Aritzia sets sights on US expansion to fuel future growth

Canadian women's fashion retailer Aritzia reported net revenue increase of 11.5 percent to 728.7 million Canadian dollars, with comparable sales growth of 6.6 percent. The company's performance underscores the effectiveness of its growth strategy, with a clear focus on expanding its footprint in the US market.

Looking ahead, Aritzia expects fourth quarter net revenue to be in the range of 830 million Canadian dollars to 850 million Canadian dollars, an increase of around 22 percent to 25 percent and full year net revenue to be in the range of 2.67 billion Canadian dollars to 2.69 billion Canadian dollars, an increase of around 15 percent.

"Our momentum has continued into the fourth quarter, as a strong inventory position and positive client response to our winter assortment helped drive record-breaking sales over the holiday period," said Jennifer Wong, the company’s CEO in a statement.

"We still have a long runway for growth in the United States and remain confident that our plans for the business will generate long-term profitable growth."

Aritzia focuses on retail expansion in the US

Aritzia has strategically expanded its store count, particularly in the United States, where it sees significant growth potential. This expansion has been complemented by investments in its ecommerce platform. The company’s third quarter revenues in the United States increased by 23.6 percent to 403.7 million Canadian dollars, comprising 55.4 percent of net revenue.

"We are particularly pleased with the outstanding performance of our business in the United States, illustrating the strength of the Aritzia brand and growing affinity for our everyday luxury offering," added Wong.

The company plans to open 12 new boutiques, all located in the US. With 592 boutiques in the region, Aritzia has identified an opportunity to expand to over 150 locations in the US in future. The company plans to open 8 to 10 new US boutiques annually through FY2027 and reposition three to five boutiques, growing the total count to approximately 150.

Retail net revenue for the quarter increased by 10.3 percent to 486.6 million Canadian dollars and ecommerce net revenue increased 14 percent to 242.1 million Canadian dollars, comprising 33.2 percent of net revenue.

Though Aritzia faces competition from both traditional retailers and online brands including fast-fashion giants like H&M, Zara, and Uniqlo offering similar styles at lower price points, analysts project that the company could achieve continued strong revenue growth through a combination of strategic store openings, e-commerce expansion, and product diversification.

Gross profit margin for the quarter increased 430 bps to 45.8 percent, and adjusted EBITDA increased 48.7 percent to 136.4 million Canadian dollars. Net income increased 71.9 percent to 74.1 million Canadian dollars or 0.63 Canadian dollars per share, while adjusted net income increased 57.5 percent to 83 million Canadian dollars or 0.71 Canadian dollars per share.

Aritzia’s year-to-date revenue and profit witness strong growth

The company’s year-to-date net revenue increased 11.7 percent to 1.8 billion Canadian dollars with comparable sales growth of 5.3 percent driven by performance in the United States, where net revenue increased 20.6 percent to 1 billion Canadian dollars. Net revenue in Canada increased 2 percent to 809.2 million Canadian dollars.

Retail net revenue increased 12.3 percent to 1.3 billion Canadian dollars driven by strong performance of the new and repositioned boutiques, as well as positive comparable sales growth in its existing boutiques. Ecommerce net revenue increased 10.2 percent to 573 million Canadian dollars.

Gross profit for the period increased 25.5 percent to 800.5 million Canadian dollars, net income was 108.1 million Canadian dollars, an increase of 98.2 percent or 0.93 Canadian dollars per share, an increase of 93.8 percent.

Adjusted EBITDA was 245.5 million Canadian dollars, up 69.9 percent, adjusted net income was 132.5 million Canadian dollars, an increase of 96.8 percent or 1.14 Canadian dollars per diluted share, an increase of 93.2 percent.