Aritzia Q1 2027 Earnings Report

Aritzia EPS Results

• Actual EPS: C$0.96
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Aritzia Revenue Results

• Actual Revenue: $951.01 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Aritzia Announcement Details

• Quarter: Q1 2027
• Date: 7/9/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 9, 2026
• Conference Call Time: 4:30PM ET

Aritzia (TSE:ATZ) Inc is an integrated design house of exclusive fashion brands. It designs apparel and accessories for its collection of exclusive brands and sells them under the Aritzia banner. The category of products offered by the firm is blouses, T-shirts, pants, dresses, sweaters, jackets and coats, skirts, shorts, jumpsuits, and accessories. Its geographical segments include Canada and the United States. The company generates the majority of revenue from Retail, followed by eCommerce.

Aritzia Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Aritzia delivered a very strong Q1, with net revenue up 43%, Adjusted EBITDA margin reaching a record 20.1%, and Adjusted EPS rising 96% year over year.
• Positive Sentiment: U.S. growth remained exceptional, as revenue increased 55% and was supported by strong performance from new boutiques, existing-store comps, and accelerating digital demand.
• Positive Sentiment: Digital momentum was a major driver, with digital revenue up 56% in Q1, aided by the new mobile app, marketing investments, and stronger international e-commerce sales.
• Positive Sentiment: Margins expanded meaningfully despite tariff pressure, as gross profit margin rose 310 basis points to 50.3% and the company said the improvement came from better merchandise margins, lower markdowns, and cost leverage.
• Neutral Sentiment: Management raised full-year guidance to CAD 4.55 billion–CAD 4.75 billion in revenue and expects continued comp growth, but noted the back half will face tougher comparisons and ongoing investment needs.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to Aritzia's first quarter 2027 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. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I will now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

[Beth Reed, VP of Investor Relations at Aritzia]

Thanks, operator, and thank you all for joining Aritzia's first quarter fiscal 2027 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.

[Beth Reed, VP of Investor Relations at Aritzia]

Our earnings release, the related financial statements, and the MD&A are available on SEDAR+ as well as the investor relations section of our website. I'll now turn the call over to Jennifer.

[Jennifer Wong, CEO at Aritzia]

Thanks, Beth, and good afternoon, everyone. Thank you for joining us today. We began fiscal 2027 on an exceptionally strong note, delivering net revenue growth of 43% and a record Q1 adjusted EBITDA margin of 20%. This drove a 96% increase in adjusted EPS. These results underscore the sustained momentum of our business model and the best-in-class execution of our team. By consistently delivering against our three primary growth pillars, geographic expansion, digital growth, and increased brand awareness, we're amplifying the Aritzia brand and capturing robust client demand. We continue to successfully scale our footprint in the United States while deepening client loyalty in Canada. Best of all, this momentum across the board has carried into the second quarter. Looking at the drivers behind our momentum, our 43% top-line growth was fueled by a robust 35% increase in comparable sales.

[Jennifer Wong, CEO at Aritzia]

This performance reflects broad-based strength across the entire business, spanning all geographies, channels, and brands. In the United States, Q1 net revenue growth accelerated to an exceptional 55%. This was fueled by widespread demand for our brand across new boutiques, existing boutiques, and digital. In our U.S. retail channel, we benefited from 16 highly productive new and repositioned boutiques over the last year. We also delivered outstanding comparable sales growth across our existing boutiques. In digital, accelerated momentum was fueled by our new mobile app and strategic marketing investments. In Canada, we delivered net revenue growth of 25%. Our success was underpinned by exceptional momentum in digital. We also had robust comparable sales growth across our established boutique network. In addition, our new boutique at Oakridge Park in Vancouver and our two repositions in the past year are delivering excellent results.

[Jennifer Wong, CEO at Aritzia]

The reopening of our Oakridge boutique was a proud full-circle moment for me. When Aritzia was founded by Brian Hill and his family back in 1984, Oakridge debuted as our very first standalone location at just 1,500 sq ft. It is also in the exact shopping center I frequented growing up and where I first met Brian. Today, the reimagined 10,000 sq ft space showcases our modern boutique experience while honoring our rich heritage defined by our loyal people and our loyal clients. To celebrate this milestone, we hosted a series of specialized events for our people, clients, media, and influencers. Oakridge is a reflection of many of our boutiques with its long-tenured world-class style advisors. They are one of the enduring strengths of our retail business. Their passion for fashion and deep knowledge of our product are integral to our differentiated premium client service model.

[Jennifer Wong, CEO at Aritzia]

As we continue investing in our boutiques, we remain focused on scaling this model. It is a key element of our brand and part of our Everyday Luxury offering. Turning to results in retail, we captured demand across every client touchpoint, reflecting the balanced omni-channel strength of our business. In retail, we delivered an increase in net revenue of 39%. Our performance was driven by exceptional comparable boutique sales, which was fueled by higher traffic. Our strategic marketing investments continue to help deepen brand affinity and drive sustained demand into our boutiques. Our growth was also driven by our real estate expansion strategy, which continues to yield exceptional results. In the past 12 months, we opened a total of 19 new and repositioned boutiques. Square footage growth was in the mid-teen.

