Aritzia Q3 profit jumps 16 per cent amid 17th quarter of growth in same-store sales

Aritzia Q3 profit jumps 16 per cent amid 17th quarter of growth in same-store sales
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TORONTO — Aritzia Inc. says its first outlet boutique has been “incredibly profitable” in its first two months open, but don’t expect the womenswear retailer to push heavily into the discount space.

Brian Hill, the Vancouver-based company’s chief executive officer, told analysts on a Wednesday call that the outlet Aritzia opened at the Toronto Premium Outlets mall in November has already made back its original capital investment, but “to be clear, this is not the start of an outlet rollout.”

Hill’s remarks came as Aritzia — also the owner of Wilfred, Babaton and TNA stores — announced its third quarter had delivered the company’s 17th consecutive quarter of growth in comparable-store sales.

The key retail metric for sales from stores open at least a year jumped by 12.9 per cent for the period ended Nov. 29, up from 6.3 per cent a year ago. That’s due, in part, to celebrities Hailey Bieber, Bella Hadid and the Duchess of Sussex, formerly Meghan Markle, wearing pieces from the company in the quarter and from Kendall Jenner, who Aritzia launched a marketing campaign with, executives said.

“There are lots of potential opportunities in front of us and a lot of brand awareness that we can continue to increase,” said Hill. “I think we really just got the tip of the iceberg, but we have a long way to go.”

The company also revealed that its net income increased by more than 16 per cent, reaching $32.6 million, or 28 cents per diluted share, up from $28.1 million or 24 cents per share the year before.

Excluding one-time items, adjusted earnings equalled 31 cents per share, two cents per share above analyst forecasts, according to analysts polled by Thomson Reuters Eikon.

Meanwhile, its net revenue climbed 18.8 per cent to $242.9 million, from $204.4 million in the third quarter the year before.

It attributed about 40 per cent of its revenue growth to its U.S. business, which evolved over the last two quarters to include two pop-up boutiques in San Jose, Calif., and Chicago.

Aritzia predicted its 2020 fiscal year will be its biggest yet for U.S. expansion with plans to open six boutiques.

“Our business in the U.S. is so good right now that we feel we can open up in any premier shopping destination in the U.S. right now and do extremely well and we are seeing lots of deals and opportunities in these locations,” said Hill.

The brand said the months ahead would bring some challenges from currency fluctuations and continued raw materials cost pressures.

To mitigate both, Hill said Aritzia is already continually reviewing its pricing and new product opportunities, but has also looked to its outerwear offerings and Black Friday sales.

Companies in this story: (TSX:ATZ)

Tara Deschamps, The Canadian Press

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