Aritzia Reports Second Quarter Fiscal 2025 Financial Results
VANCOUVER, BC, Oct. 10, 2024 /PRNewswire/ - Aritzia Inc. (TSX:ATZ) ("Aritzia", the "Company", "we" or "our"), a design house with an innovative global platform offering Everyday Luxury online and in its boutiques, today announced its financial results for the second quarter ended September 1, 2024 ("Q2 2025").
"Our performance during the second quarter of Fiscal 2025 exceeded our expectations, as we delivered a 15% increase in net revenue compared to the second quarter of Fiscal 2024 and generated comparable sales growth of 6.5%. Our top line was fueled by a 24% net revenue increase in the United States, which was driven by our proven real estate expansion strategy, a meaningful acceleration in eCommerce growth and strong comparable sales growth in our boutiques. We again delivered substantial improvement in our Adjusted EBITDA margin, representing another step toward our historical levels in the high-teens," said Jennifer Wong, Chief Executive Officer.
"Although we're navigating a softer consumer environment in Canada, we're pleased with the positive client response to our Fall launch on both sides of the border. The performance of our new and repositioned boutiques remains extremely strong, and we are particularly excited about the extraordinary pipeline of openings over the balance of the year. We also have a number of initiatives underway to help fuel further acceleration in our eCommerce business, including the upcoming launch of our enhanced website. Along with our growing brand awareness, the momentum we're seeing in both channels keeps us on track to deliver on our long-term goals, while the strategic investments we're making today will position us to generate profitable growth well into the future," concluded Ms. Wong.
Second Quarter Highlights
For Q2 2025, compared to Q2 20241:
Net revenue increased 15.3% to $615.7 million, with comparable sales2 growth of 6.5%
United States net revenue increased 23.9% to $345.4 million, comprising 56.1% of net revenue
Retail net revenue increased 17.6% to $425.6 million
eCommerce net revenue increased 10.4% to $190.0 million, comprising 30.9% of net revenue
Gross profit margin2 increased 520 bps to 40.2% from 35.0%
Selling, general and administrative expenses as a percentage of net revenue increased 40 bps to 32.4% from 32.0%
Adjusted EBITDA2 increased 160.7% to $55.2 million. Adjusted EBITDA2 as a percentage of net revenue increased 500 bps to 9.0% from 4.0%
Net income increased 404.6% to $18.2 million, or 3.0% as a percentage of net revenue. Net income (loss) per diluted share was $0.16 per share, compared to $(0.05) per share
Adjusted Net Income2 increased 618.5% to $24.5 million. Adjusted Net Income per Diluted Share2 was $0.21 per share, compared to $0.03 per share
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1 All references in this press release to "Q2 2025" are to our 13-week period ended September 1, 2024, to "YTD 2025" are to our 26-week period ended September 1, 2024, to "Q2 2024" are to our 13-week period ended August 27, 2023, to "YTD 2024" are to our 26-week period ended August 27, 2023, to "Fiscal 2024" are to our 53-week period ended March 3, 2024, to "Fiscal 2025" are to our 52-week period ending March 2, 2025, to "Fiscal 2026" are to our 52-week period ending March 1, 2026, and to "Fiscal 2027" are to our 52-week period ending February 28, 2027.
2 Certain metrics, including those expressed on an adjusted or comparable basis, are non-IFRS measures or supplementary financial measures. See "Comparable Sales, "Non-IFRS Measures and Retail Industry Metrics" and "Selected Financial Information".
