Morning, ladies and gentlemen, and welcome to Groupe Dynamite's second quarter fiscal 2026 results conference call. At this time, all lines are in listen-only mode, and the conference is being recorded. Following management's prepared remarks, there will be a question and answer session with financial analysts. If at any time during the call you require immediate assistance, please press star zero for the operator. On today's 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 August 1st, 2026. The press release and related disclosure documents are available in the Investors section of the company's website at groupedynamite.com and on SEDAR+. A replay of the webcast will be available shortly after the conclusion of the call. Before management begins, please refer to slide two of Q2 2026 investor presentation for the company's full statement on forward-looking information and to the appendix for a reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures. The call will now be turned over to the Chief Executive Officer and Chair of the Board, Andrew Lutfy. Please go ahead. Good morning, everyone, and thank you for joining us. Q2 was another strong quarter for Groupe Dynamite. We grew sales, expanded profitability, increased earnings and free cash flow, and raised all three guidance metrics. But more important than any single quarter is the trajectory behind it. For six consecutive years, we have progressively improved key brand and financial metrics across the business. That's not luck. There's no such thing as six years of overnight success. And importantly, that performance has continued through very different economic environments, supply chain disruptions, tariffs, geopolitical uncertainty, and a rapidly changing consumer behavior. That gives us increasing confidence that what we are seeing is not simply a period of strong performance, it's the result of a business model that has been deliberately built, tested, and refined over many years. Our luxury-inspired business model is working, and the premiumization of our brands is strengthening. As we enter the second half, we will lap two of the strongest quarters in our history. We knew that when we built the plan. So I'd say Q2 is another proof point in a six-year progression and further validation that our model and our brands continue to strengthen. When we talk about our luxury-inspired business model, it starts with the deliberate premiumization of our brands. Garage and Dynamite are fundamentally two different brands than they were six years ago and even two years ago. We have elevated every customer touchpoint, the product, the confection, the categories we compete in, the real estate, and ultimately, the entire brand experience. Our AUR has roughly doubled since 2019, and we're not charging twice as much for the same white T-shirt. We have built a more elevated proposition, and our brand has followed. That is the difference between raising prices and building brand equity, which creates real pricing power. That power comes from the emotional equity we have built through an obsession with understanding our customer and staying culturally relevant. Another important part of the model is inventory. We view inventory as capital allocation. We intentionally operate lean and engineer scarcity into the model. In fashion, having too much of the wrong product is far more expensive than occasionally having too little of the right product. Scarcity alone isn't enough. We operate a pull inventory model. Then we let the customer decide where that inventory goes. Our highest productivity stores pull the hardest against global inventory because that is where demand and full price sell-through are strongest. Our objective isn't to maximize inventory in every store. It's to maximize the productivity and gross margin dollars network-wise. That drives stronger full price selling, fewer markdowns, faster inventory turns, and greater agility. That is how we take the fashion risk out of fashion. Real estate is another part of that same equation. Our philosophy is simple, the smallest house on the best street. Today, our investment-grade real estate, Tier 1 through three, represents approximately 72% of sales. In 2017, it was roughly 28%. Our highest quality stores don't simply generate greater volumes, they turn inventory materially faster than our lower-tier locations. As we shift more sales towards investment-grade real estate, we aren't simply improving the quality of our stores, we are improving the productivity of the entire business. Over time, that creates a higher quality network and continuously raises the performance standards across the portfolio. It's a positive flywheel effect. Canada and the United States, represent different stages of the same story shaped by Garage's significant evolution. Historically, a denim and woven-led casual brand, Garage has become a highly coveted L.A.-inspired lifestyle and activewear brand. That stronger positioning has also changed where the assortment resonates most. Climate and culture influence demand, but real estate is equally important. Canada has nearly 6 times the store density per capita of the U.S., with a greater share of its mature fleet outside the investment-grade locations we increasingly prioritize. Our strongest performance is concentrated in premium markets where the customer and the brand and the real estate are best aligned. Our pull inventory model reinforces that dynamic by directing product towards the strongest demand and full price sell-through. The U.S. presents a very different opportunity. Substantially lower penetration, significant investment-grade real estate white space, and a customer and climate that align well with Garage's evolved proposition. Our opportunity is to scale that success with discipline, opening the right stores in the right markets, and directing inventory towards the strongest demand. That gives us continued confidence in Garage U.S.'s runway, not to mention the U.K. Ultimately, none of this is possible without our people. Our people are our true superpower. We are a genuinely culture-led organization, and that culture is revealed most clearly when conditions become difficult. In moments of uncertainty or disruption, our people draw on shared values such as ownership, empathy, curiosity, and passion to move with urgency, support one another, and find creative solutions. These values are not words on a wall. They shape how we think, act, and lead. That is the foundation of our resilience. Because so many of our people are also shareholders, that ownership mindset is deeply authentic. People think and act like owners because they are owners. The combination of culture, ownership, and talent is extraordinary and quite impossible to replicate. It is not simply our competitive advantage. It is the force that will continue to carry Groupe Dynamite forward. When I step back from Q2, the message is simple. We have made deliberate choices for six years. Brand elevation over promotion, investment-grade real estate over growth at any cost, scarcity and agility over excess inventory, and a culture of ownership