Q2 2027 Aritzia Inc Earnings Call

October 8, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to Aritzia's second quarter 2027 earnings conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded.

Operator: Thank you for standing by. This is the conference operator. Welcome to Aritzia's Q2 2027 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 one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I will now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

Speaker #1: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one, on your telephone keypad.

Speaker #1: Should you need assistance during the conference call, you may reach an operator by pressing star, then zero. I will now turn the conference over to Beth Reed, Vice President, Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thanks, operator. And thank you all for joining Aritzia's second quarter fiscal 2027 earnings call. On the call today, I'm joined by Jennifer Wong, our Chief Executive Officer, and Todd Ingledew, our Chief Financial Officer.

Beth Reed: Thanks, operator, and thank you all for joining Aritzia's Q2 fiscal 2027 earnings call. On the call today, I am joined by Jennifer Wong, our Chief Executive Officer, and Todd Ingledew, our Chief Financial Officer. As a reminder, please note that remarks made 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 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.

Speaker #2: As a reminder, please note that remarks made 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.

Speaker #2: 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.

Speaker #2: Our earnings release, the related financial statements, and the MD&A are available on Cedar Plus as well as the Investor Relations section of our website.

Beth Reed: Our earnings release, the related financial statements, and the MD&A are available on SEDAR+ as well as the investor relations section of our website. I will now turn the call over to Jennifer.

Speaker #2: I'll now turn the call over to Jennifer.

Speaker #4: Thanks, Beth. And good afternoon, everyone. Thank you for joining us today. We sustained exceptional momentum in the second quarter, delivering 44% net revenue growth and a 35% increase in comparable sales.

Jennifer Wong: Thanks, Beth, and good afternoon, everyone. Thank you for joining us today.

Jennifer Wong: We sustained exceptional momentum in Q2, delivering 44% net revenue growth and a 35% increase in comparable sales. This, combined with disciplined execution and our profitability initiatives, drove a 590 basis point increase in our adjusted EBITDA margin, reaching a Q2 record of 21%. In addition, adjusted EPS more than doubled compared to last year. These results, which exclude the benefit of $97 million in tariff refunds, demonstrate the tremendous earnings power of our business model as we continue to scale. Strength was broad-based across geographies, channels, and product categories, underscoring the wide appeal of our brand. We generated high demand for our summer and fall collections and supported this with optimal inventory positioning. In addition, strategic investments in digital, real estate, and marketing continued to expand our reach. in the United States, Q2 net revenue growth accelerated to an outstanding 60%.

Speaker #4: This, combined with disciplined execution and our profitability initiatives, drove a 590 basis point increase in our adjusted EBITDA margin, reaching a second quarter record of 21%.

Speaker #4: In addition, adjusted EPS more than doubled compared to last year. These results, which exclude the benefit of $97 million in tariff refunds, demonstrate the tremendous earnings power of our business model as we continue to scale.

Speaker #4: Strength was broad-based across geographies, channels, and product categories, underscoring the wide appeal of our brand. We generated high demand for our summer and fall collections and supported this with optimal inventory positioning.

Speaker #4: In addition, strategic investments in digital, real estate, and marketing continue to expand our reach. In the United States, Q2 net revenue growth accelerated to an outstanding 60%.

Speaker #4: This was fueled by widespread demand for our brand across our digital channels, existing boutiques, and new boutiques. In digital, momentum continued to build, propelled by our mobile app and full-funnel marketing initiatives.

Jennifer Wong: This was fueled by widespread demand for our brand across our digital channel, existing boutiques, and new boutiques. In digital, momentum continued to build, propelled by our mobile app and full-funnel marketing initiatives. In our US retail channel, we delivered robust double-digit comparable sales gains across our existing boutique network. In addition, we added 15 highly productive new and repositioned boutiques over the trailing 12 months, growing US square footage by approximately 20%. Our performance in Canada also remained strong, with net revenue up 20%. Our growth was driven by momentum in digital, fueled by meaningful client acquisition and greater purchase frequency. In addition, we generated double-digit comparable sales growth in our Canadian retail business. Turning to our retail channel, we delivered another quarter of outstanding results. Net revenue rose 34%, marking an impressive six-quarter streak of top-line growth exceeding 30%.

Speaker #4: In our US retail channel, we delivered robust double-digit comparable sales gains across our existing boutique network. In addition, we added 15 highly productive new and repositioned boutiques over the trailing twelve months, growing US square footage by approximately 20%.

Speaker #4: Our performance in Canada also remained strong, with net revenue up 20%. Our growth was driven by momentum in digital, fueled by meaningful client acquisition and greater purchase frequency.

Speaker #4: In addition, we generated double-digit comparable sales growth in our Canadian retail business. Turning to our retail channel, we delivered another quarter of outstanding results.

Speaker #4: Net revenue rose 34%, marking an impressive six-quarter streak of top-line growth exceeding 30%. Comparable store sales remained exceptional, primarily driven by strong traffic gains.

Jennifer Wong: Comparable store sales remained exceptional, primarily driven by strong traffic gains. Our strategic marketing initiatives are working. They are building deeper brand loyalty and generating sustained demand into our boutiques. Our growth was also driven by our real estate expansion strategy, which continues to yield phenomenal results. We opened a total of 19 new and repositioned boutiques over the trailing 12 months, yielding square footage growth in the mid-teens. New store productivity and paybacks remain exceptional. In Q2, we expanded into three new markets: Birmingham, New Orleans, and St. Louis. Our bespoke boutique activations continue to yield great results, generating awareness and community engagement. This drove strong traffic and sales when we opened our doors. In addition to fueling a robust omni-channel halo effect, these boutiques are already generating highly attractive unit economics. In digital, our momentum continued to accelerate.

Speaker #4: Our strategic marketing initiatives are working. They're building deeper brand loyalty and generating sustained demand in our boutiques. Our growth was also driven by our real estate expansion strategy, which continues to yield phenomenal results.

Speaker #4: We opened a total of 19 new and repositioned boutiques over the trailing 12 months, yielding square footage growth in the mid-teens. New store productivity and paybacks remain exceptional.

Speaker #4: In Q2, we expanded into three new markets: Birmingham, New Orleans, and St. Louis. Our bespoke boutique activations continue to yield great results, generating awareness and community engagement.

Speaker #4: This drove strong traffic and sales when we opened our doors. In addition to fueling a robust omnichannel halo effect, these boutiques are already generating highly attractive unit economics.

Speaker #4: In digital, our momentum continued to accelerate. Net revenue surged 68% over last year—a gain led by strong traffic trends. As a percentage of net revenue, digital increased nearly 500 basis points year over year.

Jennifer Wong: Net revenue surged to 68% over last year, again led by strong traffic trends. As a percentage of net revenue, digital increased nearly 500 basis points year over year. Growth was fueled by exceptional demand for our product, our strong inventory position, our mobile app, and our full-funnel marketing initiatives. Balanced investments across owned and paid marketing channels continued to introduce new high-value clients to our brand and re-engage existing ones. We further enhanced our marketing tactics across existing channels while launching new channels to fuel ongoing brand awareness. Our mobile app also delivered outstanding results, with sustained monthly downloads and deep client engagement. It continued to drive higher conversion, higher average monthly sessions, and repeat purchase behavior. In addition, the improvements to our international digital experience continued to pay off, with sales up 165% over last year.

Speaker #4: Growth was fueled by exceptional demand for our product, our strong inventory position, our mobile app, and our full-funnel marketing initiatives. Balanced investments across owned and paid marketing channels continued to introduce new high-value clients to our brand and re-engage existing ones.

Speaker #4: We further enhanced our marketing tactics across existing channels, while launching new channels to fuel ongoing brand awareness. Our mobile app also delivered outstanding results.

Speaker #4: With sustained monthly downloads and deep client engagement, it continued to drive higher conversions, higher average monthly sessions, and repeat purchase behavior. In addition, the improvements to our international digital experience continued to pay off.

Speaker #4: With sales up 165% over last year. Turning to product, our commitment to offering high-quality styles across a diverse assortment of categories continued to drive outstanding results.