[Jennifer Wong, CEO at Aritzia]

On average, new boutiques continue tracking to pay back in less than one year, beating our target of 12-18 months. We continue seeing highly attractive unit economics even as we scale into mid-size metropolitan markets. Furthermore, we are seeing clear proof of concept with our larger boutiques. These 10,000+ sq ft locations are matching the strong productivity levels of our smaller footprints. Our digital channel delivered a phenomenal performance in Q1. Net revenue growth accelerated to 56%, led by strong traffic trends. This was fueled by our new mobile app and our investments in full-funnel marketing. Our balanced investments across marketing channels continue to introduce new clients to our brand while re-engaging existing ones. We are connecting with high-value clients across a diversified mix of owned and paid channels. Our growing brand affinity continues to translate into more efficient client acquisition and stronger retention rates.

[Jennifer Wong, CEO at Aritzia]

We continue to optimize our three digital channels through compelling brand storytelling and world-class commerce features. First, ongoing website enhancements, including personalized search improvements, immersive multimedia content, and site responsiveness are driving strong conversion and sales momentum. Second, app adoption remains outstanding with sustained monthly downloads and deep client engagement. Our product initiatives, styling content, and continuous release of new features are resonating with clients. This is driving repeat purchasing behavior and higher conversion. We're seeing clients browse and shop the app multiple times per week. Third, the improvements to our international e-commerce experience continue to pay off, with sales up nearly 170% year-over-year. In addition, our international marketing pilot showed strong initial results. Turning to product, our commitment to offering high-quality styles at attainable price points continues to drive outstanding results.

[Jennifer Wong, CEO at Aritzia]

Widespread demand across all regions reflects the growing affinity for our brand and deep loyalty of our client base. Our broad assortment and disciplined inventory management fueled strong trends across diverse regional climates. The healthy composition of our inventory continues to drive a lower markdown rate. For summer, we introduced fresh silhouettes and new color launches. From linen to satin to terry fleece and dresses, we drove client engagement throughout the season. At the same time, we saw sustained momentum in the iconic franchises for which we are well-known and loved. In marketing, our world of Everyday Luxury continued to successfully broaden our reach and introduce new audiences to Aritzia. This fueled another quarter of robust client acquisition. At the same time, we remained focused on deepening our connection with existing clients and maximizing share of closet. Our bespoke boutique activations also yielded strong returns.

[Jennifer Wong, CEO at Aritzia]

With the highly anticipated openings at Oakridge Park and Toronto Eaton Centre, our activations generated incredible brand heat and community engagement. This drove strong traffic and sales, fueling outstanding opening weekends. In May, we achieved a meaningful milestone in the expansion of our supply chain network, the go live of our new 380,000 sq ft distribution center in British Columbia. This facility features industry-leading goods-to-person technology, enabling reduced pick times and greater order accuracy. The team executed an exceptionally smooth ramp-up over a matter of weeks, maintaining our high standard of client service throughout. This successful execution gives us great confidence as we pivot toward expanding our distribution network in the United States to support our growing digital and retail channels. As I noted earlier, our strong momentum has carried into the second quarter, propelled by exceptional client demand for our spring/summer product.

[Jennifer Wong, CEO at Aritzia]

This momentum is underpinned by the enduring strength of the Aritzia brand, our disciplined execution, and our healthy financial foundation. Our business has never been better positioned for growth. We are excited to detail our next multi-year strategic and financial plan this fall. Meanwhile, our focus remains squarely on our three proven growth levers, geographic expansion, digital growth, and increased brand awareness. This fiscal year, we have a strong pipeline of 12-13 new boutiques in premier locations and four to five repositions. In Q2, we're on track to open three new U.S. boutiques. Each one is in a new market for us, Birmingham, New Orleans, and St. Louis. We're also opening one reposition in Canada. In addition to generating incremental top-line retail growth, we expect these new boutiques to continue fueling an omnichannel halo effect, particularly in new markets.

[Jennifer Wong, CEO at Aritzia]

In our digital channel, we're executing on several key initiatives to support continued momentum. These are focused on channel expansion and digital marketing optimization. Near-term priorities include continuing to embed AI into how we work and support clients, releasing new mobile app features and upgrades, optimizing our omnichannel infrastructure, and continuing to enhance our international digital shopping experience. In terms of brand awareness, our real estate expansion and strategic marketing investments represent proven multi-year levers to help scale the Aritzia brand across the United States. The affinity for our brand continues to grow, leaving us exceptionally well-positioned to capitalize on our long runway for growth in the U.S. and beyond. Furthermore, we continue to strategically invest in world-class infrastructure to help ensure our business is built for scalable, profitable growth for the long term.