over bureaucracy. Those choices are working. Our brands are stronger, our network is more productive, our inventory turns faster, our economics continue to improve, and our runway remains significant. Q2 is another proof point. Our luxury-inspired business model is working. We are looking at a company that has spent six years getting better and still has a way to go. With that, I will hand it over to Stacie. Thank you, Andrew, and good morning, everyone. Andrew spoke about the strength of the model. What I want to focus on is how that model translated into execution in Q2. The story of the quarter was our ability to see, respond, and execute quickly. We entered Q2 with an opportunity to bring greater newness into our assortments. We recognized it early, acted decisively, and used the speed of our operating model to adjust product and season. The response was clear. Sales strengthened throughout the quarter, and we exited Q2 with good momentum. That is an important distinction about Groupe Dynamite. We do not have to make every decision months in advance and hope the customer agrees with us. We stay close to her, read the signals, and move. Our advantage is not simply speed, it is speed with precision. Increasingly, we have the infrastructure to support that speed at greater scale. Our U.S. distribution center is reducing last-mile friction and strengthening our ability to move inventory closer to where demand is strongest. Turning to stores, our physical fleet remains one of our most powerful customer acquisition vehicles and the fullest expression of our brands. This quarter, sales per square foot reached 1,056, up 28.9% year-over-year. That productivity matters because our strategy is not simply to operate more stores. It is to operate better stores and better locations, generating greater productivity. We opened seven stores during the quarter across the U.S. and U.K. Early results from the U.K. openings of Bluewater Centre and Oxford Street are very encouraging, and we are already applying what we are learning to inventory allocation and localized marketing. That is how we intend to scale internationally, learn quickly, localize intelligently, and maintain the discipline that has driven our North American success. Turning to digital, e-commerce sales increased 31.5% in Q2, supported by healthy growth in both traffic and conversion. We see digital as much more than another transaction channel. It is increasingly the connective tissue of our customer experience. Our roadmap is focused on greater personalization, removing friction, stronger social integration, and extending our brands to customers well beyond our physical footprint. We recently expanded shipping to nine additional countries across Europe and Australia, meaningfully increasing our global reach. With Henry Spear joining as Chief Customer Officer, we now have dedicated leadership focused on personalization, friction, and increasing customer lifetime value. Now to the most important driver of our business, product. Our teams are staying extremely close to culture and, equally importantly, to the customer signals that tell us where to move next. At Garage, our off-duty lifestyle continues to perform strongly. Our Wild Tempo campaign with Honey Balenciaga generated significant brand heat, while our Green Envy drop was a great example of the model working in real-time. Our community asked for it, our teams listened, we responded. At Dynamite, Q2 delivered strong momentum led by dresses and supported by culturally relevant brand activations. From inserting Dynamite into the Montreal Grand Prix conversation to an influencer self-shot campaign in the south of France, we continue to elevate how and where the brand shows up. The objective is not simply awareness. It is to translate brand heat into product demand, full price selling, and stronger customer relationships. That brings me to the customer. Across the business, transactions grew in both stores and online. Our active customer base continued to expand year-over-year, supported by stronger retention and increasing value per customer. Importantly, as customers engage with us across channels, we are seeing growth in their average customer lifetime value. That is ultimately what omnichannel should do. Not simply move a transaction from one channel to another, but creating more valuable relationship with the customer. As we enter the second half, our priorities are clear. Stay close to the customer, move quickly on product, increase the productivity of every customer touch point, and scale without compromising the discipline that got us here. We have strong momentum, increasingly protective stores, a growing digital business, and significant white space ahead of us. But none of that happens without our people. I want to thank our field associates and our head office employees. Your ownership, curiosity, agility, and passion are what allow us to operate at this pace and bring Garage and Dynamite to life every day. With that, I'll turn it over to JP to walk you through the financial results. Thank you. Thank you, Stacie, and good morning, everyone. Total revenue for the second quarter increased by 29.8% to CAD 423.6 million. Brick-and-mortar comparable store sales grew 10.3%, or 12.3% on a constant currency basis. That compares with a 28.6% increase in Q2 last year, and on a two-year basis, is a stack of 38.9%, up from 35.6% in the first quarter. We also had meaningful contributions from stores opened over the past year, including three locations in the U.K., and continued momentum across both banners. By geography, revenue in the United States increased 52.2% to CAD 271.6 million. Canada was CAD 145.1 million, down 1.9% on a fleet that is 13 stores smaller. For the first half of the year, Canada is up 2.1%. The U.K. contributed CAD 6.9 million in revenue in the quarter. Our Canadian business is mature. The United States is earlier in its penetration, and the U.K. earlier still. We expect brick-and-mortar growth to come primarily from the United States and, in due course, from the U.K. That is purposeful. Those are the markets where we are investing, where we are opening stores, where our most profitable stores sit, and where we are building momentum. Moving to digital, top-line growth was also supported by online revenue, which increased by 31.5% to CAD 61.4 million, reflecting continued strength in the channel with balanced growth across both stores and e-commerce. As a reminder, our long-term target for online revenue is 25% of total revenue. As we continue to generate momentum in brick-and-mortar and from new stores, online penetration has to grow faster still. We aim to add roughly 1 to 1.5 percentage points of online penetration a year toward that 25% goal. On the trailing 12-month basis, penetration moved from 17.5% to 18.5%. Turning to profitability, gross profit increased by 40.5% to CAD 291.6 million. Gross margin expanded 520 basis points to 68.8%. That figure excludes the CAD 9.4 million recovery of tariff refund claims, which appears as its own line on the P&L. Most of that improvement is the lapping of the elevated