Fiscal 2025 Annual Report
2 |
Fiscal 2025 Annual Report | 3
Aritzia is a design house
with an innovative
global platform.
We believe in high-quality, beautifully designed product.
We believe in aspirational environments and experiences.
We believe in personalized and engaging client service.
And we believe that all of this should be attainable.
We call this Everyday Luxury
TM.
4 |
FROM OUR
CHIEF EXECUTIVE OFFICER
Fiscal 2025 Highlights
In Fiscal 2025, we drove a 19% increase in net revenue,
excluding the 53rd week of Fiscal 2024, resulting in
a strong five-year compound annual growth rate
(“CAGR”) of 23%. From our evolving assortment of
beautiful, high-quality products and our optimized
inventory position to our three new brand-propelling
flagships and our rapidly accelerating digital channel
— the progress we made in Fiscal 2025 to deliver $2.74
billion in net revenue is tangible. Simultaneously, we
continued to offer exceptional service to our clients.
We made substantial progress in these five key areas.
•
We optimized the composition and quality
of our inventory position, which fueled an
acceleration in comparable sales growth
in each quarter of the fiscal year.
•
We increased investments in digital and
brand marketing to help protect and propel
the Aritzia brand, grow awareness and
generate new client acquisition.
•
We opened 12 new boutiques and
repositioned three existing boutiques,
including three iconic, brand-propelling
flagship locations — two in Manhattan and
one in Chicago.
•
We launched an improved aritzia.com,
which features an enhanced client
experience, including greater
personalization, and allows for the seamless
integration of a customer mobile app.
•
We delivered a 550 basis point improvement
in Adjusted EBITDA as a percentage of
net revenue1, driven by IMU improvement,
lower markdowns, lower warehousing costs
and savings from the Company’s smart
spending initiative.
Our world-class team executed at a very high
level across the board in Fiscal 2025. I’m extremely
grateful to our People for their perseverance and
commitment to excellence as we continue to build on
the momentum we generated this year.
1 Adjusted EBITDA as a percentage of net revenue” is a non-IFRS ratio, does not have a
standardized meaning prescribed by IFRS and is therefore unlikely to be comparable
to similar measures presented by other companies. For further details, see “How We
Assess the Performance of our Business”, “Selected Financial Information” and “Non-IFRS
Measures and Retail Industry Metrics.”
Fiscal 2025 Annual Report | 5
SALES CHANNEL HIGHLIGHTS
Our sales growth in Fiscal 2025 was driven by
accelerated momentum in eCommerce, our
geographic expansion strategy and mid-single-digit
comparable sales growth in our existing boutiques.
Total comparable sales grew 11%. We continued to
expand our portfolio of boutiques in premier locations,
with our retail net revenue growing to $1.79 billion — a
17% increase from last year, excluding the 53rd week.
Across eCommerce, our performance was driven
by robust demand for our products, our improved
inventory position and our focus on full-funnel
marketing. In Fiscal 2025, our eCommerce net revenue
grew to $951 million, increasing 23% year-over-year,
excluding the 53rd week, and delivering a five-year
eCommerce net revenue CAGR of 33%.
GEOGRAPHIC EXPANSION
Throughout Fiscal 2025, our increased investment
in the United States continued to yield impressive
results. We opened 12 new and three repositioned
boutiques — our most openings ever in a single year —
with our in-line boutiques continuing to perform better
than our payback expectations of 12 to 18 months.
This included three flagship locations: Fifth Avenue
and Soho in Manhattan, as well as Michigan Avenue
in Chicago. Net revenue in our United States business
grew to $1.58 billion in Fiscal 2025, an increase of
31% from last year, excluding the 53rd week. In Fiscal
2025, the United States generated 58% of our total
net revenue — and we continue to have a tremendous
opportunity for growth ahead of us.
eCOMMERCE GROWTH
In Fiscal 2025, we completed the upgrade of the
technology underpinning our eCommerce platform,
which enables us to deliver best-in-class experiences
to both our new and loyal clients. We also began
to invest more meaningfully in digital performance
marketing to help amplify our product franchises,
grow brand awareness in the United States and drive
customer engagement. Further, we launched our new
and improved aritzia.com, which features an elevated
client experience, including greater personalization
and enhanced product discovery.
