The refreshed “Dynamite 3.0” concept is skewing more upscale and targeting an older demographic. (THE CANADIAN PRESS/Graham Hughes) · The Canadian Press
CIBC has initiated coverage of Canadian fashion retailer Groupe Dynamite (GRGD.TO) with an “Outperformer” rating and a $65 price target, noting growth that has “vastly outperformed expectations and reached levels rarely seen.”
“We believe GRGD has created a unique apparel business model that reduces fashion risk while generating attractive financial metrics,” analyst Mark Petrie wrote in a note to clients Monday that highlighted the company’s speedy supply chain, potential for U.S. store growth and e-commerce ambitions.
Shares of Groupe Dynamite have soared roughly 176 per cent since the company’s IPO on the Toronto Stock Exchange last fall, when insiders sold about 14 per cent of the business at $21 per share. The company’s sales and earnings have consistently beaten forecasts since then.
CIBC’s $65 target implies further upside from the current share price — the stock was trading at around $59.20 as at 12:20 p.m. ET Tuesday, up around two per cent from Monday’s close. CIBC applies a 30x price-to-earnings multiple on their 2026 estimate, which they note sits seven per cent above consensus.
Petrie notes that supply chain agility is the company’s defining advantage, with roughly a third of products moving from design to distribution in under eight weeks. “If we were to boil Groupe Dynamite down to one strength, it would be its supply chain,” he wrote, adding that the model helps mitigate “stale product [and] excessive markdowns” and has given Groupe Dynamite inventory turnover rates “55 per cent better than peer average.”
The Garage banner is an engine of that growth. It operates 120 U.S. stores today but aims to reach 180 by 2028, a level CIBC says would still leave the chain “well below numerous peers” such as American Eagle and Lululemon. Petrie describes store economics as “compelling,” with new locations now paying back their opening costs in about 18 months. CIBC notes that’s an improvement from roughly 24 months at the time of the IPO, and ahead of what’s typical in apparel retail, underlining the brand’s strong unit economics.
The bank also highlights the retailer’s push to close weaker mall locations and shift towards higher-end properties, estimating that the real estate “high-grading” strategy alone could generate more than seven per cent sales growth on top of comparable-store gains.
Beyond the Garage brand’s U.S. expansion, Petrie points to potential catalysts in a refreshed “Dynamite 3.0” concept — skewing more upscale and to an older target customer — and the company’s first international stores, slated to open in the U.K. in 2026. He also notes that e-commerce still represents less than one-fifth of revenue, leaving meaningful room to catch up with peers.
Other brokerages have taken notice as well. RBC boosted its price target to $43 earlier this month after stronger-than-expected second-quarter results, while Desjardins lifted its target to $53 on expectations momentum would continue. Those views are part of a general trend of increasing confidence in the retailer’s growth story.
CIBC’s price target is around $10 above the average among published analysts’ targets. Petrie cautions that risks such as tariffs, shifting fashion trends and the company’s concentrated insider ownership — CEO Andrew Lutfy owns 85.9 per cent of outstanding shares — could weigh on the stock.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
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