Aritzia Inc.

Thank you for standing by. This is the conference operator. Welcome to Ritzia's second quarter 2021 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I will now turn the conference over to Helen Kelly, Vice President of Investor Relations. Please go ahead.

Thank you, Anastasia, and thank you all for joining Aritzia's second quarter 2021 earnings conference call. Apologies for the brief delay. On the call today, I'm joined by Brian Hill, our Founder, Chief Executive Officer and Chairman, Jennifer Wong, President and Chief Operating Officer, and Todd Engledue, our Chief Financial Officer. Following management's discussion, we will host a question and answer period open to analysts and investors. Please note that remarks on this conference call may include our expectations, future plans and intentions, and may constitute forward-looking statements. The uncertain and dynamic nature of COVID-19 and its ongoing impact could continue to materially alter our performance. We would refer you to our most recently filed management's discussion and analysis and annual information form, which include a summary of the material assumptions, as well as certain material risks and factors that could affect our future performance and our ability to deliver on these forward-looking statements. Our earnings release, the related financial statements, and MD&A are available on CDAR, as well as the investor relations section of our website at ericdaer.com. I'll now turn the call over to Brian.

Thank you, Helen, and thank you, everyone, for joining us this afternoon. I'm pleased to report alongside Jennifer and Todd are Q2 results, which reflect the encouraging recovery of our business. Notwithstanding the ongoing impact of COVID-19 and the evolving social, economic and political climate, we are pleased with our performance and excited about the outlook for the future. And I could not be more grateful for our incredible team with whom I have had the privilege of working alongside every day. All of our boutiques are now open and have been performing better than our expectations. Our e-commerce business has maintained its exceptional growth, albeit not at the same rate as when our boutiques were closed, at far higher projections than previous to COVID. Our world-class talent and infrastructure in which we continue to invest remains strong, and we have capitalized and will continue to capitalize on the many opportunities made available in this unprecedented time. Net revenue was $200 million in Q2, down 17% from $241 million last year. As you will recall, our net revenue was down 43% in Q1. The significant improvement in our quarter-over-quarter results is an encouraging sign of our business's ongoing recovery. Despite shuttering our retail operations in March, we were thrilled by the response of our people and our clients. As we reopened and began the recovery of our retail operations early May, this enthusiasm carried forward into Q2. Our multi-channel client relationship continued, upholding the momentum of our e-commerce business, which delivered 82% growth compared to last year, despite the reopening of our boutiques throughout the quarter. Importantly, Our increasing revenue combined with highly effective inventory and cost management allowed us to maintain our strong cash position. As a result of keeping all our people employed during the shutdown and starting to plan our reopening the moment we closed our doors, we were able to reopen our boutiques quickly, efficiently, and above all, remain vigilant with our health and safety precautions for our people, our clients, and our communities. At the start of the quarter, 31% of our boutiques were reopened, and by the end of it, 96% were. As of September 9th, all our boutiques were reopened. Notwithstanding lower traffic and social distancing limiting our in-store capacity, as we reopened our boutiques in the second quarter, our clients enthusiastically returned. While it is too early to tell what our new normal boutique performance will be, we were encouraged by the persistent improvement in our boutique productivity during the quarter, with reopened boutiques performing, on average, at 70% of last year's productivity. With geographical variation in performance depending on the past and present impacts of COVID-19, this is clearly a regional recovery for us. Suburban boutiques outperformed downtown boutiques and Canada, unsurprisingly, recovered in Q2 at a quicker pace than the United States. During the quarter, we began a number of initiatives and launched new enhancements to our e-commerce website, enriching our client shopping experience, which Jennifer will share with you shortly. In addition, our site navigation and content on the breadth of offerings were optimized, allowing our clients to more easily shop various attributes such as fabric, rise, length, and color. This meaningful extension of our site navigation supports our expanding product offering and will continue to scale with the growth of our assortment. And while we have typically largely forgone paid advertising, the online environment offers compelling opportunities to test. As such, we recently launched a paid media pilot to evaluate the potential return on a formal paid media program. We will share more details if