Aritzia Inc.

This is the conference operator. Welcome to RITC's third quarter 2024 earnings conference 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 then zero. I would now like to turn the conference over to Beth Reed. Vice President, Investor Relations. Please go ahead.

Thanks, Ashia, and thank you, everyone, for joining Aritzia's third quarter fiscal 2024 earnings call. On the call today, I'm joined by Jennifer Wong, our Chief Executive Officer, and Todd Engledue, our Chief Financial Officer. As a reminder, 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 as well as the competitive environment. 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 management's 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 the forward-looking information. Our earnings release, the related financial statements, and the MD&A are available on CR as well as the investor relations section of our website. Following prepared remarks, in order to give everyone the opportunity to have their questions addressed, please limit yourself to one question and a related follow-up. I'll now turn the call over to Jennifer.

Thanks, Beth. Good afternoon, everyone. Happy New Year and thank you for joining us today. For the third quarter of fiscal 2024, we delivered net revenue of $654 million, an increase of 5% compared to the third quarter of fiscal 2023. This is on top of delivering outstanding revenue growth of 38% in the third quarter last year and 63% in the third quarter of fiscal 2022. Comparable sales growth increased 0.5% for the quarter, on top of a remarkable 23% comparison last year. In the US, our net revenue increased 4% for the quarter on top of 58% growth in the third quarter last year. While in our Canadian market, sales grew 5% as we lapped 22% growth in the third quarter of fiscal 2023. In our retail channel, Net revenue increased 4% in the third quarter, driven by the progress we've made on our real estate expansion strategy. During Q3, we opened one new boutique in Charlotte, North Carolina, as well as our newly expanded Prudential location in Boston. In Q4 so far, we have opened new boutiques in Indianapolis, Indiana, Puerto Madera, California, and one boutique expansion in Skokie, Illinois. Next month, we plan to open another new boutique in Roseville, California, representing three new boutiques in the fourth quarter. The performance of our new boutiques remains strong and continues to result in better-than-expected payback periods. Our most recent new boutiques remain on track to pay back in approximately one year or less, ahead of our expectations for 12 to 18 months. The new Charlotte boutique we opened in November is generating better-than-planned sales results and tracking to pay back in just 10 months. Our boutique expansions also continue to perform well, elevating the customer experience as well as driving increased revenue and profitability. The expanded boutique we opened in Boston last August is generating incremental sales growth of 40%, and rent has increased by only 25%. delivering a meaningfully higher contribution. Turning to e-commerce, the net revenue increased by 6% in the third quarter, following three years of extremely strong growth and resulting in a four-year CAGR of nearly 40%. That said, we believe the potential growth in our e-commerce channel is greater than our recent performance. And with that, I'm extremely pleased to announce that we have added a chief digital officer to our senior leadership team. The chief digital officer has oversight of the digital customer journey and is responsible for bringing everyday luxury to life online. This individual has a proven track record of delivering impressive top line and bottom line results through successfully building and scaling best in class digital businesses. We've also increased our level of digital marketing. The natural next step in our influencer strategy In a compliment to our boutique opening, we believe digital marketing will help grow our brand awareness in the U.S., protect our product franchises, and position us to acquire even more new customers. We're also in the process of upgrading our technology stack, which is a major milestone in the e-commerce 2.0 journey and will help unlock all future customer-facing experiences online, ultimately positioning us to realize our e-commerce 2.0 vision across our three value propositions, tailored product discovery, intuitive experiences, and creative innovation. Throughout the quarter, we continued our pilot of additional omnichannel services, buy online, pick up in store, and ship from store. We completed our ship from store rollout in Canada with revenue exceeding our expectations. At a minimum, we believe the incremental contribution of our omnichannel services could ultimately drive a low to mid-single-digit percentage of e-commerce sales. We're very encouraged with our early omnichannel results and look forward to beginning our rollout in the U.S. next month. In product, our assortment of new styles resonated well with our clients during Q3, and we saw a strong start to the outerwear season across puffers and wool coats. We continue to expect our assortment to improve with a higher proportion of new styles for spring 2024, which begins to launch at the end of this month. From an inventory perspective, we're very pleased with the progress we've made in continuing to optimize our position. At the end of Q3, inventory was down 22% over last year. We were able to clear through our inventory and have less product at the end of the season compared to last year. and we therefore expect to sell more new products and client favorites for spring. During the quarter, we had our first ever digital archive sale, building on the success of our annual physical warehouse sale here in Vancouver. The event went better than planned, allowing us to profitably clear more product early in the season and to test additional inventory clearing strategies as we grow. To date, we have not seen any material cannibalization to regular price or seasonal sales as a result of the archive sale. And to be clear, our promotional strategy has not changed. We run a full price retail model with markdowns used to clear items that we no longer plan to sell in the future. Throughout the fourth quarter, we expect our inventory position to continue to improve and we look forward to starting spring 2024 with a more optimized product assortment. In marketing, as I mentioned earlier, we have increased our level of digital marketing to propel brand awareness in the US, including paid search and paid social, and successfully launched our affiliate marketing program. Early results have been positive, and we are expanding our social and affiliate programs to help ensure our brand is top of mind, drive client acquisition, and drive conversions. Our Super Puff campaign this year featured a cast of high-profile influencers and celebrities, including Emma Chamberlain, chef and model Gabrielle Bestel, NASCAR driver Tony Bredinger, skier Austin Ross, and a musician named Maria Zardoja. We strategically partnered with a wide range of athletes and fashion and cultural icons to connect our Super Puff with the whole of our client base. Our puffer is designed for anyone and everyone. Already well known for its style, this year we highlighted its superior technical qualities, positioning the Super Puff as the most versatile puffer in the marketplace. Turning to supply chain, this was our first Black 5-Day and Cyber Monday utilizing our new Ontario Distribution Centre, and it was a tremendous success. After coming online just three months earlier, the new facility ramped up smoothly to accommodate volumes higher than we've ever experienced, and it operated as our primary distribution center, packing three times the number of orders compared to the peak day of our outsourced Ontario distribution center last year. Our already exceptional click-to-door improved meaningfully in both countries, and by 45%, for more than an entire day in Canada, as the in-source facility is both more productive than our prior facility and able to handle all of our East Coast volume. Needless to say, we're extremely pleased with the ramp-up of our new facility, where productivity KPIs continue to exceed our expectations. In addition, we've exited all but one of the temporary off-site warehouse facilities, which has resulted in a significant reduction in our inventory management costs. Our community remains a key priority for Aritzia, and this year marks the second year Aritzia created an orange T-shirt in recognition of Orange Shirt Day. We partnered with Indigenous artist Alana Morningstar-Duell to create a specially designed T-shirt for our people and clients, which sold out in a matter of hours and enabled us to make our largest donation to date to this organization. In addition, this holiday season marked our fourth annual warm coat donation, where we gifted 4,000 winter coats to our Aritzia community partners all across North America. With that, I will now pass the call over to Todd.