[Jennifer Wong, CEO at Aritzia]

In closing, I am profoundly grateful to our people, whose dedication to operational excellence makes these results possible. The strength of our brand has never been more evident. With great enthusiasm, we look forward to executing on our strategic vision for the future. With that, I'll now hand it over to Todd to discuss the details of our financial performance.

[Todd Ingledew, CFO at Aritzia]

Thanks, Jennifer and good afternoon everyone. As Jennifer shared, in the first quarter of fiscal 2027, we generated a 43% increase in net revenue to CAD 951 million. Comparable sales grew 35% in the quarter. This was driven by outstanding, broad-based growth across channels and geographies. In addition, we expanded our adjusted EBITDA margin by 410 basis points, all resulting in a 96% increase in adjusted net income per diluted share. Our sustained momentum remains underpinned by four factors. One, exceptional demand for our product, fueled by extremely well-positioned inventory. Two, our digital initiative, led by our mobile app. Three, highly productive new and repositioned boutiques, with square footage growth in the mid-teens. Four, strategic brand and digital marketing investment, which generated meaningful traffic growth and new client acquisition. In the United States, first quarter net revenue increased 55% to CAD 638 million.

[Todd Ingledew, CFO at Aritzia]

The strength of this performance was fueled by balanced growth across our new boutiques, existing boutiques, and our digital business. In the past 12 months, we opened a total of 16 highly productive new and repositioned boutiques in the United States. This resulted in U.S. square footage growth of approximately 25%. In addition, we generated outstanding comparable sales growth in our existing locations. On the digital front, the momentum in our business accelerated meaningfully as our performance continued to be fueled by extremely strong traffic growth. In Canada, net revenue increased 25% to CAD 313 million. This was primarily driven by outstanding comparable sales growth in both our digital channel and our boutiques. Strong product performance and affinity for the Aritzia brand in Canada continues to drive exceptional client demand.

[Todd Ingledew, CFO at Aritzia]

Turning to our channel performance, our digital business continues to have exceptional momentum, with net revenue increasing 56% in the first quarter to CAD 285 million. Robust traffic growth remained the primary driver of our performance. This was fueled by the strength of our product, our new mobile app, and our strategic marketing investments. In retail, net revenue increased 39% to CAD 666 million. This reflects double-digit comparable sales growth across both our U.S. and Canadian boutiques, as well as the strong contribution from our new and repositioned locations. As we continue to broaden our footprint in the United States, we see ongoing strength in our new boutiques, as well as consistently strong comp performance in our existing locations. In the first quarter, we delivered gross profit of CAD 478 million, an increase of 53%.

[Todd Ingledew, CFO at Aritzia]

Gross profit margin expanded 310 basis points to 50.3%, despite 190 basis points of pressure related to tariffs and the suspension of the de minimis exemption. Our gross profit expansion was driven by IMU improvements, leverage on store occupancy and other fixed costs, as well as lower markdowns. SG&A expenses for the quarter were CAD 305 million, leveraging 150 basis points as a percentage of net revenue to 32%. The improvement was primarily driven by expense leverage and savings from our Smart Spending Initiative. Adjusted EBITDA was CAD 192 million, an increase of 81% compared to the first quarter last year. Adjusted EBITDA as a percentage of net revenue expanded 410 basis points to 20.1%, compared to 16% in the first quarter last year. We've now delivered sustained margin expansion for nine consecutive quarters. This underscores our commitment to optimizing profitability while continuing to invest in our future growth.

[Todd Ingledew, CFO at Aritzia]

Turning to the balance sheet, our inventory balance was CAD 548 million at the end of the first quarter, up 34% from last year. We remain pleased with the quantity and composition of our inventory, which continues to be well-positioned to drive sales. Our liquidity position at the end of the first quarter is strong, with CAD 472 million in cash, no debt, and zero drawn on our CAD 300 million revolving credit facility. During the first quarter, we repurchased approximately 565,000 shares, returning CAD 66 million to shareholders. We plan to continue to opportunistically repurchase shares throughout fiscal 2027. Turning to our outlook, the strong momentum in our business has continued into the second quarter of fiscal 2027. Our spring/summer product is resonating extremely well, and we continue to fuel robust demand with disciplined inventory management.

[Todd Ingledew, CFO at Aritzia]

Given quarter-to-date trends, we expect net revenue in the second quarter to be in the range of CAD 1.1 billion-CAD 1.125 billion. This represents an increase of 35%-39% compared to the second quarter of fiscal 2026. This is driven by comparable sales growth in the high 20s and the strong contribution from our boutique openings. We expect gross profit margin in the second quarter to increase approximately 250-300 basis points, driven by ongoing IMU improvements and occupancy cost leverage. We forecast SG&A to leverage 25-75 basis points as a percentage of net revenue compared to the second quarter last year. Expense leverage and savings from our Smart Spending Initiative are partially offset by strategic investments in infrastructure to support our growth.

