Canada-based women’s fashion brand Aritzia has reported a modest increase in net revenue of 1.6 per cent to $534.2 million in the second quarter of fiscal 2024 (Q2 FY24), compared to $525.5 million in Q2 FY23. This is on top of strong net revenue growth over the last two years of 50.1 per cent in Q2 FY23 and 74.9 per cent in Q2 FY22, resulting in a three-year compound annual growth rate (CAGR) of 38.7 per cent.

However, comparable sales declined by 4.3 per cent, in stark contrast to a growth of 28.3 per cent in Q2 FY23. Net revenue in the US rose by 6 per cent to $278.9 million, whereas in Canada, it dropped by 2.7 per cent to $255.3 million.

Retail net revenue increased by 3 per cent to $362.0 million, but e-commerce net revenue slightly dipped by 1 per cent to $172.2 million. The e-commerce decline was attributed to softer traffic trends, especially during the spring/summer sale period, the company said in a media release.

Gross profit for the quarter took a hit, decreasing by 15.2 per cent to $186.8 million, and gross profit margin declined to 35 per cent from 41.9 per cent in Q2 FY23. Selling, general, and administrative expenses rose significantly by 16.3 per cent to $171.1 million, making up 32 per cent of net revenue as against 28.0 per cent in Q2 FY23.

The company recorded a net loss of $6 million, a sharp decline of 112.9 per cent compared to a net income of $46.3 million in the previous year's Q2. Net income per diluted share also plummeted to a loss of $0.05 per share, down 112.5 per cent from $0.40 per share in Q2 FY23. Adjusted EBITDA stood at $21.2 million, a 74.4 per cent decrease, and adjusted net income was down 93.3 per cent to $3.4 million. Adjusted net income per diluted share was $0.03, a decrease of 93.2 per cent.

Inventory at the end of the quarter was $500.9 million, an increase of 10.1 per cent compared to $455.1 million at the end of Q2 FY23.

"As we highlighted last quarter, we believe our top line trend is being impacted by missed opportunities in the level of new styles in our product assortment as well as a mixed consumer environment," said Jennifer Wong, chief executive officer. "While our quarterly results do not meet our high standards, our performance was better than anticipated, and we made significant progress in executing against our fiscal 2024 priorities. As planned, we opened our new Toronto area distribution centre at the end of August and meaningfully improved our inventory position."

Fibre2Fashion News Desk (DP)

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