After years of store closures, fashion retailer shifts strategy

After several years of shrinking store fleets, many apparel retailers have shifted toward investing in fewer, higher-performing locations. Rather than opening as many locations as possible, brands are increasingly concentrating investment in premium real estate that can serve as both shopping destinations and brand showcases.

One fashion retailer is embracing that strategy while continuing to close locations that no longer meet its profitability standards. The company is betting that flagship stores, immersive shopping experiences, and direct customer relationships will generate stronger long-term returns than rapid expansion alone.

That strategy reflects a broader evolution in brick-and-mortar retail, where physical stores increasingly function as marketing platforms and experiential destinations alongside their traditional role as places to shop.

Founded in 1975, Canadian women's fashion retailer Groupe Dynamite Inc. operates more than 300 stores across North America under its Dynamite and Garage banners.

As part of its broader growth strategy, the company is investing heavily in Garage by prioritizing flagship destinations, premium real estate, and direct relationships with shoppers instead of simply increasing its store count.

Garage is opening its biggest flagship store

Garage Clothing will open its largest and most immersive flagship to date in Manhattan's Flatiron District, New York City, at the corner of Fifth Avenue and East 21st Street.

Scheduled to open in spring 2027, the multi-level flagship will span more than 9,500 square feet and is designed to serve as both a shopping destination and a content-creation hub.

"This flagship location represents a major milestone for the brand, allowing us to showcase our full expression of Garage in one of the world's most dynamic retail markets," said Groupe Dynamite VP of Global Real Estate & Store Development Romina Kolodziejska.

"Expanding in New York at this scale underscores our confidence in the brand's continued growth, and our commitment to meeting our customers where they are."

The Manhattan flagship is only the beginning. Garage also plans to open similar flagship locations on Newbury Street in Boston and on M Street in Washington, D.C.'s Georgetown neighborhood, markets the company has identified as long-term growth priorities.

Garage continues expanding internationally

The flagship strategy is only one part of Garage's broader expansion plans.

The retailer opened five stores during the first quarter of fiscal 2026, according to its latest earnings report.

In the U.S., Garage expanded its presence in existing markets with new stores in Las Vegas and Hawaii. Internationally, the brand entered the UK by opening its first stores at Bluewater Shopping Centre in Kent and on London's Oxford Street. Additional locations are planned for Manchester, including Arndale and Trafford Centre.

The company also renovated or relocated three Canadian Garage stores during the quarter as part of its ongoing efforts to improve real estate performance and strengthen its existing portfolio.

Groupe Dynamite President and COO Stacie Beaver said the retailer's real estate strategy continues to drive customer growth and profitability.

"By opening new locations in premium centers, optimizing our fleet, and delivering a compelling in-store experience, we continue to drive significant productivity improvements across our store network," said Beaver in the company's latest earnings report.

"Most importantly, we continue to see strong customer engagement across both brands, reflected in growth in our active customer base and increasing customer lifetime value."

During its first-quarter fiscal 2026 earnings call, executives also emphasized that speed and agility remain among the company's biggest competitive advantages as fashion trends and consumer preferences continue evolving.

That philosophy is one reason the retailer has chosen not to pursue a wholesale model. By maintaining a direct relationship with customers, the company says it can respond more quickly to demand, manage inventory more efficiently, protect margins, and capitalize on emerging trends.

Store optimization remains part of the strategy

While Garage continues expanding into high-profile markets, the company is also trimming locations that no longer meet its long-term profitability goals.

During the first quarter, Groupe Dynamite closed five stores, four Dynamite locations in Canada and one Garage store in the U.S.

The closures align with the retailer's broader strategy of concentrating investments in higher-growth markets, particularly the U.S. and the U.K., where management expects stronger long-term returns.

In its fiscal 2026 outlook, Groupe Dynamite lowered its forecast for new store openings to between eight and 10, down from its previous guidance of 10 to 12. At the same time, it accelerated the planned closure of two additional stores.

According to management, both locations had already been scheduled to close next year, but executives decided to move up the timeline as part of the company's ongoing network optimization plan.

"Now to be clear, those two stores were profitable," said Groupe Dynamite CFO Jean-Philippe Lachance during the earnings call. "They simply were not profitable enough to our standards. We've decided to do the right thing for our business and close those two stores a little bit sooner than expected. This year, that brings your total amount of closures or the guidance to 16 closures, which is certainly on the high side."

The company added that while store optimization will continue over the next several years, it expects the pace of closures to slow after fiscal 2026.

Here's some of my previous coverage of store closures:

• 79-year-old fast-fashion retailer closes 128 stores
• One of the world's largest fashion retailers closes 106 stores
• Luxury chain closes flagship store after 112 years

The strategy is already delivering results

Groupe Dynamite's disciplined approach to real estate investment and store optimization is already translating into stronger financial performance.

During the first quarter of fiscal 2026:

• Total revenue increased 37% year over year.
• Comparable store sales rose 22.6%.
• Operating income climbed 80.1%.

"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," said Groupe Dynamite CEO Andrew Luffy during the earnings call.

"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 strong quarterly performance comes as Groupe Dynamite continues to invest in flagship stores, premium retail locations, and a more disciplined store portfolio, while expanding across North America and the U.K.

Related: Convenience store giant sells stores, exits market