tariffs that hit the first half of last year. Gross margin also benefited from our disciplined initial markup, a pricing strategy that carries limited reliance on markdowns, and logistics efficiency from our U.S. distribution center. Taken together, those are structural advantages rather than cyclical ones. Markdowns stayed at historically low levels. Roughly 95% of gross sales go at full price. Inventory turned 7.72 times in the quarter against 7.25 times last year. We chased more than half our receipts in season. That is how we read demand and react inside a quarter. On expenses, SG&A increased 21.8% to CAD 106.8 million from CAD 87.7 million. Wages and salaries were most of the increase. Selling and marketing rose to support growth. Admin costs rose on IT and software. As a percentage of sales, adjusted SG&A decreased 210 basis points to 24.6% from 26.7%. That is operating leverage with revenue scaling faster than SG&A. Moving down the P&L, operating income increased 60.5% to CAD 156.2 million. Adjusted EBITDA increased 55.9% to CAD 187.9 million and adjusted EBITDA margin of 44.3%, our highest since we began reporting under IFRS. That is an improvement of 740 basis points, underscoring the strength and scalability of our luxury-inspired business model. That strength flowed through to earnings. Net earnings increased 77.5% to CAD 113.4 million. Adjusted net earnings increased 68.1% to CAD 108.9 million. Adjusted diluted earnings per share increased 68.7%, from CAD 0.57 to CAD 0.96. Turning to cash flow and the balance sheet, free cash flow was CAD 109.5 million against CAD 72.6 million last year. From a balance sheet perspective, net leverage was 0.89 times. We ended with CAD 31.9 million of cash and CAD 312 million available under our credit facilities. We repaid in full the CAD 20 million drawn at the end of the first quarter and extended our credit agreement by two years to May 2030. From a capital efficiency perspective, return on assets reached 38.9% from 24.1% last year. Return on capital employed increased to 73.5% from 45% in the same quarter last year. Turning to capital allocation, during the quarter, we repurchased 993,605 shares under our NCIB at an average price of CAD 63.50 for approximately CAD 63.1 million. The framework has not changed. Capital expenditure comes first because the fleet and the platform earn our highest returns. Beyond that, we have been consistent buyers of our own stock, and we remain so. Looking ahead to the remainder of fiscal 2026, we are raising total revenue growth guidance to a range of 25%-27%, from 22%-25%. We are also raising the bottom of our brick-and-mortar comparable sales range by a point to a range of 12%-14%. New store performance is what moved the revenue guide. Those openings are not in the comparable base, which is why the revenue range moved more than the comparable sales range. We raised the bottom of the comparable sales range on the continued shift of the network toward our best locations, as well as passage of time, with half the year now behind us. As a reminder, on the second half, the brick-and-mortar comparable sales range implies 9.5%-13% growth over last year. We are happy with how the third quarter has started. We exited Q2 slightly stronger than we began it, and we continue to run around that level today. The updated annual outlook we established today balances the dynamics of continuing momentum in the business with the toughest comparisons of our year, which are immediately in front of us. From a real estate perspective, we now provide guidance independently of closures. We continue to expect 24 to 26 openings in fiscal 2026, including five total in the U.K. The cadence of openings is weighted toward the back half of 2026. Openings and closures are not symmetrical. A store closure has effectively no impact on our EPS. Even several closures together are immaterial. A new store is roughly four to five times the revenue of one we close, and the profitability gap is wider still. We have established a target of 350 stores by the end of 2028 across both banners. Our total addressable market is likely much larger. Looking at Garage specifically, we have 96 stores in Canada and 139 in the U.S. The United States market is more than eight times the size of Canada by population. We believe there is significant opportunity beyond 2028 to grow our store footprint in the U.S. and internationally. F rom a margin perspective, we are increasing our adjusted EBITDA margin outlook to a range of 39.5%-40.5%, from 38.25%-39.5%. This increase comes from three drivers. First, gross margin, concentrated in the first half. Second, continued SG&A leverage as we scale revenue. And third, greater efficiency from our U.S. distribution center, which is now fully ramped. Once again, we are not including the recovery of tariff refund claims in adjusted EBITDA. As we move into the back half of the year, we have now lapped the tariff impacts that affected the first half of last year. That comparison alone accounts for most of the expansion you saw in Q2. The back half is a clean, comparable period. We expect gross margin ahead of last year again, but by a much smaller amount and against a cleaner comparison. In closing, this quarter is a story about the strength and durability of our financial profile. We raised guidance across revenue, brick-and-mortar comps, and margin today, and we did it without leaning on any one-off items. The tariff refund recovery sits outside of our adjusted results entirely. Taken together, expanding margins, strong cash generation, and a healthy balance sheet give us a financial profile that funds its own growth. Those margins are structural rather than cyclical, and they continue to expand as we scale. That is the foundation we build the next several years on. With that, I'll turn it back to the operator to now take questions from the financial analysts. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift your handset before pressing any keys. Your first question comes from Irene Nattel with RBC Capital Markets. Your line is now open. Thanks, and good morning, everyone. The topic du jour everywhere is same-store sales. Can you talk about what you're seeing in terms of customer behavior? I think you mentioned that traffic was up across the board. So what you're seeing in terms of product demand, traffic counts, pricing, and where or if you're seeing any kind of weakness or deceleration. Thank you. Good morning, Irene. It's Andrew. Yes, very good question. Great question. Listen, there's a lot in there, so let me endeavor to unpack this a little. What we're seeing is probably a bit of a tale of two cities. In this case here, I guess it's a tale of two countries. You've got the U.S. economy that's really, really, really strong. Canadian economy is definitely a lot softer, and why it's softer, I think most of us appreciate why it's softer. The data is the data, right? GDP growth is pretty anemic. It hasn't really budged, and per capita GDP real growth hasn't changed in 20 years, and I think it's actually gone negative recently. Canadians are anxious. On the south