Jennifer Wong: Turning to product, our commitment to offering high-quality styles across a diverse assortment of categories continued to drive outstanding results. Widespread demand across all regions reflected the growing love for everyday luxury and deep loyalty of our core client base. Our strong inventory position ensured we had the right product in the right place at the right time. This enabled us to fuel robust demand and achieve a meaningful year-over-year improvement in our markdown rate. Growth was driven by the combined strong performance of our new styles as well as the iconic franchises for which we are well known and loved. We drove continued client engagement from our end of summer events through to the launch of fall. Our fall collections were extremely well received across many different categories such as T-shirts, blouses, sweat fleece, shorts, and pants, among many others.

Speaker #4: Widespread demand across all regions reflected the growing love for everyday luxury and deep loyalty of our core client base. Our strong inventory position ensured we had the right product, in the right place, at the right time.

Speaker #4: This enabled us to fuel robust demand and achieve a meaningful year-over-year improvement in our markdown rate. Growth was driven by the combined strong performance of our new styles, as well as the iconic franchises for which we're well-known and loved.

Speaker #4: We drove continued client engagement from our end-of-summer events through to the launch of fall. Our fall collections were extremely well received across many different categories, such as T-shirts, blouses, sweat sleeves, shorts, and pants, among many others.

Speaker #4: In marketing, we continued to promote our world of everyday luxury, which expanded brand awareness and drove traffic to Aritzia. This fueled another strong wave of new client acquisition.

Jennifer Wong: In marketing, we continued to promote our world of everyday luxury, which expanded brand awareness and drove traffic to Aritzia. This fueled another strong wave of new client acquisition. At the same time, we continued increasing loyalty and share of closet with our existing client base. Client growth was in the double digits in all channels and geographies. During our FIFA World Cup campaign, we extended our styling authority into sport during this year's most-watched global event. We reached new audiences through spectator styling, product placement, and paid media in host cities and key sports markets. Looking ahead, our strong momentum has continued into Q3. This is driven by exceptional client response to our fall product and the growing love for our brand. This quarter, we are introducing new and exciting styles and colors across cooler weather categories such as tailored outerwear, sweaters, and The Super Puff.

Speaker #4: At the same time, we continued increasing loyalty and share of closet with our existing client base. Client growth was in the double digits across all channels and geographies.

Speaker #4: During our FIFA World Cup campaign, we extended our styling authority into sport during this year's most-watched global event. We reached new audiences through spectator styling, product placement, and paid media in host cities and key sport markets.

Speaker #4: Looking ahead, our strong momentum has continued into the third quarter. This is driven by exceptional client response to our fall product and the growing love for our brand.

Speaker #4: This quarter, we're introducing new and exciting styles and colors across cooler weather categories such as tailored outerwear, sweaters, and the Super Puff. Our inventory remains well-positioned to support upcoming holiday demand.

Jennifer Wong: Our inventory remains well-positioned to support upcoming holiday demand. In our retail and digital channels, we are executing on several key initiatives to support ongoing omni-channel momentum. This fiscal year, we have a strong pipeline of 12 to 13 new boutiques in premier locations and four to five repositions. In Q3, we are on track to open six new US boutiques, one each in Florida, Georgia, Massachusetts, and Nevada, and two in Texas. We are also opening two repositions, one in California and one in Quebec. Our real estate expansion strategy is a proven multi-year lever to help scale the Aritzia brand across the United States. In digital, our focus is on channel expansion and digital marketing optimization. Near-term priorities include continuing to embed AI into how we work and support clients, ongoing website enhancements, releasing new mobile app features and upgrades, honing our digital marketing tactics, and optimizing our omni-channel infrastructure.

Speaker #4: In our retail and digital channels, we're executing on several key initiatives to support ongoing omnichannel momentum. This fiscal year, we have a strong pipeline of 12 to 13 new boutiques in premier locations and 4 to 5 repositions.

Speaker #4: In Q3, we're on track to open six new US boutiques: one each in Florida, Georgia, Massachusetts, and Nevada, and two in Texas. We're also opening two repositions: one in California and one in Quebec.

Jennifer Wong: We are also opening two repositions, one in California and one in Quebec. Our real estate expansion strategy is a proven multi-year lever to help scale the Aritzia brand across the United States. In digital, our focus is on channel expansion and digital marketing optimization. Near-term priorities include continuing to embed AI into how we work and support clients, ongoing website enhancements, releasing new mobile app features and upgrades, honing our digital marketing tactics, and optimizing our omni-channel infrastructure.

Speaker #4: Our real estate expansion strategy is a proven, multi-year lever to help scale the Aritzia brand across the United States. In digital, our focus is on channel expansion and digital marketing optimization.

Speaker #4: Near-term priorities include: continuing to embed AI into how we work and support clients; ongoing website enhancements; releasing new mobile app features and upgrades; honing our digital marketing tactics; and optimizing our omnichannel infrastructure.

Speaker #4: As always, we continue to strategically invest in core infrastructure to help ensure our business is built for scalable, profitable, long-term growth. This includes world-class talent to continue fueling our growth and execute on our digital and technology initiatives, as well as the expansion of our distribution center network in the U.S.

Jennifer Wong: As always, we continue to strategically invest in core infrastructure to help ensure our business is built for scalable, profitable, long-term growth. This includes world-class talent to continue fueling our growth and execute on our digital and technology initiatives, as well as the expansion of our distribution center network in the US. We remain exceptionally well-positioned to capitalize on our long runway for growth in the US and beyond. This opportunity is underpinned by the proven enduring strength of the Aritzia brand, our disciplined execution, and our healthy financial foundation. In closing, I am incredibly proud of our people and their impeccable execution. This continues to differentiate Aritzia. Their commitment to delivering exceptional experiences for our clients and advancing our strategic priorities has positioned us well for the future.

Speaker #4: We remain exceptionally well-positioned to capitalize on our long runway for growth in the U.S. and beyond. This opportunity is underpinned by the proven, enduring strength of the Aritzia brand, our disciplined execution, and our healthy financial foundation.

Speaker #4: In closing, I'm incredibly proud of our people and their impeccable execution. This continues to differentiate Aritzia. Their commitment to delivering exceptional experiences for our clients and advancing our strategic priorities has positioned us well for the future.

Speaker #4: I look forward to sharing how we will build on this momentum and unlock our next chapter of growth at our Investor Day on October 27.

Jennifer Wong: I look forward to sharing how we will build on this momentum and unlock our next chapter of growth at our Investor Day on 27 October. With that, I will now hand it over to Todd to discuss the details of our financial performance.

Speaker #4: With that, I'll now hand it over to Todd to discuss the details of our financial performance.

Speaker #2: Thanks, Jennifer, and good afternoon, everyone. Our second quarter results exceeded our expectations on both the top and bottom line. This underscores the continued strength of the Aritzia brand, as well as the disciplined execution across all of our teams.

Todd Ingledew: Thanks, Jennifer, and good afternoon, everyone. Our Q2 results exceeded our expectations on both the top and bottom line. This underscores the continued strength of the Aritzia brand, as well as the disciplined execution across all of our teams. As Jennifer shared, we grew net revenue 44% to CAD 1.17 billion and delivered comparable sales growth of 35%. This was driven by broad-based strength across channels, geographies, and product categories. Excluding tariff refunds, we expanded our adjusted EBITDA margin 590 basis points while continuing to invest in the capabilities that will drive our long-term growth. Four key drivers continued to fuel our momentum in Q2. First, exceptional client demand for our product, supported by healthy, well-positioned inventory levels. Second, strong execution across our digital initiatives, led by our mobile app. Third, square footage growth in the mid-teens, with high productivity in our new and repositioned boutiques.

Speaker #2: As Jennifer shared, we grew net revenue 44% to $1.17 billion, and delivered comparable sales growth of 35%. This was driven by broad-based strength across channels, geographies, and product categories.

Speaker #2: Excluding Carefree funds, we expanded our adjusted EBITDA margin by 590 basis points, while continuing to invest in the capabilities that will drive our long-term growth.

Speaker #2: Four key drivers continued to fuel our momentum in the second quarter. First, exceptional client demand for our product, supported by healthy, well-positioned inventory levels.

Speaker #2: Second, strong execution across our digital initiatives, led by our mobile app. Third, square footage growth in the mid-teens, with high productivity in our new and repositioned boutiques.

