Aritzia Reports First Quarter Fiscal 2022 Financial Results

VANCOUVER, BC, July 13, 2021 / - Aritzia Inc. (TSX: ATZ) ("Aritzia" or the "Company"), a vertically integrated, innovative design house offering Everyday Luxury online and in its boutiques, today announced its first quarter financial results for fiscal 2022 ended May 30, 2021.

"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. Driven by strong client response to our beautiful product assortment, our eCommerce revenues continued their positive trend, growing 19% on top of the 125% increase that we 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," said Brian Hill, Founder, Chief Executive Officer and Chairman.

"We are emerging from the pandemic confident in our ability 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. We are leveraging our world class operational expertise, infrastructure and strong financial position to expedite investments across our four key strategic growth drivers, as evidenced by our recent accelerated product expansion into men's with the acquisition of Reigning Champ. I remain deeply grateful for our people's commitment to delivering our Everyday Luxury experience and our clients' enduring loyalty to Aritzia," concluded Mr. Hill.  

First Quarter Highlights

·        Net revenue increased 121.7% to $246.9 million from Q1 2021 and 25.5% from Q1 2020 despite the closure of 34 of the Company's 102 boutiques for approximately two-thirds of the quarter, with the open boutiques in Canada operating under capacity restrictions

·        eCommerce revenue increased by 18.6% to $104.0 million from Q1 2021 and 167.3% from Q1 2020, comprising 42.1% of net revenues in Q1 2022

·        Retail sales productivity of open boutiques in the quarter trended, on average, at 99% of pre-COVID-19 levels in Q1 2020 despite capacity restrictions and limited operating hours

·        Gross profit margin⁽¹⁾ increased to 44.2% from 11.7% in Q1 2021, and 43.5% in Q1 2020

·        Adjusted EBITDA⁽¹⁾ increased to $40.9 million from $(25.2) million in Q1 2021

·        Adjusted Net Income⁽¹⁾ of $0.19 per diluted share, compared to $(0.23) per diluted share in Q1 2021

First Quarter Results Compared to Fiscal 2021

Net revenue increased by 121.7% to $246.9 million, compared to $111.4 million in Q1 2021. The Company has seen an unprecedented acceleration of sales in the United States, where net revenues increased by 205.3% to C$114.3 million, compared to C$37.4 million in Q1 2021.

• eCommerce revenue increased by 18.6% to $104.0 million, compared to $87.6 million in Q1 2021. The Company's eCommerce business continued its momentum, building on the 125.3% increase in Q1 2021 when all of the Company's boutiques were closed.

• Retail revenue increased by 501.6% to $143.0 million, compared to $23.8 million in Q1 2021. Retail revenue performance in the quarter continued to be impacted by the closure of 34, or half, of the Company's 68 boutiques in Canada for approximately two-thirds of the quarter. This compares to the closure of all boutiques at the outset of the pandemic on March 16, 2020. During the quarter, the Company opened one new boutique in the United States. Store count at the end of Q1 totaled 102 compared to 97 boutiques at the end of Q1 2021.

Gross profit increased by 735.4% to $109.1 million, compared to $13.1 million in Q1 2021. Gross profit margin was 44.2%, compared to 11.7% in Q1 2021. Compared to Q1 2021, the improvement in gross profit margin was primarily due to leverage on fixed costs, lower markdowns and the strengthening of the Canadian dollar.

Selling, general and administrative ("SG&A") expenses increased by 61.8% to $70.4 million, compared to $43.5 million in Q1 2021. SG&A expenses were 28.5% of net revenue, compared to 39.1% in Q1 2021. Excluding government payroll subsidies in Q1 2021, the increase in SG&A expenses was primarily due to an increase in selling variable costs associated with the reopening of a majority of the Company's boutiques, continued investment in talent and COVID-19 related health and safety measures.

Adjusted EBITDA⁽¹⁾ was $40.9 million, or 16.6% of net revenue, compared to $(25.2) million, or (22.7%) of net revenue in Q1 2021.

Net income (Loss) was $17.9 million, compared to $(26.5) million in Q1 2021.

Adjusted Net Income (Loss)⁽¹⁾ was $21.7 million, compared to $(24.9) million in Q1 2021.

Adjusted Net Income (Loss) per diluted share⁽¹⁾ was $0.19, compared to $(0.23) in Q1 2021.

Cash and cash equivalents at the end of Q1 totaled $157.9 million, compared to $224.3 million at the end of Q1 2021.

Inventory at the end of Q1 was $165.0 million, compared to $114.6 million at the end of Q1 2021, comprised primarily of strategic buys in feature items which continue to drive the business. The intentional increase in inventory to start the Spring/Summer season successfully fueled the Company's revenue growth in the United States and continued growth in its eCommerce business during Q1.

Capital cash expenditures (net of proceeds from leasehold inducements) were $6.5 million, compared to $12.1 million in Q1 2021.

First Quarter Results Compared to Fiscal 2020

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