side of the border, really, you've got an economy that's firing on all cylinders. Unemployment is low, personal indebtedness is low, wage growth is high. Then you've got a brand, you've got our Garage brand, let's say, that has really pivoted over the last couple of years. As we keep premiumizing, if you will, or elevating the brand and the brand's equity and including the assortments, which incidentally, we're moving in our more expensive product as we get into activewear and whatnot. So combination of the evolution of the brand as also extrapolated into even the store footprint that we have in the U.S., where 85% of our stores are sitting in these investment-grade, high quality, high volume assets. It's just really, I guess we're seeing a big difference between the two countries. So to pinpoint exactly where and why, I can't tell you with great precision, but I think all these factors go into play. Evolution of the brand, the real estate strategy. We have six times the store density, if you will, in Canada relative to the U.S. So in the U.S., it's a much higher quality real estate portfolio. Consequently, we're dealing with a K-shaped consumer down there, at the top end of a K-shaped consumer who's probably more resilient in a more resilient economy. So, not sure it fully answers, but it's ultimately what we're seeing. That's really helpful, Andrew. Thank you. Just sort of as a follow-up, if I may. Obviously, we're seeing a very impressive gap between that same store sales number and the total revenue number. How should we be thinking about the magnitude of that gap on a go-forward basis? Good morning, Irene. This is JP. Thank you for the question. You are correct in that in Q2, there was a noticeable gap, and obviously this is the impact of new stores that are performing incredibly well. If you look at our comps for Q2 on a constant currency basis at 12.3% versus the total revenue that was up almost 30%, that gap is almost 18 points. There is a little bit of it coming from a better e-com penetration rate, but the majority of that gap truly comes from store openings that were opened in the past year, not only in the past quarter, because that's a year-over-year number. That cohort in the last year has performed incredibly well. We are happy with the performance of those new stores. In fact, that's why we were comfortable this morning raising the full-year revenue guide by 2 to 3 percentage points. Really, the new stores are doing well. We're happy to see that, and we believe that will continue for the next quarters in front of us. That's great. Thanks. I'll pass it off and get back into the queue. Thank you. Your next question comes from Chris Li with Desjardins. Your line is now open. Hi. Good morning, everyone. Thanks for all the color so far. Very helpful. My first question is, if I take a low end of your revised full-year comp sales guidance, it would imply a continuing acceleration on a two-year stack basis to around 40%-41% in the second half. Is that correct? If so, what is your confidence in achieving this despite all the ongoing macro uncertainties out there? Thanks. Hey, good morning, Chris. You are correct. Effectively, the lower end of the range on an annual basis, the 12%. Maybe if I take the whole range for a second. The brick-and-mortar comp range is now 12%-14%, which means that by difference, the back half is 9.5%-13%. Now, if you look at it on a two-year stack basis, that will give you 40% at the lower end of the range and 44% at the top end of the range. I think what is important here to note is that we feel good about this range. We are very comfortable with that range, which is why we've increased it this morning. Effectively, also, you are right. Pretty much every point here points to an acceleration versus Q2, which was also an acceleration versus Q1. Again, the business is not getting harder. The compare is getting harder, as Q3 and Q4 last year were two of the best quarters in the history of this company. We feel comfortable with the guide, and yes, your math is correct. Okay, that's helpful. My follow-up is, I'm sorry if you disclosed this already, but can you share with us the breakdown in same store sales between AUR and traffic this quarter? Good morning, Chris. I will take that one. AUR, as it has been over the last few years, is doing most of the work. While we have clearly stated in the past that we are targeting 2 times inflation, I want to be very clear with all of you that that is the output. The input is not taking a $20 top and charging $22 next year. The input is coming from an AUR strategy focused on brand elevation across three metrics, which Andrew has touched on, but I will follow up with. One, product mix. Our positioning of off-duty and on-duty. That can enable a bare top to move from $26 to a $45 retail when it shifts to a performance fabric with technical capabilities. AUR is not just a higher ticket, it is elevating what we are actually offering, and our merchant and design teams know that we are not creating anything that anyone needs. We are creating things that people want. The second thing is our geography. Geography, as you guys know, we have mentioned we charge the same price in Canada and the U.S. As both gentlemen have spoken to our success in the U.S. just by penetration alone, we pick up AUR. Third is our real estate strategy. As Andrew likes to mention, the smallest house on the nicest street. This is where actual units matter more than the actual transaction. Our order value rose in units. Our orders per price per units rose. I said that backwards, sorry. But generally what I am trying to say is if price is an issue, the units are going to fall first and units are rising. We continue to believe in this 2 times inflation as a strategy, but know that that is not actually the action we are taking. It is the three inputs I just mentioned. Very helpful. Thank you, Stacie, and all the best. Your next question comes from George Doumet with Ventum Financial. Your line is now open. Yeah. Hi, guys. Good morning. Congrats on the quarter. I think you mentioned early in the quarter the assortment was pivoted towards newness. I was hoping to get a little bit more color on that. JP, I believe you mentioned the markdown rate is at 5%. I just wanted to confirm that number. Maybe you can tell us a little bit what that number was last year and perhaps what's embedded in the guide for an exit rate this year. Thanks. You want to talk about that? Yeah. So, Stacie, we'll start with newness, and then I'll take the markdown question. Newness is a factor we're hedging really hardly on. We're watching it as a leading indication. As I just mentioned, we can't keep taking up retails if we don't invest in that quality and the offering that we're serving up to the customer. We're paying close attention to what's going on culturally. We're watching what the customer is telling her, and we're trying to create an emotion of a want that she can't pass it up when she walks in the store. There's too many options out there competitively on needs, which is why we're trying to focus or create wants. With that, the