Speaker #2: And fourth, strategic brand and digital marketing investments that generated significant traffic growth and attracted new clients. In the United States, second quarter net revenue increased 60% to $779 million.

Todd Ingledew: Fourth, strategic brand and digital marketing investments that generated significant traffic growth and attracted new clients. In the United States, Q2 net revenue increased 60% to $779 million. Digital led our performance as strategic investments in full-funnel marketing and our mobile app generated exceptional traffic growth and stronger conversion. Our US retail business delivered outstanding double-digit comparable sales growth. We also benefited from the strong contribution of our highly productive new and repositioned boutiques. We increased US square footage by approximately 20%. These results demonstrate that our omni-channel expansion is not only driving immediate top-line growth, but also building brand awareness and affinity in our highest priority growth market. In Canada, net revenue increased 20% to CAD 390 million, led by the strength of our digital channel. In addition, retail delivered double-digit comparable sales growth.

Speaker #2: Digital led our performance, as strategic investments in full-funnel marketing and our mobile app generated exceptional traffic growth and stronger conversion. Our U.S. retail business delivered outstanding, double-digit comparable sales growth.

Speaker #2: We also benefited from the strong contribution of our highly productive new and repositioned boutiques. We increased U.S. square footage by approximately 20%. These results demonstrate that our omnichannel expansion is not only driving immediate top-line growth, but also building brand awareness and affinity in our highest priority growth market.

Speaker #2: In Canada, net revenue increased 20% to $390 million, led by the strength of our digital channel. In addition, retail delivered double-digit comparable sales growth.

Speaker #2: These results reinforced the strength of our Canadian market and the enduring loyalty of our clients. Turning to our sales channels, the momentum in our digital business continued to accelerate.

Todd Ingledew: These results reinforce the strength of our Canadian market and the enduring loyalty of our clients. Turning to our sales channels, the momentum in our digital business continued to accelerate. Net revenue increased 68% to CAD 403 million. Strong product demand, our mobile app, and our strategic marketing investments drove traffic growth across the United States and Canada. Our performance reinforces our confidence in the significant opportunity to expand digital, particularly in the United States. In retail, net revenue increased 34% to CAD 767 million. We delivered double-digit comparable sales growth in both the United States and Canada. We also benefited from the strong contribution of our 14 new and five repositioned boutiques opened in the trailing 12 months. Our most recent openings continue to perform exceptionally well. New boutiques opened in fiscal 2026 are generating higher sales per square foot than prior cohorts and are tracking toward faster payback periods.

Speaker #2: Net revenue increased 68% to $403 million. Strong product demand, our mobile app, and our strategic marketing investments drove traffic growth across the United States and Canada.

Speaker #2: Our performance reinforces our confidence in the significant opportunity to expand digital, particularly in the United States. In retail, net revenue increased 34% to $767 million.

Speaker #2: We delivered double-digit comparable sales growth in both the United States and Canada. We also benefited from the strong contribution of our 14 new and 5 repositioned boutiques.

Todd Ingledew: We delivered double-digit comparable sales growth in both the United States and Canada. We also benefited from the strong contribution of our 14 new and five repositioned boutiques opened in the trailing 12 months. Our most recent openings continue to perform exceptionally well. New boutiques opened in fiscal 2026 are generating higher sales per square foot than prior cohorts and are tracking toward faster payback periods.

Speaker #2: Opened in the trailing 12 months. Our most recent openings continue to perform exceptionally well. New boutiques opened in fiscal 2026 are generating higher sales per square foot than prior cohorts, and are tracking toward faster payback periods.

Speaker #2: Excluding the benefit of $97 million from tariff refunds, we delivered second quarter adjusted gross profit of $570 million, an increase of 60%. Adjusted gross profit margin expanded 490 basis points to 48.7%.

Todd Ingledew: Excluding the benefit of CAD 97 million from tariff refunds, we delivered Q2 adjusted gross profit of CAD 570 million, an increase of 60%. Adjusted gross profit margin expanded 490 basis points to 48.7%. The improvement was driven by IMU expansion, leverage on store occupancy and other fixed costs, and lower markdowns. SG&A expense was CAD 345 million, leveraging 130 basis points as a percentage of net revenue to 29.5%. The improvement was primarily driven by expense leverage and savings from our smart spending initiative. Again, excluding the benefit from tariff refunds, adjusted EBITDA was CAD 246 million, an increase of 100% compared to Q2 last year. As a percentage of net revenue, adjusted EBITDA expanded 590 basis points to 21%. We have now delivered sustained margin expansion for 10 consecutive quarters. This underscores our commitment to optimizing profitability while continuing to invest in our future growth.

Speaker #2: The improvement was driven by IMU expansion, leverage on store occupancy and other fixed costs, and lower markdowns. SG&A expense was $345 million, leveraging 130 basis points as a percentage of net revenue to 29.5%.

Speaker #2: The improvement was primarily driven by expense leverage and savings from our Smart Spending initiative. Again, excluding the benefit from tariff refunds, adjusted EBITDA was $246 million.

Speaker #2: This represents an increase of 100% compared to the second quarter last year. As a percentage of net revenue, adjusted EBITDA expanded 590 basis points to 21%.

Speaker #2: We have now delivered sustained margin expansion for ten consecutive quarters. This underscores our commitment to optimizing profitability while continuing to invest in our future growth.

Speaker #2: Turning to the balance sheet, we ended the second quarter with $715 million of inventory, up 36% from last year. We remain pleased with both the composition and quantity of our inventory.

Todd Ingledew: Turning to the balance sheet, we ended Q2 with CAD 715 million of inventory, up 36% from last year. We remain pleased with both the composition and quantity of our inventory, which is well-positioned to fuel demand through the back half of the year. Our liquidity position at the end of Q2 is strong, with CAD 528 million in cash, no debt, and zero drawn on our CAD 300 million revolving credit facility. During the quarter, we repurchased approximately 900,000 shares for CAD 125 million. Year-to-date, through 2 October, we have repurchased 2.1 million shares at an average price of CAD 127, returning CAD 270 million to shareholders. We intend to continue repurchasing shares opportunistically throughout fiscal 2027. Turning to our outlook, we have sustained our momentum into Q3 of fiscal 2027 as clients continue to respond well to our fall product.

Speaker #2: This is well positioned to fuel demand through the back half of the year. Our liquidity position at the end of the second quarter is strong, with $528 million in cash, no debt, and zero drawn on our $300 million revolving credit facility.

Speaker #2: During the quarter, we repurchased approximately 900,000 shares for $125 million. Year to date, through October 2nd, we have repurchased 2.1 million shares at an average price of $127.

Speaker #2: Returning $270 million to shareholders, we intend to continue repurchasing shares opportunistically throughout fiscal 2027. Turning to our outlook, we have sustained our momentum into the third quarter of fiscal 2027, as clients continue to respond well to our fall product.

Speaker #2: Our performance remains robust in both the United States and Canada, showcasing the broad strength of our brand. Based on quarter-to-date trends and accounting for the exceptional strength of our business in the back half of the last two years, we expect third quarter net revenue of $1.275 to $1.325 billion.

Todd Ingledew: Our performance remains robust in both the United States and Canada, showcasing the broad strength of our brand. Based on quarter-to-date trends and accounting for the exceptional strength of our business in the back half of the last two years, we expect Q3 net revenue of CAD 1.275 to CAD 1.325 billion. This represents growth of 23% to 27% from last year. We expect comparable sales growth in the high teens, as well as strong contribution from our new and repositioned boutiques. We expect Q3 gross profit margin to increase 100 to 150 basis points, primarily driven by continued IMU improvements and occupancy cost leverage. We expect SG&A as a percentage of net revenue to increase 50 to 100 basis points in Q3 compared to last year.

Speaker #2: This represents growth of 23% to 27% from last year. We expect comparable sales growth in the high teens, as well as strong contribution from our new and repositioned boutiques.

Speaker #2: We expect third quarter gross profit margin to increase 100 to 150 basis points, primarily driven by continued IMU improvements and occupancy cost leverage. We expect SG&A, as a percentage of net revenue, to increase 50 to 100 basis points in the third quarter compared to last year.

