Aritzia Inc.

Thank you for standing by. This is the conference operator. Welcome to Oritia's fourth quarter and full year fiscal 2023 earnings call. As a reminder, all participants are in lesson-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 zero. I would now like to turn the conference over to Beth Reed, Vice President, Investor Relations. Please, go ahead.

Good afternoon and thanks for joining Aritzia's fourth quarter and full year fiscal 2023 earnings call. On the call today, I'm joined by Jennifer Wong, our Chief Executive Officer, and Todd Engledue, our Chief Financial Officer. Please note the 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 and a competitive environment. Actual results may differ materially from the conclusions, forecasts, or projections expressed by the forward-looking information. We will refer you to our most recently filed quarterly and annual management discussion and analysis and our annual information form that are 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 financial statements, and the MD&A are available on CDAR as well as the investor relations section of our website. I'll now turn the call over to Jennifer.

Thanks, Beth, and good afternoon, everyone, and thank you for joining us today. Our strong results in Q4 wrapped up a tremendous year where the momentum in our business surpassed our highest expectations. After 37 years of consistent growth, Aritzia reached $1 billion in sales in fiscal 2022. And just 14 months after that, we achieved $2 billion, ending fiscal 2023 at $2.2 billion in sales. This resulted in an unprecedented two-year top-line increase of 160% and a new $2.2 billion baseline from which we will continue to grow. Maximizing sales and meeting the surging demand for our product in an extremely dynamic operating environment was our top priority for the last two years. In fiscal 2023, we delivered 47% net revenue growth on top of 74% in fiscal 2022, primarily driven by client acquisition with consistency across customer metrics such as spend per client, shopping frequency, and basket size. More people than ever before discovered our much-loved everyday luxury experience with our active client base in the United States increasing by more than 50% during the year, on top of an increase of over 100% in the prior year. In addition, we added seven new boutiques in the United States an increase of 18%. The U.S. now generates more than half of our total net revenue and we still have a long runway of growth ahead of us. Turning to Q4, record sales were higher than anticipated across all channels and all geographies. Net revenue of $638 million increased 44% from last year with comparable sales growth of 32%. This growth was primarily fueled by our business in the U.S., where our outstanding pace continued, growing by 56% from last year, while in Canada, we saw strong sales growth of 32%. In e-commerce, revenue grew an impressive 51% in Q4, driven by traffic growth in both Canada and the U.S., as well as improvement in conversion due to search and browse site enhancements and our improved inventory position compared to last year. We also made progress toward delivering e-commerce 2.0. Personalized and product recommendation tests showed increased conversion rates and higher revenue per session. We will continue to further refine our personalization strategies as we execute on our e-commerce 2.0 roadmap to ensure that we are bringing a captivating, personalized experience to our clients throughout their shopping journey on aritzia.com. We will seek to inspire the customer to discover our entire diverse product assortment while tailoring content to their individual style and preferences to keep them engaged. We continue to believe that e-commerce 2.0 is the key to more than doubling our e-commerce revenue by fiscal 2027. Our retail net revenue increased 38% in Q4, surpassing our expectations. Our 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 two new boutiques during the quarter, La Cantera in San Antonio, Texas, which is a new market for us, and our fourth boutique in the state of Texas, as well as Fashion Outlets of Chicago. Later this month, we will open our fifth boutique in Texas, South Lake Town Center in Dallas. New locations continue to open above our sales expectations and our growing collection of premier boutiques remains our number one client acquisition tool by propelling our brand and driving and supporting our e-commerce business. In Q4, We also expanded our Upper Canada boutique in Ontario to a stunning 15,000 square foot space including an AOK cafe. Our boutique expansions continue to perform exceptionally well with better than expected payback periods as the additional square footage allows us to provide our clients with an elevated shopping experience and a meaningfully wider product assortment. In product, Sales of our professional assortments continued to increase even as we maintained our momentum in casual and active wear styles. We also experienced another strong outerwear season as we continue to be the destination for the Super Puff and wool coats. Our Super Puff influencer program strengthened throughout winter with the Super Puff seen on celebrities like Tracee Ellis Ross, Lupita Nyong'o, and even Martha Stewart. We also continue to see strong results through our partnership with Emma Chamberlain and recently featured her as the face of our Sunday Best Spring Campaign, Sunday Musing with Emma. Supported by our social and influencer strategies, our beautiful product and real estate expansion strategy are driving increased awareness of the Aritzia brand and a greater market share, propelling us along our path to gaining widespread recognition across the US. Shifting to supply chain, we took possession of our new Cornerstone Distribution Center in Toronto, which will serve as a fulfillment hub for Eastern Canada and Eastern United States as soon as the floor was poured in January. As a reminder, We are moving from a third party operated 150,000 square foot facility to a brand new Aritzia operated 550,000 square foot location that is designed to support several years of growth. The racking is in now and it remains on track to open in late August. We ended the quarter with inventory up 125% over last year. Our inventory is heavily concentrated in client favorites, and the year-over-year growth has further moderated throughout Q1 of fiscal 2024. We continue to expect growth to more closely align with sales trends by the end of Q2. Our growing recognition and industry-leading wages have allowed us to continue attracting world-class talent. The ongoing investments that we're making in retail labor help ensure that our clients continue to receive exceptional service, which is a key tenant of our everyday luxury experience. We are continuing to make smart, strategic investments in our future. This includes investments in infrastructure that will allow us to catch up with our recent tremendous growth. And for example, we're currently in the process of upgrading our point of sale system for increased stability and performance while laying the foundation for future enhancements such as mobile point of sale and omnichannel services. In addition, we are investing in talent across all areas of the business as we scale our teams to align with our recent growth. That said, while we continue to strategically invest with a long-term view We are also focused on optimizing our processes to more efficiently manage our current business and ensure scalability for our ongoing growth. We have already identified and actioned opportunities that will deliver cost efficiencies beginning in the back half of the year, which Todd will discuss momentarily. Turning to ESG, as Aritzia continues to grow and as our clients strive to live and purchase better, We're working to extend our sustainability programs and accelerate our progress across the value chain. Fiscal 2023 was our first full year with an established environmental and social board committee, and we plan to publish our second annual ESG report in June. I will now pass the call over to Todd.