Vancouver, October 12, 2016 – Aritzia Inc. (“Aritzia” or the “Company”) (TSX: ATZ), an innovative design house and fashion retailer of exclusive brands, today announced financial results for the second quarter ended August 28, 2016. Unless otherwise indicated, all amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted or comparable basis, are non-IFRS measures. See “Non-IFRS Measures” below.

Highlights for the Second Quarter Fiscal 2017:

• Net revenue increased by 30.1% to $157.9 million from $121.4 million in the second quarter last year.
• Comparable sales growth was 16.9%, on top of a 20.8% comparable sales growth in the second quarter last year.
• Gross profit margin increased to 35.9% from 34.3% in the second quarter last year.
• Adjusted EBITDA increased by 20.4% to $19.8 million from $16.5 million in the second quarter last year.
• Adjusted Net Income increased by 42.5% to $9.3 million from $6.5 million in the second quarter last year.
• Stock-based compensation of $90.9 million was expensed in the quarter due to the fair value accounting of legacy time-based options and the triggering of legacy performance-based options in connection with the Company’s initial public offering. This primarily contributed to a net loss of $67.3 million, as compared to net income of $4.7 million in the second quarter last year.
• During the quarter, the Company opened one new store in Long Island, New York and relocated and expanded one flagship store in the Greater Toronto Area.

“We are pleased to have delivered our eighth consecutive quarter of strong positive comparable sales growth, which demonstrates the strength of our exclusive multi-brand strategy in both our retail stores and eCommerce business,” said Brian Hill, Aritzia’s Founder, Chairman and Chief Executive Officer. “We remain focused on the long term growth of the business as we maintain our commitment to deliver beautifully designed product, an aspirational shopping experience and exceptional customer service, all driven by operational excellence.”

Second Quarter Summary

All comparative figures below are for the 13-week period ended August 28, 2016 compared to the 13-week period ended August 30, 2015.

Net revenue increased by 30.1% to $157.9 million from $121.4 million in the prior year. The increase was driven by comparable sales growth of 16.9%, arising from both the strong performance in stores and continued momentum in the Company’s eCommerce business, as well as, the revenue from eight new store openings and four expanded or repositioned stores since the second quarter of last year.

Gross profit increased by 36.3% to $56.7 million, or 35.9% of net revenue, compared to $41.6 million, or 34.3% of net revenue, in the prior year. The 160 basis point increase in gross profit margin was primarily due to lower product costs in addition to leverage on store occupancy costs. The improvement in gross profit margin was partially offset by one-time costs associated with the transition of the Company’s Toronto area distribution center from a replenishment to a full-service facility (addressing both the Company’s stores and eCommerce requirements), as well as, the use of a higher cost shipping provider during the period threatened by a potential Canada Post strike.

Selling, general and administrative (“SG&A”) expenses increased by 45.5% to $46.4 million, compared to $31.9 million in the prior year. Excluding the impact of the initial public offering costs of approximately $4.6 million incurred during the quarter, SG&A expenses were 26.5% of net revenue, compared to 26.3% of net revenue in the prior year. In the quarter, the Company increased its investment in online product catalogue, marketing campaigns and support office talent.

Adjusted EBITDA increased by 20.4% to $19.8 million, or 12.5% of net revenue, compared to $16.5 million, or 13.6% of net revenue, in the prior year. Excluding the realized contractual and operational foreign exchange gains of $0.2 million in the quarter this year and $1.8 million in the prior year, Adjusted EBITDA increased by 33.3% to $19.6 million, or 12.4% of net revenue, compared to $14.7 million, or 12.1% of net revenue, in the prior year.

Stock-based compensation of $90.9 million was expensed in the quarter due to both legacy time-based options adjusted to fair market value of $68.4 million and the triggering of legacy performance-based options of $22.5 million in connection with the Company’s initial public offering. The stock-based compensation expense primarily contributed to a net loss of $67.3 million, compared to net income of $4.7 million in the prior year.

Excluding the impact of stock-based compensation, initial public offering costs and unrealized foreign exchange (gains) losses on U.S. dollar forward contracts, Adjusted Net Income increased by 42.5% to $9.3 million, compared to $6.5 million in the prior year.

Year-to-Date Summary

All comparative figures below are for the 26-week period ended August 28, 2016 compared to the 26-week period ended August 30, 2015.

Net revenue increased by 29.4% to $284.3 million from $219.7 million in the prior year. The increase was driven by comparable sales growth of 15.1%, arising from both the strong performance in stores and continued momentum in the Company’s eCommerce business, as well as, the revenue from non-comparable stores.

