Aritzia Inc.

We're standing by. This is the conference operator. Welcome to Aritzia's third quarter 2021 earnings call. As a reminder, all participants are in a 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 would now like to 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 Third Quarter 2021 Earnings Conference Call. On the call today, I'm joined by Brian Hill, our Founder, Chief Executive Officer and Chairman, Jennifer Wong, our President, Chief Operating Officer, and Todd Engledue, our Chief Financial Officer. Following management's discussion, we'll host a question and answer period open to analysts and investors. Please note that the remarks on this call may include our expectations, future plans, and intentions that 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 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, as well as our investor presentation are available on CDAR, as well as the investor relations section of our website, betteratseer.com. I will now turn the call over to Brian.

Thank you, Helen, and thank you everyone for joining us this afternoon. 2020 has been a year unlike any other we have experienced in our 37-year history at Aritzia. As a team, I am proud of what we have accomplished so far, despite the many challenges along the way. Looking beyond this pandemic, we're well positioned for meaningful growth, capitalizing on the unprecedented opportunities ahead. While we believe our results during fiscal 2021 have been impressive, given the circumstances, what's far more important, however, is what they signal about Aritzia's post-pandemic. Throughout this year, we progressively adjusted and adapted through the pandemic's vast challenges. Notwithstanding restrictions as a result of the virus's impact, we continue to grow our revenue, are in a much stronger financial position, and have accelerated our strategic investments in infrastructure across people, processes, and technology. Our four growth levers, digital innovation of e-commerce, retail, and omnichannel capabilities. Secondly, geographic expansion across the United States. Third, development throughout all our product divisions. And four, brand awareness in both the United States and international. drove our growth pre-pandemic, has ensured our success mid-pandemic, and will fuel our growth post-pandemic. We will emerge from COVID-19 poised to elevate our much-loved everyday luxury experience consisting of our engaging service provided by our outstanding boutique and concierge teams, our beautiful and expanding multidimensional product, our aspirational environments throughout our e-commerce and retail channels, and our captivating communications shared by world-class marketing campaigns. Together with Jennifer and Todd, I am pleased to report our Q3 results. In the third quarter of fiscal 2021, in the midst of this pandemic, we grew our revenue, we delivered meaningful EBITDA, and we strengthened our balance sheet. Todd will discuss the details shortly. At the start of the quarter, 93 of our 97 boutiques were open. However, we ended the quarter with 83 of our now 101 boutiques open. We had to close 18 boutiques in the heart of Toronto for the last week of the quarter. Unfortunately, this meant these boutiques were closed during our busiest week of the year. For health and safety reasons, capacity restrictions, and in anticipation of further boutique closures, we made the decision to pull forward the start of our Black Friday event to the week prior, stretching out demand in our boutiques. In hindsight, this was a fortuitous decision as we shortly thereafter received 48 hours notice of the boutique closures in Toronto. In spite of these closures, our decision to pull forward our Black Friday start resulted in a record event performance. For all our boutique employees impacted by these temporary closures, we have once again continued to ensure they have income continuity. This has proven invaluable in our ability to quickly reopen once the restrictions lift and continues to build loyalty within our team. I remain thankful for the commitment of our people during these times of uncertainty. Notwithstanding the impact of these closures had on our business, our open boutiques, despite severe restrictions, performed beyond our expectations. On average, at 81% of last year's productivity, an increase from the 70% productivity of Q2. Regional variation in performance endures depending on both the impact of COVID and the severity of government restrictions by geography and environment. Operating as our most effective yet profitable marketing tool, we continue to expand our boutique network thoughtfully, with fastidious location selectivity, exceptional business terms, and with downside safeguards in place. During the quarter, we successfully opened five new boutiques comprised of four ritzy boutiques, and most excitingly, our first super world boutique in Soho, New York, in the iconic former flagship Dean & DeLuca space. In addition, we expanded two of our existing boutiques, increasing our footprint in these highly successful locations. Appreciating the everyday luxury experience they've come to love and expect from us, our clients continue to enjoy our existing and new boutiques, while also showing a growing affinity to shop with us online. Client enthusiasm for our e-commerce channel sustained its accelerated momentum in the third quarter, with revenue up 78.5%, despite most of our boutiques being open. Ongoing investments online continue throughout the quarter, as Jennifer will speak to shortly. The ability to deliver new features and functions on our digital platforms allows us to thoughtfully expand our online capabilities, replicating the same everyday luxury experience our clients enjoy in our boutiques. Our boutiques and e-commerce channel complement one another. and our clients have a growing affinity to flexibly shop with us whenever, wherever. Our omnichannel clients spend three times more than both our retail-exclusive and our e-commerce-exclusive clients. Due to this, we will continue to both open boutiques and invest in our e-commerce channel, deepening our clients' loyalty. Across our boutiques and online, our fall winter assortment is arguably the best product season we've had ever at Aritzia. We have multiple programs across categories driving our businesses, resonating with our clients' evolving lifestyle. With a stronger than expected season and a purposefully conservative initial buy, we experienced sellouts across all our key programs. To capitalize on the demand, we did our best to mitigate these product shortages. However, with global transportation compromised due to the pandemic, we were somewhat inhibited in our ability to do so. Our wide assortment coupled with our product strategy of testing and reacting to highly productive programs has always served us well and will continue to do so into the future. In marketing, we continue to produce captivating campaigns, including our well-received holiday gift, which reflected and embrace our clients' current stay-at-home lifestyle. This is mirrored in our product catalog, where we continue to feature models at home with great efficiencies gained as we learn and adjust with each new season. Not only is this unique approach grounded in our prioritization of health and safety, it resonates with our clients' reality. During the quarter, we also introduced our With Love brand campaign, rooted in celebrating fearless individuality and our diverse Aritzia community, a reflection of our ongoing investment in diversity and inclusion. In short, I am proud of our entire team's achievements as we close another challenging yet successful quarter. I will now turn the call over to Jennifer to give you an update on some of the key areas of our operations. However, before I do, I would like to congratulate Jennifer on the November cover story in the Globe and Mail report on business, where she was duly recognized as one of those one of Canada's best executives.