[Todd Ingledew, CFO at Aritzia]

Due to the strength of our first quarter and the continued strong momentum of our business, we're raising our net revenue forecast for the full fiscal year to CAD 4.55 billion-CAD 4.75 billion. This represents growth of 23%-28% from fiscal 2026. Our guidance for the year is underpinned by high teens to low 20s comparable sales growth and the strong contribution from 12-13 new boutique openings and four to five repositions. We expect gross profit margin to increase by 175-225 basis points compared to last year. As a reminder, our outlook includes global tariffs in the United States at 10% and the ongoing suspension of the de minimis exemption for the remainder of the year. Our outlook does not yet include the benefit of any tariff refunds.

[Todd Ingledew, CFO at Aritzia]

We expect SG&A as a percentage of net revenue to be flat to down 50 basis points compared to fiscal 2026. Our outlook for adjusted EBITDA as a percentage of net revenue is now approximately 19.5%, primarily driven by improvements in gross profit margin. In closing, the ongoing strength of our performance further reinforces our confidence in our strategic growth levers. We continue to see a significant runway for profitable growth in the United States. Our strategic initiatives, including new and repositioned boutique expansions, digital growth, and targeted marketing investments, continue to drive momentum and support our multi-year growth trajectory. These opportunities, our proven track record of successful execution, and our strong financial foundation all position us well to sustain our trajectory of profitable, disciplined growth. Thank you.

[Jennifer Wong, CEO at Aritzia]

With that, operator, let's please now open up the line for questions.

[Operator]

Thank you. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. That we can get to everyone on the call today, please limit yourselves to one question. The first question comes from Brian Morrison with TD Cowen. Please go ahead.

[Brian Morrison, Analyst at TD Cowen]

Thanks very much. Afternoon, Jen and Todd. I guess well done on the print, the guide, the brand strengths. To the team's credit, you've had such success recently driving top-line and notably same-store sales growth, including your Q2 outlook, but this has been against two-year stacks in the 20s the past year. In the second half, you're going to start to lap 40% and 50% two-year stacks. The question is: how do you plan for and approach inventory for fall and winter as you comp these numbers? As it looks like high single digit, low double digits in the back half of the year. Is it simply plan conservatively and then air freight? I ask as it seems aggressive to think that this elevated rate can go on perpetually.

[Jennifer Wong, CEO at Aritzia]

Hi, Brian. Thanks for your question. No question that we are lapping extremely robust growth, particularly in Q3 and Q4. I want to zoom out a little bit on your question there. We're experiencing fantastic momentum in our business, which we did say has continued into Q2, and quite frankly, has accelerated slightly into Q2. I have nothing but confidence. I've never been more confident in the business as I am right now. We are very well set up with all of the elements to continue to drive the strength, certainly starting with product. It always starts with product. We have an amazing range of product. The assortment is fantastically balanced between client favorites and newness. We absolutely have the right product in the right place at the right time. We will be opening another 12-13 boutiques this year.

[Jennifer Wong, CEO at Aritzia]

Plus, we're benefiting from the mid-teen square footage growth of the past year. We've got a slew of digital initiatives on the go. We continue our strategic investments in marketing. As it relates to product, we have, over the last 24 months, honed our planning and allocation and inventory management aspect of our product strategy. The team has done a phenomenal job in optimizing our inventory. Part of our business model, an integral part of our business model, is our ability to flex our inventory in season to meet demand. That will be a fundamental part of our ability to perform and continue with the strength and meet the business as we continue with 2027.

[Brian Morrison, Analyst at TD Cowen]

Thank you. Good luck.

[Jennifer Wong, CEO at Aritzia]

Thank you.

[Operator]

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

[Martin Landry, Analyst at Stifel]

Hey, good afternoon. Congrats on your amazing results. I was wondering if you could talk a little bit about the fall/winter collection that's probably going to roll up into your stores in the coming weeks. If you can talk about it from a style perspective, but also from a numbers perspective, a percentage of newness, average price point versus last year. Any tidbits on a numbers basis would be helpful as well.

[Jennifer Wong, CEO at Aritzia]

Our product strategy, Martin, has not changed. Clearly, our strategy is working. We'll be launching fall later this month, and excited to see the fall launch perform. We'll be entering the season as we do every season with a balanced assortment between newness and client favorites. When you walk into the store, once we're fully launched, what you'll see is roughly 50/50 between the two. As far as price points, as far as styles, as far as our franchises, we will continue with our existing product strategy and continue to have a range of product that appears to be resonating with the client very well.

[Martin Landry, Analyst at Stifel]

Okay.

[Operator]

The next question comes from Jon Keypour with Goldman Sachs. Please go ahead.

[Jon Keypour, Analyst at Goldman Sachs]

Hi. Thank you, guys. I guess the question I want to know about is the Canada business, considering how well it held up. I think there were a good amount of fears heading into this quarter. You guys did so well with it. Obviously, the growth numbers get bigger in the back half. I'm just wondering how you think about this business entering maturity. It doesn't seem like it's fully mature yet, but it's your most well-established business. I guess, how long can these kinds of growth rates sustain, and what do you think exactly is driving it? Is it new customer acquisition, or is it bigger basket or something like that?

