Earnings call transcript: Aritzia Q1 2026 sees 33% revenue growth, strong U.S. sales

Aritzia Inc. reported robust financial results for the first quarter of fiscal year 2026, driven by significant revenue growth and strong performance in both the U.S. and Canadian markets. The company’s net revenue rose by 33% year-over-year to $663 million, bolstered by a 19% increase in comparable sales. With a market capitalization of $6.2 billion and an impressive 80.71% return over the past year, Aritzia’s strategic initiatives and market expansion continue to show promise. According to InvestingPro analysis, the company currently trades near its Fair Value, supported by strong financial health metrics and consistent growth.

Key Takeaways

• Aritzia’s Q1 FY2026 net revenue increased by 33% year-over-year.
• The U.S. market saw a 45% rise in net revenue.
• Gross profit margin improved by 320 basis points to 47.2%.
• Adjusted EBITDA surged by 77% year-over-year.
• Stock price fell by 0.71% in after-hours trading.

Company Performance

Aritzia’s performance in Q1 FY2026 reflects its strong market position and effective growth strategies, particularly in the U.S. market, where net revenue grew by 45%. The company’s focus on product innovation and expansion in digital and physical retail spaces has contributed to its impressive financial performance. Aritzia’s ongoing efforts to diversify its supply chain and mitigate tariff impacts further strengthen its competitive position.

Financial Highlights

• Revenue: $663 million, up 33% year-over-year
• Comparable sales growth: 19%
• Gross profit: $313 million, up 42% year-over-year
• Gross profit margin: 47.2%, an increase of 320 basis points
• Adjusted EBITDA: $95 million, up 77% year-over-year
• Adjusted EBITDA margin: 14.4%

Market Reaction

Aritzia’s stock experienced a slight decline of 0.71% in after-hours trading, closing at $74.58. This movement occurred despite the company’s strong financial performance, suggesting that investors may have been anticipating even higher results or are reacting to broader market trends. Trading just 0.98% below its 52-week high of $55.41, the stock shows strong momentum with a beta of 1.5. InvestingPro technical analysis indicates the stock is currently in overbought territory, while maintaining an analyst consensus recommendation of 1.36 (Strong Buy).

Outlook & Guidance

Looking ahead, Aritzia has set a full-year net revenue guidance of $3.1 billion to $3.25 billion, representing growth of 13% to 19%. For the second quarter, the company expects net revenue between $730 million and $750 million, with an adjusted EBITDA margin projected between 15.5% and 16.5%. Aritzia aims for a 19% EBITDA margin by fiscal year 2027, driven by ongoing product innovation and market expansion. With analyst targets ranging from $47.57 to $69.52, and three analysts recently revising earnings estimates upward, the company’s growth trajectory appears promising. For comprehensive analysis including detailed valuation metrics and growth projections, investors can access the full Pro Research Report on InvestingPro.

Executive Commentary

CEO Jennifer Wong emphasized the company’s robust business model, stating, "Our recent results underscore the strength of our business model and growing appreciation for our brand." CFO Todd Ingledew highlighted the company’s momentum, noting, "We continue to see strong momentum in both countries and in both channels." These statements reflect Aritzia’s strategic focus on customer demand and market expansion.

Risks and Challenges

• Supply chain disruptions could impact product availability and cost.
• Market saturation in key regions could limit growth opportunities.
• Tariff changes may affect profitability despite mitigation strategies.
• Economic downturns could reduce consumer spending on discretionary items.

Q&A

During the earnings call, analysts inquired about Aritzia’s tariff mitigation strategies, inventory optimization efforts, and the effectiveness of digital marketing initiatives. Executives addressed these concerns, emphasizing their proactive measures to manage risks and enhance brand visibility through strategic collaborations and marketing campaigns.

Full transcript - Aritzia Inc (ATZ) Q1 2026:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to Aritzia’s First Quarter twenty twenty six Earnings Conference Call. I will now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

Beth Reed, Vice President, Investor Relations, Aritzia: Thanks, operator, and thank you all for joining Aritzia’s first quarter fiscal twenty twenty six earnings call. On the call today, I’m joined by Jennifer Wong, our Chief Executive Officer and Todd Ingledew, our Chief Financial Officer. As a reminder, please note that remarks made on this call may include our expectations, future plans and intentions that may constitute forward looking information. Such forward looking information is based on estimates and assumptions made by management regarding a modest general economic and geopolitical conditions as well as the competitive environment. Actual results may differ materially from the conclusions, forecasts or projections expressed by the forward looking information.

We would refer you to our most recently filed Management’s Discussion and Analysis and our Annual Information Form, which include a summary of the material assumptions as well as risks and factors that could affect our future performance and our ability to deliver on the forward looking information. Our earnings release, the related financial statements and the MD and A are available on SEDAR plus as well as the Investor Relations section of our website. I’ll now turn the call over to Jennifer.

