Earnings call transcript: Aritzia’s Q4 2025 revenue surges, stock rises

Aritzia Inc., a $4.07 billion market cap retailer, reported a robust financial performance in the fourth quarter of fiscal year 2025, with net revenue reaching $895 million, marking a 31% year-over-year increase. The company’s earnings per share for the year more than doubled to $1.98. Following the release, Aritzia’s stock rose by 2.29%, closing at $48.49. The strong results were driven by significant growth in the U.S. market and an expanded gross profit margin. According to InvestingPro data, the company maintains a healthy gross profit margin of 42.05% and has shown consistent revenue growth of 10.36% over the last twelve months.

Key Takeaways

• Aritzia’s Q4 FY2025 net revenue increased by 31% year-over-year.
• The U.S. market contributed significantly, with a 48% increase in net revenue.
• The company’s stock price rose by 2.29% following the earnings announcement.
• Aritzia plans to open new boutiques and expand its digital presence in FY2026.
• The company anticipates potential consumer slowdown later in the year.

Company Performance

Aritzia demonstrated strong performance in Q4 FY2025, with net revenue reaching $895 million, a 31% increase from the previous year. The U.S. market was a key driver, contributing a 48% rise in net revenue. The company’s gross profit margin expanded by 420 basis points to 42.5%, reflecting improved operational efficiencies and product mix.

Financial Highlights

• Revenue: $895 million, up 31% year-over-year
• Earnings per share: $1.98, more than double the previous year
• Adjusted EBITDA: $161 million, a 122% increase year-over-year
• Comparable sales growth: 26%

Market Reaction

Following the earnings release, Aritzia’s stock experienced a 2.29% increase, closing at $48.49. The stock’s movement reflects positive investor sentiment driven by the company’s strong financial results and strategic initiatives. With a beta of 1.55, the stock shows higher volatility than the market average. InvestingPro analysis suggests the stock is currently fairly valued, with analysts maintaining a strong buy consensus and setting price targets that suggest significant upside potential. For detailed valuation metrics and 10+ additional ProTips, subscribers can access the comprehensive Pro Research Report.

Outlook & Guidance

Aritzia provided an optimistic outlook for FY2026, with net revenue guidance between $3.050 billion and $3.250 billion, representing an 11-19% growth. The company plans to open at least 12 new boutiques and reposition five existing ones. Despite anticipating a potential consumer slowdown, Aritzia remains focused on supply chain diversification and maintaining product quality. InvestingPro data shows the company operates with a moderate level of debt and maintains a solid current ratio of 1.29, suggesting strong financial health to support its expansion plans. The company’s impressive five-year revenue CAGR of 22% demonstrates its consistent execution of growth strategies.

Executive Commentary

CEO Jennifer Wong emphasized the company’s adaptability and execution capabilities, stating, "Adaptability and executing with excellence are built into our DNA." She also highlighted the company’s strategic position, "We are in a position of strength, which will help us adapt to evolving macro developments and execute our growth strategy."

Risks and Challenges

• Potential consumer slowdown in the latter half of the year could impact sales.
• Tariffs are expected to create 400 basis points of gross margin pressure.
• Supply chain diversification away from China presents logistical challenges.
• Maintaining product quality amidst rapid expansion is crucial.

Q&A

During the earnings call, analysts inquired about the impact of tariffs on gross margins and Aritzia’s supply chain strategies. The company reassured investors of proactive management and no immediate plans for price increases, focusing on maintaining product quality and customer experience.

Full transcript - Aritzia Inc (ATZ) Q4 2025:

Conference Operator: Thank you for standing by. This is the conference operator. Welcome to Earthsea’s Fourth Quarter twenty twenty five Earnings Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

We’ll now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

Beth Reed, Vice President, Investor Relations, Aritzia: Thank you, operator, and thanks for joining Aritzia’s fourth quarter fiscal twenty twenty five 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 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, among other things, 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: Thanks, Beth. Good afternoon, everyone, and thank you for joining us today. Our results for the fourth quarter and full year fiscal twenty twenty five underscore the strength of our business model and growing affinity for the Auryxia brand. Underpinned by our assortment of beautiful products, our optimized inventory position and our strategic marketing investments, we feel accelerated momentum in The United States and in Canada both online and in our boutiques. On the heels of our strong fourth quarter performance and the continued momentum we’re seeing in the new fiscal year, I’m confident we’ll successfully navigate the current external uncertainties including tariffs and the potential impact on our consumer.

Our successful forty plus year track record demonstrates our resilience across varying economic conditions. We are in a position of strength, which will help us adapt to evolving macro developments and execute our growth strategy. Turning to our fourth quarter highlights, we delivered double digit top line growth in each month resulting in a 38% increase in Q4 net revenue excluding the impact of last year’s extra week. Comparable sales grew an outstanding 26% as all channels and all geographies comped positively. Strength in The United States continues to drive our results.

Exceptional client response to our winter and spring products and our investments in marketing propelled further acceleration in e commerce growth and generated strong double digit comparable sales growth in our existing boutiques. We also added to our portfolio of premier real estate locations. All of this fueled an increase of 56% in net revenue in The United States excluding last year’s extra week. In addition, our base of active clients in The U. S.