INCREASED BRAND AWARENESS
During Fiscal 2025, our robust social media and
influencer strategies, coupled with our beautiful
product and real estate expansion strategy,
continued to drive increased brand awareness,
propelling us further toward widespread recognition
across the United States. Our active client base in the
United States has increased fivefold since Fiscal 2020
as we deliver Everyday Luxury™ to more people than
ever before.
IMPACT
As Aritzia continues to grow, so does our potential
to make an impact and create lasting change.
At Aritzia, Impact refers to the contributions we
make to People and the Planet. We believe these
contributions matter to our consumers and to our
overall business resilience. The Impact scope spans
Aritzia’s full value chain — from raw material sourcing
in our upstream operations through to product end
of life in our downstream operations. With the goal
of strengthening our positive impact, we share
initiatives and oversight of these areas throughout
our organization. We seek to take an evidence-based
approach and deliver long-term positive impact for
the benefit of our stakeholders and our business
resilience.
6 |
Jennifer Wong
Chief Executive Officer
In eCommerce, we have initiatives underway to
support our ongoing momentum in the years ahead,
such as our enhanced international website and a
customer mobile app. Additionally, a strategic focus
on digital marketing will further support growth in our
digital business.
As I reflect on Fiscal 2025, I recognize that we have
so much to be proud of. We had an excellent year
with impressive financial performance. The strength
of our brand, the quality of our assortment and
our Everyday LuxuryTM customer experience are all
resonating exceptionally well with our clients, giving
us confidence in our ability to capitalize on the
opportunities that lie ahead.
To our shareholders — thank you for your continued
support and your trust in our business plan. I have
great confidence in our world-class team, and I’m
grateful for the perseverance and hard work we’ve
put in to generate the momentum we’ve experienced.
As we propel the business forward, we remain focused
on our fundamentals, our solid foundation and our
resourcefulness.
Sincerely,
Looking Forward
This year, we remain committed to excellence as we
build on our momentum — diligently managing our
business for both the near and long-term. We have a
healthy balance sheet and we’re well-positioned to
navigate the rapidly evolving retail landscape, while
remaining steadfast in advancing our key growth
levers.
We have a robust pipeline of boutiques opening in
Fiscal 2026, with a focus on increasing our presence
in existing markets, as well as broadening our reach
across the United States. New markets for us this
year include Scottsdale, AZ; Raleigh, NC; Cincinnati,
OH; Pittsburgh, PA; and Salt Lake City, UT. Our total
square footage growth is expected to be in the mid
to high teens, with the vast majority occurring in the
United States. We expect these boutique openings
to propel retail sales growth and drive incremental
eCommerce sales as we continue to broaden our
geographic footprint.
Fiscal 2025 Annual Report | 7
8 |
Aritzia is a design house with an innovative global
platform. We’re creators and purveyors of Everyday
LuxuryTM and home to an extensive portfolio of
exclusive brands tailored to every function and
individual aesthetic.
We’re about good design, quality materials and
timeless style — all with the wellbeing of our People
and Planet in mind. We pride ourselves on creating
immersive, highly personalized shopping experiences
both at aritzia.com and in our 130+ retail boutiques
throughout North America. Our multi-brand strategy
and expansive range of fashion apparel enable us
to appeal to our clients across various aspects of
their lifestyles and stages of their lives. They’re how
we nurture strong and enduring client loyalty. Our
exclusive brands currently represent 96% of Aritzia’s
net revenue.
Brands and Products
Fiscal 2025 Annual Report | 9
We connect our clients to the energy of our culture
through the product we sell and the environments
we create. We sell our product through our boutiques
and aritzia.com, giving us complete control of the
presentation of our brand and our relationships with
our clients.
We carefully consider each Aritzia destination —
physical and digital — individually, ensuring we provide
our clients with aspirational shopping experiences and
exceptional service at every touchpoint.
