Aritzia Inc.

that remarks on this call may include are 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 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 Plus as well as the investor relations section of our website. I'll now turn the call over to Jennifer.

good afternoon happy new year and thank you for joining us today our strong performance in the third quarter of fiscal 2025 underscores the progress we've made across key areas of our business excluding the impact of last year's digital archive sale and the shift in the timing of our vancouver warehouse sale from q3 to q2 net revenue increased 16 in the third quarter as we drove accelerated momentum in e-commerce and executed on our geographic expansion strategy. Trends accelerated sequentially each month, and our performance in November was particularly strong, fueling outstanding net revenue growth that was beyond what we would have expected. The holiday season was off to a great start as we delivered record-breaking results during our Black Five Day event. Retail sales in both Canada and the United States hit all-time daily highs, with nearly 40% of our stores achieving all-time sales records. E-commerce sales in both Canada and the United States also hit record daily highs. The event generated excitement for our client base and enticed new customers to shop our brand, while we benefited from lower markdowns compared to last year's event due to our improved inventory position. Our growth continued to be fueled by our business in the United States, where, adjusting for the digital archive sale, net revenue increased 27% in the third quarter. This illustrates the strength of the Aritzia brand and growing affinity for our everyday luxury offering. Our momentum in the United States was driven by further acceleration in e-commerce growth, the outstanding performance of our new and repositioned boutiques, and strong mid-single-digit comp growth in our existing boutiques. Adjusting for the digital archive sale and the shift of our warehouse sale, net revenue growth in Canada was 5%. In November, both our Canadian retail and e-commerce channels started to accelerate meaningfully, and we're encouraged by this momentum, which has continued into the fourth quarter. In our retail channel, adjusting for the shift of our warehouse sale, we drove a top line increase of 13% in the third quarter. This growth was fueled by the contribution from 11 new and three repositioned boutiques in the last 12 months, the most boutiques we've ever opened in a single year. In Q3, we opened the reposition of our SoHo flagship on the iconic corner of Broadway and Prince Street. We also opened five new boutiques across the United States, including our first boutique in the Kansas City area, and our stunning flagship on Michigan Avenue in Chicago. Thus far in Q4, we've opened our repositioned Fifth Avenue flagship in Manhattan near Rockefeller Center, tapping off an unprecedented seven openings in just six weeks. In addition, we plan to open a total of four new boutiques in the fourth quarter, including two that have already opened. I'm extremely proud of the work our teams have done this year in executing an extraordinary pipeline of projects. And what I'm particularly thrilled with is the execution of our flagship opening. They're absolutely stunning, meticulously designed to capture the spirit of everyday luxury, truly next level. The expansive square footage allows us to showcase the depth of our beautiful product in the best possible way, carrying the broadest assortment and offering an element of discovery. The flagships allow us to offer immersive brand moments and create elevated experiences. Even with the expansion, the space feels like a boutique, designed so you can intimately experience the collection. The unparalleled designs are reflective of the neighborhoods they're in, and they're resonating so well. In Chicago, where we renovated a 100-year-old building on Michigan Avenue, We're thrilled to help generate activity and add energy back to the Magnificent Mile, supporting the revitalization of one of the most iconic shopping destinations in the United States. We have a long history of executing with excellence, and our flagships have further demonstrated our world-class capabilities. In e-commerce, adjusting for the digital archive sale net revenue increased 22% in Q3, accelerating for a third consecutive quarter. This was primarily driven by traffic growth in the United States, fueled by a focus on full funnel marketing and a strong response to our fall and winter product. We drove an increase in new, existing, and reactivated customers, illustrating that our investment in digital is paying off. We're extremely pleased with the performance of our e-commerce business, particularly as many of our digital initiatives have yet to reach the customer. To build on our momentum, we remain focused on a number of opportunities to drive sustained growth in e-commerce and elevate our clients' digital experience. These initiatives include an ongoing investment in digital marketing, which is showing strong positive results across the business as we continue to build on our