Increased by more than 40% illustrating the strength of our brand, increased awareness and growing appreciation for our everyday luxury offering. We’re also extremely pleased with our accelerated momentum in Canada. Strong client response to our products supported by our investments in marketing drove a 16% increase in fourth quarter net revenue excluding last year’s extra week. In retail, we achieved an unprecedented expansion of our physical presence, opening 12 new and three repositioned boutiques in the last twelve months, our most openings ever in a single year. In Q4, we opened four new boutiques across The United States, including two in Florida and one in each of California and Pennsylvania.

We also opened our repositioned iconic Fifth Avenue flagship near Rockefeller Center in Manhattan. This helped drive a 31% Q4 increase in our retail channel, excluding last year’s extra week. In addition, strong demand for our products, supported by our investments in marketing, fueled double digit comparable sales growth in our existing boutiques. In fiscal twenty twenty six, we remain focused on our winning real estate strategy, which continues to prove itself over and over again. We plan to open a minimum of 12 new boutiques and five boutique reposition increasing our presence in existing markets as well as broadening our reach across The United States.

We plan to open in five new markets this year including Cincinnati, Pittsburgh, Raleigh, Salt Lake City and Scottsdale. In e commerce, we improved our performance for a fourth consecutive quarter. Net revenue in Q4 increased 48% excluding the extra week last year. This was driven by robust demand for our assortment of high quality beautiful products and our optimized inventory position. In addition, our focus on full funnel marketing fueled an increase in traffic of more than 50% in The U.

S. We continue to drive growth in new, existing and reactivated clients, further illustrating our investment in digital is paying off. We also saw a 25% increase in omni channel clients, our most profitable client segment. During the quarter, we launched our new and improved aritzia.com, which features an elevated client experience, including greater personalization and enhanced product discovery. This new platform will allow us to be much more agile, creating more competitive, innovative experiences that support our growth strategy.

This in turn will boost customer engagement and drive incremental sales through higher conversion. We’re thrilled with the e commerce momentum we generated in fiscal twenty twenty five, accelerating digital quarter after quarter even with key initiatives still underway that our clients have yet to experience. These include an enhanced international e commerce site that will be rolled out in the first half of the fiscal year and a mobile app which we expect to launch by the end of the fiscal year. Turning now to product. Our work to optimize the depth and breadth of our inventory enabled us to capitalize on the robust broad based demand for our product.

This is reflected in our outstanding fourth quarter net revenue growth, which included a record performance over the holiday season. In February, spring was off to a strong start with positive client response to our most beloved franchises as well as exciting new styles and seasonal fabric. Earlier receipts of our spring inventory this year enabled us to maximize the transition from winter. We feature transitional seasonal products in a relevant and timely way, allowing our clients to refresh their wardrobe for spring as soon as the weather warmed. Our optimized inventory position and strong full price sell through resulted in a lower mix of markdown sales compared to the fourth quarter last year.

This helped drive continued gross margin improvement. We continue to see great success with our strategic investment in digital marketing, both online and in our boutiques. Our performance resulted in Aritzia being recognized by Google in Q4 as the fastest growing search term for U. S. Women’s apparel.

We continue to build on our learnings with a focus on growing awareness and acquiring new clients, particularly in The U. S. In brand marketing, we curated an exciting opening weekend to celebrate our newest flagship on Fifth Avenue in Manhattan. The event garnered significant media coverage, adding to the tremendous amount of buzz around the Aritzia brand and driving Aritzia’s industry position as a leading fashion brand. To help grow awareness and strengthen our positioning as an everyday luxury retailer, we continue to refine our full funnel marketing strategy, increasing the integration of marketing across the business and creating a halo effect on all of the boutiques in our portfolio.

As I reflect on fiscal twenty twenty five, I recognize that we have so much to be proud of. We’ve had an excellent year with impressive financial results. Our performance in the fourth quarter underscores the progress we made throughout the year across key areas of our business. This includes optimizing our inventory, increasing our marketing investment, opening a record number of boutiques and unveiling our enhanced website. And all of these help contribute to delivering a five fifty basis point improvement in our adjusted EBITDA margin.

This resulted in a record annual earnings per share of $1.98 for fiscal twenty twenty five, more than double the prior year. Looking ahead, our momentum has continued into the first quarter of fiscal twenty twenty six, fueled by a positive client response to our spring and summer product and our optimized inventory position. We remain focused on delivering our vision of everyday luxury with another exciting pipeline of boutiques planned for this fiscal year. We also have initiatives underway to support ongoing e commerce momentum in the years ahead. And finally, our new boutiques and investment in marketing are multi year levers to help grow brand awareness in The United States where we continue to have a long runway for growth.

Recent macro uncertainty including U. S. Tariffs and concern about the health of the consumer poses unique challenges for us and our entire industry. However, the strength of our brand has never been greater. We have an exceptionally loyal client base.