Jennifer Wong, Chief Executive Officer, Aritzia: Good afternoon, everyone, and thank you for joining us today. Our results for the first quarter of fiscal twenty twenty six exceeded the outlook we provided in May, and they highlight the strength and growing awareness of the Aritzia brand. Fundamental to our performance was our springsummer assortment of high quality beautiful products which resonated extremely well with our clients. This combined with our optimized inventory position, strategic marketing investments and new boutique openings drove continued strong momentum in e commerce and accelerated growth in our retail channel. For the first quarter, we achieved net revenue of $663,000,000 a 33% increase over last year and above the top end of our guidance range.

Growth was consistent across channels with net revenue increasing 34% in retail and 30% in e commerce. This underscores the broad strength of our multichannel business. Comparable sales grew an outstanding 19% fueled by double digit positive growth in all channels and all geographies. Our business in The United States continued to drive our results. This was fueled by the strong performance of our new and repositioned boutiques over the last twelve months.

In addition, elevated demand for our springsummer product drove continued momentum in e commerce. We supported this through strategic investments in marketing, and we also generated strong comparable sales growth in our existing boutiques. During the quarter, we continued to drive brand awareness and fueled the growing appreciation for our everyday luxury offering. Our base of active clients in The U. S.

Increased by approximately 40% compared to Q1 last year. All of this drove a 45% increase in first quarter net revenue in The United States. We’re also extremely pleased with our first quarter results in Canada, building on our strong Q4 momentum. In Q1, we drove a 17% increase in net revenue. Clients responded well to our product assortment and our marketing helped keep Aritzia top of mind when they were ready to shop.

Turning to our retail channel, over the past twelve months, we grew our square footage by an unprecedented 25%. During this time, we opened a total of 13 new and three repositioned boutiques, which included one new and one repositioned boutique in the first quarter, both in Canada. We also generated strong mid teens comparable sales growth in our existing boutiques. This was fueled by elevated demand for our products and supported by our investments in marketing. Our successful real estate expansion strategy and strong comparable sales growth enabled us to deliver retail net revenue growth of 34% in the quarter.

Our real estate expansion strategy continues to yield strong results year after year. Payback periods for even our newest boutiques are exceeding our target of twelve to eighteen months. The fiscal twenty twenty five class of standard boutiques is tracking the payback in less than twelve months. Our repositions also continue to perform well, top line growth and profitability while elevating the customer experience. Our newly expanded and repositioned boutique here in the Greater Vancouver area has the distinction of being our largest boutique in Canada at 22,000 square feet.

It features the first AOK Cafe on the West Coast Of Canada. Sales in the first two months are beating our expectations by 50%, putting it on track to pay back well ahead of our target of eighteen to twenty four months for reposition. Our boutique openings have a consistent track record as our most predictable driver of top line growth. They help drive awareness and client acquisition in both new and existing markets. This fiscal year, we plan to open a minimum of 12 new and five repositioned boutiques, including locations in five new markets across The United States.

In Q2, we expect to open four new boutiques in The U. S. This includes locations in Raleigh and Salt Lake City, which are new markets for us, as well as in Miami and the Boston area. We also plan to open our newly expanded boutique in Orlando. In e commerce, we delivered an increase in net revenue of 30% in the first quarter.

This was driven by a robust demand for our springsummer assortment. In addition, our focus on full funnel marketing fueled an increase in e commerce traffic of nearly 50% in The United States. We also continued to drive meaningful growth in new and existing clients both in Canada and The United States. In Q1, we completed the migration of all website traffic to the new and improved aritzia.com. We’re extremely pleased with the performance of our new site.

It enables us to offer our clients an elevated experience, greater personalization, and enhanced product discovery. Over the balance of this year, we’re launching additional functionality aimed at further boosting client engagement and encouraging omnichannel shopping. We remain on track with the expansion of our digital commerce platforms, including international e commerce that will launch next month and the Aritzia mobile app launching in the back half of this fiscal year. These platforms will provide clients with greater access to our product assortment while reducing friction, increasing conversion, and most importantly, further fueling the momentum in our e commerce business. Turning to product.

Throughout the first quarter, demand for our springsummer assortment was broad based. Clients responded well to our iconic franchises and exciting styles in lighter weight fabrics. We drove additional excitement through collaborations, such as the Sperry Aritzia collab and seasonal drops that resonated with our clients. To help grow awareness and further amplify our unique everyday luxury offering, we continue to refine our marketing strategy. By increasing the integration of marketing across the business, we’ve created a halo effect that spans all geographies, both online and in all of our boutiques.

Our teams across product, marketing, retail and digital are laser focused on initiatives that will elevate brand love for everyday luxury and in turn grow awareness. In Q1, we continue to spotlight the core elements that make our brand iconically Aritzia high quality product, beautiful and aspirational shopping environment and dedicated and engaging client service. Our increased investment in digital marketing has continued to fuel our growth both online and in our boutiques. Just one year in, we’ve already seen meaningful success. Our focus remains on reinforcing our everyday luxury brand ethos, growing awareness across U.

