Aritzia Inc Q4 2025 Earnings Call Transcript

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

Question: Luke Hannan - Canaccord Genuity - Analyst : I wanted to start on the topic of production. You mentioned that you're diversifying the supply chain that you have, right now. Can you give us a sense of the sourcing breakdown, as of today, and then what you envision it looking like, perhaps, 6 months or 12 months from now? Again, assuming that things stay where they are. I realize it's probably a big assumption at this point, just given the fluidity of everything going on. But, maybe, just a further breakdown on how you envision your production base looking like, down the road?

Question: Mark Petrie - CIBC - Analyst : I wanted to ask about the thought process around and, maybe, openness to price increases. I know this is a multi-year journey around IMU. But I think, in the past, this has been something that there's been some reluctance to take and at the risk of maybe disrupting the momentum with consumers, even when competitors were taking price. So I'm just hoping you could talk about the current mindset, particularly in light of the tariffs. And specific to fiscal '26, I know, as you mentioned, a bunch of the product has already landed. But what would be the timing on that decision, if they would be in place to offset whatever tariff impact is actually felt? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, ATZ.TO - Q4 2025 Aritzia Inc Earnings Call

Question: Irene Nattel - RBC Capital Markets - Analyst : Great quarter. And it sounds as though the momentum is continuing into Q1. Can you walk us through how you're thinking about the evolution of the year, from a demand perspective? And then, also from a margin perspective, because if half of your product is onshore and was, prior to the tariffs, then that must mean that we should be thinking about the first half being strong and the second half being more challenging.

Question: Michael Glen - Raymond James - Analyst : Just on inventory: We're reading a lot about dropping shipments in the news. I'm just wondering if you have any concerns about your ability to actually get the inventory you need or if you're taking any steps to ensure -- how you're taking steps to ensure you get the inventory you need for the fall season?

Question: Michael Glen - Raymond James - Analyst : Okay. And then, are you able to give us some granularity, at all, in terms of your COGS -- how your cost of goods sold breaks down across different buckets: supply chain, freight, apparel, and product. Just different broad buckets, how to think about the breakdown of cost of goods sold?

Question: Mauricio Vega - UBS - Analyst : I just wanted to get a better sense. Is it fair to assume -- you mentioned a 400 basis points impact from the tariff. How are you thinking about, full year, the gross margin contraction? I assume there's a contraction, net. So how much of a gross margin contraction would you be expecting for full year? And just to confirm, that's assuming 145% in China, 10% elsewhere? Is that a fair way to think about the underlying assumptions there?

Question: Mauricio Vega - UBS - Analyst : Understood. And then, a quick follow-up. You mentioned something about the guidance for sales implies, in both situations, that there's a deceleration in the comp sales throughout the year, depending on whether it's a weaker consumer outlook -- it could be faster. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, ATZ.TO - Q4 2025 Aritzia Inc Earnings Call So just thinking about, like, in downside scenario, what kind of comp sales are you baking in by 4Q?

Question: Mauricio Vega - UBS - Analyst : Okay. Understood. Super helpful. Very last one. Depreciation, you said $110 million for the year. How much of that is the depreciation that is not related to rent?

Question: Mauricio Vega - UBS - Analyst : Yeah. But then, there's, like, out of that, some of that is rent, some of that is not rent. What is the part that is not rent?

Question: Martin Landry - Stifel - Analyst : Congrats on your great results. Todd, I would want to continue on the discussion you just provided on the 400 bps pressure coming from tariffs on your EBITDA line. You do mention that 50% is going to be abated by mitigating measures that you're taking and 50% is -- it feels like you're eating it up, right now. Obviously, these tariffs are going to have an impact, as you mentioned previously, half of the year. So how do we think about this and the spillover effect into next year? I know it may be a little early. But is there going to be a spillover effect that we should take into account? Or do you expect mitigation measures to accelerate towards the end of the year so that tariffs may have a very small impact into next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, ATZ.TO - Q4 2025 Aritzia Inc Earnings Call

Question: Stephen MacLeod - BMO Capital Markets - Analyst : I'm just going to shift gears a little bit. Just wanted to get some specific -- just dig in a little bit on the supply chain. You talked about diversifying

Question: Corey Tarlowe - Jefferies - Analyst : Great. First question is just: As the weather has gotten a little bit warmer, is there any color that you can provide on products and trends that are working, at the moment? And then, secondarily, Todd, in your remarks, I think you referenced really strong traffic, several times. So what I wanted to ask, as a follow-up to that, is how do you think about traffic versus ticket in the guide, as we look ahead?

Question: Corey Tarlowe - Jefferies - Analyst : Got it. That's very helpful. And then, just as an additional question: Is there anything that you could share on recent April trends?

Question: Brian Morrison - TD Cowen - Analyst : Sorry to beat this question, again. But does that 400 basis points represent tariffs for the year or half the year? Or is that an annual impact? And I understand your net impact with mitigating factors -- is that 200 basis points? Like, ex-tariffs, would have been closer to the 16.5% range? And I respect quality but can you mitigate [321] by allocating your client favorites to outside China, in a rapid manner?

Question: Mark Petrie - CIBC - Analyst : I wanted to ask about your customer mix and, specifically, at the flagships, how the mix of new versus existing customers compares to other stores. And then, what you see on those new customers that might have been visiting repurchasing back in their home markets, either in-store or online? And related to that, if you also have a sense of the halo effect from the new non-flagship stores, if that's evolved, at all, from what you've called out, previously?

Question: Luke Hannan - Canaccord Genuity - Analyst : Just a quick follow-up, for me, on the new CapEx guidance. So you took it up to $750 million for between fiscal '24 and '27. That was at $500 million previously. Can you help us think through how much of that is attributed to some of the square footage acceleration that you would have seen in the past versus, maybe, what you had planned, going forward? I recognize there's a currency aspect to this, as well. But I guess what I'm trying to get at, also, is you've talked about higher square footage growth for this year. Should we be thinking about this being the case for fiscal '27, as well?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : That's fine. I was going to ask about the CapEx so I already got the color.

Question: Mauricio Vega - UBS - Analyst : Yes. Great. I just had a couple of follow-ups. I got a little bit confused about that comment that without tariffs, margins would have been 16%, 17%. Because the comment was, like, the impact of the tariff was 400 basis points of that. I just wanted to understand that better. And the other follow-up is I wanted to ask if you have seen, in your Canadian business, any benefit or type of tailwind from -- what we're hearing is, like, more consumers in Canada are turning more towards, actually, domestic brands, just given the dynamic that is happening in the US.