team's very focused, and with it, if we can turn faster, create those wants, the AUR can come with it. On the markdown question, that's correct. Our markdown rate has remained at or around 5%, which was also consensus with the past couple of quarters. In terms of what's being baked in in our forecast, we effectively assume we'll remain at or around these levels. Could be a point to the left, could be a point to the right, but broadly speaking, we assume status quo. Yeah. Thanks for that. As a quick follow-up, I was hoping to get a little bit of an update on denim. I know it was a pressure point last quarter. Maybe if you can just let us know how that's trending and maybe as we exit the year. Thanks. Yeah. I'll mention it because I think my takeaway was wrong, or what I said was inferred wrong. Denim is downplayed in our assortment mix as we talk about shifting more to an athleisure lifestyle in both on-duty and off-duty. Off-duty for us is based around fleece bottoms, outfitting, think of her going to and from campus, to and from the gym. On-duty is more technical. She can actually work out in it. It supports, it holds in all the right spots. We have purposely downgraded our denim contribution to the business, and it's coming in as we planned it to. But as we've mentioned in the past, and Andrew Lutfy just opened with, Canada and the U.S. are in different spots on expectations. The U.S. is picking up what we're putting down in on-duty and off-duty because they have no expectation. We're a new brand, and they're absorbing it. In Canada, denim is hurting a bit because we used to be like the general store up here. You could buy jeans and a plaid shirt. You could buy a dress to a homecoming event. We used to carry everything, and we're in some very remote locations where we are the only game in town. But when you go to the U.S. and you have to compete, you need a point of view on your customer and your assortment. As we've narrowed that and doubled down on this athleisure assortment, it is working in The States very aggressively. They're adapting to it. We're taking market share, and we like where we're positioned. In Canada, we need to work on that repositioning, and that's where you'll see a little bit of a degradation on denim. Great. Thanks a lot for your answers. Your next question comes from Michael Glen with Raymond James. Your line is now open. Hey, good morning. I just want to go back to the strength you're seeing in the new store openings. What should we anticipate as these new stores go into the comp base? Will they continue? Are you seeing a leveling off or a trending lower on the new stores as they mature a little bit? What are you seeing in terms of, say, a two-year or three-year trend? Hey, good morning, Mike. Historically, when we open up a new store, it starts off really, really strong, and then it continues to be strong. We are not one of these retailers where we will start at, say, 80% of performance and work our way to 100%. In fact, the first month is usually incredibly strong. As those stores eventually join the comp base, we are very excited by the dollar contribution that those stores are bringing, because those are top-tier assets. However, if you look at the comp or the gain year-over-year in percentage terms, it is very healthy, don't get me wrong, but the rest of the network is also healthy. In terms of contribution to the comp in percentage points, it is not going to hurt us, let me be very clear, but it is not going to add a lot of points to it either. It is really on the dollar side of things, where these stores make a noticeable difference. Okay. Thank you. Just on gross margin through the back half of the year, I know that we are dealing with a lot of the tariff noise. In a normal year, will your gross margin increase sequentially from Q2 to Q3? I am just trying to understand what that cadence looks like on a relative basis. Yep. I am happy to speak to that as well. Last year in Q1 and Q2, tariffs were very topical, and we talked about that, which is why in Q1 and Q2 of this year, our gross margin year-over-year is up 520 basis points. As we get to Q3, we are now on a level playing field. The comparison is clean, and it is a real comparable base. To illustrate what I am saying, if you look at our LTM gross margin rate, at the end of Q2, we are at 66.3%. Effectively, that rate is Q3 and Q4 of last year and Q1 and Q2 of this year. As such, that number of 66.3% is not impacted by last year's crazy tariffs in the first half. That is clean, comparable base to start with. Back to my earlier comments in the opening remarks, we believe there is further room for expansion in Q3 and Q4. However, the magnitude will be far smaller than what you've seen because we no longer get the benefit of comping those tariffs. What we're going to get in Q3 and Q4 are the benefits of our USDC on logistics, and that is expected to be incremental to the gross margin. Starting from your 66.3 LTM, which is a good, solid, clean base, we expect to grow that a little bit with passage of time, but certainly not with the same magnitude that you've seen in the first half of this year. Okay. Thank you for taking the questions. Thank you. Your next question comes from Brian Morrison with TD Cowen. Your line is now open. Thank you. Good morning. Andrew, I think at the beginning of the call, you said that the AUR has doubled since a certain time frame. I did not get that. But then Stacie highlighted product mix and U.S. parity and higher U.S. mix to justify some of that. At the beginning of the call, you said this reflects brand building and improved brand strength. I am just wondering, has this resulted in any changes to your consumer profile, the average age to a Garage customer? Yeah. Great question. Yes, it is all changed. What we spoke about, or what I spoke about earlier, was basically a doubling in the AUR over the last six years. JP is looking at me. Yes. That is right. Yes. If you think about where the brand was six years ago, our target customer was our target market, our muse, if you will. She was 16 years old, and mathematically, we would land best customer, best markets, probably land around 14 years old. Today, our muse is 24 years old, and mathematically, we land at about 22 and a half years old. So for sure, the customer has aged up from 14 to 22. So the customer has aged up. Even the end use. Again, Stacie mentioned, we used to be a denim and a plaid shirt, and homecoming dress, and that is kind of like what you could expect at a Garage six years ago. Today, you are proudly wearing our booty shorts and support tops, bear support tops into an active wear class, a yoga class, a Pilates class, kickboxing class. Furthermore, we are dressing in the right lifestyle to get you to and from that class. The brand has evolved completely. The customer has evolved completely. The real estate and the real estate strategy has evolved completely. This investment-grade real estate that we always talk about, it takes courage, right? To do a store in Soho. These are big, big rents. Or Oxford, between New Bond Street and Regent. These are big