Speaker #2: Q3 SG&A outlook reflects the timing this year of some of our key strategic infrastructure investments that will power our long-term expansion. This timing, however, does not change our SG&A guidance for the full year.

Todd Ingledew: Q3 SG&A outlook reflects the timing this year of some of our key strategic infrastructure investments that will power our long-term expansion. This timing, however, does not change our SG&A guidance for the full year. Due to our year-to-date performance and the continued momentum in our business, we are raising our full-year net revenue outlook to CAD 4.78 to CAD 4.88 billion. This represents growth of 29% to 32% from fiscal 2026, driven by comparable sales growth in the low twenties and strong contributions from 12 to 13 new boutique openings and four to five repositions. We are also raising our full-year adjusted gross profit margin outlook to an increase of 225 to 275 basis points. We have assumed US global tariffs of 10% to 12.5%. Our guidance excludes any benefit from tariff refunds.

Speaker #2: Due to our year-to-date performance and the continued momentum in our business, we're raising our full-year net revenue outlook to $4.78 to $4.88 billion.

Speaker #2: This represents growth of 29 to 32 percent from fiscal 2026, driven by comparable sales growth in the low 20s and strong contribution from 12 to 13 new boutique openings and 4 to 5 repositions.

Speaker #2: We are also raising our full year adjusted gross profit margin outlook to an increase of 225 to 275 basis points. We have assumed US global tariffs of 10 to 12 and a half percent.

Speaker #2: Our guidance excludes any benefit from tariff refunds. We continue to expect SG&A, as a percentage of net revenue, to be flat to down 50 basis points compared to fiscal 2026.

Todd Ingledew: We continue to expect SG&A as a percentage of net revenue to be flat to down 50 basis points compared to fiscal 2026. We now expect adjusted EBITDA as a percentage of net revenue to be approximately 20%. In closing, our business continues to perform exceptionally well, and our core growth drivers are delivering. We have confidence in our momentum, and we remain focused on what comes next. We will continue to invest with discipline, execute our long-term priorities, and build the business for sustainable, profitable growth. We look forward to sharing our next multi-year plan at our Investor Day on 27 October. Thank you.

Speaker #2: We now expect adjusted EBITDA as a percentage of net revenue to be approximately 20%. In closing, our business continues to perform exceptionally well, and our core growth drivers are delivering.

Speaker #2: We have confidence in our momentum, and we remain focused on what comes next. We will continue to invest with discipline, execute our long-term priorities, and build the business for sustainable, profitable growth.

Speaker #2: We look forward to sharing our next multi-year plan at our Investor Day on October 27th. Thank you.

Speaker #1: With that, operator, let's please open up the line for questions.

Jennifer Wong: With that, operator, let's please open up the line for questions.

Speaker #3: Thank you. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request.

Operator: Thank you. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. So that we can get to everyone on the call today, please limit yourself to one question and a related follow-up. The first question comes from Brian Morrison with TD Cowen. Please go ahead.

Speaker #3: If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two, so that we can get to everyone on the call today.

Speaker #3: Please limit yourself to one question and a related follow-up. The first question comes from Brian Morrison with TD Cohen. Please go ahead.

Speaker #4: Good evening. Question for Jen or Todd. Clearly, demand remains strong. My question is on an annual basis: How do you think about your sustainable top line growth algorithm as we lap the forthcoming 40% and 50% two-year tax?

Brian Morrison: Good evening. Question for Jen or Todd. Clearly demand remains strong. My question is, on an annual basis, how do you think about your sustainable top-line growth algo as we lap the forthcoming 40% and 50% two-year stacks? I guess, assuming new store grows at about 8% or so, what do you view as a steady state same-store sales growth target? Any color how you parse that between bricks and mortar and e-commerce. I'm just trying to assess here if a sustainable near mid-teen revenue growth rate is reasonable.

Speaker #4: And I guess, assuming new store growth is about 8% or so, what do you view as a steady-state same-store sales growth target? And any color on how you parse that between bricks-and-mortar and e-commerce?

Speaker #4: I'm just trying to assess here if a sustainable, near mid-teen revenue growth rate is reasonable.

Jennifer Wong: Hi, Brian. I would like to address that first, then I will hand it over to Todd. I would like to zoom out first and just discuss the drivers of the growth of our business. These are all things that we have gone over already in the past, and I am going to sound a little bit like a broken record, but these drivers are the same drivers that have contributed to that robust growth pretty much over the last eight quarters and will continue to drive our growth. First and foremost, it starts with our position in the market. We are in the category of everyday luxury. We offer an everyday luxury value proposition, and our brand has never been stronger. It is the momentum of that brand that has really underpinned our growth.

Speaker #1: Hi Brian. I would like to address that first, and then I'll hand it over to Todd. I'd like to zoom out first and just discuss the drivers of the growth of our business.

Speaker #1: And these are all the things that we've gone over already in the past, and I'm going to sound a little bit like a broken record.

Speaker #1: But these drivers are the same drivers that have grown, that have contributed to that robust growth pretty much over the last eight quarters, and will continue to drive our growth.

Speaker #1: And first and foremost, it starts with our position in the market. We're in the category of everyday luxury. We offer an everyday luxury value proposition.

Speaker #1: And our brand has never been stronger. And it's the momentum of that brand that has really underpinned our growth. And then, of course, product is at the center of everything that we do.

Jennifer Wong: Then, of course, product is at the center of everything that we do, and we have had a phenomenal assortment and range in our product, and we continue to innovate in our product. That coupled with our optimized inventory has really fueled the demand, and we continue to be in a really, really great position on that front. The next thing is our boutique openings. We have consistently opened boutiques year over year. We are increasing the number of boutiques that we open this year at 12 to 13. We have repositions with that. So we benefit from new square footage growth from the prior years. They continue to drive traffic to our online business. With that, we have a multitude of digital initiatives underway, a whole roadmap of digital initiatives, whether it be redesigning our website, continuing with features and functionality on our mobile app.

Speaker #1: We have had a phenomenal assortment and range in our product, and we continue to innovate in our product. Coupled with our optimized inventory, this has really fueled demand, and we continue to be in a really, really great position on that front.

Speaker #1: And then the next thing is our boutique openings. We have consistently opened boutiques year over year. We're increasing the number of boutiques that we open this year to 12 to 13.

Speaker #1: We have repositions with that, so we benefit from new square footage growth from the prior years. They continue to drive traffic to our online business.

Speaker #1: And with that, we have a multitude of digital initiatives underway—a whole roadmap of digital initiatives, whether it be redesigning our website or continuing with features and functionality on our mobile app. Really exciting growth is happening in digital.

Jennifer Wong: Really exciting growth happening in digital. It is our fastest-growing channel. Certainly marketing. We continue our strategic investments in marketing, full-funnel marketing, where at the top of the funnel, we are amplifying our brand and introducing new customers to our brand, as well as driving traffic and conversion at the bottom of the funnel. We are getting better and better at that. Last but not least, it is all wrapped up in talent. We have a phenomenally talented team here that, as I said in my prepared remarks, are executing impeccably. All of those things together is what is driving our growth and is also what is driving our growth for the rest of the year and beyond that. So I personally could not be more excited about the business.

Speaker #1: It is our fastest-growing channel. And then, certainly, marketing. We continue our strategic investments in marketing. Full-funnel marketing—we're at the top of the funnel.

Speaker #1: We're amplifying our brand and introducing new customers to our brand, as well as driving traffic and conversion at the bottom of the funnel. We're getting better and better at that.

Speaker #1: And last but not least, it's all wrapped up in talent. We have a phenomenally talented team here that, as I said in my prepared remarks, are executing impeccably.

Speaker #1: And all of those things together are what is driving our growth, and also what will drive our growth for the rest of the year.

Speaker #1: And beyond that, I personally couldn't be more excited about the business. As Todd said in his prepared remarks, the team continues to be excited about our business for the near and for the long term.

Jennifer Wong: As Todd said in his prepared remarks, the team continues to be excited about our business for the near and for the long term. So that hopefully sets the stage for you. I will let Todd go over the details for growth in the back half of the year. So Todd.