Our financial position is extremely healthy and we have an agile global supply chain which is built upon long standing partnerships with trusted manufacturers. Additionally, at this time, 40% of our revenue is generated outside The United States and we have already on hand almost half of the inventory we anticipate needing for this fiscal year. We’re currently engaged in opportunities to mitigate the impact of tariffs and protect our margins. These include partnering with our suppliers to ensure continued resilience and commitment to our everyday luxury quality standards and fiercely protecting our margins while maintaining our commitment to providing everyday luxury value for our clients, as well as further diversifying our supply chain and realizing cost reductions across the business. Adaptability and executing with excellence are built into our DNA.

With a world class team like ours, adversity highlights our resilience and becomes a catalyst for growth and another building block to future successes. In closing, the strength of our brand, the quality of our assortment and our everyday luxury client experience are all resonating exceptionally well with our clients. This gives us confidence in our ability to execute and capitalize on the opportunities that lie ahead. We are focused on our fundamentals, our solid foundation and our resourcefulness. Our healthy balance sheet combined with the momentum in our business puts us in a position of strength to successfully navigate the rapidly evolving landscape while remaining steadfast in advancing our key growth levers.

I’m incredibly proud to lead our team and grateful to our people for the perseverance and hard work required to generate the outstanding momentum we’re seeing in our business. We remain committed to excellence as we build on our momentum prudently managing our business for the near term and the long term. This concludes my prepared remarks for today. And I’ll now turn the call over to Todd to discuss the details of our financial performance.

Todd Ingledew, Chief Financial Officer, Aritzia: Thanks, Jennifer, and good afternoon, everyone. I want to emphasize that we are navigating this period of uncertainty from a position of strength as evidenced by our exceptional fourth quarter performance and our strong momentum in the first quarter. First, let me walk you through our fourth quarter results where we delivered net revenue that exceeded our outlook, meaningful gross profit margin expansion, as well as SG and A expense leverage. This resulted in our fourth consecutive quarter of substantial year over year improvement in adjusted EBITDA. Turning to the details of our performance, in the fourth quarter of fiscal twenty twenty five, we generated net revenue of $895,000,000 This represents a 31% increase from last year.

Excluding the extra week last year, net revenue increased 38%. Comparable sales grew 26% as all channels and all geographies comped positively. This accelerated performance was driven by four factors. First, we enjoyed an extremely positive response to our winter and spring product. Second, we supported that response with our optimized inventory position.

Third, we made strategic investments in digital and brand marketing. And finally, we benefited from 12 new and three repositioned boutiques in fiscal twenty twenty five. Our performance continues to be driven by the strength of our business in The United States where net revenue was $548,000,000 an increase of 48%. Excluding the extra week last year, net revenue in The United States increased 56%. Our U.

S. E commerce business was driven by meaningful traffic growth. In our U. S. Retail channel, performance was driven by our new and repositioned boutiques opened in the fiscal year, which combined added 50% to our square footage in The United States.

This included three brand propelling flagship locations, two in Manhattan and one in Chicago. Finally, strong double digit comp growth in our existing boutiques also contributed to the outstanding performance in The United States. In Canada, net revenue was $347,000,000 an increase of 11%. Excluding the extra week last year, net revenue in Canada increased 16% driven by accelerated momentum in both our e commerce and retail channels. Turning to our sales channels, net revenue in our retail channel was $517,000,000 an increase of 24%.

Excluding the extra week last year, retail net revenue increased 31%. This was driven by double digit comp growth in our existing boutiques in both Canada and The United States as well as the strong performance of our new and repositioned boutiques. In e commerce, net revenue was $378,000,000 an increase of 42%. Excluding the extra week last year, e commerce net revenue increased 48%. This was driven by strong traffic growth fueled by the four factors I mentioned earlier.

We delivered gross profit of CAD380 million, an increase of 45% compared to the fourth quarter last year. Gross profit margin expanded four twenty basis points to 42.5. Our ongoing actions to further drive margin expansion generated benefits from IMU improvements, lower markdowns, lower warehousing costs and tailwinds from store occupancy costs. These benefits were partially offset by higher freight costs. SG and A expenses for the quarter were $246,000,000 leveraging 140 basis points as a percentage of net revenue to 27.5%.

The improvement was driven by fixed cost leverage and savings from our smart spending initiative. Adjusted EBITDA in the fourth quarter was $161,000,000 an increase of 122 from last year. Adjusted EBITDA as a percent of net revenue expanded seven forty basis points to 18%. This was driven by our ongoing efforts to deliver multi year margin expansion, SG and A expense leverage and benefit from other income. As we have communicated, the improvements we delivered in each quarter of fiscal twenty twenty five represent a key step on our path back to achieving our historic EBITDA margin levels in the high teens.

Turning to the balance sheet, inventory was $379,000,000 at the end of the fourth quarter, up 12% from last year. Importantly, prior to the implementation of reciprocal tariffs by The United States, we had already received the vast majority of inventory required to satisfy demand for our springsummer season. During the quarter, we generated $66,000,000 in free cash flow. Our liquidity position is strong with $286,000,000 in cash, no debt and zero drawn on our $300,000,000 revolving credit facility at the end of the fourth quarter. I will now shift to our outlook for the first quarter and fiscal year 2026.