commitments. You are playing with the world's best brands, so you need to be at that level, and that is really what we have been. Quarter after quarter, that is what we keep doing, is elevating that brand. I know you are not asking, but I would like to follow up even to Irene's question, is what is really, really important, I do mention in my opening comments, we run a full model, a full inventory model. What that really means is, we are not playing God, planning and allocating and where we send the inventory. We actually do not. We send a very small percentage of the inventory, sprinkle it all over the place, and then we basically let the customer, and ultimately the demand coming out of those store locations, dictate where the inventory is going to go. When you have a store, as you think about these amazing assets that we are opening up in the U.S., right? Again, we are only one-sixth as penetrated in the U.S. as we are in Canada. Let us not even talk about the U.K. that is over-performing. These assets are pulling hard on the inventory, and we like engineered scarcity because I hate inventory. As we keep pulling on this inventory, unfortunately, that store in Sudbury, Ontario, in a tertiary market, and nothing against Sudbury, may ultimately pay the price. This is all part of a very deliberate and strategic evolution of the brand. At the end of the day, if you look at our six-year stack of numbers, it is continuous improvement in every single metric. Quite frankly, I like it. I like this idea of running a more science-based, engineered business that has greater predictability and resiliency. Well, thank you. Sorry about that. No, that's no problem. I was kind of curious if you've seen yet that age difference at Subway Yeah in the last couple of years in Seattle. Yes. Yes, okay. And then. Sorry, Stacie, go ahead. No, she was just agreeing. I'm just saying it was intentional. Yeah, it was targeted to. That customer has aged up roughly about two years. Listen, it's a much bigger addressable market, and that's strategically why we chose to go there. Yeah. Okay, follow-up. Just in terms of the retail sales per store. I see the runway and growth in the U.S., but they look to be double or more of that in Canada. 40% or so is currency, and I understand the optimized real estate footprint. Can you provide to us what the average size 4 walls in the U.S. or average size square foot U.S. is relative to Canada? I'm afraid no. I'm afraid we won't go into these details, Brian. I can say that certainly U.S. stores versus Canadian stores on average are far more profitable. When we look at new store openings these days, they're also accretive to the chain average, and those are in USD. Certainly, we notice the impact of those openings in the U.S. market. Thank you. Your next question comes from Stephen MacLeod with BMO Capital Markets. Your line is now open. Thank you. Good morning, everyone. Lots of color on the call so far, so thank you very much. I just wanted to ask about just sort of some of the fuel inflation that we're seeing and have been seeing, and how that impacts the guidance or how that's considered in the guidance. And whether you have more exposure to that factor, just given your high level of inventory turns. Good morning. Yes, certainly the dynamics we're seeing around fuel inflation are considered into our guidance. We are very much mindful of the situation out there. And we have taken conservative assumptions in our guidance to make sure that it reflects the current market conditions. Yes, this is a cost that we need to be thoughtful about. And you're absolutely right, we do turn our inventory very fast. As such, this cost would impact us sooner than later in the P&L. And yes, we have reflected it in our guidance. Okay. That's great. Thanks, JP. On the store mix, Tier 1 to 3 versus Tier 4 to 5, you gave an updated number, Andrew, on how that breaks down right now. I am just curious, when you think about the Tiers 4 to 5 becoming closer to 100% of the network mix, what is the cadence of that growth? Yes, Steve, I can take that question. As it stands today, in terms of stores, 57% of our stores are in Tiers 1, 2, and 3, which we believe to be investment grade. However, if you look at it in dollars, that percentage gets you to 72%. If you look at our target, which is 350 stores by the end of fiscal 2028, we assume that 70% of stores, versus 57% today, will be in investment-grade locations. As such, the dollars percentage will also go up. I think if you are thinking about it this way, moving from 57% to 70% in two and a half years from today, I would say you would be in the right zip code. Right. Okay. That's great. Thanks, JP. Appreciate the color. Thank you. Your next question comes from Vishal Shreedhar with National Bank. Your line is now open. Hi. Thanks for taking my questions. I wanted more perspective on the Canada assortments change and the customer reaction. In particular, since Q1, did you rotate the assortment back to the more traditional assortment, or is the intent to elevate the Canadian assortment along the lines of what you have done in the U.S.? Secondarily, did the Canada performance on a same-store basis, did that stabilize in Q2, and should we expect those trends to recover in Q3, or do we expect some malaise to persist in Canada? Regarding the second part, JP, why don't you take the second part and I will take the first part? Sure. On the Canada same store, as you know, Vishal, we do not disclose comps by geography nor by banner. In Andrew's opening statements, we did say that Canada, in totality, was down 2% with 13 fewer stores. As such, Canada's same-store performance was, call it flat-ish. Now, we will not give you a Q3-to-date number on that metric, and we will refer you to our annual guidance on comps, which again, has been increased this morning from 12% to 14%. On the Canada mix, I will leave it to Andrew to answer that question. Yeah. So listen, to answer your question very clearly, no, there is really no change in the strategy. There is only one strategy, and there has always only been one strategy for all countries. So there is no change there. And listen, this is a brand that is deliberately in transition, and this transition has been taking place over the last six years, and every quarter we keep nudging it up and nudging it up and nudging it up and nudging it up. So what that means is, if you think of, let us say, what we call casual street, which would have been denim, sweaters, woven shirts, and so on and so forth, six years ago, order of magnitude, that could have represented 70% of sales, and planned as such. Today, it might be, I do not know, 15% of sales or something like that. Every quarter, we keep planning it down and down and down and down because ultimately that is not where culture is going, that is not where premium brands are going, and that is not the white space that we want to address in the athleisure and activewear markets. So the good news is there is not much left to trim from that assortment. What I would say is, I think the bigger thing at play is the pull model. Again, we have