learnings. A new and improved Aritzia.com, which we expect to go live later in the fourth quarter. An enhanced international e-commerce site and improved customer experience that will be rolled out in the first half of next fiscal year. And last but not least, a mobile app, which we expect to launch by the end of next fiscal year. Turning now to products. The strong response to our fall and winter assortment was driven by both new styles and client favorites. Our performance was broad-based, from the Effortless Collection to the Super Puffs and all of our brands, such as Wilfred, Babaton, T&A, and Golden. Targeted product and color drops drove excitement and interest throughout the season, with strong sell-through and positive client feedback. Our focus on refining the depth and breadth of our inventory is reflected in our strong third quarter net revenue growth. Our teams worked diligently to ensure we had the right product in the right place at the right time, which enabled us to capitalize on the elevated demand for our product. Due to our improved inventory position, we had a lower mix of markdown sales compared to the third quarter last year, which helped drive continued gross margin improvement. To build excitement and drive momentum around the Aritzia brand, we amplified our flagship opening with our biggest ever marketing and PR campaign. This included an exclusive VIP first look opening party at our Soho flagship, which brought together top VIPs, media, influencers, and celebrities, driving brand awareness, fashion credibility, and cultural relevance. This event elevates brand prestige and reinforces Aritzia's status within the global fashion landscape. It garnered media coverage from the likes of InStyle, W Magazine, and L'Officiel. Press and social coverage surrounding the event and store opening reached a combined audience of more than 350 million. Other events and activations for our flagship openings included a subway takeover at Rockefeller Center, exclusive clientele shopping opportunities, opening weekend gifts, at a SuperPOP photo booth. All of our hard work on these iconic flagship locations culminated in a tremendous amount of buzz around the Aritzia brand, helping grow awareness and build brand affinity in the United States, and helping fuel our accelerated momentum in November and into the fourth quarter across all channels and all geographies. Now, let me turn the call over to Todd.

Thanks, Jennifer, and good afternoon, everyone. Our performance in the third quarter of fiscal 2025 delivered strong results on both the top and bottom line. Trends accelerated sequentially each month of the quarter, and we again delivered meaningful gross margin expansion, resulting in a third consecutive quarter of substantial year-over-year improvement in our adjusted EBITDA margin. In order to provide clear visibility on underlying trends, During my prepared remarks, I will first reference our reported net revenue and comparable sales growth, followed by normalized growth where appropriate, which excludes the impact of the digital warehouse sale in the third quarter last year and the shift of the Vancouver warehouse sale into the second quarter this year from the third quarter last year. Turning to the details of our performance, In the third quarter of fiscal 2025, we generated net revenue of $729 million, representing an increase of 12% from last year. Comparable sales grew 6.6%. Normalized net revenue in the third quarter increased 16%, and normalized comparable sales grew 9.2%. We exited the quarter with double-digit comp growth as trends accelerated meaningfully in November. concluding with a Black Friday event that broke all records. We remain particularly pleased with the strength we're seeing in the United States, where growth in both channels exceeded 20%. Net revenue in the United States increased 24% to $404 million in the third quarter. Normalized net revenue growth was 27%. The foundation of this accelerated performance was an extremely positive response to our fall and winter product, fueled by our optimized inventory position. Our performance in e-commerce was further propelled by our investments in marketing, which drove meaningful traffic growth. Strength in our U.S. retail channel was driven by the contribution from 11 new and three repositioned boutiques in the last 12 months. In just the third quarter alone, we increased our total square footage in the United States by 25% as we opened our newly repositioned Soho flagship, our new Chicago flagship, as well as four additional new boutiques. Finally, strong mid-single digit comp growth in our existing boutiques also contributed to the outstanding performance in the United States. In Canada, Net revenue in the quarter decreased 0.6% from last year to $325 million. Normalized net revenue growth in Canada was 5%. Importantly, in November, we started to see meaningful improvement in both our Canadian retail and e-commerce channels. Turning to our sales channels, net revenue in our retail channel was $487 million. an increase of 10% from the third quarter last year. Normalized retail net revenue growth was 13%. This was driven by the performance