We continue to see strong momentum in our business in the first quarter fueled by a positive client response to our springsummer product and our optimized inventory position. Given quarter to date trends, we expect net revenue in the first quarter of fiscal twenty twenty six to be in the range of $620,000,000 to $640,000,000 representing growth of 24% to 28%. Our net revenue outlook for the first quarter is based on continued performance in The United States and our ongoing momentum in Canada, both 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 first quarter to increase approximately 200 basis points compared to the first quarter of fiscal twenty twenty five. This improvement is driven by leverage on rent, lower distribution costs and continued IMU improvements.

We forecast SG and A leverage of approximately 100 basis points in the first quarter. This is primarily driven by cost leverage due to the increased revenue growth and our ongoing smart spending initiative. Turning to the full fiscal year, we are forecasting net revenue in the range of $3,050,000,000 to $3,250,000,000 representing growth of 11% to 19% from fiscal twenty twenty five. While our momentum across channels and geographies remains strong year to date, due to the dynamic macro environment, our outlook accommodates for a range of scenarios. Our fiscal twenty twenty six net revenue outlook is underpinned by our boutique openings both this year and last.

We plan to open a minimum of 12 new boutiques and reposition five boutiques including the reposition of our Flatiron flagship in Manhattan. The opening this year will deliver total square footage growth in the mid to high teens on top of 25% square footage growth last year. Turning to tariff impacts, the tariffs currently being imposed by The United States result in just over 400 basis points of gross margin pressure in fiscal twenty twenty six. To offset this pressure and work to maintain our margins, we are focused on the following shifting production into countries with lower tariffs, partnering with our suppliers to help absorb the added costs, realizing cost reductions from across the business and continuing our focus on our multi year IMU opportunities. With this in mind, adjusted EBITDA as a percent of net revenue is expected to be approximately 14 to 15% in fiscal twenty twenty six compared to 14.8% in fiscal twenty twenty five.

We expect depreciation and amortization in fiscal twenty twenty six of approximately $110,000,000 compared to $84,000,000 in fiscal twenty twenty five. We expect capital expenditures for fiscal twenty twenty six of approximately $180,000,000 This includes $110,000,000 related to investments in new and repositioned boutiques for fiscal twenty twenty six and the start of construction for boutiques opening in early fiscal twenty twenty seven. We continue to see our most recent new boutiques tracking to pay back in approximately one year or less exceeding our target of twelve to eighteen months. Our CapEx spend also includes $70,000,000 primarily related to the expansion of our distribution center network including our new facility in the Vancouver area. We plan to renew our NCIB this month and throughout fiscal twenty twenty six we expect to purchase shares opportunistically to offset the dilution of option exercises.

In closing, while the recent U. S. Tariffs pose a significant challenge for our industry, the strength of our business model, our forty year proven track record, the strong momentum in our business and our healthy liquidity position give us confidence in our path forward. We are well positioned to successfully navigate the continually evolving macro environment as we remain focused on delivering our everyday luxury experience to our clients and advancing our key strategic levers to drive long term profitable growth for our stakeholders. Thank you.

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

Conference Operator: We will now begin the question and answer session.

Jennifer Wong, Chief Executive Officer, Aritzia: Session.

Conference Operator: The first question comes from Lou Cannon with Canaccord Genuity. Please go ahead.

Lou Cannon, Analyst, Canaccord Genuity: Yes, thanks, and good afternoon, everyone. I wanted to start on the topic of production. You mentioned that you’re diversifying that the supply chain that you have right now. Can you give us a sense of the sourcing breakdown as of today? And then what you envision it looking like perhaps six months or twelve months from now?

Again, assuming that things stay where they are. I realize it’s probably a big assumption at this point just given the fluidity of everything going on, but maybe just a further breakdown on how you envision your production base looking like down the road? Thanks.

Jennifer Wong, Chief Executive Officer, Aritzia: Thanks, Liz, for that question. I want to start off by saying that quality is paramount for us at Aritzia. So when we’re thinking about our sourcing, ensuring that we maintain the integrity of our product and the quality of our product is top, top priority. So at this point in time, the majority of our production is in three countries. That would be China, Vietnam and Cambodia.

The remainder of our production is spread over 10 countries. So effectively we are in a total of 13 countries across four continents. Obviously where tariffs are most impacted is in China and we’ve reduced our production already from 25% to 20% for fallwinter. We are working to further diversify that and we see that being mid single digit percentage for spring of next year which is less than a year away. And so the good news with some of this acceleration in our existing strategy of diversifying is that the quality will at least remain consistent with where it is today.

If not, I think in some cases, we’ll even improve the quality with some of these shifts.

Lou Cannon, Analyst, Canaccord Genuity: Okay. Thank you very much.

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

Todd Ingledew, Chief Financial Officer, Aritzia: Yes, good afternoon. I wanted to ask about sort of the thought process around and maybe openness to price increases. I know this is a multiyear journey around IMU. But I think in the past, this has been something that there’s been some reluctance to sort of take and at the risk of maybe disrupting the momentum with consumers even when competitors were taking price. So I’m just hoping you could talk about the current mindset, particularly in light of the tariffs.

