Aritzia Inc.

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.

Thanks, Beth. Good afternoon, everyone, and thank you for joining us today. Our results for the fourth quarter and full year of fiscal 2025 underscore the strength of our business model and growing affinity for the Aritzia brand. Underpinned by our assortment of beautiful products, our optimized inventory position, and our strategic marketing investments, we fueled accelerated momentum in the United States and in Canada, both online and in our boutiques. On the heels of our strong fourth quarter performance and the continued momentum we're seeing in the new fiscal year, I'm confident we'll successfully navigate the current external uncertainties, including tariffs, and the potential impact on our consumer. Our successful 40 plus year track record demonstrates our resilience across varying economic conditions. We are in a position of strength, which will help us adapt to evolving macro developments and execute our growth strategy. Turning to our fourth quarter highlights, we delivered double digit top line growth in each month. resulting in a 38% increase in Q4 net revenue, excluding the impact of last year's extra week. Comparable sales grew an outstanding 26% as all channels and all geographies comped positively. Strength in the United States continues to drive our results. Exceptional client response to our winter and spring products and our investments in marketing propelled further acceleration in e-commerce growth and generated strong double-digit comparable sales growth in our existing boutiques. We also added to our portfolio a premier real estate location. All of this fueled an increase of 56% in net revenue in the United States, excluding last year's extra week. In addition, our base of active clients in the U.S. increased by more than 40%, illustrating the strength of our brand increased awareness, and growing appreciation for our everyday luxury offering. We're also extremely pleased with our accelerated momentum in Canada. Strong client response to our products, supported by our investments and marketing, drove a 16% increase in fourth quarter net revenue, excluding last year's extra week. In retail, we achieved an unprecedented expansion of our physical presence. opening 12 new and three repositioned boutiques in the last 12 months, our most openings ever in a single year. In Q4, we opened four new boutiques across the United States, including two in Florida and one in each of California and Pennsylvania. We also opened our repositioned iconic Fifth Avenue flagship near Rockefeller Center in Manhattan. This helped drive a 31% Q4 increase in our retail channel, excluding last year's extra week. In addition, strong demand for our products, supported by our investments in marketing, fueled double digit comparable sales growth in our existing boutiques. In fiscal 2026, we remain focused on our winning real estate strategy, which continues to prove itself over and over again. We plan to open a minimum of 12 new boutiques and five boutique repositions increasing our presence in existing markets as well as broadening our reach across the United States. We plan to open in five new markets this year, including Cincinnati, Pittsburgh, Raleigh, Salt Lake City, and Scottsdale. In e-commerce, we improved our performance for a fourth consecutive quarter. Net revenue in Q4 increased 48% excluding the extra week last year. This was driven by robust demand for our assortment of high-quality, beautiful products and our optimized inventory position. In addition, our focus on full funnel marketing fueled an increase in traffic of more than 50% in the U.S. We continue to drive growth in new, existing, and reactivated clients, further illustrating our investment in digital is paying off. We also saw a 25% increase in omni-channel clients. our most profitable client segment. During the quarter, we launched our new and improved Aritzia.com, which features an elevated client experience, including greater personalization and enhanced product discovery. This new platform will allow us to be much more agile, creating more competitive, innovative experiences that support our growth strategy. This, in turn, will boost customer engagement and drive incremental sales through higher conversions. We're thrilled with the e-commerce momentum we generated in fiscal 2025, accelerating digital quarter after quarter, even with key initiatives still underway that our clients have yet to experience. These include an enhanced international e-commerce site that will be rolled out in the first half of the fiscal year, and a mobile app which we expect to launch by the end of the fiscal year. Turning now to product, Our work to optimize the depth and breadth of our inventory enabled us to capitalize on the robust, broad-based demand for our product. This is reflected in our outstanding fourth quarter net revenue growth, which included a record performance over the holiday season. In February, spring was off to a strong start with positive client response to our most beloved franchises, as well as exciting new styles and seasonal fabrics. Earlier receipts of our spring inventory this year enabled us to maximize the transition from winter. We featured transitional seasonal products in a relevant and timely way, allowing our clients to refresh their wardrobe for spring as soon as the weather warmed. Our optimized inventory position and strong full price sell-through resulted in a lower mix of markdown sales compared to the fourth quarter last year. This helped drive continued gross margin improvement. We continue to see great success with our strategic investment in digital marketing, both online and in our boutiques. Our performance resulted in Aritzia being recognized by Google in Q4 as the fastest growing search term for U.S. women's apparel. We continue to build on our learnings with a focus on growing awareness and acquiring new clients, particularly in the U.S. In brand marketing, we curated an exciting opening weekend to celebrate our newest flagship on Fifth Avenue in