Speaker #1: And so, that hopefully sets the stage for you. I'll let Todd go over the details for growth in the back half of the year.

Speaker #1: So Todd.

Speaker #2: Okay. Yeah, sure. Maybe I'll leave the long-term growth algorithm for the Investor Day. You might hear that a lot today, but we'll start with the first question, saying it.

Todd Ingledew: Okay. Yeah, sure. Yeah, maybe I will leave the long-term growth algo for the Investor Day. You might hear that a lot today, but we will start with the first question saying it. But I can focus on the back half of this year. So as you said, over the last three quarters, we have delivered exceptional revenue growth, and that is on top of more than 30% growth in the previous year in each of those quarters. And that strong momentum that we have been seeing has continued into Q3. But as we look towards the back half of Q3, we are anniversarying the launch of our mobile app on 27 October, where we drove substantial revenue in its first week last year. And then in November, we will begin to lap not one, but two years of exceptional growth.

Speaker #2: But I can focus on the back half of this year. So as you said, over the last three quarters, we've delivered exceptional revenue growth.

Speaker #2: And that's on top of more than 30% growth in the previous year in each of those quarters. And that strong momentum that we've been seeing has continued into the third quarter.

Speaker #2: But as we look towards the back half of Q3, we're anniversarying the launch of our mobile app on October 27th, where we drove substantial revenue in its first week last year.

Speaker #2: And then in November, we'll begin to lap not one, but two years of exceptional growth. So, obviously, we felt it was prudent to take this into consideration when providing our guidance.

Todd Ingledew: Obviously, we felt it was prudent to take this into consideration when providing our guidance, which is net revenue growth of 23% to 27%. For Q3, reflecting revenue growth for the remainder of the quarter in the high teens to low 20s. If you work out the math on the implied guide for Q4, it is the same, high teens to low 20s. But I think you need to keep in mind, as Jennifer Wong said, we are seeing broad-based strength across all channels and all geographies, and our inventory is in great position to continue meeting client demand.

Speaker #2: Which is net revenue growth of 23 to 27 percent for Q3, reflecting revenue growth for the remainder of the quarter in the high teens to low 20s.

Speaker #2: And if you work out the math on the implied guide for Q4, it's the same: high teens to low 20s. But I think you need to keep in mind, as Jen said, we're seeing broad-based strength across all channels and all geographies.

Speaker #2: And our inventory is in a great position to continue meeting client demand.

Speaker #3: The next question comes from John Caper with Goldman Sachs. Please go ahead.

Operator: The next question comes from John Caper with Goldman Sachs. Please go ahead.

Speaker #5: Hi, guys. Thank you very much. Given that stores are performing so well in light of the online momentum exploding, I'm just curious—do you have a sense of what is keeping people coming back to the store?

John Caper: Hi, guys. Thank you very much. Given that stores are performing so well in light of the online momentum exploding, I am just curious, do you have a sense of what is keeping people coming back to the store, why there is not cannibalization online? Anything you can tell us about shopping trends of longer-term customers in terms of what proportion of your customer book shop both online and in-store versus just online?

Jon Keypour: Hi, guys. Thank you very much. Given that stores are performing so well in light of the online momentum exploding, I am just curious, do you have a sense of what is keeping people coming back to the store, why there is not cannibalization online? Anything you can tell us about shopping trends of longer-term customers in terms of what proportion of your customer book shop both online and in-store versus just online?

Speaker #5: Why isn't there cannibalization online? And is there anything you can tell us about shopping trends for longer-term customers, in terms of what proportion of your customer base shops both online and in-store versus just online?

Speaker #1: Yeah, great question. Plain and simple, our retail experience is second to none in the world. I don't hesitate to say that it is the world's best.

Jennifer Wong: Yeah, great question. Plain and simple, our retail experience is second to none in the world. I do not hesitate to say that it is world's best. Our in-store environment and our in-store client experience is something that sets Aritzia apart from everyone else. I think we offer something that is unique, and it is unique to Aritzia. As we continue to open new stores and new markets and new stores in existing markets, we continue to have lineups around the corner on the first day. We continue to be very encouraged by the performance of our stores. That said, we, at the same time, have a digital playbook and a strategy to accelerate digital because right now, as of the end of Q2, we have 79 stores. Today, we have 82.

Speaker #1: And our in-store environment and our in-store client experience are things that set Aritzia apart from everyone else. So I think we offer something unique, and it is unique to Aritzia.

Speaker #1: As we continue to open new stores in new markets and new stores in existing markets, we continue to have lineups around the corner on the first day.

Speaker #1: So, we continue to be very encouraged by the performance of our stores. That said, we, at the same time, have a digital playbook and a strategy to accelerate digital.

Speaker #1: Because right now, we only have 70 as of the end of Q2. We have 79 stores today. We have 82. And so I think there's still a lot of opportunity for store growth, particularly in the U.S.

Jennifer Wong: I think there is still a lot of opportunity for store growth, particularly in the US. All of the things that I said at the beginning of the call to answer Brian's question, those are all things that go into what drives the demand for Aritzia.

Speaker #1: And all of the things that I said at the beginning of the call to answer Brian's question—those are all things that go into what drives the demand for Aritzia.

Speaker #3: The next question comes from Irene Mattel with RBC Capital Markets. Please go ahead.

Operator: The next question comes from Irene Nattel with RBC Capital Markets. Please go ahead.

Speaker #6: Thanks, and good afternoon, everyone. Clearly, exceptional performance, and it sounds as though the new marketing initiatives—both digital and otherwise—are really attracting new customers.

Irene Nattel: Thanks, and good afternoon, everyone. Clearly exceptional performance, and it sounds as though the new marketing initiatives, both digital and otherwise, are really attracting new customers. I was wondering if you could talk. Loyal customers and spent. Can you talk about what you are doing differently and where these new customers are coming from and how we should think about the evolution of all of these as we look forward?

Speaker #6: And so I was wondering if you could talk about sort of loyal customers—how much they've spent. Can you talk about what you're doing differently, where these new customers are coming from, and how we should think about the evolution of all of these as we look forward?

Speaker #1: We're simply getting better at what we're doing. And we have a culture here of continuous improvement in anything that we do. Marketing is an example of where our marketing is becoming more and more effective.

Jennifer Wong: We are simply getting better at what we are doing, and we have a culture here of continuous improvement in anything that we do. Marketing is an example of where our marketing is becoming more and more effective. It is not any one thing. Again, it is really a talented team across the board on all fronts that is contributing to that. Certainly, we are seeing double-digit client growth, and we are seeing that in both countries. Obviously, US is driving that growth. But it is really positive to see that it is happening in both countries. The nature of the customer that we are attracting is simply the Aritzia customer. The customers that we are attracting are customers that stay with us. They are returning to us. So we are not just acquiring customers for a one and done.

Speaker #1: And so, it's not any one thing. Again, it's really a talented team across the board, on all fronts, that is contributing to that.

Speaker #1: Certainly, we're seeing double-digit client growth, and we're seeing that in both countries. Obviously, the US is driving that growth, but it's really positive to see that it's happening in both countries.

Speaker #1: The nature of the customer that we're attracting is simply the Aritzia customer. And the customers that we are attracting are customers that stay with us.

Speaker #1: They're returning to us, so we're not just acquiring customers for a one-and-done. They're returning, and, as I said, welcoming them into the world of Aritzia.

Jennifer Wong: They are returning and, as I said, welcoming them into the world of Aritzia, and I think it bodes very well for our future, near and long term.

Speaker #1: And I think it's both very good for our future, near and long-term.

Speaker #3: The next question comes from Lou Cannon with Canaco Dinoti. Please go ahead.

Operator: The next question comes from Luke Hannan with Canaccord Genuity. Please go ahead.

Speaker #5: Thanks, and good afternoon. Todd, I wanted to go back to your prepared remarks. I believe you said that digital in the U.S. in particular is an opportunity, so maybe a two-part question on that.

Luke Hannan: Thanks, and good afternoon. Todd, I wanted to go back to your prepared remarks. I believe you had said that digital in the US in particular is an opportunity, and so maybe a two-part question on that. First, if the inference for that is that as it stands right now, the proportion of Canada within overall digital revenue, if that is higher than your overall business today, or maybe put differently, if the US penetration for digital is a little bit lower than what you see. If that is true, what is it that will help close that gap, I guess, for the US versus Canada?