[Jennifer Wong, CEO at Aritzia]

Thanks for your question. I think you're asking specifically about Canada.

[Jon Keypour, Analyst at Goldman Sachs]

Yeah.

[Jennifer Wong, CEO at Aritzia]

What we're seeing is the comps continue to be meaningfully positive in both countries, in both Canada and the U.S. Obviously, our growth is driven by the U.S. We're super pleased with the trends that we're seeing in Canada. Our performance continues to be strong. It has been trending strong for the last several quarters. We're not seeing anything in our data that indicates a trend otherwise right now. For us, things continue to be strong, and we see that going forward.

[Jon Keypour, Analyst at Goldman Sachs]

Thank you.

[Operator]

The next question comes from Luke Hannan with Canaccord. Please go ahead.

[Luke Hannan, Analyst at Canaccord]

Thanks. Good afternoon. Congratulations on the really strong results. Jennifer, you touched on, in your prepared remarks, that you had undertaken a marketing pilot for the international business, which showed strong results. I'm curious to know if you can share anything, maybe a little bit more detail, on what exactly that pilot showed you, and whether or not the international customer or potentially the go-to-market strategy there differs at all compared to how it is that you're expanding in North America. Thanks.

[Jennifer Wong, CEO at Aritzia]

Yeah. It was a very small pilot that we started in May. I want to emphasize a very small pilot. We launched with typical performance marketing in digital, paid search, paid social. We did some affiliate campaigns. We kept it to two localized regions, two countries. What we saw was a tremendous response, both in terms of traffic and conversion. All of our hypotheses appear to be playing out. We'll continue with the pilot. It's still very early days, but it's a good test. It's a good test for us to see how our product and our brand is received around the world.

[Luke Hannan, Analyst at Canaccord]

Thank you very much.

[Operator]

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

[Irene Nattel, Analyst at RBC Capital Markets]

Thanks. Good afternoon, and let me add my congratulations on the quarter. You mentioned that the stores are paying back, or you keep saying, rather, that the stores are paying back in less than one year. Can you talk about how they're maturing and whether some of these new stores are delivering significantly better than expected performance as they go through, let's say, year two, year three? Then, the related question is, particularly in new markets that you're entering, can you talk about the extended halo effect there in both channels?

[Todd Ingledew, CFO at Aritzia]

Yeah, I'll take that, Irene. I hope you're doing well. Historically, when we look at a comp waterfall, our Canadian stores always open closer to maturity, with the U.S. stores having a multi-year ramp. What we're seeing now, and really over the last couple of years, is that the U.S. stores are opening much closer to maturity. We're seeing, especially with the FY 2026 cohort of stores, that they're opening in a very strong position from a productivity perspective. Then those stores are falling into the comps that we're seeing across the business, which obviously is extremely strong. There is still growth in those new stores once they're open, but they're falling more in line with how we're comping across the business.

[Todd Ingledew, CFO at Aritzia]

From a halo perspective, we continue to see approximately a 70% lift in the first year, in new markets in our e-commerce business. That's compared to the growth across the rest of, say, the United States in the case of the U.S. We're seeing a 70% lift there. It continues to be a very meaningful contributor to our overall growth, and we're really pleased with the performance of the new stores.

[Irene Nattel, Analyst at RBC Capital Markets]

Thank you.

[Operator]

The next question comes from Chris Li with Desjardins. Please go ahead.

[Chris Li, Analyst at Desjardins]

Good afternoon, everyone. Congrats on the strong results again. As you continue to exceed your expectation, I know you mentioned growth was very broad-based. I'm just wondering, as you look back, was there one or two areas that particularly outperformed your internal expectation? Was it the mobile app? Was it a new store contribution? Just curious to see, was it one or two that really kind of exceeded your own internal expectations? Thank you.

[Jennifer Wong, CEO at Aritzia]

Thanks for your question, Chris. Really, the strength is driven by a confluence of factors. It's never any one thing. It's everything working so well together, and gaining the momentum together. Of course, as I've said in the past and said even on this call, it starts with product. Product is central and at the heart of what we do, and we've absolutely gotten the product right. We have the product that our client is loving and new clients are loving. We've had an exceptional response to our spring/summer product. This is, of course, supported by extremely well-positioned inventory. We continue to see strong momentum in e-commerce that's led by the mobile app. The retail square footage growth, of course, contributes.

[Jennifer Wong, CEO at Aritzia]

We've increased strategic investments in marketing to help keep awareness up and to help keep us top of mind with clients, and attract new clients as well as I said, keep us top of mind with existing clients. All of that working together, they're all synergistic together, and not one of those things on their own. It can't be contributed to any one of those things. It's all of it working together.

[Chris Li, Analyst at Desjardins]

That makes sense. Have a great summer. Thank you.

[Jennifer Wong, CEO at Aritzia]

Thank you.