of our new and repositioned boutiques, as well as positive comp growth in our existing boutiques in both Canada and the United States. In e-commerce, net revenue was $242 million, an increase of 14% from the third quarter last year. Normalized e-commerce growth was 22%. We're encouraged by our return to strength in this key growth pillar, where we continue to see opportunity to drive further momentum. We're extremely pleased with our continued progress as we saw e-commerce net revenue increase by more than 30% exiting the quarter. We delivered gross profit of $333 million. an increase of 23% compared to the third quarter last year. Gross profit margin was 45.8% compared to 41.5% last year, an increase of 430 basis points. This is despite an 80 basis point headwind from higher freight costs. The increase in gross profit margin was driven by IMU improvements, lower markdown rates, savings from our smart spending initiative, and lower warehousing costs. SG&A expenses for the quarter were $216 million, up 15% from last year. This was primarily driven by variable selling costs associated with the increase in revenue, as well as strategic investments that are fueling our growth, including flagship launches, marketing, infrastructure projects, and technology initiatives. SG&A as a percent of net revenue increased 90 basis points to 29.6%, compared to 28.7% last year. Adjusted EBITDA in the third quarter was $136 million, an increase of 49% from last year. Adjusted EBITDA as a percent of net revenue expanded 470 basis points to 18.7% compared to 14% last year. This demonstrates our ongoing efforts to deliver multi-year margin expansion and keeps us on track to achieve our fiscal 2027 adjusted EBITDA margin target of approximately 19%. Turning to the balance sheet, at the end of the third quarter, inventory was $462 million, up 16% from last year, closely aligned with normalized sales growth. We're pleased with the composition of our inventory, and we're well positioned to capitalize on the strong demand for our product. We generated $104 million in free cash flow during the third quarter, ending Q3 with $207 million in cash and zero drawn on our $300 million revolving credit facility. As our cash balance begins to build, we expect to use our NCIB to purchase shares opportunistically and offset the dilution of option exercises. In the third quarter, we began repurchasing shares, buying back 134,000 supported voting shares, returning $5.9 million to shareholders. Shifting to our outlook, the accelerated momentum we saw in the third quarter has carried into the fourth quarter. Given quarter-to-date trends, we expect net revenue in the fourth quarter to be in the range of $830 to $850 million. representing growth of 22% to 25%, or growth of 28% to 31%, excluding the 53rd week in the fourth quarter last year. Our net revenue outlook for the fourth quarter is based on the strength in the United States and our improved performance in Canada, driven by accelerated e-commerce growth, our boutique openings, and comparable sales growth in our existing boutiques. We expect gross profit margin in the fourth quarter to increase approximately 400 basis points compared to the fourth quarter of fiscal 2024, despite absorbing meaningfully higher freight costs. We forecast SG&A leverage of approximately 100 to 200 basis points in the fourth quarter. This is primarily driven by cost leverage from the increased revenue growth and our ongoing spend management initiatives. For the full year of fiscal 2025, we're raising our outlook for net revenue to a range of $2.67 to $2.69 billion, representing growth of approximately 15% from fiscal 2024 or growth of 16% to 17%, excluding the 53rd week last year. We continue to expect gross profit margin to increase approximately 450 basis points in fiscal 2025. and for SG&A as a percentage of net revenue to be approximately flat to up 50 basis points compared to last year. We expect adjusted EBITDA as a percent of net revenue in fiscal 2025 to increase 400 to 450 basis points, reflecting the leverage across the range of our net revenue outlook. Our results for the third quarter demonstrate the progress we've made across key areas of our business, Our performance continues to be driven by strength in the United States, and we're encouraged by the momentum we're seeing in Canada. In addition, our e-commerce initiatives are generating substantial momentum in what is one of our key growth levers, while our retail channel continues to deliver outstanding results. As we finish fiscal 2025, the combination of our anticipated revenue growth and margin expansion will nearly double our earnings this year. Looking to fiscal 2026, we expect top line momentum to continue. This will be supported by the record square footage growth this year, another strong pipeline of boutiques planned for next year, and our ongoing e-commerce initiatives. Further, we expect to continue driving adjusted EBITDA margin improvement with ongoing gross profit margin expansion as well as SG&A leverage. This keeps us firmly on track to achieving our top and bottom line fiscal 2027 targets. With that, I'll now turn the call back to Jennifer.