Gross profit increased by 38.4% to $107.9 million, or 37.9% of net revenue, compared to $78.0 million, or 35.5% of net revenue, in the prior year. The increase in gross profit margin was primarily due to lower product costs in addition to leverage on store occupancy costs. The improvement in gross profit margin was partially offset by one-time costs discussed above for the second quarter.

SG&A expenses increased by 32.8% to $80.8 million, compared to $60.9 million in the prior year. Excluding the impact of the initial public offering costs of approximately $4.6 million incurred during the second quarter, SG&A expenses were 26.8% of net revenue, compared to 27.7% of net revenue in the prior year.

Adjusted EBITDA increased by 41.9% to $40.0 million, or 14.1% of net revenue, as compared to $28.2 million, or 12.8% of net revenue, in the prior year.

Stock-based compensation of $94.7 million was expensed in the first two quarters due to both legacy time-based options adjusted to fair market value of $72.2 million and the triggering of legacy performance-based options of $22.5 million in connection with the Company’s initial public offering. The stock-based compensation expense primarily contributed to a net loss of $59.5 million, compared to net income of $6.8 million in the prior year.

Excluding the impact of stock-based compensation, initial public offering costs and unrealized foreign exchange (gains) losses on US dollar forward contracts, Adjusted Net Income increased by 97.9% to $18.9 million, compared to $9.5 million in the prior year.

Outlook

Jennifer Wong, Aritzia’s President and Chief Operating Officer, commented “We remain pleased with the strength of our business and the growth opportunities that lie ahead. Our fall season has started off well as customers continue to respond favourably to our product offering. Our new stores are meeting expectations and we look forward to opening three to four new stores and expanding or repositioning three existing stores in the next six months. Finally we are excited to be launching international shipping, which will broaden our eCommerce reach by over 220 countries.”

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited interim condensed consolidated financial statements for the 13-week and 26-week periods ended August 28, 2016 and Management’s Discussion and Analysis (“MD&A”) thereon are available under the Company’s profile on SEDAR at www.sedar.com and on Aritzia’s investor relation website at investors.aritzia.com .

Conference Call

A conference call to discuss second quarter results is scheduled for tomorrow, October 13, 2016, at 6:00 a.m. PST / 9:00 a.m. EST. A replay will be available shortly after the conclusion of the call and will remain available until October 27, 2016. To access the replay, please dial 1-855-669-9658 and use replay access code 0848. A webcast will be available after the call and will remain on Aritzia’s investor relations website at investors.aritzia.com for thirty days.

About Aritzia

Aritzia is an innovative design house and fashion retailer of exclusive brands. We design apparel and accessories for our collection of exclusive brands and sell them under the Aritzia banner. Our expansive and diverse range of women’s fashion apparel and accessories addresses a broad range of style preferences and lifestyle requirements. We are well known and deeply loved by our customers in Canada with growing customer awareness and affinity in the United States and outside of North America. We aim to delight our customers through an aspirational shopping experience and exceptional customer service that extends across our more than 75 retail stores and our eCommerce business, aritzia.com.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures including certain retail industry metrics. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures including “EBITDA”, “Adjusted EBITDA” and “Adjusted Net Income”. This press release may also makes reference to “comparable sales growth”, which are commonly used operating metrics in the retail industry but may be calculated differently compared to other retailers. These non-IFRS measures including retail industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures including retail industry metrics in the evaluation of issuers. Our management also uses non-IFRS measures including retail industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our MD&A.

Forward-Looking Information

Certain information contained in this press release may constitute forward-looking information under applicable securities laws, including statements related to the Company’s anticipated growth opportunities, anticipated new store openings, contemplated expansion or repositioning of existing stores, fall launch of international eCommerce, and the Company’s commitment to deliver beautifully designed product, an aspirational shopping experience and exceptional customer service, all driven by operational excellence . This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and are made as of the date of this press release. However, we do not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including those described in “Risk Factors” which are described in the Company’s final prospectus filed in connection with its initial public offering on September 26, 2016 (the “Prospectus”).

We caution that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect our results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “About this Prospectus – Forward-looking Information” and “Risk Factors” in the Prospectus for a discussion of the uncertainties, risks and assumptions associated with these statements.

Contact Information:
Investor Relations:
Jean Fontana
ICR, Inc.
646-277-1214
IR@aritzia.com

Media Contact:
Brittany Fraser
ICR, Inc.
647-277-1231
Brittany.fraser@icrinc.com