Second Quarter Results Compared to Q2 2024
(Unaudited, in thousands of Canadian dollars, unless otherwise noted)
Q2 2025
Q2 2024
Change
% of net revenue
% of net revenue
%
% pts
Retail net revenue
$ 425,621
69.1 %
$ 362,014
67.8 %
17.6 %
eCommerce net revenue
190,042
30.9 %
172,177
32.2 %
10.4 %
Net revenue
$ 615,663
100.0 %
$ 534,191
100.0 %
15.3 %
Gross profit
$ 247,486
40.2 %
$ 186,846
35.0 %
32.5 %
5.2 %
Selling, general and administrative ("SG&A")
$ 199,502
32.4 %
$ 171,116
32.0 %
16.6 %
0.4 %
Net income (loss)
$ 18,247
3.0 %
$ (5,990)
(1.1) %
404.6 %
4.1 %
Net income (loss) per diluted share
$ 0.16
$ (0.05)
420.0 %
Adjusted EBITDA2
$ 55,167
9.0 %
$ 21,160
4.0 %
160.7 %
5.0 %
Adjusted Net Income2
$ 24,536
4.0 %
$ 3,415
0.6 %
618.5 %
3.4 %
Adjusted Net Income per Diluted Share2
$ 0.21
$ 0.03
600.0 %
Net revenue increased by 15.3% to $615.7 million, compared to $534.2 million in Q2 2024. Comparable sales2 growth was 6.5%. Trends accelerated in August, resulting in better-than-expected net revenue for the quarter.
In the United States, net revenue increased by 23.9% to $345.4 million, compared to $278.9 million in Q2 2024. This was primarily driven by the Company's real estate expansion strategy and an acceleration in eCommerce growth. Net revenue in Canada increased by 5.8% to $270.3 million, compared to $255.3 million in Q2 2024, Results in Canada benefited from a calendar shift causing the week of the Company's annual warehouse sale to fall in the second quarter this year compared to the third quarter last year. Comparable sales growth was positive in both countries.
Retail net revenue increased by 17.6% to $425.6 million, compared to $362.0 million in Q2 2024. The increase was primarily driven by strong performance of the Company's new and repositioned boutiques, as well as positive comparable sales growth in its existing boutiques. In the last 12 months, the Company opened 7 new boutiques and repositioned 3 boutiques. Boutique count3 at the end of Q2 2025 totaled 122 compared to 116 boutiques at the end of Q2 2024.
eCommerce net revenue increased by 10.4% to $190.0 million, compared to $172.2 million in Q2 2024. The increase was primarily driven by traffic growth in the United States, strong response to the Company's Fall product and the Company's investment in digital marketing.
Gross profit increased by 32.5% to $247.5 million, compared to $186.8 million in Q2 2024. Gross profit margin2 was 40.2%, compared to 35.0% in Q2 2024. The increase in gross profit margin of approximately 520 bps was driven by lower markdowns, IMU improvements, lower warehousing costs and savings from the Company's smart spending initiative, partially offset by higher freight costs.
SG&A expenses increased by 16.6% to $199.5 million, compared to $171.1 million in Q2 2024. SG&A expenses were 32.4% of net revenue, compared to 32.0% in Q2 2024. The increase in SG&A expenses was driven by investments in digital marketing to protect and propel the Aritzia brand, as well as investments in infrastructure projects and technology initiatives to support the Company's growth.
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3 There were four Reigning Champ boutiques as at September 1, 2024 and August 27, 2023 which are excluded from the boutique count. There was one Aritzia boutique closure in Fiscal 2024.
Net income (loss) was $18.2 million, an increase of 404.6% compared to $(6.0) million in Q2 2024, primarily attributable to the factors described above as well as an increase in stock-based compensation expense mainly due to the effect of mark-to-market changes, offset by an increase in other income. Net income (loss) per diluted share was $0.16 per share, an increase of 420.0% compared to $(0.05) per share in Q2 2024.
Adjusted EBITDA2 was $55.2 million or 9.0% of net revenue, an increase of 160.7% compared to $21.2 million or 4.0% of net revenue in Q2 2024.
Adjusted Net Income2 was $24.5 million, an increase of 618.5% compared to $3.4 million in Q2 2024.
Adjusted Net Income per Diluted Share2 was $0.21 per share, an increase of 600.0% compared to $0.03 per share in Q2 2024.
Cash and cash equivalents totaled $104.0 million, compared to $76.5 million at the end of Q2 2024.
Inventory at the end of Q2 2025 was $482.6 million, a decrease of 3.7%, compared to $500.9 million at the end of Q2 2024.
Capital cash expenditures (net of proceeds from lease incentives)2 were $49.7 million, compared to $45.7 million in Q2 2024. The increase is primarily due to capital investments in new and repositioned boutiques partially offset by a decrease in capital investments related to support office expansion and distribution centres.