S. Demographics and acquiring new clients and retaining existing clients to drive incremental revenue. Our updated fiscal twenty twenty six outlook reflects the substantial decrease in U. S. Reciprocal tariffs on Chinese goods to 30% from 145%.

While this is a positive development, the impact from the tariffs remains meaningful. I think it’s important to note that without the pressure from reciprocal tariffs, we would have guided to an adjusted EBITDA margin in the range of 17% to 18%. Todd will speak to our revised assumptions during his remarks, but first I want to provide an update on our approach to help mitigate the impact of tariffs and grow our margins. First, the diversification of our supply chain is well underway and has exceeded even our own expectations. We expect our China sourcing mix to be in the mid single digits, if not lower for spring twenty twenty six.

Second, we’ve had productive conversations with our long standing supplier partners regarding cost sharing. That said, given the change in tariff landscape, this will have a smaller impact than initially anticipated. Third, we’re in year three of our smart spending initiative and have implemented additional non client facing cost reduction. We have been particularly thoughtful about ensuring a balance between growing our margins and investing for the future. And finally, we’re continuing to focus on our multi year initiative to improve IMU.

And as a reminder, nearly 40% of our business is not impacted by the tariffs because it is generated outside The United States. Macro uncertainty including U. S. Tariffs and broader consumer concerns continues to pose unique challenges for virtually every company across all industries. However, we remain confident given our strong fundamentals.

We have an agile global supply chain. Our balance sheet is healthy. Our client base is extremely loyal. The strength of the Aritzia brand has never been greater and adaptability and our ability to execute with excellence are built into our DNA. Looking ahead, we’re pleased with the start to our second quarter where our momentum has continued across the business.

I’m both optimistic and realistic as I reflect on our strong first quarter and the initiatives on deck for the balance of the year, yet mindful we will be cycling our exceptional growth in the back half of last year. We have a great pipeline of boutique openings for fiscal twenty twenty six. We’re in a strong inventory position to meet the demand for our product and we’re launching international e commerce as well as our mobile app. We continue to navigate macro developments from a position of financial and operational strength as we adapt to the environment around us and execute across our three strategic growth levers: geographic expansion, digital growth and increased brand awareness. Our recent results underscore the strength of our business model and growing appreciation for our brand, and yet we still have a long runway for growth in The United States.

Even with the impact of tariffs, we’re on the path to reaching our fiscal twenty twenty seven adjusted EBITDA margin target of approximately 19%. This gives me great confidence in our ability to execute and capitalize on all of the opportunities that lie ahead. In closing, these tremendous results could not be possible without our world class team. And I would like to thank all of our people for their dedication to excellence and commitment to growing the Aritzia brand. With that, I’ll now hand it over to Todd to discuss the details of our financial performance.

Todd Ingledew, Chief Financial Officer, Aritzia: Thanks, Jennifer, and good afternoon, everyone. In the first quarter of fiscal twenty twenty six, we generated outstanding revenue growth as well as delivered meaningful gross profit margin expansion and SG and A leverage. This resulted in our fifth consecutive quarter of substantial year over year growth in adjusted EBITDA. Turning to the details of our first quarter performance, we delivered net revenue of $663,000,000 an increase of 33% from last year. This was above our guidance range of 24% to 28%.

Comparable sales grew 19% driven by double digit growth in all channels and across all geographies. This strong performance was driven by the following factors. First, our springsummer product resonated extremely well with our clients and we were in an optimal inventory position to respond to that elevated demand. Our growth was further fueled by a 25% year over year increase in total retail square footage. And finally, our increased investments in digital and brand marketing amplified our everyday luxury offering and resulted in traffic growth across both channels.

In The United States, net revenue increased 45% to $413,000,000 in the first quarter. Our U. S. E commerce business was driven by meaningful traffic growth. In U.

S. Retail, our performance was driven by the opening of highly productive new and repositioned boutiques as well as strong comparable sales growth in our existing boutiques. Our U. S. Performance underscores the strength of our business model and the ongoing success of our strategic initiatives.

This gives us confidence in our ability to capitalize on our long runway for continued growth. We are also incredibly pleased with our performance in Canada where accelerated comparable sales growth both online and in stores drove a 17% increase in first quarter net revenue to $250,000,000 Turning to our sales channels. Net revenue in our retail channel was $480,000,000 an increase of 34%. This was driven by the strong performance of our new and repositioned boutiques which drove more than half of the retail net revenue growth. In our existing boutiques, we also delivered exceptional results with comp growth in the mid teens.

In e commerce, net revenue was $183,000,000 an increase of 30% driven by strong traffic growth that was fueled by the response to our product, our inventory position, the halo effect from the opening of our new boutiques and our digital marketing. We delivered gross profit of $313,000,000 an increase of 42% compared to the first quarter last year. Gross profit margin expanded three twenty basis points to a record 47.2%. The increase was primarily driven by leverage on store occupancy costs, lower warehousing costs and savings from our smart spending initiative. These benefits were partially offset by higher freight costs.