engineered scarcity, right? We intentionally buy not enough inventory. So what ends up happening is those stores, you think about an Oxford Street, right? Like a Locomotive store, Soho or any of these, and soon we are going to be opening on Fifth Avenue, right? These are high profile, high premium, top of the K-shaped economy type of customer. They pull hard on the inventory, and unfortunately, Canada at times ends up paying the price. I will just put out there, not all Tier 5s do the same volume, right? This whole tier thing is ultimately based on a very rigid set of standards. None of them actually have to do with sales, right? It is more about, is there luxury or is not? Is there public transportation or subways, or are not there? So, I would venture to say a Tier 5 in Canada performs far less than a tier 5 in the U.S. So, this is really the pull model at work. But at the end of the day, I would just, again, look at our six-year performance, look at our EBITDA margin, look at our growing margin, look at our same-store sales that keep growing. Listen, we firmly advocate this strategy and are excited to keep on the same path. Thank you. Your next question comes from Adrienne Yih with Barclays. Your line is now open. Hey, everyone. It's Mike Vu on for Adrienne, and thank you for taking our questions. First, Stacie, thanks for all the color around the e-commerce channel. That was super helpful, and I know it's a pretty important piece of the overall story out there. I guess with that said, as you continue investing behind the digital platform to achieve that long-term e-com penetration goal, where are you seeing the biggest opportunities to improve the customer experience and further strengthen that omnichannel model in general? Along with that, are you seeing any kind of changes or differences or resonance with the online shopping by geography versus another? Good morning. Thanks. Yeah, on online, as you guys, we've thrown out there, our goal is over time to hit a 25% penetration. It's not a date we've thrown out to hit it, but it's a ratio we're trying to move it. It moved 20 basis points year-over-year for Q2. You also should just know that Q2 is our lowest penetration, and Q4 ends up being our highest. So when you're looking at penetration, you need to look at it year-over-year, but also quarter-over-quarter. We still know we have tremendous run room here on e-com. The thing that holds us back is a positive. It's a bigger denominator in the stores being so strong. So the ratio moves slowly because the stores grow just as much. They grew 30% this quarter overall, and e-com grew 31. It's hard to move that penetration number, but we are not targeted on it. What things are moving the needle here, as you just asked, was headless commerce. We launched that on our app, and we opened the U.K. with it on their website. It launches this month in North America, so we are excited about that. We are moving some of the friction points in how we are moving the customer through the journey, and we are really excited that Henry Spear joined us this month as a Chief Customer Officer. His mandate is personalization, removing friction, and lifetime customer value, not just on digital, but that omnichannel customer. So we are excited about the growth of digital. Great. As a follow-up, as we were approaching holiday, how are you thinking about inventories, promotion, pricing, customer demand? What are you accounting for in the back half of the year related to the overall apparel environment and how you are thinking about that? I can take it. Yeah. Regardless of the quarter, we are always looking to watch what the customer signals are, what is going on culturally, and create product that is exciting. We know she comes out in Q4 because there are generic reasons that she needs to shop, whether it is a holiday party, a company party. There are so many activities that women need to dress for that we call it a moment in time where she is coming out. We need to be top of mind, so we are working on that in Q3 to grow our customer base so we have more people to contact into Q4. In most times, as Andrew just told you, he hates inventory. Q4 is no different time. He holds that across all four quarters. We also hate promotions. So again, we are putting all of our effort into what is new, what is exciting, what is she going to want. When she wants something, price really does not matter. When she does not want something, also price does not matter, which is why we do not play the POS or the up-and-down game or try to drive revenue off of markdowns. Got it. Thank you so much. Thank you. Your next question comes from Martin Landry with Stifel. Your line is now open. Hi. Good morning, guys. Congrats on your results. I want to touch on the gross margin. They were extremely high this quarter, near 69%. I am just trying to understand at what point do you think, "Okay, we are comfortable with these margins. The rest of the increase we want to pass on to our customer in the form of more value in our products." Because I got to think that at some point when your margins are growing that much, is there a risk that the customer sees less value in your products? Morning, Martin. Listen, as I think it was Stacie actually who mentioned, part of this is also mix, right? As we do less business in Canada as a percent of the whole and more business in the U.S. and even the U.K., and U.K. being modeled after the U.S., right? You are naturally going to see expansion in margin. It is just math, right? So that is part of the story. The other part of the story is this. A s I mentioned in my opening remarks, roughly about 28% of our revenue came out of what I would call investment-grade assets that might address a upper, top quartile consumer in terms of discretionary income. Today, it is 72%, and every quarter it keeps going up. 80/20 rule of life, we will probably be at 80% at a certain point. So you have got the smallest house on the best street. You have got a mixed conversation between the countries taking place. So it is not as egregious as it would seem from a customer standpoint. And I will remind you, our competitors are Actually, I have been warned not to mention who our competitors are, so I will not mention the competitors. But, you could think of best-in-class North American activewear, athleisure brands out there, right? Those are our competitors, and their prices are anywhere from 50% to 250% more expensive than us. So even if they raise their prices at the rate of inflation, right? I do not see them compressing on margins. So as they keep raising the prices at the rate of inflation, and if we raise at twice the rate of inflation, it could take 25 to 50 years to actually catch up to them. So I am very comfortable with the strategy, and I hope that answers your question. Yeah, it does. And maybe just as a follow-up, you have increased shipping to international destinations to more countries this quarter. Just how many countries do you ship now internationally, and is there a further room to open up other countries in the near future? Yeah. I will answer that. We have opened