Aritzia (TSE:ATZ) reported a sharply stronger start to fiscal 2027, with management citing broad-based demand across geographies, channels and brands during the company’s first-quarter earnings call.
Chief Executive Officer Jennifer Wong said the apparel retailer delivered net revenue growth of 43%, supported by a 35% increase in comparable sales. Adjusted EBITDA margin reached what she called a record first-quarter level of 20%, while adjusted earnings per share rose 96%.
U.S. Expansion and Canadian Demand Drive Sales
Wong said Aritzia’s U.S. net revenue increased 55% in the quarter, fueled by demand across new boutiques, existing boutiques and digital channels. She said the company benefited from 16 highly productive new and repositioned U.S. boutiques over the past year, as well as strong comparable sales in existing locations.
In Canada, net revenue rose 25% to CAD 313 million, according to Chief Financial Officer Todd Ingledew. He said the increase was primarily driven by strong comparable sales growth in both digital and boutiques. Wong also highlighted the reopening of Aritzia’s Oakridge Park boutique in Vancouver, noting that Oakridge was the site of the company’s first standalone location in 1984.
Across channels, retail net revenue increased 39% to CAD 666 million, while digital net revenue rose 56% to CAD 285 million. Management attributed the digital growth to strong traffic trends, the company’s mobile app and marketing investments.
Wong said Aritzia’s international e-commerce improvements also continued to gain traction, with international online sales up nearly 170% year over year. She said a small international marketing pilot launched in May in two localized regions produced “a tremendous response” in traffic and conversion.
Margins Expand Despite Tariff Pressure
Aritzia reported gross profit of CAD 478 million, up 53% from the prior year. Gross profit margin expanded 310 basis points to 50.3%, despite 190 basis points of pressure from tariffs and the suspension of the de minimis exemption, Ingledew said.
The margin expansion was driven by initial markup improvements, leverage on store occupancy and other fixed costs, and lower markdowns. SG&A expenses were CAD 305 million, or 32% of net revenue, leveraging 150 basis points year over year, which Ingledew attributed to expense leverage and savings from the company’s Smart Spending Initiative.
Adjusted EBITDA increased 81% to CAD 192 million, and adjusted EBITDA margin expanded 410 basis points to 20.1%. Ingledew said the company has now delivered margin expansion for nine consecutive quarters.
At quarter end, Aritzia had CAD 548 million in inventory, up 34% from last year. Ingledew said the company was pleased with both the quantity and composition of inventory. Aritzia ended the quarter with CAD 472 million in cash, no debt and nothing drawn on its CAD 300 million revolving credit facility. During the quarter, the company repurchased about 565,000 shares, returning CAD 66 million to shareholders.
Guidance Raised for Fiscal 2027
Management said business momentum continued into the second quarter, supported by demand for spring and summer products. Aritzia expects second-quarter net revenue of CAD 1.1 billion to CAD 1.125 billion, representing growth of 35% to 39% compared with the prior-year quarter. The outlook assumes comparable sales growth in the high 20% range and contributions from boutique openings.
For the full fiscal year, Aritzia raised its net revenue forecast to CAD 4.55 billion to CAD 4.75 billion, representing growth of 23% to 28% from fiscal 2026. The forecast is based on comparable sales growth in the high teens to low 20% range, as well as 12 to 13 new boutique openings and four to five repositions.
The company expects full-year gross profit margin to increase 175 to 225 basis points and adjusted EBITDA margin to be approximately 19.5%. Ingledew said the outlook assumes global tariffs in the U.S. remain at 10% and that the suspension of the de minimis exemption continues for the rest of the year. The outlook does not include any benefit from potential tariff refunds.
In response to an analyst question, Ingledew said Aritzia expects minimal incremental tariff pressure in the second quarter, a modest tariff tailwind in the third and fourth quarters, and potential pressure of CAD 25 million to CAD 30 million in the back half of the year if tariffs rise to 20%.
Management Highlights App, Store Economics and Investment Plans
During the question-and-answer session, Wong said Aritzia’s product strategy for fall remains unchanged, with stores expected to feature a roughly 50/50 mix of newness and client favorites once the season is fully launched.
Ingledew said Aritzia’s U.S. stores are opening closer to maturity than in the past, with new stores falling more in line with companywide comparable sales trends. He also said the company continues to see about a 70% lift in e-commerce growth in new markets during the first year after opening a boutique, compared with broader U.S. growth.
The company’s mobile app has reached 2 million downloads, Ingledew said, exceeding initial expectations. He said roughly 30% of Aritzia’s digital business is now transacted through the app, which contributed incremental sales in the high single digits for the digital business in the first quarter.
Wong said larger boutiques of 10,000 square feet or more are producing sales per square foot in line with smaller, highly productive locations. She said Aritzia’s unit economics are now based on 10,000-square-foot stores, though the company evaluates locations case by case.
Management also pointed to ongoing investments in distribution, technology, AI enablement, digital enhancements and customer initiatives. Wong said the company recently brought online a new 380,000-square-foot distribution center in British Columbia and is preparing to expand its U.S. distribution network to support growth in both digital and retail channels.
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.