Speaker #5: First, if the inference for that is that, as it stands right now, the proportion of Canada within overall digital revenue—if that's higher than your overall business today, or maybe put differently, if the U.S. penetration for digital is a little bit lower, then what you see.

Speaker #5: And if that's true, what is it that will help close that gap, I guess, for the US versus Canada?

Speaker #2: Yeah, thanks, Lou. Our digital penetration is relatively consistent across both countries, but we think therein lies the opportunity. When we look at the boutique footprint that we have in Canada versus the boutique footprint that we have in the United States, we should have meaningfully more opportunity from an e-commerce perspective in the U.S.

Todd Ingledew: Yeah. Thanks, Luke. Our digital penetration is relatively consistent across both countries, but we think therein lies the opportunity. When we look at the boutique footprint that we have in Canada versus the boutique footprint that we have in the United States, we should have meaningfully more opportunity from an e-commerce perspective in the US. And we are seeing that in the performance in Q2. The strength, really, it was across both countries, but particularly in the United States. And on an ongoing basis as we look forward, we do feel there is an opportunity specifically in the US to really expand and grow our digital business.

Speaker #2: And we are seeing that in the performance. In the second quarter, the strength really was across both countries, but particularly in the United States.

Speaker #2: And on an ongoing basis, as we look forward, we do feel there's an opportunity, specifically in the US, to really expand and grow our digital business.

Speaker #3: The next question comes from Chris Lee with Desjardins. Please go ahead.

Operator: The next question comes from Chris Li with Desjardins. Please go ahead.

Speaker #5: Good afternoon, everyone. We'd love to get an update on the mobile app in terms of the percentage of digital business transacted through the app, incremental sales growth contribution, the number of downloads—whatever stats you can provide would be very helpful.

Chris Li: Good afternoon, everyone. I would love to get an update on the mobile app in terms of the percentage of digital business that is transacted through the app, incremental sales growth contribution, the number of downloads, whatever stats you can provide would be very helpful. Thank you.

Speaker #5: Thank you.

Speaker #1: Thanks for your question. As I said in my prepared remarks, the app is performing well above our initial expectations. In fact, we're coming up on the anniversary of the app.

Jennifer Wong: Thanks for your question. As I said in my prepared remarks, the app is performing well above our initial expectations. In fact, we are coming up on the anniversary of the app, and in just one year, we have pretty much catapulted to the top standings among our peers, where some of those peers have actually been operating an app for nearly a decade, and in some cases, more than a decade. So we are exactly where we want to be. We are probably there a little bit earlier than we initially anticipated. We are performing at the high end of the range for best-in-class peers. We said we had over 2.5 million downloads. The strong downloads do continue year over year, so it continues to be strong and at the high end of the range. And we did report 34% of our business was in digital.

Speaker #1: And in just one year, we've pretty much catapulted to the top standings among our peers, where some of those peers have actually been operating an app for nearly a decade.

Speaker #1: And, in some cases, more than a decade. So we're exactly where we want to be. We're probably there a little bit earlier than we initially anticipated.

Speaker #1: We're performing at the high end of the range for best-in-class peers. We said we had over 2.5 million downloads. The strong downloads do continue year over year.

Speaker #1: So it continues to be strong and at the high end of the range. We did report 34% of our business was in digital.

Speaker #1: You can see what it continues to contribute to our overall business.

Jennifer Wong: You can see what it continues to contribute to our overall business.

Speaker #3: The next question comes from Mauricio Serna with UBS. Please go ahead.

Operator: The next question comes from Mauricio Serna with UBS. Please, go ahead.

Speaker #5: Great, good afternoon. Thanks for taking my question. Maybe just on the comp sales growth, 35%—pretty outstanding. Could you unpack a little bit more how much of that comes from AUR growth versus unit?

Mauricio Serna: Great. Good afternoon. Thanks for taking my question. Maybe just on the comp sales growth, 35%, pretty outstanding. Could you unpack a little bit more how much of that comes from AUR growth versus unit? I know in the last few quarters, you talked about AUR maybe being low single digits. Just wanted to get a sense if that is the case. Then on inventory, I know that also has been one of your strong points. Just wondering if you could elaborate a little bit more on I see you ended Q2 with inventory up 36% versus the expected growth of 23% to 27% for Q3. Just wanted to see if you could reconcile a little bit how the high inventory growth versus your expectations for Q3 sales growth. Thank you.

Speaker #5: I know in the last few quarters you talked about AUR maybe being low single digit. Just wanted to get a sense if that's still the case.

Speaker #5: And then, on inventory, I know that's also been one of your strong points. Just wondering if you could elaborate a little bit more.

Speaker #5: I see you ended Q2 with inventory up 36% versus the expected growth of 23, 27% for Q3. So just wanted to see if you could reconcile a little bit how it should house the high inventory growth versus your expectations for Q3 sales growth.

Speaker #5: Thank you.

Speaker #1: Hi Mauricio. I'll take the first part, and then I'll let Todd take the second part. On the comp drivers, obviously, everything is going well on all fronts, as I've said now several times.

Jennifer Wong: Hi, Mauricio. I will take the first part, then I will let Todd take the second part. On the comp drivers, obviously everything is going well on all fronts, as I have said now several times. As it has been in previous quarters, the comp has been primarily driven by traffic versus the ticket. Primarily all traffic. So remains consistent quarter to quarter, including Q2.

Speaker #1: As it has been in previous quarters, the comp has been primarily driven by traffic versus ticket—primarily all traffic. So it remains consistent quarter to quarter, including Q2.

Speaker #2: Okay, yeah. And then, from an inventory perspective, we're extremely pleased with the composition and quantity of our inventory. As I said in my prepared remarks, it was up 36% at the end of Q2.

Todd Ingledew: Okay. Yeah. From an inventory perspective, we are extremely pleased with the composition and quantity of our inventory, as I said in my prepared remarks, which was up 36% at the end of Q2. The growth over the prior year is actually more a reflection of not having quite enough inventory last year. Our strong inventory position, as we have said repeatedly, continues to be a primary driver of our top-line momentum.

Speaker #2: The growth over the prior year is actually more a reflection of not having quite enough inventory last year. And our strong inventory position, as we've said repeatedly, continues to be a primary driver of our top-line momentum.

Speaker #3: The next question comes from Dylan Carden with William Blair. Please go ahead.

Operator: The next question comes from Dylan Carden with William Blair. Please go ahead.

Speaker #5: Hey, sorry, I'm catching up a little bit here, but can you unpack some of the infrastructure investments in the third quarter that you're making? And then, going back to a question from a couple of questions ago.

Dylan Carden: Hey, sorry. Catching up a little bit here. Can you unpack some of the infrastructure investments in Q3 that you are making? Going back to a question a couple of questions ago, new versus existing, it seems that there is a real driver of some of the business in new customers through square footage, digital marketing. Have you looked at or quantified new versus existing, particularly as it relates to your point about being able to convert those same new customers further down? Thanks.

Speaker #5: New versus existing—it seems that there's a real driver of some of the business and new customers: the square footage, digital marketing. Have you looked at, or quantified, kind of new versus existing?

Speaker #5: Particularly as it relates to your point about being able to sort of convert those same new customers further down. Thanks.

Speaker #2: Yeah, I can start with the infrastructure question. Just suffice it to say we have projects underway across all areas of the business, whether that's the digital roadmap investments we're making, our distribution center network, tech and AI enablement, merch planning software, or customer initiatives.

Todd Ingledew: Yeah, I can start with the infrastructure question. Suffice it to say, we have projects underway across all areas of the business, whether that is the digital roadmap investments that we are making, our distribution center network, tech and AI enablement, merch planning software, customer initiatives, and RFID. Frankly, that is really just the start of it. So those are the big projects we are working on, but we do have an even longer list beyond that. Just the way the projects have flowed through the year, the heavier investment is in the back half. So that is what you are seeing in our guidance for SG&A.

Speaker #2: And RFID, so, frankly, that's really just the start of it. Those are the big projects we're working on, but we do have an even longer list beyond that.

