Groupe Dynamite shares pulled back Thursday as an impending second-half profit slowdown overshadowed a better-than-expected second quarter and outlook upgrade.

Shares bounced around throughout the session, recently trading 1.7% higher at 57.85 Canadian dollars ($41.89), coming down from a high of C$63.49 earlier in the morning.

The initial market rally faded after management said on its earnings call that the strong profit gains seen in the first half, which were fueled by lapping temporary tariff drags, are now over. Chief Financial Officer Jean-Philippe Lachance said the second half is now a "clean comparable period," meaning that the tariff effects have been lapped, and that profit will temper for the remainder of the year.

"The updated annual outlook we established today balances the dynamics of continuing momentum in the business with the toughest comparison of our year, which are immediately in front of us," Lachance said, who noted that gross margin is expected to be stronger than last year's, but by a much smaller amount.

Groupe Dynamite raised its full-year outlook, now expecting total revenue growth of 25% to 27%, up from a previous range of 22% to 25%, and lifted the lower end of its comparable-store sales target to a range to 12% from 11%, with the high end unchanged at 14%.

Adjusted earnings before interest, taxes, depreciation and amortization guidance also was upgraded to between 39.5% to 40.5%, up from previous guidance of 38.25% to 39.5%.

However, the revised targets reflect a sharper deceleration in the back half of the year. Gross margin expanded by 520 basis points to 68.8% in the second quarter, largely driven by lapping elevated tariff costs from the prior-year period.

Management clarified that because those tariff headwinds were concentrated in the first half of last year, the margin gains seen in the second quarter won't be at the same rate through the end of the year.

The upgrade follows a second quarter where the company reported a rise in net earnings to C$113.4 million, or C$1 a share, for the three months ended Aug. 1, from C$63.9 million, or C$0.56 a share, a year earlier. Adjusted earnings of C$0.96 a share topped the C$0.80 a share expected by analysts, according to FactSet.

Revenue increased by nearly 29.8% to C$423.6 million, ahead of forecasts of C$401.7 million.

Comparable sales in the quarter were up 10.3%, which on a constant currency basis was 12.3%, compared with comparable sales growth of 28.6% a year earlier.