And I guess specific to fiscal twenty twenty six, I know, as you mentioned, a bunch of the product has already landed. But what would be the timing on that decision if those if they would be in place to offset whatever tariff impact is actually felt?

Jennifer Wong, Chief Executive Officer, Aritzia: Hi, Mark. I’m going to start with that’s a very compounded question there. I’m going to start with pricing. It’s really important that we get across that the customer is at the center of all of this, right? Ensuring that we stay committed to our everyday luxury value proposition and providing value to our clients is first and foremost a priority along with the quality of our product.

And we’re fiercely committed to protecting our margins but at the same time just as committed to providing the value to our clients. And in the number of strategies that we’ve listed to mitigate the tariff We believe that and after looking at the business quite carefully, we believe that all of the things that we’ve listed will confidently mitigate the tariffs as we know them today and obviously the situation is fluid. So we’ll continue to do what we’ve been doing now for decades, for four decades, for forty years. We do evaluate our pricing on a seasonal basis. Want to make sure that value to other customer is first and foremost.

Given these other mitigation strategies that we’ve listed particularly with diversification and the cost management initiative, We at this time do not see that we need to commit to increasing prices as a result of tariffs. That said, we will continue with our IMU improvement. As you know, that includes evaluating our prices, but the most the majority of that is driven on the cost side. So if we execute as we are setting out on all four of those mitigation strategies, pricing is not a primary lever at this point in time.

Todd Ingledew, Chief Financial Officer, Aritzia: Okay. Thanks for all those comments, Jennifer. Appreciate it.

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. And it sounds as though the momentum is continuing into Q1. So can you walk us through how you’re thinking about the evolution of the year from a demand perspective and then also from a margin perspective? Because if half of your product is onshore and was prior to the tariffs, then that must mean that we should be sort of thinking about the first half being strong and the second half being more challenging.

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. Thanks, Irene. I’ll take that one. Starting with the revenue side of things, we are, as you said, we’re continuing to see strong momentum in both countries and in both channels year to date, which is very encouraging. Our outlook does accommodate for a range of scenarios due to all these uncertainties with the broader macro environment, including the potential in the back half for a consumer slowdown.

So the top end of our range assumes, you know, effectively business as usual, and then the bottom of our range assumes a meaningful deceleration. And and that’s why we’ve broadened the range for the year. From a cadence perspective, the Q1 guidance assumes total comp growth in the mid to high teens. And then for the remainder of the year, our guidance assumes trends moderate each quarter. So getting further and further pressured as we go through the year.

And that’s because obviously we’re annualizing on extremely strong top line growth in the back half of FY 2025, but also the potential for a slowdown is increasing through the back part of the year. And so bottom line from a revenue perspective, we’re extremely pleased with the strength that we’re seeing today and we’re executing to mitigate on our tariff impact. But we’re going to continue to deliver on all of our growth levers as we work through the year and are obviously charging for the top part of our range. From a SG and A and a gross profit perspective, we’ve guided to 200 basis points of gross profit margin expansion in the first quarter. And then we expect that we’ll start to see slight impact from the tariffs in Q2.

The end of Q2 is the launch of our fall season in August. And then to see the full impact of the tariffs in the back half of the year. And then from an SG and A perspective, we’ve guided to 100 basis points of SG and A leverage in Q1 and then we expect slight improvement for the balance of the year. And of course, all of this is based on what we know today. So taking into account the current environment.

Irene Nattel, Analyst, RBC Capital Markets: That’s hugely helpful. Thanks so much.

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

Michael Glen, Analyst, Raymond James: Thanks for getting me in. Just on inventory, we’re reading a lot about dropping shipments in the news. I’m just wondering if you have any concerns about your ability to actually get the inventory you need or if you’re taking any steps to how you’re taking steps to ensure you get the inventory you need for the fall season?

Jennifer Wong, Chief Executive Officer, Aritzia: We’re not seeing anything. Hi, Michael. Thank you for the question. We’re not seeing anything right now in our supply chain. Again, we’re very proud of our agile and global partnership.

So at this point in time, again, fluid situation. But at this time, we’re not seeing any risks.

Michael Glen, Analyst, Raymond James: Okay. And then are you able to give us some granularity at all in terms of how your COGS how your cost of goods sold breaks down across different buckets supply chain, freight, apparel and product, just different broad buckets, how think about the breakdown of cost of goods sold?

Todd Ingledew, Chief Financial Officer, Aritzia: Yeah. Michael, we don’t provide that breakdown.

Michael Glen, Analyst, Raymond James: Okay. Okay. That’s it for me.

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

Mauricio Serna, Analyst, UBS: Great. Good afternoon. Thanks for taking my questions. I guess, I just wanted to get a better sense. So is it fair to assume you mentioned there’s a 400 basis points impact from the tariff.

I mean, how are you thinking about full year like the gross margin contraction? I assume there’s a contraction net. So how much of a gross margin contraction would you be expecting for full year? And just to confirm that that’s assuming 145% in China, Ten Percent elsewhere. Is that like a fair way to think about like the underlying assumptions there?