Speaker #2: And just the way the projects have flowed through the year, the heavier investment is in the back half. So that's what you're seeing in our guidance for SG&A.

Speaker #1: And on new customer acquisition, it's growing across all channels and regions. Obviously, the fastest growth is in the US. Historically, our stores and the square footage growth have been our primary client acquisition tool.

Jennifer Wong: And on new customer acquisition, it is growing across all channels and regions. Obviously, the fastest growth is in the US. Historically, our stores and the square footage growth has been our primary client acquisition tool, and it continues to be a very strong acquisition tactic. But we are seeing strong growth for new customers in digital alone as well. So what is, again, really great to see is that it is balanced, and again, broad-based. And I think what is most encouraging for us is that these are customers that return once they have experienced the Aritzia experience. So, seeing great productivity in terms of store openings for that, as well as our marketing.

Speaker #1: And it continues to be a very strong acquisition tactic. But we are seeing strong growth for new customers in digital alone as well.

Speaker #1: So what is, again, really great to see is that it is balanced and, again, broad-based. And I think what is most encouraging for us is that these are customers that return.

Speaker #1: And once they've experienced the, I would say, experience—so seeing great productivity in terms of store openings for that, as well as our marketing.

Speaker #3: The next question comes from Steven McLeod with ML Capital Markets. Please go ahead.

Operator: The next question comes from Stephen MacLeod with BMO Capital Markets. Please go ahead.

Speaker #5: Thank you. Good afternoon. Good evening, everyone. I just wanted to focus a bit more acutely on the Q3-to-date trends that you’ve seen.

Stephen MacLeod: Thank you. Good afternoon. Good evening, everyone. I just wanted to focus just a bit more acutely on the Q3 to date trends that you have seen. I know you have talked about momentum, excuse me, continuing into Q3, but wondering if you can give maybe a little bit more guidance or indication around what you are seeing in Canada versus the US specifically, and then, I guess, digital versus new stores as well, or retail.

Speaker #5: I know you've talked about momentum—excuse me—continuing into Q3, but I'm wondering if you can give maybe a little bit more guidance or indication around what you're seeing in Canada versus the US, specifically.

Stephen MacLeod: Q3, but wondering if you can give maybe a little bit more guidance or indication around what you are seeing in Canada versus the US specifically, and then, I guess, digital versus new stores as well, or retail.

Speaker #5: And then I guess digital versus new stores as well, or retail.

Speaker #1: Yeah. I think we've already said that our quarter-to-date trends are, well, we exited Q2 with the same momentum going into Q3. Our quarter-to-date trends are consistent with Q2.

Jennifer Wong: Yeah. I think we've already said that our quarter to date trends are, well, we exited Q2 with the same momentum going into Q3. Our quarter to date trends are consistent with Q2. I want to remind you that we are in our eighth quarter of double-digit comp growth, and while the momentum has continued, Todd has talked about the lapping of exceptional growth from last year, particularly if you would talk about November, so the last month of this quarter, as well as that last week in October when we launched the app last year. So we're still feeling very positive about the rest of the quarter, and so far with the consistency of exiting Q2, we're very confident.

Speaker #1: I want to remind you that we are in our eighth quarter of double-digit comp growth. And while the momentum has continued, Todd has talked about the lapping of exceptional growth from last year, particularly if you would talk about November.

Speaker #1: So the last month of this quarter, as well as that last week in October, when we launched the app last year. So we're still feeling very, very positive about the rest of the quarter.

Speaker #1: And so far, with the consistency of exiting Q2, we're very confident.

Speaker #3: The next question comes from Ike Farachov with Wells Fargo. Please go ahead.

Operator: The next question comes from Ike Boruchow with Wells Fargo. Please go ahead.

Speaker #6: Hi, guys. Thank you. This is Julianna for Ike. I was wondering if you could give us a little bit more color on your gross margin guide for Q3.

[Analyst] (Wells Fargo): Hi, guys. Thank you. This is Juliana on for Ike. So I was wondering if you could give us a little bit more color on your gross margin guide for Q3, and into Q4 as possible, just given all the puts and takes here. Thank you.

Speaker #6: And into Q4, if possible, just given all the puts and takes here. Thank you.

Speaker #2: Yeah, no problem. So for Q3 specifically, we expect gross margin to increase 100 to 150 basis points, and it's driven by continued IMU expansion, which includes lower tariff impacts.

Todd Ingledew: Yeah, no problem. So for Q3 specifically, we expect gross margin to increase 100 to 150 basis points, and it's driven by continued IMU expansion, which includes lower tariff impacts, as well as occupancy cost leverage. And we expect that that 100 to 150 basis points of expansion in Q3 to be relatively consistent in Q4. So therefore, for the full year, we've raised our outlook for gross profit margin expansion to 225 to 275 basis points. But going specifically to your question of the moderation of the gross profit margin, in the back half, it's driven by really three factors. First, a reduction in leverage. Second, the normalization of markdowns in the back half of the year as we lap extremely low markdowns last year. And then third, the addition of occupancy and depreciation costs from our new distribution center.

Speaker #2: And as well as occupancy cost leverage. And we expect that 100 to 150 basis points of expansion in Q3 to be relatively consistent in Q4.

Speaker #2: So, therefore, for the full year, we've raised our outlook for gross profit margin expansion to 225 to 275 basis points. But going specifically to your question about the moderation of the gross profit margin in the back half, it's driven by really three factors.

Speaker #2: First, a reduction in leverage. Second, the normalization of markdowns in the back half of the year as we lap extremely low markdowns last year.

Speaker #2: And then third, the addition of occupancy and depreciation costs from our new distribution center. I think, keeping in mind that we're extremely pleased to have delivered 10 consecutive quarters of gross profit margin expansion.

Todd Ingledew: And I think keeping in mind that we are extremely pleased to have delivered 10 consecutive quarters of gross profit margin expansion and now to be continuing to forecast meaningful ongoing expansion in the back half of the year.

Speaker #2: And now, to be continuing to forecast meaningful ongoing expansion in the back half of the year.

Speaker #3: The next question comes from Corey Charlow with Jefferies. Please go ahead.

Operator: The next question comes from Corey Tarlowe with Jefferies. Please go ahead.

Speaker #5: Great, thanks. Todd, I wanted to ask about the margin performance. I think this is the highest second quarter margin in company history. Recognizing that maybe there are some temporary factors that have driven this, but I'm assuming there are also a lot of structural elements to this as well.

Corey Tarlowe: Great. Thanks. Todd, I wanted to ask on the margin performance. I think this is the highest Q2 margin in company history. Recognizing that maybe there are some temporary factors that have driven this, maybe I am assuming there are a lot of structural elements to this as well. What of the Q2 performance maybe sticks or does not stick as we think about what is ahead?

Speaker #5: What from the second quarter performance maybe sticks or doesn't stick as we think about what's ahead?

Speaker #2: Yeah, we're extremely pleased with what we delivered—that 21% was, in fact, a record for the second quarter. And that's obviously all in spite of the tariff and de minimis pressure that's underlying within our results.

Todd Ingledew: Yeah. We are extremely pleased with what we delivered, the 21% was in fact a record for the Q2. That is obviously all in spite of the tariff and de minimis pressure that is underlying within our results. We are extremely pleased to be forecasting adjusted EBITDA margin of 20% for the full year, which is 100 basis points obviously higher than our long range FY27 target. Again, despite the tariff and de minimis pressure. I think the way we would look at it is the benefits that have helped us get there are really things that we have taken action on. So it is the revenue leverage, the gross profit expansion, leverage on SG&A, and the spend management that we have implied in there. The growth is durable. I do want to say, at this level, obviously our business is extremely healthy and generating meaningful cash flow.

Speaker #2: So, we're extremely pleased to be forecasting an adjusted EBITDA margin of 20% for the full year, which is 100 basis points higher than our long-range FY27 target.

Speaker #2: Again, despite the tariff and de minimis pressure, I think the way we would look at it is that the benefits that have helped us get there are really things that we've taken action on.

Speaker #2: So it's the revenue leverage, the gross profit expansion, leverage on SG&A, and the spend management that we have implied in there. So the growth is durable.

