Aritzia Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Luke Hannan - Canaccord Genuity Corp., Research Division - Analyst : Thanks. Jen, you had mentioned, I think, earlier in your prepared remarks that you're continuing to test and refine the algorithms when it comes to e-commerce. So I'm just curious if e-commerce, if there's any difference versus in-store when it comes to driving, we'll say, client engagement with newness versus client favorites? In other words, is it a better or worse channel for driving interest in newness versus your stores? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 28, 2023 / 8:30PM, ATZ.TO - Q2 2024 Aritzia Inc Earnings Call

Question: Luke Hannan - Canaccord Genuity Corp., Research Division - Analyst : Okay. And then when it comes to the competitive landscape, I appreciate your and Todd's commentary that the markdowns, level of markdowns that you have in your own assortment is still below pre-pandemic levels. Are you seeing any reaction from competitors being more or less promotional than you would have originally anticipated?

Question: Luke Hannan - Canaccord Genuity Corp., Research Division - Analyst : Understood. Last one, and then I'll pass the line. Todd. In the past, you've shared what your total committed inventory position has been. I'm curious to know if you can share where that is either ending the quarter or as of today?

Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst : First, I would like to ask about the Q3 sales guidance. How should we think about the implied comp sales, just given that there's like the total sales outlook implies a deceleration. I don't know that has to do with less store openings on a last 12-month basis or how should we think about that? And then in slide Q4 SG&A dollar growth, I think it seems that looking at the model, I think it implies like the SG&A dollar growth will accelerate in Q4. So I just wanted to corroborate that, how (inaudible)

Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst : Implied comp sales.

Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst : You have minus 4.3%. Is that right probably you're thinking about (inaudible) income?

Question: Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst : Got it. And then just one last follow-up on inventory, it seems -- it's great to see that progress, both on a reported basis and the committed inventory. Maybe can you elaborate a little bit more on like that competition? Is it like -- how does that look when you think about proven sellers versus unit?

Question: Dylan Douglas Carden - William Blair & Company L.L.C., Research Division - Analyst : Curious, Jennifer on the marketing comments. Is that incremental to prior thinking or just another way is the idea here that the ratio of marketing spend to sales would increase with flow through at a higher conversion at the online channel? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 28, 2023 / 8:30PM, ATZ.TO - Q2 2024 Aritzia Inc Earnings Call

Question: Dylan Douglas Carden - William Blair & Company L.L.C., Research Division - Analyst : Great. And then on new markets, paying back within a year, you're opening up new markets go forward this year and next. Are volumes still kind of double broad strokes what they were pre-pandemic? And has there been any impact on new markets from kind of the hampered newness in the inventory position in some of these markets such that you might expect the volumes could be even greater? And I have a follow-up to that.

Question: Dylan Douglas Carden - William Blair & Company L.L.C., Research Division - Analyst : Okay. And then Todd, given that kind of shortened payback period where you should theoretically land the year from a gross margin standpoint, which isn't all that far off from some prior years. What's sort of the structural margin level here go-forward? Do we think sort of low 40s which you've achieved historically even pre-2016? Is there upside to that? I know you're not going to commit to a number per se, but just trying to sort of flow through the compressed payback period to an actual kind of structural gross margin? Anything you say there would be helpful.

Question: Dylan Douglas Carden - William Blair & Company L.L.C., Research Division - Analyst : And on the project margin side, remind us about a third of that, I think, was coming from selective price increases. Is that something we should expect to see more spring-summer '24 or have you all started feather some of that in?

Question: Dylan Douglas Carden - William Blair & Company L.L.C., Research Division - Analyst : But you've been successful in pushing to some pricing in the present period in time.