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. Thanks for the question. Let me walk you through that. We’re not gonna we have we’ve only guided to adjusted EBITDA, so we’re not gonna break down the specifics between gross profit and SG and A for the guidance beyond what I just said related to the cadence. However, from an adjusted EBITDA perspective, we are, as you noted, guiding between 1415%, which is roughly flat with what we achieved last year in FY ’20 ’20 ’5.

And that includes the just over 400 basis points of pressure from the reciprocal tariffs. And obviously, the situation is evolving, but I’ll give you some context as you as you requested around the assumptions and then our current mitigation plan. From an assumption perspective, we’re using what’s currently in place. Reciprocal tariffs of 145% in China, Ten Percent for the rest of the world, the elimination of China from the de minimis, which actually takes effect tomorrow. And then for fallwinter, we’ve assumed approximately 20% of our production will come from China.

So those are kind of the key assumptions that you need to understand how we’ve built out the just over 400 basis points pressure. And then from a mitigation perspective, we have first off approximately 50% or half of the impact is going to be mitigated by margin improvement that we had previously anticipated for FY 2026. So that covers half of it. And then the other half, remaining 50% is offset by cost reductions, the acceleration of diversification out of China that Jennifer already mentioned going from 25% to 20% for fallwinter this coming fallwinter and then the sharing of costs with vendors. So those three things are the remaining 50%.

And I guess the bottom line is that under the current set of assumptions, we’re working to ensure that at a minimum we maintain margins with the levels we achieved last year.

Mauricio Serna, Analyst, UBS: Understood. And then quick quick follow-up. You mentioned something about the guidance for sales implies in both situations that there’s like a deceleration in the comp sales throughout the year depending on whether it’s like a weaker consumer outlook, it could be faster. So just thinking about like in the downside scenario, what kind of comp sales are you baking in like by 4Q?

Todd Ingledew, Chief Financial Officer, Aritzia: In in the downside by the fourth quarter, you know, the the comps in certain scenarios could be negative.

Mauricio Serna, Analyst, UBS: Okay. Okay. You you like

Todd Ingledew, Chief Financial Officer, Aritzia: For for a negative And I’m talking about for the fourth for the fourth Yeah. Quarter.

Mauricio Serna, Analyst, UBS: Yeah.

Todd Ingledew, Chief Financial Officer, Aritzia: Yeah. Because we had as we just reported, you know, extremely strong performance in the fourth quarter last year. And and then if the there’s a downturn in effect, the the comps could be meaningfully pressured, and that’s what the downside contemplates.

Mauricio Serna, Analyst, UBS: Okay. Understood. Super helpful. Very last one, depreciation, you said a hundred and $10,000,000 for the year. How much of that is like the depreciation that is not related to rent?

Todd Ingledew, Chief Financial Officer, Aritzia: Oh, that is that’s the non rent amortization. Like, that’s the that’s pure depreciation.

Mauricio Serna, Analyst, UBS: Yeah. Yeah. But then there’s, you know, out of that, what some of that is rent, some of that is not rent. Like, what is the part that is not rent?

Todd Ingledew, Chief Financial Officer, Aritzia: We’ll we’ll we’ll follow-up with you on that Okay. Mauricio.

Mauricio Serna, Analyst, UBS: Okay. No problem. Thank you. Thank you, and congratulations.

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

Martin Landry, Analyst, Stifel: Hi, good afternoon and congrats on your great results. Todd, would want to continue on the discussion you just provided on the 400 bps pressure coming from tariffs on your EBITDA line. You do mention that 50% is going to be abated by mitigating measures that you’re taking and 50% is it feels like you’re eating it up right now. Obviously, these tariffs are going to have an impact, as you mentioned previously, half of the year. So how do we think about this and the spillover effect into next year.

I know it may be a little early, but is there going to be a spillover effect that we should take into account? Or do you expect mitigation measures to accelerate towards the end of the year so that tariffs may have a very small impact into next year?

Jennifer Wong, Chief Executive Officer, Aritzia: Martijn. I’m going to take that question because it’s a longer range view. And I think clearly and obviously the situation continues to evolve. And is if there’s one thing we’re certain about it’s very uncertain. I’m sure you heard that already before.

And so our guidance that we’re sharing today contemplates what we see for this fiscal year and we are very confident and clear in the plan as we know the situation today. But we will continue to evaluate things very closely. The situation is very fluid. I don’t think it helps anybody to get into hypotheticals at this point in time. The team, we have a task force here that is planning for various scenarios.

My thought is and this is the collective thought of the team is we are being proactive. We are being extremely proactive. I like the fact that we’ve been proactive. We have to remain flexible, agile. We’re remaining flexible and agile.

We’re monitoring constantly. I think we have to be responsive and prepared for the various scenarios and I’m really proud that we are in that mode. We are ruthlessly prioritizing all of the things that we’re doing and what we’re spending money on. Immensely focused on the customer, our product and our everyday luxury experience. If there’s one thing that we will prioritize and keep at the forefront is that.