We believe our boutiques and aritzia.com are
synergetic — the success of each channel benefits
the other, driving brand awareness and affinity.
We continue to build out omnichannel capabilities
to provide an Everyday LuxuryTM experience so our
clients can shop wherever, whenever, however.
Destinations
2 Boutique count at the end of Q4 2025, excluding three Reigning Champ boutiques.
2
10 |
Future Growth
Our approach to future growth is a thoughtfully
devised roadmap that’s focused on long-term
profitability. We will continue to make strategic
investments in our People, processes and technology
to help capitalize on opportunities and accelerate the
continued expansion of Aritzia.
1. Geographic Expansion
Historically, opening new boutiques has been the most
consistent and predictable driver of incremental net
revenue and continues to be a key pillar of Aritzia’s
growth strategy. Our boutiques drive sales, build
brand awareness, propel client acquisition and fuel
our eCommerce channel. Payback periods on our
new boutiques continue to trend below our target
of 12 to 18 months due to strong sales performance
and the management of build-out costs and landlord
allowances.
We see opportunities for us to acquire prime real
estate and believe we have a meaningful opportunity
to expand our boutique network, particularly in the
United States. We have identified 150+ locations in the
United States that meet our exacting criteria and will
continue to take a disciplined approach to opening
new boutiques with a sharp focus on best-in-class
locations.
2. eCommerce Growth
We take an omni-channel approach to our
eCommerce business to seamlessly mirror our
Everyday LuxuryTM experience for our clients who
shop online. Annual increases in online traffic drove
eCommerce revenue growth of 33% on a compounded
annual basis from Fiscal 2020 to Fiscal 2025. During
this time, eCommerce revenue grew from 23% of total
net revenue in Fiscal 2020 to 35% in Fiscal 2025. We
continue to invest in our digital capabilities to support
our eCommerce business and plan to further fuel
eCommerce growth through eCommerce 2.0 — an
elevated online platform that connects our clients to
tailored product discovery, creative innovation and
intuitive experiences.
3. Increased Brand Awareness
We drive increased brand awareness through real
estate and marketing strategies designed to attract
new clients and deepen the loyalty of existing clients.
These strategies have been successfully propelling
our brand, so much so that our active client base in
the United States increased fivefold over the past five
years. Our premier real estate locations, aspirational
boutique designs and high-touch services all highlight
the unique ethos and aesthetic of our exclusive
brands — as well as Aritzia’s dedication to delivering
Everyday Luxury™. We also extend this elevated
experience online, acquiring and engaging customers
in relevant segments through strategic brand and
digital marketing that reaches beyond our retail
footprint.
Fiscal 2025 Annual Report | 11
12 |
IMPACT & SUSTAINABILITY
Our Impact Strategy
Aritzia acknowledges the importance of accelerating
its progress on our Impact goals and priorities, as
well as sustainability-related risks and opportunities
relevant to our business, brands, industry and key
stakeholders. As our business grows, so does our
potential to make an impact and create lasting
change.
At Aritzia, Impact refers to the contributions we make
to People and the Planet. Impact is integral to who we
are and what we do. The Impact scope spans Aritzia’s
full value chain — from raw material sourcing in our
upstream operations through to product end of life in
our downstream operations.
With the guidance of our Board’s Environmental &
Social Committee and the leadership of our executive
Community Taskforce (renamed Impact Taskforce in
Fiscal 2026), we continue to refine our strategies to
deliver Everyday LuxuryTM responsibly and sustainably.
The results below reflect our performance as
presented in our most recently published report, the
FY2024 Aritzia CommunityTM | ESG Report3, as at the
date of this publication, unless otherwise noted.