Manhattan. The event garnered significant media coverage, adding to the tremendous amount of buzz around the Aritzia brand and driving Aritzia's industry position as a leading fashion brand. To help grow awareness and strengthen our positioning as an everyday luxury retailer, we continued to refine our full funnel marketing strategy increasing the integration of marketing across the business and creating a halo effect on all of the boutiques in our portfolio. As I reflect on fiscal 2025, I recognize that we have so much to be proud of. We've had an excellent year with impressive financial results. Our performance in the fourth quarter underscores the progress we made throughout the year across key areas of our business. This includes optimizing our inventory, increasing our marketing investment, opening a record number of boutiques, and unveiling our enhanced website. And all of these helped contribute to delivering a 550 basis point improvement in our adjusted EBITDA margin. This resulted in a record annual earnings per share of $1.98 for fiscal 2025, more than double the prior year. Looking ahead, our momentum has continued into the first quarter of fiscal 2026, fueled by a positive client response to our spring and summer product and our optimized inventory position. We remain focused on delivering our vision of everyday luxury with another exciting pipeline of boutiques planned for this fiscal year. We also have initiatives underway to support ongoing e-commerce momentum in the years ahead. And finally, Our new boutiques and investment in marketing are multi-year levers to help grow brand awareness in the United States, where we continue to have a long runway for growth. Recent macro uncertainty, including US tariffs and concern about the health of the consumer, poses unique challenges for us and our entire industry. However, the strength of our brand has never been greater. We have an exceptionally loyal client base. Our financial position is extremely healthy, and we have an agile global supply chain which is built upon longstanding partnerships with trusted manufacturers. Additionally, at this time, 40% of our revenue is generated outside the United States, and we have already on hand almost half of the inventory we anticipate needing for this fiscal year. We're currently engaged in opportunities to mitigate the impact of tariffs and protect our margins. These include partnering with our suppliers to ensure continued resilience and commitment to our everyday luxury quality standards, and fiercely protecting our margins while maintaining our commitment to providing everyday luxury value for our clients, as well as further diversifying our supply chain and realizing cost reductions across the business. Adaptability and executing with excellence are built into our DNA. With a world-class team like ours, adversity highlights our resilience and becomes a catalyst for growth and another building block to future successes. In closing, the strength of our brand, the quality of our assortment, and our everyday luxury client experience are all resonating exceptionally well with our clients. This gives us confidence in our ability to execute and capitalize on the opportunities that lie ahead. We are focused on our fundamentals, our solid foundation, and our resourcefulness. Our healthy balance sheet combined with the momentum in our business puts us in a position of strength to successfully navigate the rapidly evolving landscape while remaining steadfast in advancing our key growth levers. I'm incredibly proud to lead our team. and grateful to our people for the perseverance and hard work required to generate the outstanding momentum we're seeing in our business. We remain committed to excellence as we build on our momentum, prudently managing our business for the near term and the long term. This concludes my prepared remarks for today, and I'll now turn the call over to Todd to discuss the details of our financial performance.

Thanks Jennifer and good afternoon everyone. I want to emphasize that we are navigating this period of uncertainty from a position of strength. As evidenced by our exceptional fourth quarter performance and our strong momentum in the first quarter. First, let me walk you through our fourth quarter results. Where we delivered net revenue that exceeded our outlook, meaningful gross profit margin expansion, as well as SG&A expense leverage. This resulted in our fourth consecutive quarter of substantial year-over-year improvement in adjusted EBITDA. Turning to the details of our performance, in the fourth quarter of fiscal 2025, we generated net revenue of $895 million. This represents a 31% increase from last year. Excluding the extra week last year, net revenue increased 38%. Comparable sales grew 26% as all channels and all geographies calmed positively. This accelerated performance was driven by four factors. First, we enjoyed an extremely positive response to our winter and spring product. Second, we supported that response with our optimized inventory position. Third, We made strategic investments in digital and brand marketing. And finally, we benefited from 12 new and three repositioned boutiques in fiscal 2025. Our performance continues to be driven by the strength of our business in the United States, where net revenue was $548 million, an increase of 48%. Excluding the extra week last year, net revenue in the United States increased 56%. Our US e-commerce business was driven by meaningful traffic growth. In our US retail channel, performance was driven by our new and repositioned boutiques opened in the fiscal year, which combined added 50% to our square footage in the United States. This included three brand-propelling flagship locations, two in Manhattan and one in Chicago. Finally, strong double-digit comp growth in our existing boutiques also contributed to the outstanding performance in the United States. In Canada, net revenue was $347 million, an increase of 11%. Excluding the extra week last year, net revenue in Canada increased 16%, driven by accelerated momentum in both our