SG and A expenses for the quarter were $222,000,000 leveraging 190 basis points as a percentage of net revenue to 33.5%. The improvement was primarily driven by expense leverage and savings from our smart spending initiative. Adjusted EBITDA in the first quarter was $95,000,000 an increase of 77 from last year. Adjusted EBITDA margin expanded three sixty basis points to 14.4%. This was driven by our ongoing efforts to deliver multi year margin expansion as well as SG and A expense leverage.

Excluding a non operational FX impact adjusted EBITDA margin would have been 16%. The margin improvements we’ve delivered for five consecutive quarters continue our progress toward achieving our previous EBITDA margin levels in the high teens. Turning to the balance sheet, inventory was $4.00 $9,000,000 at the end of the first quarter, up 3% from last year. Our optimized inventory position continues to be a driver of our exceptional performance. Our liquidity position is strong with $293,000,000 in cash, no debt and zero drawn on our $300,000,000 revolving credit facility at the end of the first quarter.

I will now shift to our outlook for the second quarter and fiscal year 2026. We continue to see strong momentum in our business in the second quarter. Given quarter to date trends, we expect net revenue in the second quarter to be in the range of $730,000,000 to $750,000,000 This represents growth of 19 to 22%. Our net revenue outlook for the second quarter is based on continued outperformance in The United States as well as strength in Canada. The anticipated revenue growth is driven by our boutique openings, comparable sales growth in our existing boutiques and strength in our e commerce business.

We expect gross profit margin in the second quarter to increase approximately 100 basis points compared to the second quarter of fiscal twenty twenty five. This improvement is driven by leverage on occupancy costs, lower distribution costs and IMU improvements, partially offset by the impact of U. S. Tariffs. We forecast SG and A as a percentage of net revenue to improve approximately 100 basis points in the second quarter, driven primarily by expense leverage from our revenue growth.

We now forecast net revenue for the full fiscal year in the range of 3,100,000,000.0 to $3,250,000,000 representing growth of 13% to 19% from fiscal twenty twenty five. Our momentum across channels and geographies remains strong. Given the dynamic macro environment, our outlook continues to accommodate for a range of scenarios. Turning to tariff impacts, our updated guidance reflects the following assumptions based on U. S.

Reciprocal tariffs in place today. Tariffs on Chinese imports reduced from 145% to 30% and tariffs on the rest of the world remaining at 10%. Assuming these percentages stay in place for the remainder of the year, we now expect the tariffs to impact gross margin by approximately 150 basis points for fiscal twenty twenty six, a meaningful improvement from the approximate 400 basis points previously anticipated. As Jen said, our mitigation efforts are well underway. We will remain agile and as the situation evolves, we will continue to balance investing in our future growth with delivering ongoing margin improvement.

With this in mind, our adjusted EBITDA margin for the year has increased and is now expected to be approximately 15.5 to 16.5% in fiscal twenty twenty six compared to 14.8% in fiscal twenty twenty five. This is driven by strong top line growth, IMU improvements, freight tailwinds, savings from our smart spending initiative and expense leverage. Importantly, excluding the 150 basis points of tariff related pressure, our adjusted EBITDA margin for fiscal twenty twenty six would be in the range of 17 to 18%. In closing, we are extremely pleased with our exceptional performance. The strength of our operating model, the momentum we have created in our business and our healthy financial position give us confidence in our path forward.

We remain agile and are well positioned to navigate macro developments while remaining focused on advancing our key strategic levers to drive long term profitable growth. Thank you.

Beth Reed, Vice President, Investor Relations, Aritzia: With that, operator, let’s please open up the line for questions.

Conference Operator: Thank

Jennifer Wong, Chief Executive Officer, Aritzia: you.

Conference Operator: The first question comes from Mark Petrie with CIBC. Please go ahead.

Mark Petrie, Analyst, CIBC: Good afternoon. Obviously, the momentum remains excellent, well balanced. So I’m just interested to hear a little bit more about your thinking about the revenue guidance range. Obviously, you brought up the lower end of the range, but just given the strength, it seems like the ceiling has probably also been raised. So hoping you can expand on the rationale as you compose that range and then the assumptions embedded particularly at the top end.

Todd Ingledew, Chief Financial Officer, Aritzia: Sure. Thanks Mark. We’re continuing to see strong momentum in both countries and in both channels in quarter to date now and obviously through Q1. But our outlook accommodates for a range of scenarios due to all uncertainties related to the broad macro environment including changes in the tariffs and the potential for a consumer slowdown. And from a cadence perspective for Q2 as you’ve seen our guidance at the midpoint of the range assumes total comp growth in the low double digits.