Our Results
PEOPLE
•
Since Fiscal 2024, we contributed a cumulative
total of $24.8M in financial support, volunteer
hours and product donations to Aritzia Community
partners and nonprofit organizations that share
our values — toward our goal of $50M by 2028
($12.5M in Fiscal 2025, $12.3M in Fiscal 2024)
•
In Fiscal 2025, we provided over 96,000 hours of
formal training to our People across all workplaces
•
We continued the expansion of our Supplier
Workplace Standards Program into selected
fabric and trims suppliers’ facilities (Tier 2)
•
In Fiscal 2025, 90% of our People participated in
our Aritzia Asks Culture Survey
•
We piloted our Worker Voice Program to amplify
the voices of individuals working in our supply
chain, starting with six finished-goods suppliers
(Tier 1)
PLANET
•
100% of the energy fuelling our Boutiques,
Support Offices and Distribution Centres comes
from renewable sources4 achieved through the
purchase of Renewable Energy Credits (RECs)
•
84% of our finished-goods (Tier 1) suppliers’
facilities5 have adopted the Higg Facility
Environment Module and, of those, 70% obtained
independent third-party verification
•
We continued to expand the Higg FEM program
into selected fabric and trims suppliers’ facilities
(Tier 2)
•
By weight, 34% of the raw materials purchased in
Fiscal 2024 met an independent third-party lower
impact environmental or social certification
•
By weight, 37% of the polyester purchased in Fiscal
2024 came from a recycled source certified by
the Global Recycle Standard or Recycled Claims
Standard
•
We are in the final stages of validating our
greenhouse gas emissions reduction targets
by the Science Based Target initiative and look
forward to publishing our targets in our upcoming
FY2025 Aritzia Impact Report
3 FY2025 results will be published in 1H Fiscal 2026, renamed the Aritzia Impact Report, and
report highlights will be shared in the Fiscal 2026 Q1 Investor Update.
4 Purchase of RECs in Canada and the USA equivalent to our electricity consumption.
5 Finished-goods suppliers’ environmental performance from calendar year 2022 is
evaluated during calendar year 2023 and reported in Fiscal 2024 for our exclusive brands.
Fiscal 2025 Annual Report | 13
Our Priorities
Informed by our Materiality6 Assessment, Aritzia’s
Impact priorities span our value chain, with People
and Planet initiatives embedded cross-functionally
throughout our organization. These priorities aim
to improve the lives of the people who propel
our business forward — those who make Aritzia
products — or the people who live in our surrounding
communities. They also aim to reduce the impact
our operations and products have on the planet. As
part of our Impact strategy, we have identified the
following priorities for the next year and beyond.
These include:
PEOPLE
•
Expanding our Supplier Workplace Standards
Program across exclusive brands’ Tier 1 and select
Tier 2 supplier facilities
•
Building and scaling People & Culture
infrastructure to attract, retain and develop high-
performing talent
•
Expanding our programs and initiatives that
propel a sense of engagement, belonging and
inclusion amongst our People and surrounding
communities
•
Maintaining our commitment to uphold and
respect human rights throughout our value chain,
in line with international standards and industry
best practices
•
Continuing to support community organizations
with product donations, funding and volunteering
PLANET
•
Expanding the use of lower-impact materials in
our products and packaging
•
Publishing and implementing science-based
greenhouse gas emissions reduction targets
•
Continuing to monitor suppliers’ environmental
performance across exclusive brands’ Tier 1 and
select Tier 2 supplier facilities
•
Delivering on priority areas identified through
Aritzia’s water strategy
GOVERNANCE
•
Maintaining a clear understanding of the
sustainability-related risks and opportunities
that matter most to our key stakeholders and
to our business through periodic materiality
assessments
6 On this page, we provide voluntary disclosures on sustainability topics, including
climate-related matters, that may not meet the definition of materiality under applicable
securities laws. When we discuss “materiality” in this context, it may be different than how
we consider materiality for disclosure requirements under applicable securities laws and
stock exchange requirements.
7 Refer to the FY2024 Aritzia Community™ | ESG Report for the most recent results as at
the date of the publication of this report. Fiscal 2025 progress on sustainability matters
will be published in 1H Fiscal 2026, renamed the Aritzia Impact Report.