[Operator]

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

[Stephen MacLeod, Analyst at BMO Capital Markets]

Thank you. Good afternoon in Vancouver. I will also add my congrats on a great quarter. I just wanted to ask a question. You've talked a lot about kind of new client acquisition, obviously, the investments in digital and further expansion in the U.S. as well as international is driving that. I was just wondering if you could give any color on any differences or nuances in shopping behaviors between new and existing clients in terms of things like traffic or basket size or frequency of repeat shopping.

[Jennifer Wong, CEO at Aritzia]

The short answer is we see consistency across both cohorts. We're loving the fact that our client base is growing, that we're acquiring new customers, we're also seeing returning clients continue to love our product and love our Everyday Luxury experience. Really, the productivity that we're seeing is consistent across both cohorts. We're not seeing any marked differences in any of those metrics. Again, really pleased and really encouraged and really happy to see that we have a broad appeal across such a broad base.

[Stephen MacLeod, Analyst at BMO Capital Markets]

That's great. Thank you, Jennifer.

[Jennifer Wong, CEO at Aritzia]

Thank you.

[Operator]

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

[Mauricio Serna, Analyst at UBS]

Great. Good afternoon. Thanks for taking my question. Congratulations on the very strong results. Maybe just to follow up on Canada, pretty strong growth. Any sense of how you're thinking of the back half growth? Just a sense of that. Then just on that point, maybe could you elaborate a little bit more on the profile of the new Canadian customer that you're acquiring? Is it maybe in terms of age or anything like that? That would be very helpful to start with.

[Jennifer Wong, CEO at Aritzia]

Yes, in terms of how we're seeing the back half of the year, we're seeing our trends continue. There's nothing in our data to indicate that anything's going to change one way or the other. We're anticipating the trends will continue in Canada as we've been seeing them. Certainly, we have a very broad appeal across three generations effectively. As the younger cohort grows into our target, we're acquiring new customers. Certainly with our broad product assortment and with the expansion of the different occasions that we develop product for, we're able to accommodate and meet the needs of a client as they go throughout all the different phases of their life, which I think is so amazing. I think that between those two things, we're picking up new customers, and that's also what's driving the loyal customer who continues to shop with us throughout many years.

[Mauricio Serna, Analyst at UBS]

Got it. Thank you so much for that. A couple of follow-ups just for Todd. I think you mentioned for the full year, the implied comp is high teens to low 20s. Could you talk about, just to confirm, how are you thinking about the back half and implied comp? Just one also quick follow-up. I see that in the tables on the release, there's a mention of investment in a joint venture. Could you elaborate what that is about? Thank you.

[Todd Ingledew, CFO at Aritzia]

Yeah. Thanks, Mauricio. Yes, as you said, the comps embedded in the FY 2027 numbers are in the high teens to low 20s, driven by the continuation of the momentum in the business. For the second quarter, we're forecasting comp growth in the high 20s. For the back half of the year, we're forecasting comp growth in the double digits as we lap two years of exceptional growth. Keep in mind that at the top of the range, our two-year stack comp is consistent for the first three quarters, and our three-year stack in the fourth quarter actually accelerates. We're extremely pleased with how the business is performing, and that's reflected in the revenue guidance for FY 2027, which is now CAD 4.55 billion-CAD 4.75 billion, or 23%-28% total growth on top of 35% total growth last year.

[Todd Ingledew, CFO at Aritzia]

From the joint venture perspective, that's an acquisition of a piece of property effectively for a future store location.

[Operator]

Once again, so that we can get to everyone on the call today, please limit yourself to one question. The next question comes from Dylan Carden with William Blair. Please go ahead.

[Dylan Carden, Analyst at William Blair]

Sorry, I was muted. Is there a way to quantify the, and if you did, apologies, I'm kind of just a little bit late, the benefit of the app from a sales standpoint? Did you say in the prepared remarks that the productivity of the larger format stores is approaching smaller format? If that's true, or even if it's not, are you thinking about expanding overall square footage across the fleet? Thanks.

[Todd Ingledew, CFO at Aritzia]

Thanks, Dylan. From an app perspective, it's contributing incremental sales in the high single digits, for the digital business. That was what occurred in Q1 and what's included in our guide. We're extremely pleased with the app. We have 2 million downloads thus far, which has been far exceeding our initial expectations. We're seeing approximately 30% of our digital business now transacted through the app. It's a great tool for us to drive conversations with our clients and increase our personalization. Did you want to take the other one?

[Jennifer Wong, CEO at Aritzia]

I was going to. You go ahead.

[Todd Ingledew, CFO at Aritzia]

There we go.

[Jennifer Wong, CEO at Aritzia]

I think it was in my prepared remarks that I talked about the larger boutique sizes. We are seeing tremendous success with the larger footprint. Specifically, the sales per square foot are in line with our highly productive smaller boutiques. If I understand your question, we have in fact gone larger with our boutique sizes. If you recall, 10 years ago, we talked about an average boutique size of 6,000 sq ft. A few years later, we discussed average boutique sizes being 8,000 sq ft, and now we are at 10,000+ sq ft. Obviously, we've had some flagship stores that are considerably larger than that. Our unit economics now are based on 10,000 sq ft. These stores contribute more in terms of the dollar.

