning, Adrienne. I'll start with the first part of your question.

You are correct in that gross margin was very, very strong in Q1. It was actually stronger than we had internally planned, we're very pleased with the performance of our gross margin.

To give you a little bit more color on the gross margin for Q1, our IMUs were very strong. Certainly, the tariff situation year on year was more favorable, which certainly that part we knew, and also our markdown rate was a little bit lower than expected.

These 3 things together really contributed to a healthy gross margin rate in Q1. It is that strength in our gross margin in Q1 that actually had us revise the full-year outlook on adjusted EBITDA margin.

If I take the midpoint of the range, we've basically increased our EBITDA margin range by call it 40 basis points compared to prior guidance, and I would attribute the whole 40 basis points to the strength of the gross margin. In prior earnings calls, again, taking the midpoint of the range, we were looking for 200 basis points improvement year on year, and I did say half of it would be coming from GM and half of it from SG&A.

In this case here, I would attribute the extra 40 basis points to gross margin alone. SG&A continues to be very healthy and where we want it to be, but the gross margin is really surprising us to the upside in Q1.

I'll leave the second part of the question to Andrew.

Good morning. That was regarding the health of the customer, if I'm not mistaken?

Yes.

Yeah. Listen, we're not seeing any issues with the customer.

Listen, our historically low markdown rate has gotten even lower, there doesn't seem to be any pushback in terms of pricing, supply/demand, all that kind of stuff. Listen, I very much believe in this K-shaped economy.

That top 20% of consumers is still seemingly in a good place, still in a good place in terms of disposable income. The US is definitely on fire.

SpaceX is now bigger than Canada in terms of market cap, no

I hear you.

Spain. Elon Musk is the new Spain.

From our vantage point, the customer is still in really good shape and listen, I still look at the 2-year stack and feel very, very, very good about where we are and the performance of our new stores. It's great.

We open new stores, and there's lineups that go literally around the block and through the shopping center. The customers are just ecstatic to see us, and these new stores keep overperforming in these new markets, it's really great.

Great. Thank you very much.

Very helpful. Best of luck.

Thank you.

Good morning. Thank you.

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

Hey. Good morning.

No, not really. I would say in so far as pricing, or even if you look at markdowns or what not, no, we don't see really any regional issues, I must say.

Happy to report. No, listen, the Canadian economy is just not as strong as the US economy, and I think it's really more broadly that.

It really doesn't show up in the assortments or the merchandising mix or even promotional activity or other.

Thanks for that. All the best.

All right, thank you.

Hi. Thanks for taking my questions.

Wanted to get your perspective on the online growth, still very strong relative to the business, but slower than the prior 2 quarters. Is that seasonality or anniversaring the stronger growth, and what e-commerce growth rate should we expect?

I know you gave us a penetration rate target, but through the course of the year as you even anniversary higher growth in that business, what should we expect?

Hi. Good morning, it's Stacie again.

I'll take that. We're happy with the year-over-year growth and feel like it's healthy at almost 36%, and it's a split between traffic and conversion.

Again, like to see that there's balance there. We think that increased performance is coming from including where she's navigating the site, the functionality, all things we're working on.

We know we have more opportunity there and shifting more technology towards AI and relevance for her to engage and convert. Happy with the quarter.

Last year, we were up 21, again, a 2-year stack on digital there's at 57. What we're actually trying to get is that penetration number going up, so that didn't move in Q1.

It held pretty flat. As you guys know, we're trying to chase to that 25% penetration, but we do think through the assortment mix we're going to be offering and the double down on technology in that user experience and her journey in total that we're going to get there.

I was relatively pleased with how Q1 delivered on digital.

Thank you.

good morning, everyone. Hey, JP, you did a good job sort of quantifying and calling out the gross margin drivers for the quarter.

My question is, as you look into the second half, now once you've lapped the tariff impact, the other factors you mentioned in terms of low markdowns and cost management, do you expect those growth to continue to persist and how should we think about the gross margin rate in the back half of the year? Thanks.

Hi, good morning, Chris. Thank you for the question.

Certainly we would not expect Q3 and Q4 to show improvements of 530 basis points like we've just delivered in Q1. Again, I think you've hit it on the nail, whereby year on year, we have an easier comparison for both Q1 and Q2, especially knowing all the tariff noise that we had to go through last year.

For Q2, we do expect another strong quarter in terms of gross margin as a rate of sales. It might not necessarily be the full 530 basis points year-on-year improvement, but it will be quite healthy.

Moving on to Q3 and Q4, and especially distribution center is now pretty much fully ramped up, that also brings benefits to our P&L. As a result of that, we do believe Q3 and Q4's gross margin are likely to be higher than prior year as a rate of sales.

It will certainly not be the same magnitude as the first half of the year, but we do see a better gross margin year on year for H2 as well. For the whole year, it basically positions us very well to deliver a good number for the full year.

Yes, back half, we also expect some strength in terms of the gross margin as a rate of sales. Great,

thank you. All the best.

Thank you.

Hi, good morning, everyone. Just want to touch on Canada versus US.

Your Canadian sales were up 7% year over year, a bit of a slower growth than what we've seen in the past quarters. Can you talk a little bit about the 2 brands, Dynamite and Garage?

I think in your opening remarks you did say that Dynamite performed well, but would love to have a little bit more color on that. Any trends you can talk to us about in terms of basket versus traffic would be super helpful for Canada.

I think overall, again, as I mentioned at the beginning, we're excited by the +37 comps overall. We're also turning faster.

If you guys caught, the turn this quarter was at 9.69. As we look to our allocation of assets, the US always wins there too with a more accretive margin.

We're running a little tighter probably in Canada, but it's the traffic piece that's a little slower. When she's coming in, she's converting, and that's why I go back to the customer's responding.

