Aritzia Inc.'s net income jumped by almost 72 per cent over the last year as the company's e-commerce and U.S. revenues soared, but some of its financial figures also showed softness in the Canadian market.
The Vancouver-based apparel retailer announced Wednesday that its third-quarter net income totalled $74.1 million compared with about $43.1 million a year earlier.
Aritzia executives framed the big jump as a sign of strength on many fronts rather than the product of success in one area.
"When things are going this well, it is difficult to pinpoint and isolate any one aspect of it. It is everything working together," said chief executive Jennifer Wong, when pressed by analysts on a Wednesday call looking to parse exactly what had driven the quarter's gains.
"It is that clich茅 saying that the whole is greater than the sum of the parts."
Some of the parts she named as successes include a product assortment that balanced customer favourites with new additions, optimized inventory processes that were better able to meet consumer demand, new store openings and increased marketing efforts that boosted Aritzia's online sales channels.
The company saw a 14 per cent year-over-year spike in e-commerce net revenue along with foreign exchange gains and lower markdowns and warehouse costs.
There was also a sense that the increased attention Aritzia is putting toward the U.S. is paying off.
In the last year, the company's net revenue attributable to the U.S. increased 23.6 per cent to $403.7 million as it opened "flagship" stores in New York's SoHo neighbourhood and on Chicago's trendy Michigan Avenue.
Increasing the company's footprint has a "halo effect," Wong said.
"When we open a new store and a new market ... all of the buzz around the flagship openings and the marketing around that does drive traffic to the e-commerce site," she said.
What Aritzia saw in the U.S., however, stood in contrast to Canada, where net revenue declined 0.6 per cent year-over-year to $325 million.
Aritzia attributed the decline in revenue growth in Canada to its annual warehouse sale, which this year was held in the second quarter instead of the third quarter. The most recent sale brought in $10 million in retail net revenue in Canada.
It also pointed out that the market was affected by the lack of a digital archive sale, which wasn't held this year but has driven sales in past years.
Canadian consumers have been grappling with the aftermath of a spike in inflation and interest rate hikes to tamp it down, which caused many to cut back on discretionary spending.
Inflation continued to ease in 2024, setting up the company for a Black Friday that chief financial officer Todd Ingledew said "broke all records."
In the third quarter, which ended Dec. 1 and spanned the start of the holiday shopping period, Aritzia's profit amounted to 63 cents per diluted share, compared to 38 cents per diluted share in the third quarter of its 2024 fiscal year.
Its adjusted net income reached about $83 million, up 57.5 per cent from a year earlier.
Its net revenue increased by 11.5 per cent year-over-year to $728.7 million.
Looking forward, the company expects its fourth quarter net revenue to be in the range of $830 million to $850 million.
In its next fiscal year, Wong teased Aritzia will launch an enhanced international e-commerce cite and a mobile app.
"I'm really excited about all the initiatives," she said. "I'm probably most excited about the mobile app."
This report by The Canadian Press was first published January 9, 2025.
Companies in this story: (TSX:ATZ)
Tara Deschamps, The Canadian Press