Speaker #2: But I do want to say, at this level, obviously our business is extremely healthy and generating meaningful cash flow. So as we look forward, we do continue to have significant investments that are required to drive and enable our growth.

Todd Ingledew: As we look forward, we do continue to have significant investments that are required to drive and enable our growth. Therefore, we will continue to balance investing in that growth and growing our margins. I guess we are extremely comfortable with where we are at, and this level has been achieved through durable components.

Speaker #2: And therefore, we will continue to balance investing in that growth and growing our margins. So, I guess we're extremely comfortable with where we're at.

Speaker #2: And the level has been achieved through durable components.

Speaker #3: The next question comes from Martin Landry with Stifel. Please go ahead.

Operator: The next question comes from Martin Landry with Stifel. Please go ahead.

Speaker #7: Hi, good evening, everyone. Jennifer, you did mention that your comp sales are driven mostly by traffic, and I think that's been the case for several quarters now.

Martin Landry: Hi, good evening, everyone. Jennifer, you did mention that your comp sales are driven mostly by traffic, and I think that has been the case for several quarters now. The question I have, I am trying to understand a little bit your boutique capacity, right? If traffic has been growing steadily for several years now, obviously traffic in your boutique is not smooth over the week and there are peak periods. So how much more capacity do you have in your boutique to welcome new customers?

Speaker #7: So the question I have—I'm trying to understand a little bit about your boutique capacity, right? I mean, if traffic has been growing steadily for several years now, obviously traffic in your boutique is not smooth over the week.

Speaker #7: There are peak periods. So, how much more capacity do you have in your boutique to welcome new customers?

Speaker #1: Well, if I take us back to 2016 when we talked about opening boutiques that are, on average, 6,000 square feet, and then go to our last Investor Day...

Jennifer Wong: Well, if I take us back to 2016 when we talked about opening boutiques that are on average 6,000 square feet, and then go to our last Investor Day, I think we said it was 6,000 square feet, then we grew to 8,000 square feet, and then at our last Investor Day, we talked about having 10,000 square foot stores. I think that right there indicates our ability to increase our capacity as our comps continue to grow. Obviously, we have stores, like our flagships are much larger than that at 30,000 square feet plus. But right now with our current economics at 10,000 square feet, that right there is what allows us to have more fitting rooms, more space to showcase our product, obviously invite just more higher volume of people into the store. This is how we have, over time, grown with the growth of our business.

Speaker #1: I think we said it was 6,000 square feet. Then we grew to 8,000 square feet. And then, at our last Investor Day, we talked about having 10,000 square-foot stores.

Speaker #1: I think that right there indicates our ability to increase our capacity as our comps continue to grow. Obviously, we have stores like our flagships, which are much larger than that, at 30,000 square feet plus.

Speaker #1: But right now, with our current economics at 10,000 square feet, that right there is what allows us to have more fitting rooms, more space to showcase our product.

Speaker #1: Obviously, invite just more higher volume of people into the store. This is how we've, over time, grown with the growth of our business.

Speaker #3: The next question comes from Michael Glenn with Raymond James. Please go ahead.

Operator: The next question comes from Michael Glen with Raymond James. Please go ahead.

Speaker #8: Hey Jennifer, you're clearly winning market share. Where do you think the market share is coming from, and what categories are you winning the most in?

Michael Glen: Hey, Jennifer. You are clearly winning market share. Where do you think the market share has come, and what categories are you winning the most in?

Speaker #1: Well, as we've been saying, thank you for your question. As we've been saying, it's very broad-based. The beautiful thing about Aritzia and our Everyday Luxury is that it has a broad appeal to a broad customer base.

Jennifer Wong: Well, thank you for your question. As we have been saying, it is very broad-based. The beautiful thing about Aritzia and our everyday luxury is that it has a broad appeal to a broad customer base. I have said before in the past how it spans three generations, it might even be spanning four now, of customers. We have a breadth of an assortment that can cater to almost any profile of a client. So I think, again, it is not any one segment that we are gaining market share in. I think it is across the board. Anyone who values high quality product with a depth of design and impeccable construction, such as our product, at an attainable price point, is going to resonate with our product and our service and all of the experiential aspects that go with it.

Speaker #1: I've said before in the past how it spans three generations, and might even be spanning four now, of customers. We have a breadth of an assortment that can cater to almost any profile of a client.

Speaker #1: And so I think it's not, again, it's not any one segment that we're gaining market share in. I think it's across the board.

Speaker #1: Anyone who values a high-quality product with a depth of design and impeccable construction, such as our product, at an attainable price point is going to resonate with our product.

Speaker #1: And our service, and all of the experience aspects that go with it, I think we have something that is very, very special. And we're getting more and more recognized for that.

Jennifer Wong: I think what we have is something that is very special, and we are getting more and more recognized for that. Again, I could not be more excited about the business. So I think the other point is, just seeing how we are growing here, is that there is still a lot more potential, whether you look at it from the lens of the number of stores that we can open. Somebody asked a question earlier about digital penetration in the US. I just think that there is just so much more runway for us, and it is very positive.

Speaker #1: And again, I couldn't be more excited about the business. So, I think the other point is, seeing how we're growing here, is that there's still a lot more potential—whether you look at it from the lens of the number of stores that we can open. Somebody asked a question earlier about digital penetration in the U.S.

Speaker #1: I mean, I just think that there's so much more runway for us, and it's very positive.

Speaker #3: The next question comes from Joseph Savello with Tourist. Please go ahead.

Operator: The next question comes from Joseph Civello with Truist. Please go ahead.

Speaker #9: Hey, thanks so much, and congratulations on more exceptional results. I wanted to check in on the IMU process—what interview are we in there, and what are the key opportunities remaining?

Joseph Civello: Hey, thanks so much, and congratulations on more exceptional results. I wanted to check in on the IMU improvements. What integrated in there, and what are the key opportunities remaining? Then separately, I know you guys have been really successful at optimizing inventory, but still have a planning system implementation underway. Can you give us an update on progress there and what we should expect to see from that initiative?

Speaker #9: And then, separately, I know you guys have been really successful at optimizing inventory, but still have a planning system implementation underway. Can you give us an update on progress there and what we should expect to see from that initiative?

Speaker #2: Yeah, thanks, Joe. From the IMU perspective, we continue to have opportunities. We're incredibly pleased with the work the team has done and continues to do—both obviously elevating our product and, at the same time, driving improvements in margin.

Todd Ingledew: Yeah. Thanks, Joe. From the IMU perspective, we continue to have opportunities. We are incredibly pleased with the work the team has done and continues to do, both obviously elevating our product and at the same time, driving improvements in margin. It is really two primary drivers. First, cost savings, where we are leveraging our growing scale. Then also, we are continuing to optimize our country mix. Both of those are driving the cost side from an IMU perspective. Secondly, we continue to review our pricing on a seasonal basis. There is some benefit from that as well. But the majority of our IMU improvements have been coming through the cost savings.

Speaker #2: It's really two primary drivers. First, cost savings, where we're leveraging our growing scale. And then, we're continuing to optimize our country mix. So both of those are driving the cost side.

Speaker #2: From an IMU perspective, and then secondly, we continue to review our pricing on a seasonal basis. So, there is some benefit from that as well.

Speaker #2: But the majority of our IMU improvements have been coming through the cost savings. And, yeah, as I said, we're continuing to expect IMU improvement in the back half of the year.

Todd Ingledew: As I said, we are continuing to expect IMU improvement in the back half of the year, and we will be providing more information about how that will continue when we give our guidance for our Investor Day.

Speaker #2: And we'll be providing more information about how that will continue when we give our guidance for our Investor Day.

Speaker #3: This concludes the question-and-answer session and today's conference call. Thank you for joining, and have a pleasant day. You may now disconnect your line.

Operator: This concludes the question and answer session and today's conference call. Thank you for joining, and have a pleasant day. You may now disconnect your lines.

Operator: Carefully, we will come through. Could it be easy to start over? Somehow I will bring you through. You have a newborn mind. You and me don't mean to say goodbye.

Speaker #10: Carefully, we will come through. Could it be easy to start over? Somehow I will bring you to have me lose my mind and you bring me something I can't define and.