Aritzia Q2 Earnings Call Highlights

Key Points

• Aritzia exceeded expectations in Q2 fiscal 2027, with revenue up 44% year over year to CAD 1.17 billion, comparable sales up 35%, and adjusted EBITDA margin reaching a record 21%, excluding tariff refunds.
• U.S. and digital operations drove growth: U.S. revenue increased 60% and digital revenue rose 68% to CAD 403 million, while expanding boutiques and the mobile app helped boost traffic, conversion and repeat purchases.
• The company raised its full-year outlook to CAD 4.78 billion–CAD 4.88 billion in revenue, with low-20s comparable-sales growth and adjusted EBITDA margin expected near 20%; Aritzia also continued share repurchases and ended the quarter debt-free.

Aritzia TSE: ATZ reported second-quarter fiscal 2027 results that exceeded management’s expectations, with net revenue rising 44% year over year to CAD 1.17 billion and comparable sales increasing 35%.

Chief Executive Officer Jennifer Wong said growth was broad-based across geographies, sales channels and product categories. The company’s adjusted EBITDA margin reached a second-quarter record of 21%, up 590 basis points from the prior year when excluding CAD 97 million in tariff refunds. Adjusted earnings per share more than doubled from a year earlier, Wong said.

“These results, which exclude the benefit of CAD 97 million in tariff refunds, demonstrate the tremendous earnings power of our business model as we continue to scale,” Wong said.

U.S. and Digital Growth Lead Results

U.S. net revenue increased 60% to CAD 779 million during the quarter, supported by demand across digital, existing boutiques and newer locations. The company increased U.S. square footage by approximately 20% over the trailing 12 months, adding 15 new and repositioned boutiques, according to Wong.

Canadian net revenue increased 20% to CAD 390 million, led by digital-channel momentum and double-digit comparable sales growth in retail.

Digital revenue climbed 68% to CAD 403 million and represented 34% of total business, Wong said. The company attributed the growth to strong product demand, marketing investment, its mobile app and traffic gains. International digital sales rose 165% from the prior year.

Wong said the mobile app has exceeded the company’s initial expectations. Aritzia reported more than 2.5 million app downloads and said the platform has driven higher conversion, more frequent sessions and repeat purchases.

Retail revenue rose 34% to CAD 767 million, extending a six-quarter streak of retail top-line growth above 30%, according to management. The company opened 14 new boutiques and completed five repositionings during the trailing 12 months. New boutiques opened in fiscal 2026 are producing higher sales per square foot than prior cohorts and are tracking toward faster payback periods, Chief Financial Officer Todd Ingledew said.

Aritzia expanded into Birmingham, New Orleans and St. Louis during the second quarter. Wong said new locations have generated strong traffic and sales following their openings, while also contributing to an “omni-channel halo effect.”

Margins Expand as Markdown Rates Decline

Excluding tariff refunds, adjusted gross profit increased 60% to CAD 570 million. Adjusted gross margin expanded 490 basis points to 48.7%, driven by initial merchandise margin expansion, leverage on occupancy and other fixed costs, and lower markdowns.

SG&A expense was CAD 345 million, representing 29.5% of revenue and leveraging 130 basis points from the prior year. Ingledew attributed the improvement to expense leverage and savings from the company’s smart-spending initiative.

Adjusted EBITDA, excluding tariff refunds, doubled to CAD 246 million. The company has now produced adjusted EBITDA margin expansion for 10 consecutive quarters, Ingledew said.

Management said comparable-sales growth was driven primarily by traffic rather than ticket size. Wong also said inventory was positioned to meet demand and contributed to an improvement in markdown rates. Inventory totaled CAD 715 million at quarter-end, up 36% year over year. Ingledew said the increase partly reflected insufficient inventory in the prior-year period.

The company ended the quarter with CAD 528 million in cash, no debt and no borrowings under its CAD 300 million revolving credit facility. During the quarter, Aritzia repurchased about 900,000 shares for CAD 125 million. Through Oct. 2, the company had repurchased 2.1 million shares at an average price of CAD 127, returning CAD 270 million to shareholders.

Raised Full-Year Outlook

Aritzia said momentum continued into the third quarter, supported by demand for fall merchandise. For the fiscal third quarter, the company expects revenue of CAD 1.275 billion to CAD 1.325 billion, representing year-over-year growth of 23% to 27%. It expects comparable-sales growth in the high teens.

Third-quarter gross margin is expected to increase by 100 to 150 basis points, primarily from continued initial merchandise margin improvement and occupancy-cost leverage. SG&A as a percentage of revenue is expected to rise by 50 to 100 basis points due to the timing of strategic infrastructure investments.

For the full fiscal year, Aritzia raised its revenue outlook to CAD 4.78 billion to CAD 4.88 billion, representing growth of 29% to 32% from fiscal 2026. The forecast assumes comparable-sales growth in the low 20s and contributions from 12 to 13 new boutique openings and four to five repositionings.

• Full-year adjusted gross margin is expected to expand by 225 to 275 basis points.
• SG&A as a percentage of revenue is expected to be flat to down 50 basis points from fiscal 2026.
• Adjusted EBITDA margin is expected to be approximately 20%.
• Guidance assumes U.S. global tariffs of 10% to 12.5% and excludes any benefit from tariff refunds.

Management said it plans to continue investments in digital capabilities, artificial intelligence, distribution-center capacity, merchandising planning software, customer initiatives and RFID technology. Wong said the company is on track to open six new U.S. boutiques and two repositioned locations in the third quarter.

Aritzia plans to present its next multiyear plan at an Investor Day scheduled for Oct. 27.

About Aritzia (TSE:ATZ)

Aritzia 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.

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