Aritzia Inc.’s ATZ-T retail business has become a tale of two consumers, as demand slows among Canadian shoppers, while American clients continue to fuel its growth.
The Vancouver-based fashion retailer swung to a net profit of $18.2-million or 16 cents a share in the second quarter, compared with a net loss of nearly $6-million or 5 cents a share in the same period last year.
“Ultimately, we started to see a bifurcation in the second quarter, mainly due to the U.S. momentum,” chief executive Jennifer Wong told analysts on a call Thursday to discuss the results. In the U.S., the company has seen growth from new store openings, accelerating e-commerce sales and strong performance of existing boutiques, she said.
In the second quarter ended Sept. 1, shopping habits in Canada remained “consistent” compared with the previous quarter, Ms. Wong added, but trends have begun to soften in the third quarter. Canadian shoppers are becoming “more discerning,” shopping less frequently both online and in person, Ms. Wong said.
Aritzia ATZ-T reported a 24-per-cent increase in U.S. sales – which make up just more than half of its business – in the second quarter. In Canada, sales grew by 5.8 per cent, but those results got a boost from the company’s popular Vancouver warehouse sale during the second quarter of this year, while it had occurred during the third quarter the year before.
“In Canada we saw less momentum, which we believe is due to a softer consumer environment,” Ms. Wong said of the second-quarter results.
Aritzia reported its net revenue increased by 15.3 per cent in the second quarter, to $615.7-million.
Newly opened stores in the United States, as well as “repositioned” boutiques, contributed to the growth, according to the company. Aritzia is planning to open 12 to 13 new stores in the U.S. this fiscal year, the vast majority of them in the back half of the year.
Comparable sales – an important industry metric that tracks sales growth that removes the impact of new store openings – grew by 6.5 per cent in the quarter.
E-commerce net revenue increased by 10.4 per cent to $190-million. Aritzia is planning upgrades to its website before the end of the fiscal year. Currently, international markets make up less than 1 per cent of Aritzia’s e-commerce sales, which the site improvements should help to expand, Ms. Wong said.