this becomes a meaningful ongoing initiative. As noted, we see unlimited potential in our online growth, complementing the strategic advantage of a strong boutique network. Our clients continue to demonstrate their desire for an omni experience, and this multi-channel relationship presents boundless opportunities. Since the beginning of COVID-19, as we have discussed, our product team pivoted flawlessly. Immediately upon closing our boutiques in the first quarter, we focused on moving our spring-summer inventory. This put us in great inventory position to start the second quarter and allowed us to maintain markdown levels consistent with the same time last year. This meant that at the beginning of August, we were in a remarkably clean inventory position which allowed us to launch fall with new, exciting product that has been incredibly well received and notably has facilitated full price selling. Second, we effectively pivoted our inventory to reflect our clients' lifestyles and activities with less professional and event product to more of a casual and lifestyle product. As we recently saw in our clients' response to the launch of our fall 20 product lines, we are still chasing the overwhelming demand that we have experienced since the start of COVID. And thirdly, we began our exciting new initiative to significantly expand our product assortment. The expansion of breadth, including new style development, depth, including sizes, length, and colors, and new categories such as swim, intimates, bags, shoes, and beauty, many of which are targeting our e-commerce channel, began with our Fall 20 collection, and we will have an even larger impact on Spring 21 and thereafter. As Jennifer will elaborate in a minute, we are exceedingly pleased with the launch of our product lifestyle management system this week, which will support the ongoing expansion of our product strategy. As we move forward with our expansion, attracting top creative talent remains in utmost importance. In the second quarter, we expanded our design team with talent acquired from world-renowned fashion brands who are already making a significant contribution to our product expansion strategy. And to complement our design team, we further invested in our manufacturing talent, securing senior leaders whose global experience is invaluable. In marketing, we presented our clients with captivating campaigns that both reflected their stay-at-home reality and resonated with their adjusted lifestyles. Our product catalog continues to successfully feature models shooting from home, and our compelling product campaigns continued with the fall launch of each of our major brands. During the quarter, we wrapped up our Aritzia Community Care Program, which we launched to show our heartfelt gratitude and support from those fighting on the virus frontlines. Through the program, we gifted 100,000 frontline health care workers in Canada and the United States with custom clothing packages, a total retail value of $10 million. It was our honor to do our part to support the selfless health care heroes. Last but not least, sustainability has always been a priority for us. We are proud to have completed our first CDP climate assessment in August, and officially became a company with carbon-neutral operations within our offices, stores, and managed DCs as of the second quarter, covering our 2019 scope 1 and 2 emissions. We achieved all this through all of our efforts to minimize our footprint, complemented by purchasing renewable energy credits and VCS-certified carbon offsets. While this is an important first step, we know there is more we can do as an industry leader to make a difference. We are committed to this important work and we will continue on our journey to do the right thing for our people and the planet. As we progress into our new normal, we are encouraged by our results and in embracing our opportunities. We are proud of how much we have accomplished as a team in the second quarter. Our results are testament to the everyday luxury experience that continues to resonate with our loyal clients. Our engaging service, beautiful product, aspirational environments, and the unwavering commitment of our people. Looking at Q3 to date, we are pleased with the positive client response to our fall-winter product launch. This has manifested itself into sustained momentum of e-commerce business and continued improvement in boutique productivity in the first six weeks of the third quarter. As we now prepare for the holiday season, which represents our busiest time of year, we are cautiously optimistic about our potential. Given our clients' enthusiastic response to our fall launch, we are prepared, as always, to respond to the demand with flexibility. As we move forward through the fall season and enter winter, we are already experiencing sellouts and are quickly chasing reorders on these highly productive styles. And while occupancy restrictions, recent increases in COVID-19 positive case rates, and new corresponding government restrictions in some markets will continue to impact our retail performance, our e-commerce business is well positioned to continue to offset these measures. I will now turn the call over to Jennifer to give you an update on some of the key areas of our operations. Jen?