•
Refining our sustainability-related risks and
opportunities management processes as
an integrated part of our enterprise risk
management function and our strategy-setting
functions
•
Continuing to advance our sustainability
disclosures on performance against our Impact
priorities, our material sustainability topics and
California’s climate reporting regulations and
in line with the voluntary adoption of leading
practice sustainability reporting frameworks,
including the Canadian Sustainability Disclosure
Standards and the Sustainability Accounting
Standards Board (SASB) Apparel, Accessories &
Footwear Standard
•
Continuing to evaluate solutions to improve the
visibility and traceability of our supply chain
For a detailed discussion on our approach,
performance and practices, refer to the FY2025
Aritzia Impact Report7, available on Aritzia’s
Environmental and Social Investor Relations page at
www.investors.aritzia.com
14 |
Proven Results8
8 Results in FY2021 and FY2022 reflect temporary boutique closures and severe occupancy restrictions due to the COVID-19 pandemic. As temporary boutique closures in FY2021 and
FY2022 resulted in all boutiques being removed from our comparable store base, we believe total comparable sales was not representative of the underlying trends of our business. We do
not believe this metric is useful to investors in understanding performance and therefore have not reported this metric for FY2021 or FY2022.
9 Adjusted EBITDA and Adjusted Net Income are non-lFRS measures. Adjusted EBITDA as a percentage of net revenue and Adjusted Net Income as a percentage of net revenue are
non-IFRS ratios and comparable sales is a retail operating metric. A quantitative reconciliation of Adjusted EBITDA and Adjusted Net Income to Net Income for Fiscal 2025 to Fiscal
2020, respectively, can be found below under “Selected Financial Information”, page 8 of our annual MD&A for Fiscal 2024 dated May 2, 2024, page 8 of our annual MD&A for Fiscal 2023
dated May 2, 2023, page 8 of our annual MD&A for Fiscal 2022 dated May 5, 2022, page 7 of our annual MD&A for Fiscal 2021 dated May 11, 2021 and page 15 of our annual MD&A for Fiscal
2020 dated May 28, 2020, in each case filed on SEDAR+ at www.sedarplus.com, which reconciliations are incorporated herein by reference. For further details, see “How We Assess the
Performance of our Business”, “Selected Financial Information” and “Non-IFRS Measures and Retail Industry Metrics.”
Fiscal 2025 Annual Report | 15
Operational and Financial Summary
SELECTED FINANCIAL INFORMATION
(in thousands of Canadian dollars,
unless otherwise noted)
Fiscal 2025
52 Weeks
Fiscal 2024
53 Weeks
Fiscal 2023
52 Weeks
Fiscal 2022
52 Weeks
Fiscal 2021
52 Weeks
Fiscal 2020
52 Weeks
Financial Summary:
Net revenue
$
2,738,112 $ 2,332,350 $
2,195,630 $ 1,494,630 $
857,323
980,589
Cost of goods sold
1,557,493
1,433,369
1,281,638
839,678
544,818
577,165
Gross profit
1,180,619
898,981
913,992
654,952
312,505
403,424
Selling, general and administrative
837,456
708,783
602,469
392,802
250,726
243,362
Stock-based compensation expense
48,373
31,784
24,369
26,131
10,691
7,790
Income from operations
294,790
158,414
287,154
236,019
51,088
152,272
Finance expense
48,800
49,091
31,263
25,202
28,420
28,319
Other expense (income)
(44,463)
(5,287)
(7,916)
(8,783)
(3,534)
(2,185)
Income before income taxes
