Aritzia Inc.

Thank you for standing by. This is the conference operator. Welcome to Aritzia's second quarter 2023 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 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

Thank you, Ariel, and thanks for joining Arisia's second quarter fiscal 2023 earnings call. On the call today, I'm joined by Jennifer Wong, our Chief Executive Officer, Todd Engledue, our Chief Financial Officer, and Brian Hill, our Founder and Executive Chair. Following prepared remarks from Jennifer and Todd, there will be an opportunity to ask questions. Please note that remarks on this call may include our expectations, future plans, and intentions that may constitute forward-looking statements. Such outlook is based on estimates and assumptions made by management regarding, among other things, general and economic and geopolitical conditions and the competitive environment, as well as further COVID-19 resurgences. Actual results may vary. We would refer you to our most recently filed management discussion and analysis and our annual information form, which include a summary of the material assumptions as well as 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 the MD&A are available on CDAR as well as the investor relations section of our website at aridsia.com. I'll now turn the call over to Jennifer.

Thanks Beth. Good afternoon everyone and thank you for joining us today. Our performance in the second quarter of fiscal 2023 highlights the ongoing sales momentum that we are seeing across our business. Demand from new and existing clients continues to exceed our expectations as our much loved everyday luxury experience resonates across all geographies and all channels. Our better than anticipated sales results in Q2 were led by exceptional strength in the US, where both new and mature markets outperformed. E-commerce growth also meaningfully exceeded our expectations, underscoring the success of our multi-channel business. In Q2, we delivered net revenue of $526 million, an increase of 50% from last year. fueled by our business in the US, which continued to grow at a phenomenal pace, increasing 80% from last year. In Canada, we grew by 29% with strong double-digit comparable sales growth and the benefit of reopened boutiques in Eastern Canada. And in e-commerce, we saw impressive growth of 33% on top of 49% last year. Our outstanding sales growth continues to be driven by new client acquisition as more people discover and become loyal to the Aritzia brand. Our unprecedented growth in the U.S. was fueled by exceptional comp store sales, as well as the progress we made on our geographic expansion strategy. In Q2, our retail business surpassed our expectations, increasing 60% from last year. We opened three new boutiques in the quarter to a tremendous client response, two of which were in new markets, Orlando, Florida, and Atlanta, Georgia. We also opened in Palo Alto, expanding our presence in Northern California, where we now operate four boutiques. We remain extremely pleased with the early results we're seeing in our new boutiques and in our new markets. The ongoing success of our real estate strategy enhances our already premier boutique portfolio and positions Aritzia for continued growth into the future. Our e-commerce business continues to be driven almost entirely by traffic growth, led by the U.S. where traffic increased more than 50% from last year. To maintain our momentum, we're continuing to add new and improved features and functionalities to Aritzia.com, including user-generated content. We also signed a multi-year contract with a personalization platform. This will allow us to drive deeper loyalty and deliver an enhanced client experience, including tailored product discovery. In Q2, We continue to see key programs and client favorites drive our strong demand. Selling in our professional, fashion, and tailored assortments continue to increase as we maintained our momentum in lifestyle apparel. We also continue to invest in the Super Puff brand, expanding the assortment across styles and colors. And we're installing a dedicated super world experience in select stores, which will bring the brand to life in a new and immersive way for our clients. Our multi-brand business model continues to enable us to provide our clients with beautiful products for all aspects of their life. The combination of our boutique expansion and beautiful product collections continue to propel our brand awareness. The Aritzia brand is resonating incredibly well with our clients. who have been actively posting about us on TikTok, generating 2 billion views to date. Our clients are doing the talking for us, and through our own social and influencer strategies, we are amplifying what they are already saying. In Q2, we made further progress on our path to getting famous in the U.S., where client growth has increased more than 300% in the past two years. we finished the quarter with more clients than ever before. Like all global businesses, we continue to navigate supply chain challenges. Last year, we were unable to procure all of the inventory we required due to supply chain disruptions, which did affect sales. In Q2, we strategically pulled forward winter buys into fall and selective spring buys into winter in order to mitigate supply chain risk and ensure our ability to meet the robust demand for our product. We are confident with the composition of our inventory, which is concentrated in client favorites. And we believe that we are appropriately positioned to capitalize on the strong sales momentum we are experiencing. Looking ahead, We are encouraged by moderating air and sea rates as well as improved transit time. Sea freight timing is now approximately seven to eight weeks, down from 11 to 12 weeks at the peak, though still roughly double our pre-pandemic range. We expect freight times will hold steady through the holiday season and likely decline going into next year. Our outstanding performance has helped us to continue attracting a team of world-class talent. We filled a multitude of key positions across all areas of the business, and we are continuing to invest in talent, particularly across creative, e-commerce, marketing, and technology as we build the infrastructure that will allow us to capitalize on our growth strategies. While competition for talent remains challenging, we are extremely competitive due to our incredible employment brand, industry-leading wages and benefits, and inspirational workplace environments. This quarter, I visited many of our boutiques across Canada and the U.S. As always, I was impressed with our leadership and the proven ability of our style advisors to progress their careers much like I did myself. We are growing from within, hiring and developing amazing talent. Their passion for Aritzia and enthusiastic representation of our brand is truly incredible. I am thrilled with the great momentum that I saw not only among our people, but in our busy and energetic boutiques as well. Our beautiful products, aspirational shopping environment, and exceptional service are clearly resonating with clients. Our commitment to our people and the planet remains a top priority. We published our inaugural ESG report in Q2 and our first United Nations Global Compact Communication on progress against our ESG initiatives. We also joined as a member of the Good Cashmere Standard and continue to prioritize incorporating certified sustainable raw materials in our product collection. Over 60% of our fall and winter styles will contain a sustainable attribute. We also continue to focus on supporting the people we serve across our communities. This year, we observed and commemorated Orange Shirt Day through Aritzia's first-ever collaboration with Athena Pika, who is a Salish artist from Kwantlen First Nation. We were proud to amplify Indigenous voices through the gifting and sale of orange shirts featuring artwork by Athena with all proceeds going to Orange Shirt Society. Demand for our brand remains exceptional, and we continue to successfully navigate a dynamic macro backdrop. While we are closely monitoring our business and the external environment, we are, as always, focused on the long term, and we are investing in our strategic initiatives and the infrastructure required to scale our business for years to come. Now I'll pass the call over to Todd.