And as you know we have to balance the short term with the long term and that’s kind of the name of the game I think for everybody in our situation. And what we must do is we must execute. We must execute on our business model. We must execute on the plan that we have in front of us for this fiscal year. We are focused on getting those 12 new boutiques open, those five new repositions and we’re focused on servicing the customer with an everyday luxury value proposition.

And I think if we execute with excellence that is putting us in our best position of strength to deal with the uncertainty.

Martin Landry, Analyst, Stifel: Okay. Understood. Thank you.

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

Stephen MacLeod, Analyst, BMO Capital Markets: Thank you. Good evening, everyone. Thanks for all the color so far. I’m just going to shift gears a little bit. Just wanted to get some specific just sort

Martin Landry, Analyst, Stifel: of dig in a little

Stephen MacLeod, Analyst, BMO Capital Markets: bit on the supply chain. You talked about diversifying your supply away from China to 20% and then down to the mid single digit range. I’m just curious, where does that incremental supply come from? Is it in existing markets? Or are you seeking out new markets?

Are you having to seek out new suppliers at the same time? Just trying to get a sense of of how easy it is, and maybe easy is not a fair word, to make that shift.

Jennifer Wong, Chief Executive Officer, Aritzia: Hi, Steven. Yep. All of the above. All of the above. We are taking the word diversification right down to the very epitome of what diversification means.

And so, the good news is we have lots of established long standing partnerships who are diversifying themselves and it literally means all of that. Existing countries, exploring new countries, it does mean diversifying our supplier base and that’s where I think that’s somewhat of the exciting part where I think we’re getting into facilities and with suppliers that can improve upon our product. And so, again, this has been part of our existing strategy to diversify now for nearly a decade. We’ve been at it for nearly a decade and it just means that we’ve accelerated on that.

Stephen MacLeod, Analyst, BMO Capital Markets: Great. Thanks, Jennifer.

Conference Operator: The next question comes from Cory Tarlow with Jefferies. Please go ahead.

Beth Reed, Vice President, Investor Relations, Aritzia0: Great. Thanks. First question is just as the weather has gotten a little bit warmer, is there any color that you can provide on products and trends that are working at the moment? And then secondarily, Todd, in your remarks, I think you used or you referenced really strong traffic several times. So what I wanted to ask as a follow-up to that is how do you think about traffic versus ticket in guide as we look ahead?

Jennifer Wong, Chief Executive Officer, Aritzia: Hi, Chris. Thank you for your questions. On the product side, when business is as good as we’re seeing it in Q4 and going into Q1, it’s pretty broad based. So everything is working well. All the categories, styles, fabrics, colors, we were able to transition into spring in February quite nicely with lighter weight fabrics.

We’ve got great colors. I love the colors that I’m seeing in our assortment this season. And so and we continue to be performing very well in our existing franchises. So really super pleased that everything is resonating with the customer and we couldn’t be more pleased with our inventory position at the same time because it’s meeting the demand when the customer is coming in and wanting to buy these things. As it relates to traffic, our trends are driven by traffic.

Again, we’re seeing no real change, no material change, no change at all really. It’s consistent in terms of the average basket size, the units per transaction, the average all of that remains consistent. Really this is a story about increased traffic growth across both channels and both geographies.

Beth Reed, Vice President, Investor Relations, Aritzia0: Got it. That’s very helpful. And then just as an additional question, is there anything that you could share on April on recent April trends?

Jennifer Wong, Chief Executive Officer, Aritzia: I think it’s safe to say that when we say we’ve entered into Q1 with momentum and that spring is off to a strong start that would apply to April.

Beth Reed, Vice President, Investor Relations, Aritzia0: Okay. Thank you very much.

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

Beth Reed, Vice President, Investor Relations, Aritzia0: Thanks very much. Good evening. Sorry to beat this question again, but is that 400 basis points represent tariffs for the year or half the year? Or is that an annual impact? And I understand your net impact with mitigating factors, Is that 200 basis points like ex tariffs would have even closer to the 16.5% range?

And I respect quality, but can you mitigate ’3 ’20 ’1 by allocating your client favorites to outside China in a rapid manner?

Todd Ingledew, Chief Financial Officer, Aritzia: Thanks, Brian. I’ll take that. Yes, first off from a margin perspective, we would have been in the 16% to 17% range had we not had the impact of tariffs. And is the 400 basis points or just over 400 basis points is for this fiscal year. That’s not an annualized number.

However, I don’t actually think it’s pertinent to look at an annualized number because by the time we get to spring, we’ll be in a different situation regardless of what’s going on with the reciprocal tariffs. So, yeah, it’s a it’s a FY ’26 number. And then from a supply chain perspective, you know, it takes it can take up to six months to to move from from one supplier to another. But, you know, Jennifer said over and over again, we are not going to sacrifice quality through this process and we’ll be willing to take the impact of that.

Beth Reed, Vice President, Investor Relations, Aritzia0: Understood. Thank you very much.

Conference Operator: We have a follow-up question from Mark Petrie with CIBC. Please go ahead.

