Canadian-based Aritzia eyes U.S. expansion.
Aritzia reported first-quarter financial results for fiscal 2022 on Tuesday, citing a “terrific” start to the year, showing net revenue growth of 122% and retail sales returning to pre-pandemic levels.
“We are extremely pleased with the start of fiscal 2022. The strength of our multi-channel business fueled first quarter net revenue growth of 122%, despite half of our Canadian boutiques remaining closed for the majority of the quarter,” said Brian Hill, founder, chief executive officer and chairman of the Canadian apparel brand, in a prepared release.
Citing strong response to its product assortment, eCommerce revenues continued its positive trend, he noted, growing 19% on top of the 125% increase the firm saw in the first quarter last year.
“Retail sales productivity at our open boutiques returned to pre-COVID-19 levels, ramping faster than we anticipated. In the United States, our brand affinity is deepening, where net revenues have more than tripled, growing at 200% from the prior year,” Hill said.
The retailer, whose casual yet trendy styles have won over celebrities like Meghan Markle and Kendall Jenner, appears to have emerged from the pandemic confident, able to “consistently deliver profitable growth given the momentum in our business, led by the continued acceleration of sales in the United States and sustained growth in our eCommerce business,” Hill noted.
For the first quarter, net revenue spiked 121.7% to $246.9 million, 25.5% stemmed from the first quarter in 2020, even though 34 of the company’s 102 boutiques were closed for approximately two-thirds of the quarter, with open boutiques in Canada operating with capacity restrictions. E-commerce revenue tracked a 18.6% increase to $104 million from the first quarter 2021 and 167.3% from Q1 2020.
Even as the year showed a promising start, product disruptions continue to be a challenge and the effects of the pandemic are not over.
“There’s a massive logistics challenge for the world,” Hill said on a call following the meeting. “Ports are jammed, freighters are full, there’s a shortage of containers. It’s hard getting product. A lot of the capabilities were decreased while the pandemic went on and all of a sudden, overnight, there’s a lot of demand.”
The raw material shortage is affecting the entire apparel industry and industries beyond, he noted.
“Particularly organic material,” Hill said. “The consumer is very conscious of things and some of the more environmental materials are hard to come by right now.”
For this year, Aritzia is focused on four key goals: product expansion, geographic expansion, building brand awareness or as Hill calls it “getting famous” in the U.S. and growing omni-channel capabilities.
Fulfilling part of its product expansion goal, Aritzia announced its $63 million purchase of Reigning Champ in June, moving the Canadian fashion brand into men’s wear. The deal marked Aritzia’s first acquisition in more than 37 years.
The earnings report comes on the heels of Aritzia’s first-ever West Hollywood boutique, The Grove, opening this Thursday. In August, the retailer will re-open its Super World boutique, located in the former Dean & Deluca store in NYC’s Soho neighborhood and a pop-up boutique in the iconic Fred Segal in Los Angeles. In total, Aritzia has 110 boutiques in North America, with 38 boutiques in the U.S.
“We’re continuing our expansion, we’ve always opened six to eight stores each year in the U.S.,” said Hill. “We’re exploring multiple deals in Florida, we’re working on deals in Ohio, Tennessee, Virginia and Nevada.”
The executive said the U.S. business has grown substantially in the last 12 months—at a far higher pace than Canada. In addition, the U.S. e-commerce business is growing at a faster rate than its Canadian counterpart.
“We’re not as famous in the U.S.,” Hill said. “We’ve had stores in Manhattan for quite some time but there are some states like Texas, Florida, Tennessee, Ohio and even parts of Southern California, we’re still getting discovered.”