290,453
114,610
263,807
219,600
26,202
126,138
Income tax expense
82,663
35,830
76,219
62,683
6,975
35,544
Net income
$
207,790 $
78,780 $
187,588 $ 156,917 $ 19,227
90,594
Net income per diluted share
$
1.78 $
0.69 $
1.63 $
1.36 $
0.17
0.81
Adjusted EBITDA(10)
$
406,344 $
217,056 $
351,181 $
289,385 $ 76,812
172,572
Adjusted Net Income(10)
$
230,549 $
105,557 $
214,771 $
176,736 $
26,028
97,388
Adjusted Net Income per Diluted Share(10)
$
1.98 $
0.92 $
1.86 $
1.53 $
0.23
0.87
Weighted average number of diluted
shares outstanding (thousands)
116,731
114,194
115,301
115,784
112,844
112,128
Cash and cash equivalents
$
285,635 $
163,277 $
86,510 $
265,245 $
149,147
117,750
Capital cash expenditures (net of proceeds from
lease incentives)(10)
$
(253,490) $
(155,256) $
(112,050) $ (52,607) $ (42,529)
(36,253)
Free cash flow(10)
$
95,598 $
99,502 $
(119,656) $
221,937 $
36,306
117,246
Percentage of Net Revenue:
Gross profit
43.1 %
38.5%
41.6%
43.8%
36.5%
41.1%
Selling, general and administrative
30.6 %
30.4%
27.4%
26.3%
29.2%
24.8%
Net income
7.6 %
3.4%
8.5%
10.5%
2.2%
9.2%
Adjusted EBITDA(10)
14.8 %
9.3%
16.0%
19.4%
9.0%
17.6%
Adjusted Net Income(10)
8.4 %
4.5%
9.8%
11.8%
3.0%
9.9%
Other Metrics:
Year-over-year net revenue growth (decline)
17.4 %
6.2%
46.9%
74.3%
(12.6)%
12.2%
Comparable sales(10) growth
(decline)
11.0 %
(1.0)%
28.2%
n/a
n/a
7.6%
Boutiques:(11)
Number of boutiques, end of year
130
119
114
106
101
96
New boutiques
12
6
8
6
7
5
Pop-up boutique converted to
permanent boutique
-
-
1
-
-
-
Repositioned to a flagship boutique
-
-
(1)
-
(1)
-
Boutique closure
(1)
(1)
-
(1)
-
-
Boutique closed due to mall
redevelopment
-
-
-
-
(1)
-
Repositioned boutiques
3
3
5
6
3
3
10 Adjusted EBIDTA and Adjusted Net Income are non-IFRS financial measures; Adjusted Net Income per Diluted Share, Adjusted EBITDA as a percentage of net revenue and Adjusted Net
Income as a percentage of net revenue are non-IFRS ratios; capital cash expenditures (net of proceeds from lease incentives and free cash flow are capital management measures; and
gross profit margin and comparable sales are supplementary financial measures. See “Non-IFRS Measures and Retail Industry Metrics” for an explanation of the composition of these
non-IFRS measures, ratios and capital management measures, how these non-IFRS measures, ratios and capital management measures provide useful information to an investor and the
purposes for which management uses these non-IFRS measures and ratios. A quantitative reconciliation of Net Income to EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of
net revenue, Adjusted Net Income and Adjusted Net Income as a percentage of net revenue can be found on page 8 of our annual MD&A for Fiscal 2025 dated May 1, 2025, page 8 of our
annual MD&A for Fiscal 2024 dated May 2, 2024, page 8 of our annual MD&A for Fiscal 2023 dated May 2, 2023, page 8 of our annual MD&A for Fiscal 2022 dated May 5, 2022, page 7 of
our annual MD&A for Fiscal 2021 dated May 11, 2021, and page 15 of our annual MD&A for Fiscal 2020 dated May 28, 2020, filed on SEDAR+ at www.sedarplus.com, which reconciliations are
incorporated herein by reference.
11 There were three Reigning Champ boutiques in Fiscal 2025 and four Reigning Champ boutiques in Fiscal 2024, Fiscal 2023 and Fiscal 2022 which are excluded from the boutique count.