For the back half of the year our guidance assumes trends moderate in each quarter as we annualize obviously the strong top line growth in the back half as well as the potential for a slowdown in the pace of the consumer spending. And that’s why we’ve maintained a relatively broad range at $150,000,000 Our assumptions for the year at the top end of the range assume basically business as usual and low double digit comp for the entire year. The bottom of the range assumes a meaningful deceleration still which it would be in the mid single digit comp growth. And then the midpoint of our guide assumes total comp growth in the high single digits. And I think it’s important to remember that our guide is underpinned by our new and repositioned boutiques as well as that comp growth.

And again, we’re extremely pleased with the strength that we’re seeing today and the momentum into the second quarter, but it’s still very early in the year and we’ve got a lot of a long way to go ahead of us.

Mark Petrie, Analyst, CIBC: Yes, fair enough. And just thinking about the fiscal twenty twenty seven, 19% EBITDA margin aspiration and trying to bridge that versus the 17% to 18% guide that you would have mentioned for this year excluding tariffs, how much of the gap between your current guidance and that 19% would be further tariff mitigation efforts versus the natural margin expansion and margin recovery that you would have otherwise expected?

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. Again, the environment remains dynamic. So it’s hard to pin down specifically. But we do anticipate that next year, we will benefit from the lowering of the impact of the tariffs through our sourcing diversification. We continue to have our multiyear IMU opportunity as our business mix expands in The United States and as well as expense leverage as our revenue grows.

So it’s really still underpinned by those key factors. And it is a dynamic environment. We’re using the facts as of today from a tariff perspective and that could change. But with where we’re sitting today, we still see a path to that high teens adjusted EBITDA margin.

Conference Operator: The next question comes from Irene Nattel with RBC Capital Markets. Please go ahead.

Irene Nattel, Analyst, RBC Capital Markets: Thanks and good afternoon everyone. Great quarter. Just continuing on sort of the outlook. You talk about your current inventory position as we move into fallwinter? How much has been on shored as we come up to the important sort of end of the tariff approval?

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. Irene, well, first off, we’re extremely pleased with our inventory position. We’re in a strong position today and our fallwinter receipts are coming in on time. By the August, we would anticipate approximately 35% of our fallwinter inventory would be in North America. And so that’s where we’re sitting today.

But we’re, again, extremely pleased, and the you know, inventory continues to be a key driver of our revenue. Our our optimized inventory position continues to be a key driver. So pleased with where we’re sitting and we’ve there would be depending on the timing of tariff changes, benefits from the inventory already being onshore.

Irene Nattel, Analyst, RBC Capital Markets: That’s very helpful. Thank you. And just related question, when you think about where you are today on inventory versus springsummer relative to the anticipated demand, how would you describe it? And have you seen any differences in terms of price point or category in terms of sell through?

Jennifer Wong, Chief Executive Officer, Aritzia: Irene, thank you for your question. I can’t underscore enough in addition to what Todd said is we are in a great inventory position. We’ve done a lot of work over the past year and a half, two years to refine our playbook and ensure that our inventory is productive and efficient. And I think we’re in a fantastic place right now very well positioned well positioned overall quite frankly in terms of our overall assortment, the optimized levels of inventory in terms of breadth and depth and the timing. You brought up timing in your previous question.

So as it relates going into fall couldn’t be better positioned at this point in time from what we to what we have visibility into and looking forward to the fall launch.

Conference Operator: The next question comes from Luke Cannon with Canaccord Genuity. Please go ahead.

Luke Cannon, Analyst, Canaccord Genuity: Thanks. Good afternoon and congratulations on the results. Jennifer, you touched in your prepared remarks on the success that you’re seeing within your digital marketing initiatives over the course of the last year. Can you share with us I mean what it is that you’ve learned I guess from those initiatives? And what it is that you’re going be deploying over the next coming quarters that you think is going to help build your brand awareness particularly in The U.

S?

Jennifer Wong, Chief Executive Officer, Aritzia: Thanks Luke. We have certainly added more ways to speak to our clients to our overall tool set. This is something that we’ve been working on now for a better part of the year just getting into it for better part of the year. And we started investing in digital marketing to complement our broader marketing efforts. We’ve always had brand marketing and ensuring that we’re elevating our everyday luxury brand through interesting and creative ways.

But adding this digital marketing is something that’s newer for us. And since during the year, we increased our efficiency and return on spend. It’s as simple as that. We tested each component of our digital campaigns to understand what resonates with our customer. We leverage this data to ensure that we have precision in our targeting, relevance in our creative, presence where the customer is spending their time online.

And so all of these things that we’ve refined over the year combined with having the right assortment, the right product and the right inventory is what’s fueled growth online and not just online, but also there’s been a halo effect in our boutiques.

Luke Cannon, Analyst, Canaccord Genuity: That’s great. Thanks. And then as my follow-up as well you touched on the expanded boutique that you have in Vancouver and mentioning that the economics unit economics are exceeding expectations that you’re seeing for repositions. Does that give you any thought as to whether perhaps there might be a longer term opportunity to modernize the fleet of boutiques that you have in Canada? And if so, is there opportunity just purely from a real estate availability perspective to be able to undertake that?