[Jennifer Wong, CEO at Aritzia]

Obviously, because they're bigger, they are contributing more and are on a dollar basis. That is because their sales per square foot are in line with the original smaller boutiques. We're extremely pleased with how this strategy has evolved. Of course, we explore all scenarios on a case-by-case basis, and we'll adjust as we see fit. Right now, we're really thrilled with where we're at with these larger format stores. They're producing and paying back.

[Dylan Carden, Analyst at William Blair]

I appreciate it. Thanks. Sorry to you, too.

[Jennifer Wong, CEO at Aritzia]

Thanks. Oh, yeah.

[Operator]

The next question comes from Joseph Civello with Truist. Please go ahead.

[Joseph Civello, Analyst at Truist]

Hey, guys. Thanks for taking my question. Add my congrats on another great update. I just wanted to ask if you could talk a little bit more about where you prioritize incremental investment dollars as sales continue to come in stronger than expected. I know marketing is still growing with sales. Just any additional color there or initiatives on the app or anything like that. Thanks.

[Todd Ingledew, CFO at Aritzia]

Yeah. We are definitely investing in the app. I would categorize it as we are investing across the business. We have, whether it's our distribution center network investments with the opening of our new DC here in Vancouver and the future investments that'll be required in the U.S. network. We have tech and AI enablement investments occurring. Digital roadmap, which includes the app, there's also a lot of site enhancements occurring. We also have customer initiatives as well. It's very broad-based, the investments that we're making. We're, as we've said, balancing margin expansion with investments in our business. Yeah, we're excited about the long list of initiatives we currently have underway.

[Joseph Civello, Analyst at Truist]

Great. Thanks.

[Operator]

The next question comes from Ike Boruchow with Wells Fargo. Please go ahead.

[Ike Boruchow, Analyst at Wells Fargo]

Hey, guys. Let me add my congrats. Todd, two for you. The revenue raise for the year. No raise on the leverage you expect for the year, so I assume there's incremental investments you want to make. Can you just elaborate on where those dollars are going? Sorry if I missed it, but can you quantify the tariff and the de minimis impact on gross margin in the first quarter and kind of what's embedded the rest of the year? Because I assume that because of how tariffs have worked out, there's going to be a benefit that flips around in the back half of the year. If you walk us through the math, how those line items play out, that might be helpful. Thank you.

[Todd Ingledew, CFO at Aritzia]

Sure. From an SG&A perspective, we are expecting to be flat to down 50 basis points for the full fiscal year. We are expecting some leverage for the year, but as I literally was just saying, we're balancing that margin expansion with investments in our business. The investments are literally what I was just communicating. The expansion in our EBITDA margin is coming from the gross profit expansion. I think that's how we see it on a go-forward basis, because we do have a long runway ahead of us of growth, and it's going to require investments to ensure we're building the infrastructure and enabling that growth with investment. From a tariff perspective, we talked about the 190 basis points of pressure in the first quarter.

[Todd Ingledew, CFO at Aritzia]

In the second quarter, we expect minimal incremental pressure as compared to last year because the tariffs began to ramp in Q2 last year. In Q3 and Q4, we actually expect a modest tailwind from tariffs. There will be a slight benefit. I should say, or reiterate, that we have tariffs currently at 10%. Throughout this whole period, we've been providing our guidance based on whatever is in effect at the time. Our guide today is based off of 10% tariffs continuing. That may change in July, at the end of July, and potentially go up to 20%. If that were to occur, it would be approximately CAD 25 million-CAD 30 million of pressure in the back half of the year from the increased tariffs.

[Todd Ingledew, CFO at Aritzia]

Remembering that we have actually not yet included any benefit in our outlook for the tariff refunds, which, depending on how we treat them, would likely offset any pressure from the incremental tariffs.

[Ike Boruchow, Analyst at Wells Fargo]

The 190 for Q1, is that tariffs plus de minimis, or is that just tariffs?

[Todd Ingledew, CFO at Aritzia]

It's tariffs plus de minimis. Three quarters plus tariffs.

[Ike Boruchow, Analyst at Wells Fargo]

Got it. Thank you.

[Operator]

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

[Michael Glen, Analyst at Raymond James]

Oh, hey. Maybe just on gross margin guidance specifically. Todd, it looks like the way the guidance is structured, you're embedding very muted gross margin gains in the back half of the year, but you're also referencing you probably have this tariff tailwind. What are the items that come in and start muting the year-over-year gains in gross margin in the back half of the year that you're thinking about?