There doesn't seem to be a pushback in AUR cuz obviously we've questioned that. The transactions being up in both countries and the business being up in both countries leads us to believe it's a demand.

At the beginning, I'm never allowed to say weather because I can't control it, but we're hoping to see an uptick in the weather that can different in a product category, in an AUR pushback. We're not running more markdowns in Canada than the US.

The businesses are actually in parallel. We're just seeing the US greatly outperform, and that's in comps and aggressively in the new stores.

Okay. Thank you, and best of luck.

Thanks.

Hey, good morning. Just to come ponents of gross margin would you say are inflationary right now?

Do you Do you see inflation in product cost, are you seeing much inflation in freight, just trying to I know there's a lot of positive things happening in gross margin. What What's actually a headwind for gross margin right now?

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

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

In terms of rates, I would say where we're seeing the most inflation is probably around the freight component. This being said, as a percentage of total cost of goods sold, this is certainly not the majority.

This inflation piece is certainly something we are comfortable dealing with as part of our ongoing AUR strategy and IMU strategy. We are seeing a little bit of inflation in certain pockets of the cost of goods sold, but this is nothing that we can't deal with given the magnitude of the impact we're seeing right now.

Does that answer your question well, Michael?

Product cost overall just remains stable for you?

Yes. Yes, product cost is remaining stable.

Thank you.

Thank you.

Great. Good morning, thanks for taking my question.

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

Thank you.

Hi, Mauricio. Good morning.

The 9% quarter-to-date comp that we've provided, AUR certainly is the main driver of that number at the moment, which is similar to what you've seen also in the prior quarter. I wouldn't say there's a major shift here.

The components in terms of their contribution remain aligned with what you've seen. Then on the second part of the question, the leveraging aspect, certainly as we continue to deliver same-store sales in line with our annual guidance, that definitely creates opportunities for us in terms of getting better as a rate of sales.

Certainly that 9% that we've talked about, or 11% to 14% for the full year, that is more than enough to provide us with operating leverage at the SG&A level. I will also remind everyone that the 9% number that we've quoted for Q2 to date, that is in CAD.

In constant currency, that would be 11%.

Got it. Very helpful.

You expect that to continue to be driven by AUR for the remainder of the quarters?

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

Thank you so much.

Thank you.

Thanks. Good morning.

I just wanted to follow up on the AUR conversation. I know part of the strategy in being located in these higher-tier shopping centers was, I guess, helping to sustain the pace of AUR growth that you've had of late.

I'm curious to know, when it comes to the competitive set that you're seeing in those shopping centers, has the rate of magnitude, I guess, of their price increases or any of their portions of the assortment that might overlap with yours, has the pace of price increases there changed at all given the geopolitical backdrop?

Sorry. No, I would say, to answer your question on AUR again, we're looking at pricing power, not overpricing the product.

We're elevating the product. There's a reduction in markdowns.

We think the product's also being driven by brand heat, which is also up, and the transaction growth at +19. Again, I'm not concerned about the AUR.

As far as the competitive set, depending on who you're looking at, we're still well in the market and ticket for ticket, we're still under most. Again, most of those US retailers are still highly promotional, their ticket is one thing, their out-the-door price is another.

We don't play that high-low game, out-the-door price, we're probably higher. To the mix of the real estate where we're going, when you compare us to an Alo, a Lululemon, those likes, we're still, as we like to say, the cheapest house on the nicest block.

We're still feeling very confident about our AUR strategy go forward.

Great. Thank you very much.

Thank you. Good morning.

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

Good morning. Hey, I'll take that.

It's funny you should ask because we were actually just looking at that. Listen, I'm happy to report that whether we look at the more recent vintages or the ones of 2, 3, 4 years ago, what's incredibly promising is they all have more or less the same comp on a year-to-date basis, on an annual basis.

The good news is the beta volatility from different vintages is incredibly low. They are remarkably similar.

That's great. Even as we look at the 2025 vintages that we've opened up, now of course there's only a few that would be lapping this year, they as well are comping up.

I think it stands to reason that this consistency would be true because, listen, you've got a consistent set of eyes, consistent leadership running the real estate strategy. This is an area of responsibility for which I deeply am involved in, there's consistency in the strategy, in the standards, in the people running the standards.

That discipline is providing consistent results, which is great.

That's helpful. Thank you.

Hey, good morning, everybody. Thank you for the question.

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

Hey, good morning. Thanks for the question.

We haven't broken it down specifically, but the best color I can give you is the following: if you look at Q1 and Q2's gross margin last year compared to the prior year, you'll see that for the first half last year gross margin was down 200 basis points year on year, if memory serves. Then if you look at the second half of the year last year, which had no tariff impact or almost none, then your gross margin as a rate of sales year on year was actually the other way around, up 200 basis points last year.

Tariffs are definitely the biggest driver in that significant shift between -200 H1 and +200 H2. Hopefully that gives you a good idea of the magnitude of the tariffs that we had to go through in H1 last year, whereby in the second half there was almost none.

Does that answer your question well, John?

Okay.

Thanks.

Definitely.

Thank you. Listen, thank you, everyone.

Appreciate the call. Listen, I could feel the energy on the line is certainly a little less enthusiastic than prior calls, but I just want to put it out there.

Listen, we're delivering on the guidance, as a matter of fact we're raising the guidance. We're very comfortable with our numbers.

We're very excited with the new store openings and our business. We're very enthused with where we're going digitally and fundamentally our strategic plans and ambitions.

The team is in a good place, and so notwithstanding the mood which is a little softer on this call, I can promise and assure you we're actually far more excited internally and looking forward to a very strong year. With that, I thank you, and I wish you all a wonderful day and a wonderful week.

Thank you.

Thank you.