Thanks, Brian, for the very kind introduction. And good afternoon, everyone. I trust you had a peaceful holiday season with your families and a chance to reflect and take a moment as we step into the new year. Looking back, we knew this holiday would be far from normal due to the pressured conditions imposed by COVID-19. Yet I continue to be proud of what our team has achieved through tremendous adaptability, focus, and resilience. We successfully executed another strong holiday season while making considerable progress to advance our long-term strategies. And we achieved all of this while continuing to uphold our industry-leading health and safety standards and ensuring our people whose jobs were affected by mandated COVID measures had income continuity. I want to touch on three areas of focus within operations this quarter. First, the efficient and effective management of our distribution center and concierge teams to support our peak holiday period. Second, the continued investment in digital capabilities to elevate our omnichannel offering. And finally, the fulfillment of our responsibility as a corporate citizen by giving back to the communities where we live and work. We began prepping for our peak holiday period in mid-fall with the hiring and training of nearly 800 seasonal associates across our distribution centers and expanded our concierge team with the addition of almost 180 permanent and seasonal staff and redeploying 100 retail style advisors from temporarily closed boutiques. By all standards, it was an historic Black Friday for Aritzia. We achieved record-breaking performance on several fronts. On Black Friday alone, we recorded nearly 1 million visits on aritzia.com. And over the entire event, our distribution centers picked, packed, and shipped more than 1 million units, forging new all-time records at two of our DCs. while our concierge team facilitated more than 120,000 client interactions over email, chat, and phone. And in particular, I'm proud of the manner in which our DC and logistics operations pivoted in response to industry-wide carrier delays. Above and beyond our efficient daily operations, our teams acted with swift operational dexterity, making real-time adjustments to mitigate these carrier delays. Our omnichannel experience was another point of pride in the quarter. As our boutiques warmly welcomed our clients with exceptional service, our e-commerce team seamlessly mirrored that experience online with enriched functionality, while our concierge team engaged our clients with quality care across both channels. Our concierge function was established in 2012 with the startup of our e-commerce website. It has grown over the years alongside Aritzia.com including the migration to a new case management system under the SAP platform and a new integrated and vastly expanded phone system early this year. We also hired a seasoned vice president of concierge, just in time to lead through an exceptionally busy holiday period. Talk about hitting the ground running. And while our team has done a phenomenal job to date, we're further investing to take every aspect of this growing operation to the next level. We will evolve and integrate our people, processes, and technology in this critical area to support our accelerated e-commerce growth and elevate our omnichannel offering, to delight our customers. During the quarter, we continued to invest in our digital capabilities to enrich our multi-channel client relationship. We made enhancements to site navigation and invested in personalization. This included the opportunity for clients to customize their superpuff and an AI tool for size and fit, which has already been used by hundreds of thousands of clients. In addition, we introduced free shipping and free returns to support our continued U.S. expansion. And as I mentioned on the last call, we launched our Afterpay partnership in November. While the concept of buy now, pay later is relatively new in Canada, this payment option share of e-commerce transactions is growing globally, particularly amongst Gen Z and millennials. With limited marketing to date, we've already seen higher average order values and after-pays proving to be an attractive choice for our clients to transact with us. Our investment in our digital selling tool, the Clientel app, is also continuing to drive higher average order values and conversion. We remain excited about the app's potential and expect to roll it out across all of our boutiques in the coming months. And finally, we're planning additional Omni capabilities to integrate our boutiques with our e-commerce channel. As a result of the recent reclosure of our boutiques in Ontario and Quebec, we introduced a new call and collect service whereby our clients may purchase online through our concierge and pick up curbside at a closed boutique. And starting in fiscal 22, we will introduce functionalities such as store inventory visibility, buy online ship from store, and buy online pick up in store. These initiatives allow our clients to shop precisely where, when, and how they prefer, while driving sales and conversions as we optimize inventory across our network. With the impact of COVID-19 reducing many companies' ability to give during the holiday season, we were grateful to be able to sustain our corporate giving program. With the support of our people and our loyal clientele, we continued to give back to our communities where we live and work. Through our riskier community giving program, we donated holiday backpacks filled with comfort essentials to youth experiencing homelessness in Vancouver's downtown Eastside, and partnered with local agencies to gift a thousand supercuts to women and girls in need across Canada. And lastly, with COVID numbers escalating in many parts of Canada as the year drew to a close, we extended our Orixia Community Care Program to even more people on the virus's frontline. In 2020, we gifted a total of 110,000 clothing packages to healthcare heroes with our heartfelt appreciation. And despite the massive disruptive nature of COVID-19 this past year, we continue to successfully navigate the uncertainty with agility. We've redoubled our focus on managing through the virus resurgence, and it's been tremendously rewarding to see all that we've accomplished. While we could not have imagined this kind of strain pre-pandemic, it's made us all that much wiser and stronger. As Brian noted earlier, our performance under the weight of COVID is a compelling indicator of just what we can and will do once it's over. I'll now turn the call over to Todd to discuss our financial results.