Todd Ingledew, Chief Financial Officer, Aritzia: Yes, thanks. I wanted to ask about your customer mix. And specifically at the flagships, how the mix of new versus existing customers compares to other stores? And then what you see on those new customers that might have been visiting, repurchasing back in their home markets, either in store or online? And I guess related to that, if you also have a sense of the halo effect from the new non flagship stores, if that’s evolved at all from what you’ve called out previously?

Thanks.

Jennifer Wong, Chief Executive Officer, Aritzia: Great question on customer. The halo effect on opening new stores in new markets continues to show that we get a 70% halo effect in e commerce for that first year. So super pleased to see that. Our flagship performance we expected our flagships to be fantastic and it is they are fantastic. It’s more than a financial payback for us.

It’s about a brand propelling marketing vehicle that showcases everyday luxury and offers the broadest product assortment, feeling really great about all of those things as it relates to the flagship. Certainly, we’re seeing new client growth in all of our new stores and that is of course includes the flagships. I think what happens is a lot of customers, particularly international visitors who have heard about our brand, they come and see our stores on those very popular streets whether it be in SoHo, Fifth Avenue or Michigan. And if our U. S.

Customer growth at over 40% is any indication about the client acquisition vehicle that these new stores are particularly the flagship, I think it’s more than meeting our expectations.

Todd Ingledew, Chief Financial Officer, Aritzia: Okay. Thanks for that and all the best.

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

Lou Cannon, Analyst, Canaccord Genuity: Yes. Thank you. Just a quick follow-up for me on the new CapEx guidance. So you took it up to $750,000,000 for between fiscal twenty twenty four and 2027. That was at CAD500 previously.

Can you help us think through how much of that is attributed to some of the square footage acceleration that you would have seen in the past versus maybe what you’ve had planned going forward? I recognize there’s a currency aspect to this as well. But I guess what I’m trying to get at also is you’ve talked about higher square footage growth for this year. Should we be thinking about this being the case for fiscal twenty twenty seven as well?

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. A %. And you have kind of answered the question in your question. But, you know, as as we’ve talked about, we’ve been tracking ahead of our initial expectations for really over a year and a half now that we had initially laid out during our investor day. And that’s because we’ve increased the cadence of the of the new store openings and because we’ve increased the average size of those new stores.

And, you know, obviously, the stores are paying back in less than twelve months and that the growth that they represent is creating a fantastic foundation for our annual growth each year. So it’s extremely well deployed capital, but that is the bulk of the additional CapEx. And and, you know, there are inflationary increase as well, you know, increases across the project. But the the majority is from the additional stores as well as the additional square feet. And then the impact of FX, obviously, because the majority of the capital is being deployed in The United States with all the new stores there.

And so the guidance originally was done at 1.3 and obviously, we’ve been close to 1.4 as of late. So those are the the main puts and takes.

Mauricio Serna, Analyst, UBS: Okay. Thanks.

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

Stephen MacLeod, Analyst, BMO Capital Markets: That’s fine. I was going to ask about the CapEx. So I’ve already got the color. Thank you.

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

Mauricio Serna, Analyst, UBS: Yes. Great. I just had a couple of follow ups. I got a little bit confused about that comment that without tariffs, like margins would have been 16%, seventeen % because the comment was like it was like the impact of the tariff was 400 basis points. Is that I just wanted to understand that better?

And the other follow-up is, I wanted to ask if you have seen in your Canadian business any sort of like benefit or yeah, type of tailwind from what we’re hearing is like more consumers in Canada are turning more towards actually domestic brands just given the dynamic that is happening in The US?

Todd Ingledew, Chief Financial Officer, Aritzia: Yes. Okay. I’ll take the first part and then Jen can take the second part. So yes, just to reiterate, of the mitigation of the 400 basis points, 50% is coming from margin improvement that we were previously anticipating effectively for FY ’26. Those are that’s from like the ongoing IMU improvements we’ve been talking about, the freight tailwinds, rent, smart spending, all of that was already anticipated and that would have gotten us to that 16% to 17% range.

And then the other half of the mitigation, the other 400 basis points or 200 basis points is from the cost reductions, the accelerated diversification of our sourcing and then the sharing of costs with vendors. But it’s that initial part of the margin improvement that is what would have gotten us back.

Jennifer Wong, Chief Executive Officer, Aritzia: And on Canada, just an overall statement, I know a couple of quarters ago we had shared that we were starting to see softness in Canada probably going back to Q2 of last year. What we’re really pleased to see is that Canada has strengthened. Clearly, strengthened in Q3, Q4 and that has carried over into Q1. So, Canada has definitely strengthened for us. The customer is responding well to our product assortment, etcetera.

And pleased to see that that continues for us into spring. Despite what we’re hearing in the media or what you’re hearing in the media about Buy Canadian, I would say there’s nothing in our data We continue to be strong in both countries, Canada and The U. S. And very pleased to see that.

Mauricio Serna, Analyst, UBS: Great. Thanks. Thanks for the follow-up and congratulations.

Jennifer Wong, Chief Executive Officer, Aritzia: Thank you.

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

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