e-commerce and retail channels. Turning to our sales channels, net revenue in our retail channel was $517 million, an increase of 24%. Excluding the extra week last year, retail net revenue increased 31%. This was driven by double digit comp growth in our existing boutiques in both Canada and the United States, as well as the strong performance of our new and repositioned boutiques. In e-commerce, Net revenue was $378 million, an increase of 42%. Excluding the extra week last year, e-commerce net revenue increased 48%. This was driven by strong traffic growth fueled by the four factors I mentioned earlier. We delivered gross profit of $380 million, an increase of 45% compared to the fourth quarter last year. Gross profit margin expanded 420 basis points to 42.5%. Our ongoing actions to further drive margin expansion generated benefits from IMU improvements, lower markdowns, lower warehousing costs, and tailwinds from store occupancy costs. These benefits were partially offset by higher freight costs. SG&A expenses for the quarter were $246 million, leveraging 140 basis points as the percentage net revenue to 27.5%. The improvement was driven by fixed cost leverage and savings from our smart spending initiative. Adjusted EBITDA in the fourth quarter was $161 million, an increase of 122% from last year. adjusted EBITDA as a percent of net revenue expanded 740 basis points to 18%. This was driven by our ongoing efforts to deliver multi-year margin expansion, SG&A expense leverage, and benefit from other income. As we have communicated, the improvements we delivered in each quarter of fiscal 2025 represent a key step on our path back to achieving our historic EBITDA margin levels in the high teens. Turning to the balance sheet, inventory was $379 million at the end of the fourth quarter, up 12% from last year. Importantly, prior to the implementation of reciprocal tariffs by the United States, we had already received the vast majority of inventory required to satisfy demand for our spring-summer season. During the quarter, we generated $66 million in free cash flow. Our liquidity position is strong with $286 million in cash, no debt, and zero drawn on our $300 million revolving credit facility at the end of the fourth quarter. I will now shift to our outlook for the first quarter and fiscal year 2026. We continue to see strong momentum in our business in the first quarter, fueled by a positive client response to our spring-summer product and our optimized inventory position. Given quarter-to-date trends, we expect net revenue in the first quarter of fiscal 2026 to be in the range of $620 to $640 million. representing growth of 24% to 28%. Our net revenue outlook for the first quarter is based on continued performance in the United States and our ongoing momentum in Canada, both driven by our boutique openings, comparable sales growth in our existing boutiques, and strength in our e-commerce business. We expect gross profit margin in the first quarter to increase approximately 200 basis points compared to the first quarter of fiscal 2025. This improvement is driven by leverage on rent, lower distribution costs, and continued IMU improvements. We forecast SG&A leverage of approximately 100 basis points in the first quarter. This is primarily driven by cost leverage due to the increased revenue growth and our ongoing smart spending initiative. Turning to the full fiscal year, we are forecasting net revenue in the range of $3.05 to $3.25 billion, representing growth of 11% to 19% from fiscal 2025. While our momentum across channels and geographies remains strong year to date, due to the dynamic macro environment, our outlook accommodates for a range of scenarios. Our fiscal 2026 net revenue outlook is underpinned by our boutique openings both this year and last. We plan to open a minimum of 12 new boutiques and reposition five boutiques, including the reposition of our Flatiron flagship in Manhattan. The openings this year will deliver total square footage growth in the mid to high teens on top of 25% square footage growth last year. Turning to tariff impacts, the tariffs currently being imposed by the United States result in just over 400 basis points of gross margin pressure in fiscal 2026. To offset this pressure and work to maintain our margins, we are focused on the following. Shifting production into countries with lower tariffs, partnering with our suppliers to help absorb the added cost, realizing cost reductions from across the business, and continuing our focus on our multi-year IMU opportunities. With this in mind, adjusted EBITDA as a percent of net revenue is expected to be approximately 14 to 15% in fiscal 2026, compared to 14.8% in fiscal 2025. We expect depreciation and amortization in fiscal 2026 of approximately $110 million compared to $84 million in fiscal 2025. We expect capital expenditures for fiscal 2026 of approximately $180 million. This includes $110 million related to investments in new and repositioned boutiques for fiscal 2026 and the start of construction for boutiques opening in early fiscal 2027. We continue to see our most recent new boutiques tracking to pay back in approximately one year or less, exceeding our target of 12 to 18 months. Our capex spend also includes $70 million, primarily related to the expansion of our distribution center network, including our new facility in the Vancouver area. We plan to renew our NCIB this month, and throughout fiscal 2026, we expect to purchase shares opportunistically to offset the dilution of option exercises. In closing, while the recent US tariffs pose a significant challenge for our industry, the strength of our business model, our 40-year proven track record, the strong momentum in our business, and our healthy liquidity position give us confidence in our path forward. We are well positioned to successfully navigate the continually evolving macro environment as we remain focused on delivering our everyday luxury experience to our clients and advancing our key strategic levers to drive long-term profitable growth for our stakeholders. Thank you.