Jennifer Wong, Chief Executive Officer, Aritzia: Yes. We are absolutely thrilled with what we’re seeing in this latest boutique opening. Part of our real estate expansion strategy is about repositions and expansions. And so that’s just a prime example of not a reposition, well, it’s a slight reposition in the mall and expansion and in particular the expansion part. And so we explore every scenario on a case by case basis.

There’s always opportunities that are presented to us and depending on the location, depending on the productivity of the existing location, depending on the economics of what’s being presented to us, we will always capitalize on an opportunity that comes our way. And certainly there’s lots that present themselves. And so again, this is just a fantastic example of reposition and expansion play.

Conference Operator: The next question comes from Martin Langley with Stifel. Please go ahead.

Martin Langley, Analyst, Stifel: Hi, good afternoon and congrats on your results. I would like to dig into your Canadian revenues. They were up 17% year over year. It’s quite strong. I’m trying to want to better understand where does the growth come Are you gaining new clients or is it your existing client base that’s spending more at your stores?

Jennifer Wong, Chief Executive Officer, Aritzia: Great question, Martijn. Thank you for that. Canada has certainly strengthened. I think we were asked about this last quarter. A few quarters ago we were talking about a bit more of a muted environment in Canada and we’re super pleased to see the momentum here in Canada.

We continue to grow our active client base both in The U. S. And in Canada. So our client base continues to grow. But at the very start of it all, success at Aritzia starts with having what the customer wants.

And that doesn’t end in Canada in spite of the fact that we have as many stores as we do in Canada. Our customer is responding well to the product first and foremost. Our inventory levels are optimized to maximize sales and then capitalize on that. And then we’ve mentioned the marketing amplifying all of that. And in particular in Canada, keeping Auryxia top of mind is ready to buy.

And I think that’s an important piece for us in Canada.

Martin Langley, Analyst, Stifel: Thank you. And just maybe a follow-up on your product assortment. You have started to showcase the Eritrea name on and logo on some of your products. Can you just talk to us a little bit about how successful that is? And is there an intent to extend that to the broader assortment?

Jennifer Wong, Chief Executive Officer, Aritzia: Clients know and love Aritzia and have now for quite some time. And we saw that this, you know, was an opportunity to propel our brand, our name on our own product franchises. And it’s something that we initiated a few seasons ago. It simply increases brand awareness and elevates Aritzia and elevates the brand itself, promotes everyday luxury particularly through the product which is our primary driver And it’s an important aspect as we grow in The U. S.

And so, so far we’re seeing a great response. Most importantly, we’re seeing lifts in sales in addition to the propelling of our brand and we’re continuing to evaluate this as we go. And certainly as the opportunity expands, will ensure that we capitalize on it.

Conference Operator: The next question comes from Brian Morrison with TD Cowen. Please go ahead.

Brian Morrison, Analyst, TD Cowen: Thanks very much. First question is for Todd. So what percentage of fallwinter has now landed for H2? And then on the unmitigated tariff exposure of 150 basis points, should we think about it as 70 basis points of mitigation action and 200 basis points of operating leverage? And then lastly, can you confirm the margin guide includes the other FX headwind?

There was a notable benefit last year, but an $8,000,000 headwind to start this year.

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. Okay. Well, first off, yes, the revenue guide, it is based off of 1.37 as the exchange rate. So that’s embedded in the guidance. And that would be a headwind in the fourth quarter.

It will be relatively neutral in Q2 and Q3. And then from an EBITDA perspective, how you can think about that 150 basis points of expansion is that prior to tariffs, as I’ve said, we had 200 basis points expected for this fiscal year from a margin expansion perspective. 50 basis points of that is still being used to offset the tariffs along with all of our mitigation strategies. So they equal roughly 100 basis points. And that leaves therefore 150 basis points of the previously anticipated expansion for this year and that’s why we’ve increased our range from 14% to 15% to 15.5% to 16.5% EBITDA for the year.

Obviously, it was a meaningful change in the tariffs from China and our results for the year are benefiting from that. And then the first question that you asked about inventory, by the August we anticipate we would have approximately 35% of our inventory landed at that point.

Brian Morrison, Analyst, TD Cowen: Okay. And then my second question, Jen, are you on track with respect to timing for the introduction of your enhanced international website and the introduction of your mobile app? And what is a realistic penetration rate of ecommerce sales from mobile? And should we expect an immediate lift as it goes live?

Jennifer Wong, Chief Executive Officer, Aritzia: All great questions. I mentioned in my prepared remarks that the international ecommerce website is scheduled to go live next month. The digital team is probably cringing a little bit. It’s scheduled to go live next month. I know it is in testing as we speak.

Assuming everything goes according to plan, it will go live next month. But in any event, it’s expected to go live in q two. As far as the mobile app, had a great update on the mobile app project. Super excited about the launch of that. That is scheduled to go live in the back half of this fiscal year likely before the holiday time.