up shipping to nine additional countries across Europe and Australia. We are reading this to see where the demand is for a further roadmap for brick-and-mortar to open up down the road. Yes, we will also open up digitally first as we go down this path. First and foremost, these first nine locations are off to a pretty good start and very telling of who is resonating or who has already a strong awareness of the brand. Okay. Nine countries plus Canada, U.S., U.K. So available in 12 countries right now. Is that correct? Yes. I would have to check my U.K., Europe mapping there, but yes. Okay. Thank you, and good luck. Your next question is from Mauricio Serna with UBS. Your line is now open. Great. Good morning. Thanks for taking my question. I was just wondering on the Q2 comp sales performance. I guess it implies an acceleration versus what you were seeing quarter to date. Could you elaborate on what drove that acceleration, like traffic, AUR, conversion, and so forth? Then quarter to date, how should we think about that plan? Is it fair to say like a low double digit is the quarter to date at this point? Thank you. Yeah. I will start, which I addressed in my opening comments, but Q2 did pick up each month of the quarter. Again, we identified early on or even coming out of the tail end of Q1, that there was an opportunity for more newness. If you guys are watching Garage closely, you can see the color drops work very well for us. I also called out that the green color that we dropped was an actual customer request that came through our social channels. So we are looking for things that were resonating, but we probably were missing a little newness as we were depending on color of similar items to keep going. There was a strong injection at the beginning of Q2 to drive more newness, and that really resulted in top-line sales. So we know the momentum we are on there, and we are excited by it. JP is going to take the second part of your question. Yeah. I guess the second part of your question was on Q3 to date. Look, I think what we are comfortable saying here is that Q3 to date is off to a good start. We are happy with how Q3 is going so far. That is reflected in the full year guidance that we gave you this morning, 12%-14%, which was increased. That is as far as we will go at this time. Your next question comes from Jon Keypour with Goldman Sachs. Your line is now open. Hi, guys. Thank you for the question. Knowing that you guys will not disaggregate comp by geography, I am just curious if you could size the magnitude of the closures in Canada. Let us just ignore the renovations and relocations. Just wondering what the actual sales drop from those closed stores was. Yeah. Thank you for the question, Jon. Look, we will not break that down, unfortunately. What I am comfortable saying, though, is that store closures are, financially speaking, immaterial to the P&L, to the bottom line, to the earnings per share. The overall revenue of stores that we close versus stores that we open, the magnitude is very large. Think of it as 4x to 5 x, sometimes even larger. As such, when we closed 13 stores in Canada in the last 12 months, the impact on revenue is negligible, and the impact on earnings per share is virtually nil. That is as far as I can go this morning, but hopefully that gives you good color on the fact that store closures are really not impactful to our earnings per share. Your next question comes from John Zamparo with Scotiabank. Your line is now open. Thanks very much. Good morning. I will keep it to one question because I see we are past the hour. I wanted to come back to the U.S. D.C., and I wonder if you can say broadly, JP, what that contributed to margin expansion in the quarter. I think it was up over 500 basis points on a gross margin basis. I wonder if you can give a sense of what the U.S. D.C. is contributing and are U.S. D.C. sales or margins on those close to in line with those and so on. Good morning, John. In Q2, year-over-year, the gross margin expanded by 520 basis points. I would say there are three drivers here. The first one is by far the biggest one and more than half of it. That would be the tariffs that we faced last year. That is by far the biggest. The other two factors would be IMU expansion through a stronger AUR, which we have talked about in earlier responses on this call. The third factor would be your U.S. D.C. I do not think we will give you a hard number in terms of the contribution, but it would be a very small fraction, the 520 basis points, and it would be factor number three in the pecking order. There are no further questions at this time. I will now turn the call over to Andrew Lutfy for closing remarks. Thank you, and thank you, everyone. Appreciate everyone's time. Listen, I just want to take a step back, and if I can maybe close out and give it a lot of thought over the last couple of months as to the reaction to some of the earnings and some of the comments. Sometimes we kind of get locked up in front of a tree, and we don't see the forest anymore. I just want to close out and really talk about how strategic we are and ultimately the forest. Six years ago, we made a deliberate decision to evolve the brand. We strategically chose to acknowledge a K-shaped economy, address a customer that is a global customer in the top quartile, if you will, in terms of disposable income and in a leisure world that is gaining market share. It is a tide that is rising, right? We made these deliberate choices. We also, as a result, deliberately over the last eight years, six years, deliberately shut down tons of stores and invested, more importantly, in these high-profile global locations with amazing success. At the same time, I do like predictability, and to me, science and engineering and creating rigorous processes support that. I don't like inventory. Inventory comes with fashion risk, right? Because the more inventory you have, the more further out you've made a commitment. Honestly, it's hard to predict fashion a year or two years out. As Stacie mentioned, we had an early feedback on green. The customer wanted green, and it was like, "You know what? That makes a lot of sense." We were able to act on that in a couple of months. We run a full model that creates scarcity. We, by design, want to have as much in-season flexibility and open to buy as possible. As we fill the pipe based on information, based on knowledge, leveraging AI predictability, I got to tell you, nine out of 10 times, we're right. Listen, strategically positioned in terms of a customer, the economy, disposable income, global brands with a strong science-based engineered solution. I'm very comfortable about the business and very excited as to where we're going to be, not in the next quarter, but where we're going to be in three years from now, five years from now, and seven years from now. That's ultimately my obsession. I've been doing this for 40-odd years, so three to five years seems near term. With that, again, thank you so much, and leave it at this. Have a wonderful day. Thank you. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.