Aritzia sees net profit fall to $17.5 million in the first quarter, despite higher revenues

VANCOUVER – Aritzia Inc. saw its first-quarter net profit fall to $17.5 million, nearly half of its $33.3 million net profit a year earlier, amid inflationary headwinds and economic pressure on shoppers.

The Vancouver-based retailer said net sales for the quarter were $462.7 million, up 13.4 percent from $407.9 million in the same quarter last year.

The company said gross profit margin was lower due to higher product-related costs amid inflationary pressures, temporary storage costs associated with inventory management and other headwinds that were partially offset by lower accelerated freight costs.

Aritzia said it saw a slowdown in traffic from June, likely due to macroeconomic pressures on consumers amid higher interest rates, “as well as opportunities in the level of novelty in its product range.”

Net earnings per diluted share were 15 cents, compared to 29 cents a year earlier.

The company saw its retail net sales increase 13.8 percent to $327.6 million, while e-commerce net sales increased 12.5 percent and accounted for more than 29 percent of total net sales for made up the quarter.

“Results continued to be fueled by our operations in the United States,” CEO Jennifer Wong said in the press release Tuesday.

US net sales increased 21.8 percent, representing more than 54 percent of total net sales.

“Although we see a more challenging consumer environment to enter the second quarter, we remain disciplined to make further progress against our fiscal priorities for 2024,” Wong said.

These priorities include scaling Aritzia’s infrastructure to match the company’s “recent, unprecedented growth,” Wong said, among other goals.

Aritzia said it expects net sales in the second quarter of fiscal 2024 to be the same or slightly lower than a year earlier, noting that it has seen strong growth in the past two second quarters.

It also expects gross profit margin to decline further in the next quarter, as well as expects net revenue for the full fiscal year to be between $2.25 billion and $2.35 billion.

This report from The Canadian Press was first published on July 11, 2023.

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