We envision meaningful digital business running through this channel. Peers our peer set is show or they showed anywhere from 20 to 40% of their digital business running through their app. I would see us being at least on par with this. It’s not best in class, eventually. So lots of excitement in terms of how this will allow us to connect with the customer across all of our ecosystems and create, you know, more frequency and more engagement, deepen the loyalty with our clients.

It’s going to be a huge brand and sales generator, and effectively, it’s our digital flagship.

Conference Operator: The next question comes from Dylan Carden with William Blair. Please go ahead.

Brian Morrison, Analyst, TD Cowen: Thank you. I’m just kind of thinking

Dylan Carden, Analyst, William Blair: about lapping the current period. It would seem that a lot of the things that are driving the performance today actually have a lot longer tail on them and are lappable anniversaryable, however you want to think about it. And particularly when you mentioned just the app and other things you kind have going on in the back half of the year. So are there anything sort of more nuanced in how you might have to lap this period? And I guess something like the new flagship store openings being supported by a ton of marketing or marketing generally, are those sort of a negative initial waterfall, anything like that?

And then Todd, I’m just curious, the 10% rest of world assumption in the tariff impact, it looks like some of these countries might be coming out higher than that and sort of how you’re thinking about why using that number at this point? Thanks.

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. From a tariff perspective, we’ve just gone with what’s in place today. It’s obviously things are still extremely fluid and I would say up in the air. If Vietnam were to go to 20%, it would be approximately 30 basis points of pressure for the rest of the year, of course depending on when the change is implemented. And then Cambodia, if that were to go to 20%, it would be 20 basis points of impact.

Or if Cambodia were to go to 36, it would be roughly 40 basis points. So just for your information, yeah, that those those would be the impact. But I I think it’s still, again, very much up in the air, and nothing official has been communicated. So we’ve stuck with what has been officially communicated. And then as far as our revenue guide for the rest of the year, I think I’ve walked through the puts and takes, lapping Q4 specifically.

That’s where we have accounted for the wide range in our guide because we are at that point we don’t know where the consumer will be at. We also we’re lapping 26% comp growth. But as you said, our business continues to be extremely strong. We have growth foundations from all of the new stores we opened or are opening this year as well as some of the ones that opened late in the year last year. So that creates a great base.

And, you know, we’re extremely excited about how where our business is at today, and we’re doing everything we can from an e commerce perspective to ensure that we have accelerated performance through that period and we’ll be working hard to drive that.

Dylan Carden, Analyst, William Blair: Excellent. Thank you very much.

Conference Operator: The next question comes from Michael Glen with Raymond James. Please go ahead.

Brian Morrison, Analyst, TD Cowen: Hi.

Beth Reed, Vice President, Investor Relations, Aritzia0: Good afternoon. Just going back to margins as we think about that 19% in fiscal twenty twenty seven. Todd, can you give some indication like how we should think about you provided some buckets earlier, but how should we think about the increase between gross margin and SG and A leverage? Should we be thinking about more SG and A leverage coming into the model?

Todd Ingledew, Chief Financial Officer, Aritzia: I would say it will be from both. It will be a balance between both. And obviously, it’s predicated on the tariff environment, but we continue to expect gross profit margin expansion as well as SG and A leverage to get us to that high teens EBITDA margin level.

Beth Reed, Vice President, Investor Relations, Aritzia0: Okay. And then Jennifer, just circling over to Paul, is anything that you can share with us regarding the assortment? How you feel about the product? Do you think you have the right depths on the right product for the season? Just any of the qualitative commentary you can provide about how you feel about what you’re coming out with for fall?

Jennifer Wong, Chief Executive Officer, Aritzia: Thanks, Michael. Yes, I’m super excited about what we have coming online for fall. If springsummer was any indication, I I know for a fact our clients love what we had to offer in springsummer. When I was in the stores, the product looked amazing in the stores, merchandised beautifully. I was hearing directly from clients and our staff in the stores about how wonderful our product was showing up in our stores and I see that continuing on into fall.

I’m very, very excited for what we have in store in fall. I think as we said earlier in this call we’re in a great position both in terms of having the right product, you know, at the right time, in the right amount, in the right place. So, you know, all of all of that is coming together. It is it is due to a lot of effort and great dedication from the team. And I think we’re in as good of a position as any for our fall launch.

And I guess what I’m most excited about is the transition into fall. We’re launching just in a couple of weeks with an earlier launch to pass the back to school momentum and can’t wait to see how it performs when it hits the floor.

Conference Operator: The next question comes from Stephen MacLeod with BMO Capital Markets. Please go ahead.

Beth Reed, Vice President, Investor Relations, Aritzia1: Thank you. Good evening, everyone. Lots of great color so far, but I just wanted to ask about two things specifically. Just around your digital marketing, Jennifer, you talked a lot about just kind of the strong returns you’re seeing and how it’s positively impacting your numbers. So I was just curious if could give some color as to kind of what your digital investments are running as a percent of sales.