[Todd Ingledew, CFO at Aritzia]

Yeah. In the second quarter, we're forecasting 250-300 basis points of expansion, which continues to be driven by the IMU expansion and leverage on occupancy costs. For the back half of the year, we're expecting gross margin to expand approximately 150 basis points. The moderation is driven by three things. One is a reduction in leverage from the normalized revenue growth. Two is the normalization of markdowns in the back half of the year. Last year, we had extremely low markdowns in the back half of the year, so we'll be lapping those this year. Then third, the addition of occupancy and depreciation costs from the new distribution center here in Vancouver. Those are really the puts and takes. I think it's worth reminding that for the full fiscal year, we're forecasting now 175-225 basis points of gross profit margin expansion.

[Michael Glen, Analyst at Raymond James]

Okay. Thank you.

[Operator]

The next question comes from Corey Tarlowe with Jefferies. Please go ahead.

[Corey Tarlowe, Analyst at Jefferies]

Great. Thanks. Todd, I wanted to ask around gross margin. I think this is the first time literally in company's history where you've had a gross margin above 50% for the quarter. I wanted to ask about how you think about perhaps what's transient versus what's more permanent within that margin structure for the first quarter. It's probably not reasonable to expect this for this year based on how you've guided, of course. Is it perhaps feasible to start maybe thinking about this as a level in the out years for that might be achievable and/or sustainable? Thanks so much.

[Todd Ingledew, CFO at Aritzia]

Yeah. Okay. Quite a few things there. First off, it is a record gross profit margin for Q1, actually for any quarter. Really pleased with all the work that's gone on over the last several years to achieve that. I think we would categorize it in the middle innings of our gross profit expansion. We do have a number of years ahead of us where we feel like we will be able to continue that expansion. I think we'll provide more specifics on that in the fall. Yeah, I guess at the end of the day, we're pleased with what we're seeing, and I don't think that we would expect strength in the back half of this year to continue. That's because of the pressures that I outlined. While we're extremely pleased with where we're at and pleased with where we're going to end the year.

[Jennifer Wong, CEO at Aritzia]

Well, maybe what I would add, if this is where you're going with your question, is that these improvements are structural. These are improvements that are not transitory for the quarter here that allowed us to achieve the record. We do see these things being structural and fundamental to our business model.

[Corey Tarlowe, Analyst at Jefferies]

Great. Thanks so much. Just a quick follow-up, Jen. I think you had mentioned in the Q&A that Q2 accelerated. Curious if you could call out or speak to perhaps what drove that, if it was anything specific from a product perspective or whether anything you're seeing would be really helpful. Thanks so much.

[Jennifer Wong, CEO at Aritzia]

We exited Q1 slightly accelerating into Q2. I do emphasize it was slightly accelerating. I've said it a couple of times already on the call that it's not any one thing. It's a confluence of many strengths and many factors of how we execute. Starts with product. I sound like a broken record, but product is at the center of what we do. We have an exceptionally talented team who do a fantastic job. I can't sing their praises more, whether it's the creative team, our product business team, our sourcing and manufacturing team. All of them, and all of the teams within the whole product division really are fundamental to our success in any quarter. That combined with the store opening, the marketing, our digital acceleration, and all of our focus on digital. We're doing a lot of really great things in digital.

[Jennifer Wong, CEO at Aritzia]

It all comes together to produce these phenomenal results and these extraordinary results that we were able to deliver this quarter.

[Operator]

The next question comes from George Doumet with Ventum Financial. Please go ahead.

[George Doumet, Analyst at Ventum Financial]

Good afternoon, and congrats on the quarter. Maybe for Todd, based on your guidance, SG&A is expected to grow kind of in the teens for the second half of the year. Just wondering how much of that level of investment will continue into beyond fiscal 2027. Is that bulk going to be done this year? Just trying to get a sense of, I guess, how much of it is isolated to this year, how much of the investments are going to be ongoing beyond this year. Thanks.

[Todd Ingledew, CFO at Aritzia]

Yeah, I think we would expect the investments in SG&A to continue into next year and beyond. We have, as I said, a number of tech and AI enablement initiatives underway, our digital roadmap. The distribution center network expansion in the U.S. does drive operating costs as well, those projects. All of that will continue into next year. We expect our Well, potentially we would see some SG&A leverage looking out over the next several years. The vast majority of any margin expansion that we were to accomplish would be coming from gross profit.

[George Doumet, Analyst at Ventum Financial]

Thanks.

[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.

Participants

Executives

• Beth Reed, VP of Investor Relations
• Jennifer Wong, CEO
• Todd Ingledew, CFO

Analysts

• Brian Morrison, Analyst at TD Cowen
• Martin Landry, Analyst at Stifel
• Jon Keypour, Analyst at Goldman Sachs
• Luke Hannan, Analyst at Canaccord
• Irene Nattel, Analyst at RBC Capital Markets
• Chris Li, Analyst at Desjardins
• Stephen MacLeod, Analyst at BMO Capital Markets
• Mauricio Serna, Analyst at UBS
• Dylan Carden, Analyst at William Blair
• Joseph Civello, Analyst at Truist
• Ike Boruchow, Analyst at Wells Fargo
• Michael Glen, Analyst at Raymond James
• Corey Tarlowe, Analyst at Jefferies
• George Doumet, Analyst at Ventum Financial