YTD 2025 Compared to YTD 2024
(unaudited, in thousands of Canadian dollars, unless otherwise noted)
YTD 2025
YTD 2024
Change
% of net revenue
% of net revenue
%
% pts
Retail net revenue
$ 783,464
70.3 %
$ 689,584
69.2 %
13.6 %
eCommerce net revenue
330,829
29.7 %
307,272
30.8 %
7.7 %
Net revenue
$ 1,114,293
100.0 %
$ 996,856
100.0 %
11.8 %
Gross profit
$ 467,030
41.9 %
$ 366,797
36.8 %
27.3 %
5.1 %
SG&A
$ 375,792
33.7 %
$ 324,575
32.6 %
15.8 %
1.1 %
Net income
$ 34,080
3.1 %
$ 11,480
1.2 %
196.9 %
1.9 %
Net income per diluted share
$ 0.30
$ 0.10
200.0 %
Adjusted EBITDA2
$ 109,044
9.8 %
$ 52,748
5.3 %
106.7 %
4.5 %
Adjusted Net Income2
$ 49,524
4.4 %
$ 14,633
1.5 %
238.4 %
2.9 %
Adjusted Net Income per Diluted Share2
$ 0.43
$ 0.13
230.8 %
Net revenue increased by 11.8% to $1.1 billion, compared to $996.9 million in YTD 2024. Comparable sales2 grew 4.4%. Results continue to be driven by performance in the United States, where net revenue increased by 18.7% to $630.1 million, compared to $530.8 million in YTD 2024. Net revenue in Canada increased by 3.9% to $484.2 million, compared to $466.1 million in YTD 2024.
Retail net revenue increased by 13.6% to $783.5 million, compared to $689.6 million in YTD 2024. The increase in revenue was primarily driven by strong performance of the Company's new and repositioned boutiques, as well as positive comparable sales growth in its existing boutiques.
eCommerce net revenue increased by 7.7% to $330.8 million, compared to $307.3 million in YTD 2024. The increase was primarily driven by traffic growth in the United States and inventory optimization.
Gross profit increased by 27.3% to $467.0 million, compared to $366.8 million in YTD 2024. Gross profit margin2 was 41.9% compared to 36.8% in YTD 2024. The approximately 510 bps increase in gross profit margin was primarily due to lower markdowns, IMU improvements, lower warehousing costs and savings from the Company's smart spending initiative, partially offset by higher freight costs and pre-opening lease amortization costs for flagship boutiques.
SG&A expenses increased by 15.8% to $375.8 million, compared to $324.6 million in YTD 2024. SG&A expenses were 33.7% of net revenue compared to 32.6% in YTD 2024. The increase in SG&A expenses was driven by investments in digital marketing to protect and propel the Aritzia brand, as well as investments in infrastructure projects and technology initiatives to support the Company's growth.
Net income was $34.1 million, an increase of 196.9% compared to $11.5 million in YTD 2024, primarily attributable to the factors described above as well as an increase in stock-based compensation expense mainly due to the effect of mark-to-market changes, partially offset by an increase in other income. Net income per diluted share was $0.30, an increase of 200.0%, compared to $0.10 per share in YTD 2024.
Adjusted EBITDA2 was $109.0 million, or 9.8% of net revenue, an increase of 106.7%, compared to $52.7 million, or 5.3% of net revenue in YTD 2024.
Adjusted Net Income2 was $49.5 million, an increase of 238.4%, compared to $14.6 million in YTD 2024. Adjusted Net Income per Diluted Share2 was $0.43, an increase of 230.8%, compared to $0.13 in YTD 2024.
Capital cash expenditures (net of proceeds from lease incentives)2 were $105.2 million, compared to $72.2 million in YTD 2024. The increase is primarily due to capital investments in new and repositioned boutiques partially offset by a decrease in capital investments related to support office expansion and distribution centres.
Outlook
Aritzia expects the following for the third quarter of Fiscal 2025:
Based on quarter-to-date trends, Aritzia expects net revenue in the range of $675 million to $700 million in the third quarter of Fiscal 2025. This represents growth of approximately 3% to 7% or growth of approximately 7% to 11% excluding the following 2 factors which contributed $25 million in the third quarter last ...