And given the strong returns you’re seeing, would you seek to potentially move that higher over time?

Jennifer Wong, Chief Executive Officer, Aritzia: Great question, Stephen. Thank you. Our digital marketing, we still remain quite prudent with our marketing as encouraging as the results are. We have said in the past that it is a low single digit percentage of our overall sales. It is something that we will keep at similar levels.

It is an amplification of everything that we do. It is not a main driver of what we do. I think it just adds adds as an additional component to our overall integrated marketing and just integrated brand proposition. So yes, our efficiency in our spend has increased quarter over quarter and year over year. I’m quite pleased with that.

The data does show we have more room to grow with that. That said, I don’t see it growing more than in line with revenue at this point in time. But we’re constantly monitoring work. I have to tell you we are constantly testing everything and we do know it’s a lever that we can pull as we see appropriate.

Beth Reed, Vice President, Investor Relations, Aritzia1: That’s great. Thank you. And then just one other question. My second follow-up would be regarding some of the collaborations that you’ve done. You referenced this in your prepared remarks.

Is this something that you would continue to do going forward? And I guess as you think about collaborations, obviously, you want to collaborate with very strong brands. But is it kind of a way to get into categories where you currently don’t participate? Kind of like, you have recently had an eyeglasses or sunglass collaboration and then you mentioned Sperry as well. So just wondering how to think about that going forward.

Jennifer Wong, Chief Executive Officer, Aritzia: Yes. We have done more product collaborations this past year. It’s something that it’s been an initiative within our product marketing group. It is a fabulous way to create more activations to speak to our customers and tell them about something interesting. It does allow us to get into adjacent categories and explore that.

It really meant to continue to enhance Aritzia as a brand and enhance our everyday luxury offering and be able to show a fulsome more lifestyle aspect to the everyday luxury ethos. And I think that they are really exciting things that we can talk about and keep our customer interested and engaged. And so far, particularly that’s the Sperry Aritzia one has been hugely successful.

Conference Operator: The next question comes from Mauricio Serna with UBS. Please go ahead.

Beth Reed, Vice President, Investor Relations, Aritzia2: Great. Good afternoon. Thanks for taking my questions. I wanted to know about the Q2 guidance. It implies when you talked about the comp sales growth implied of low double digits, and, you know, it implies some deceleration.

Two questions from that. How are you running quarter to date on on comps? And, you know, and and that deceleration, where is it? Where do you expect that to come from? Is it Canada, US, channel?

How are you thinking about that? Thank you.

Todd Ingledew, Chief Financial Officer, Aritzia: Mauricio, we’re extremely pleased with the momentum that we’re seeing across the business. Really, all channels, all geographies continue to perform exceedingly well. And on a two year stack comp basis, quarter to date trends are in line with Q1. From a guidance perspective, when you look at the total revenue growth, there’s really three factors that you do have to consider. So one is that two year stack.

So the comp in Q2 last year was stronger than Q1. Q1 this year benefited from approximately two fifty basis points from FX and we aren’t expecting any FX benefit in Q2. And then the dollar benefit from the new stores is roughly consistent quarter over quarter, but the growth in Q2 is obviously measured off a higher comp base because of the larger quarter in this in q two. So our our guide does incorporate all that, and and it also incorporates some conservatism as we’re only five weeks into the quarter. And as Jen has said, fall is launching at the July.

So we still have a long way to go for this quarter, but we’re extremely pleased with the momentum that we’re seeing in our business.

Beth Reed, Vice President, Investor Relations, Aritzia2: Got it. And just a couple of follow ups. On the guide, you’re seeing adjusted EBITDA, you’re seeing you’re embedding like 200 improved tariffs. That is only going up even. It’s just one of them make this a 100 difference is related to this FX impact that you this quarter.

That that’s the that’s the only thing really. Right?

Todd Ingledew, Chief Financial Officer, Aritzia: So for all those listeners on the call, believe it or not, I did catch the question. So it why is our basically, Mauricio is asking why is the guide not going up 200 to 250 basis points because that’s how much pressure has come off from the tariffs in China. But it the math doesn’t work exactly that way, Mauricio, because, obviously, with the meaningful reduction in the tariffs from China, that naturally meaningfully reduces the benefit from our accelerated diversification strategy. So when the tariffs are at one forty five, our diversification of China has the higher benefit than it does at 30. So you need to take that into account when you’re doing the math.

But again, we’re pleased with the meaningful reduction in the tariffs and the 150 basis points of expansion that we’ve put into the guide compared to where we were two months ago when we provided our full year guidance. And we do remain agile. And if the reciprocal tariffs change as we were discussing for other countries, we will assess and work to mitigate both in the short and the long term.

Conference Operator: This concludes the question and answer session and today’s conference call. Thank you for joining and have a pleasant day. You You may now disconnect your lines.

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