Canadian clothing retail company Aritzia is expecting a net revenue between $620 million and $640 million in the first quarter (Q1) of fiscal 2026 (FY26), reflecting year-over-year (YoY) growth of approximately 24 to 28 per cent.

The company anticipates a 200-basis points (bps) improvement in gross profit margin and a 100-bps decline in selling, general and administrative (SG&A) as a percentage of net revenue, with adjusted EBITDA expected to be approximately 14 per cent of net revenue, consistent with the previous year.

Despite continued strong performance across channels and geographies, FY26 outlook accounts for macroeconomic uncertainties, including tariff-related impacts, Aritzia said in a press statement.

For the full FY26, Aritzia is expecting net revenues between $3.05 billion and $3.25 billion, an increase of 11 to 19 per cent YoY, supported by retail expansion comprising at least 12 new boutiques and five repositions—primarily in the US.

Adjusted EBITDA margin for FY26 is projected at 14 to 15 per cent, driven by improved merchandise margins, freight savings, cost-efficiency initiatives, and operating leverage, partially offset by higher US tariffs. It also expects capital cash expenditures to be around $180 million, including $110 million for boutique investments and $70 million for distribution and technology projects.

The company also revised its total capital cash expenditure forecast for FY24 to FY27 to $750 million, up from $500 million, mainly due to increased square footage growth and currency headwinds.

"We continue to see strong momentum in the first quarter of FY26, fuelled by a positive client response to our spring/summer product and our optimised inventory position. The strength of our brand, quality of our assortment and our Everyday Luxury client experience are all resonating exceptionally well, giving us confidence in our ability to capitalise on the opportunities that lie ahead,” said . “Given the recent tariff developments, it is clear we are operating in a dynamic environment. Our successful 40+ year track record across varying economic climates demonstrates our ability to pivot and adapt.”

Meanwhile, Aritzia has generated a net revenue of $2.74 billion in full fiscal 2025 (FY25) ended March 2, 2025, an increase of 17.4 per cent YoY, and 15.4 per cent on constant currency basis. The comparable sales grew 11.0 per cent, fuelled by positive client response to the company's products, its optimised inventory position and investments in digital and brand marketing, the statement added.

Its retail net revenue increased 15.5 per cent to $1.79 billion and e-commerce net revenue increased 21.1 per cent to $951.0 million. The company increased its investments in digital and brand marketing to strengthen brand equity, boost awareness, and drive new client acquisition. It opened 12 new boutiques and repositioned three existing ones, including three flagship locations designed to enhance brand visibility—two in Manhattan and one in Chicago.

Additionally, it launched its upgraded online platform, offering a more personalised client experience, improved product discovery, and seamless integration with the upcoming customer mobile app, the statement further said.

Region-wise, results continue to be driven by performance in the US, where net revenue increased 29.0 per cent YoY to $1.58 billion. Net revenue in Canada increased 4.6 per cent YoY to $1.16 billion.

The gross profit of the company in FY25 increased 31.3 per cent to $1.18 billion. The gross profit margin was 43.1 per cent. The 460 bps increase in gross profit margin was primarily driven by initial markup (IMU) improvements, lower markdowns, lower warehousing costs and savings from its smart spending initiative, partially offset by higher freight costs.

The net income in FY25 was $207.8 million, an increase of 163.8 per cent YoY due to increases in foreign exchange gains and unrealised gains on derivatives, partially offset by an increase in stock-based compensation expense mainly because of mark-to-market changes. The net income per diluted share was $1.78, an increase of 158.0 per cent.

Aritzia reported a strong financial performance with net revenue rising 31.3 per cent YoY to $895.1 million in the fourth quarter (Q4) of FY25, driven by a 26.0 per cent increase in comparable sales.

The gross profit margin in the quarter expanded by 420 bps to 42.5 per cent. Adjusted EBITDA rose by 121.8 per cent to $160.9 million, representing 18.0 per cent of net revenue. The net income increased significantly by 311.6 per cent to $99.6 million, or $0.84 per diluted share.

US’ net revenue saw a robust increase of 48.5 per cent YoY to $548.0 million in Q4, fuelled by acceleration in e-commerce growth, while Canada’s revenue increased 10.9 per cent to $347.1 million, driven by accelerated momentum in both e-commerce and retail.

“Our results for the fourth quarter and full year fiscal 2025 underscore the strength of our business and growing affinity for the Aritzia brand. Underpinned by our assortment of beautiful products, optimised inventory position and strategic marketing investments, we fuelled accelerated momentum in e-commerce and continued to execute our real estate expansion strategy, including the opening of our iconic Fifth Avenue flagship in Manhattan,” added Wong.

Fibre2Fashion News Desk (SG)