Aritzia (ATZ) Q1 2025 earnings summary

Executive summary

• Net revenue for Q1 FY2025 increased 7.8% year-over-year to $498.6 million (CAD 499 million), with comparable sales up 2% and positive comps across all geographies and channels.

• U.S. net revenue grew 13% to $284.7 million, now 57.1% of total revenue, driven by real estate expansion and brand awareness.

• Adjusted EBITDA rose 70.6% to $53.9 million, with margin expanding to 10.8% of revenue.

• E-commerce net revenue increased 4.2%, with sales momentum accelerating as inventory normalized.

• New boutiques, such as Boca Raton, exceeded sales projections and attracted a high percentage of new clients, supporting a 50% square footage growth plan in the U.S.

Financial highlights

• Gross profit rose 22% to $219.5 million, with gross margin up 510 bps to 44.0% due to lower markdowns and cost savings.

• SG&A expenses increased to $176.3 million, or 35.4% of net revenue, reflecting investments in digital marketing and technology.

• Adjusted net income more than doubled to $25.0 million, with adjusted EPS at $0.22 (+120% YoY).

• Inventory at quarter-end was $396.8 million, down 18.2% year-over-year; cash position was $100.7 million with no debt drawn.

• Free cash flow was negative $68.3 million due to increased capital investments.

Outlook and guidance

• Q2 FY2025 net revenue expected at $570–$590 million, up 7–10% year-over-year; gross margin to expand by ~450 bps.

• Full-year FY2025 net revenue guidance reiterated at $2.52–$2.62 billion (8–12% growth, or 10–14% excluding the 53rd week last year).

• 11–13 new boutiques and 3–4 repositions planned for FY2025, with ~50% square footage growth in the U.S.

• Adjusted EBITDA margin expected to expand 400–500 bps for the year; capital expenditures forecast at ~$230 million.

• Long-term target for adjusted EBITDA margin is approximately 19% by FY2027.