Aritzia Inc.

Standing by, this is the conference operator. Welcome to Aricia's third quarter 2023 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, then zero. I would now like to turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead. Thank you.

Thank you, Charisse, and thanks for joining Arisia's third 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 information. Such forward-looking information is based on estimates and assumptions made by management regarding among other things, general economic and geopolitical conditions, the competitive environment, and further COVID-19 resurgences. Actual results may differ materially from the conclusions, forecasts, or projections expressed by the forward-looking information. We would refer you to our most recently filed quarterly and annual management discussion and analysis and our annual information form that is available on CDAR, 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 the forward-looking information. Our earnings release, the related financial statements, and the MD&A are available on CDAR at www.cdar.com, as well as the investor relations section of our website. I'll now turn the call over to Jennifer.

Thanks, Beth. Good afternoon, everyone, and thank you for joining us today. I hope you all enjoyed the holidays, and Happy New Year from all of us at Aritzia. 2022 marked another exceptional year for our company as we welcomed new clients through our team of world-class talent expanded our premier portfolio of boutiques, and delivered a plan for our next phase of growth. Our performance in the third quarter of fiscal 2023 showcases the ongoing sales momentum that we're seeing in our business as our much-loved everyday luxury experience continues to resonate with both new and existing clients. Our record Q3 sales were higher than anticipated, as all geographies and all channels outperformed our expectations. Net revenue of $625 million increased 38% from last year, with comparable sales growth of 23%. This growth was fueled by our business in the US, where our outstanding pace continued, growing by 58% from last year. In Canada, we grew total sales by an impressive 22% and saw strong double-digit comparable sales growth. Our phenomenal sales results continue to be driven by new client acquisition as more people discover and become loyal to the Aritzia brand. During our Black Five Day event, we delivered record-breaking results with retail sales hitting an all-time high on Black Friday. In e-commerce, On one of the very first days of the event, we had our highest day ever and then beat that record again on Black Friday itself. During sale periods, e-commerce is becoming a larger and larger contributor to our growth. Throughout the Black Friday event, our concierge team kept pace, handling 150,000 client interactions. I'm incredibly proud of all our team's dedication and hard work. Our highly engaged people across North America, along with our best-in-class processes and infrastructure, allowed us to deliver another exceptional last five days. In Q3, our retail business surpassed our expectations, increasing 39% from last year. Our tremendous momentum in the quarter was fueled by outstanding comparable sales growth in our boutiques, as well as the progress we made on our real estate expansion strategy. We opened four newly expanded boutiques in the quarter, starting with a record-breaking opening day at our Polo Park location in Winnipeg and then ending the quarter with another record-breaking opening day at our Yorkdale flagship in Toronto. Our boutique expansions are performing exceptionally well, with the additional square footage allowing us to deliver an enhanced experience for our clients, resulting in better-than-expected payback periods. In e-commerce, revenue grew an impressive 36% on top of 47% last year. We continue to experience strong traffic growth and demand. We also saw a meaningful lift in conversion as we benefited from site enhancements and our improved inventory position compared to last year. On November 29th, we celebrated the 10th anniversary of our e-commerce business, We've come a long way in our journey to create a best-in-class shopping experience, and we remain committed to improving and elevating our online platform as we make progress towards delivering e-commerce 2.0. In Q3, we enhanced product discovery by making it easier for clients to shop matching sets, understand size, length and color availability, and navigate the site with less scrolling. We also optimize the types of images we use across various parts of our website to better enable clients to find and evaluate products. For example, we change product listing page images for our sale items to off model from on model, which makes it easier for our clients to identify which items are on sale. In Q3, key programs and client favorites continue to drive strong demand, which was balanced across the assortment. Selling in our professional, fashion, and tailored assortments continued to increase, even as we maintained our momentum in lifestyle apparel. We also saw a strong start to the outerwear season. We are pleased with the balanced demand we're seeing across our product offering as our multi-brand business model continues to enable us to cater to our clients' needs across all aspects of their lives. Our beautiful products and boutique expansion strategy continue to propel our brand awareness and drive increased market share. The Aritzia brand is resonating incredibly well on social media with our clients who are doing the talking for us. And to our own social and influencer strategies, we are amplifying what they're saying. Our views on TikTok have surpassed 2 billion and are growing at a rate of nearly 100 million every month. In Q3, we continued to expand our influencer program, most notably with our Super On You campaign for the fall-winter Super Puff collection, featuring meaningfully more paid collaborations than last year. The campaign integrated seamlessly across all our marketing channels, from social to Aritzia.com, and helped drive further progress on our path to getting famous in the U.S., where total client growth was 48%. Turning to supply chain, we saw record order and sales volume both online and in our boutiques during our Black Five Day event. We topped our record for most e-commerce orders processed in a single day while getting packages to our clients on time and more quickly than last year. I'd like to give a big shout out to our distribution team who enabled us to deliver exceptional results during the quarter while also managing earlier than expected delivery of our spring product. We ended the quarter with inventory up 187% over last year. The supply chain environment was dynamic and uncertain at the time we began placing orders for fall and winter product over 12 months ago. Given what we knew at the time, we made the strategic decision to order future season buys earlier in order to build back our inventory base due to unprecedented sales growth, mitigate supply chain risk, and ensure our ability to fuel the robust demand for our product. On top of that, improved freight timelines resulted in inventory arriving even sooner than anticipated. We expect inventory growth to begin to moderate as we move through Q4 and to more closely align with sales trends by the end of Q2 of fiscal 2024. We expect markdowns in Q4 to be no greater than pre-pandemic levels. We are confident with the composition of our inventory, which is heavily concentrated in client favorites and has certainly enabled the strong sales growth we have delivered. We believe we are positioned to capitalize on the continued robust demand for our products and the start of our spring selling season. While the competition for labor remains challenging, our growing recognition and industry-leading wages have allowed us to continue to attract world-class talent. We are experiencing higher wages and salaries in our distribution centers and boutique networks and adding headcount in our support office. Our people are a key component of the existing infrastructure that is enabling us to deliver 38% revenue growth, as well as the future infrastructure that will allow us to capitalize on our growth strategy as we deliver everyday luxury to more and more clients across the world. Investing in talent is an investment in our future. Turning to our ESG strategy, we have submitted a letter of intent to the Science-Based Target Initiative confirming our commitment to set targets to reduce greenhouse gas emissions within the next 24 months. We're excited to join the more than 4,000 global organizations who are part of this initiative. And our community remains a key priority for Eritrea. and this year marked our third annual warm coat donation where we gifted 4,000 winter coats valued at over a million dollars to our Aritzia community partners across North America. This quarter, I did visit many of our boutiques, both in Canada and across the Southeastern and Midwestern United States. What particularly impressed me is how well our everyday luxury experience has translated across geography, from Vancouver to Dallas, in Toronto to Miami. The Aritzia brand is showing up wonderfully and consistently with a geographically diverse client base discovering and loving our beautiful products, aspirational shopping environment, and the exceptional service they're receiving from our very passionate style advisors. I could not be more confident in our ongoing geographic expansion strategy and our runway for growth in the United States. Now, I will pass the call over to Todd.