Aritzia Inc.

Thank you for signing by. This is the conference operator. Welcome to IRTSIA's second quarter 2025 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 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then 0. I will now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

Good afternoon, and thanks for joining Arisia's second quarter fiscal 2025 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 will 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 the forward-looking information. 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. I'll now turn the call over to Jennifer.

Good afternoon, everyone, and thank you for joining us today. We're very pleased with our performance in the second quarter of fiscal 2025. We delivered a 15% increase in net revenue to $616 million. Comparable sales grew 6.5%. The momentum we saw in June and July accelerated in August, driving higher than expected net revenue in the quarter. Our growth was fueled by our business in the United States, which generated a 24% increase in sales in the second quarter. This was driven by our proven real estate expansion strategy, a meaningful acceleration in e-commerce growth, and strong comp growth in our existing boutiques. In Canada, we saw less momentum, which we believe is due to a softer consumer environment. Sales growth at 6% was driven by the benefit from a calendar shift, which Todd will discuss later. In our retail channel, we drove an increase of 18% in net revenue in the second quarter. This is primarily due to the progress we've made on our real estate expansion strategy. In Q2, we opened two additional boutiques in the state of Florida, in Boca Raton and Jacksonville, as well as our sixth boutique in Texas, north of Dallas. Thus far in Q3, we've opened two boutiques, one in San Diego and one in the Chicago area. For the balance of the year, we plan to open an additional nine to 10 new boutiques and two to three boutique repositions. This includes our new Chicago flagship and the repositions of our Soho and Fifth Avenue flagships in Manhattan. Needless to say, we're super excited about this extraordinary pipeline of openings, the most we've ever had in a single year. Our boutique openings have a consistent track record as our most predictable driver of top-line growth. And it's clear they help drive brand awareness and client acquisition in both new and existing markets. At our Jacksonville location, which is in a new market for us, 60% of clients during the opening month were new to Arisia. And in our newest Texas boutique, an existing market for us, 30% of clients during opening month were new to the brand. Boutique repositions also continue to perform exceptionally well, driving top-line growth and profitability while elevating the customer experience. Our newest reposition near Chicago is generating incremental net revenue of 60% and delivering meaningfully higher contribution. Turning to e-commerce, we returned to double digit growth in the second quarter as net revenue grew 10%. This was primarily driven by increased traffic in the US as well as a strong response to our fall product. We are encouraged by the momentum in this channel. We continue to focus on a number of initiatives to drive future growth in e-commerce and enhance our clients' digital journey. During Q2, we continue to make progress on enhancing arutia.com, and we expect the improved site to go live in the back half of this fiscal year. Improved functionality across the site, such as one-page checkout and AI-driven search results, will offer clients an even more frictionless and easy shopping journey helping to drive conversions. Foundational components will also enable the development of a mobile app, which we expect to launch next fiscal year. In addition, we've kicked off a project to enhance our international e-commerce site and customer experience. By optimizing for features such as local currency and prepaid duties and taxes, we'll be able to drive higher conversions. These enhancements will not only fuel revenue growth, but are also expected to improve channel operating margins. Last but not least, our investment in digital marketing this year has been successful, showing strong positive results across the business. We're excited to continue to optimize and build on our learning. Turning now to product, we saw a strong start to the fall season driven by both new styles and our client favorites. We've seen continued success in our well-known and loved categories like sweat fleece and suiting. as well as exciting growth in newer collections like Homestretch. New launches aimed at maximizing share of closets resonated very well with our clients, indicating we have opportunity to expand in these offerings. Our focus on optimizing the quantity and composition of our inventory is reflected in our strong second quarter net revenue growth. In addition, due to our improved inventory levels, we had a lower mix of markdown sales compared to the second quarter last year, which helped to drive more than 500 basis points of gross margin improvement. As part of our strategy to grow brand awareness, particularly in the U.S., we remain focused on amplifying our product and our much-loved everyday luxury experience, including the compelling value we offer to our clients. We also continue to strengthen our cultural relevance and enhance awareness by partnering with brand-propelling influencers and growing our roster of celebrity fans. In Q2, influencer Nara Smith, known for her meticulous and viral content on TikTok, starred in our fall sweat fleece campaign. Her attention to detail aligns wonderfully with our commitment to perfecting every aspect of sweat fleece, from fits to fabrics. In addition, the roster of celebrities wearing our product included Blake Lively in Sculpt Knit and Emily Ratajkowski in Sweat Fleece, highlighting the best-in-class quality of our iconically Aritzia products. It's important to me to see things firsthand and to stay connected to what's going on in our stores. In my boutique visits this quarter, I was particularly impressed with how well all of the beautiful products we have this season is merchandised. highlighting the differentiated styling and the excellent quality of our fabrics. It's elevated and there's great balance across the assortment between prints, solids, foreign fashion colors, tailored and casual styles. I also visited our flagships under construction. There is still work to do, but I can tell you no detail has been left unconsidered. They're stunning. They're aspirational. They offer amazing exposure, and I'm so excited for them to open in time for holiday. We have a long history of executing with excellence, and we intend for this to be no exception. We spent recent months hiring, developing, and building our team, perfecting design elements, and honing store operations to prepare for this level of retailing. We'll be able to offer an exceptional client experience and showcase our product in the most compelling and shoppable way. We're absolutely thrilled to provide this experience to Chicago and Manhattan and to all who may visit those locations. To celebrate the opening, we're planning some exciting activations in-store and in the community. Stay tuned. Now, let me turn the call over to Todd.