16 |
Certain statements made in this Annual Report may constitute forward-looking information under applicable
securities laws, including statements relating to: our strategic focus on investments in the scalability of our
business, digital marketing, technology and omni-channel capabilities; our expectations with respect to our
growth runway in the United States; our investments in eCommerce, including our plans to deliver eCommerce
2.0, and the anticipated results therefrom; our approach and expectations with respect to our boutique
portfolio, including the pace and timing of openings, square footage growth and the anticipated results
therefrom; our ability to successfully open new boutiques in line with expected store economics, including
average payback periods; our expectations with respect to revenue growth in eCommerce; our strategic
growth levers including geographic expansion, eCommerce growth and increased brand awareness; and our
Community priorities, environmental, social and governance initiatives and related statements regarding our
commitment to establish greenhouse gas emission reduction targets. Forward-looking statements are based on
information currently available to management and on estimates and assumptions, including assumptions about
future economic conditions and courses of action. Many factors could cause our actual results, performance,
achievements or future events or developments to differ materially from those expressed or implied by the
forward-looking statements, including, without limitation, the factors discussed in the “Risk Factors” section
below and our annual information form for the fiscal year ended March 2, 2025, which is incorporated by
reference into this Annual Report. Please refer to the “Forward-Looking Information” section below for further
details about forward-looking information.
Management’s Discussion
& Analysis
18 |
Aritzia Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Year Ended March 2, 2025
May 1, 2025
The following Management’s Discussion and Analysis (“MD&A”) dated May 1, 2025 is intended to assist readers in
understanding the business environment, strategies and performance and risk factors of Aritzia Inc. (together with
its consolidated subsidiaries, referred to herein as “Aritzia”, the “Company”, "we", "us" or "our"). This MD&A
provides the reader with a view and analysis, from the perspective of management, of the Company’s financial
results for the 13-week and 52-week periods ended March 2, 2025. This MD&A should be read in conjunction with
the Company’s audited annual consolidated financial statements and accompanying notes for Fiscal 2025 (as
hereinafter defined).
FORWARD-LOOKING INFORMATION
Certain statements made in this document may constitute forward-looking information under applicable securities
laws. Statements containing forward-looking information are neither historical facts nor assurances of future
performance, but instead, provide insights regarding management’s current expectations and plans and allows
investors and others to better understand the Company’s anticipated business strategy, financial position, results of
operations and operating environment. Readers are cautioned that such information may not be appropriate for
other purposes. Although the Company believes that the forward-looking statements are based on information,
assumptions and beliefs that are current, reasonable, and complete, such information is necessarily subject to a
number of business, economic, competitive and other risk factors that could cause actual results to differ materially
from management’s expectations and plans as set forth in such forward-looking information.
Specific forward-looking information in this document include, but are not limited to, statements relating to:
–
our Fiscal 2027 strategic and financial plan and anticipated results therefrom,
–
our expectations as to the Company's Fiscal 2026 financial outlook,
–
our approach and expectations with respect to boutique growth, expansion and enhancements, including
expectations regarding returns on capital, boutique payback period expectations and timing of openings,
–
our eCommerce growth, including our plans to fuel Digital growth, deliver our eCommerce 2.0 strategy,
invest in our digital capabilities, and the anticipated results therefrom,
–
our expectations with respect to our omni-channel capabilities including the anticipated results therefrom,
–
our ability to maintain momentum in our business and advance our strategic growth levers including
geographic expansion, eCommerce growth and increased brand awareness,
–
our continued monitoring and diversification of our supplier base, our vendor self-certification process and
the anticipated results therefrom,
–
our expectations and plans regarding the construction, completion and future operation of our new
distribution facility in Delta, British Columbia, including plans to implement increased automation, plans
relating to the use of our current facility in New Westminster, British Columbia, our expansion and
retrofitting plans for our distribution facilities in Vaughan, Ontario and Columbus, Ohio, and the anticipated
results therefrom,
–
our intention to apply to commence the 2025 NCIB (as defined herein) and enter into an automatic share
purchase plan, the timing thereof, and the number of subordinate voting shares which may be purchased
thereunder,
–
our expectations with respect to liquidity,
–
our use of financial instruments and risk mitigation strategies,
–
our future investment opportunities,
–
our ability to optimize inventory levels and maximize full-price sales,
–
our response to consumer trends and our ability to produce enduring client loyalty, and
–
our dedication to making progress on our Impact goals, priorities and our strengthening sustainability
efforts.
Fiscal 2025 Annual Report | 19
Particularly, information regarding our expectations of future results, targets, performance achievements, intentions,
prospects, opportunities or other characterizations of future events or developments or the markets in which we
operate is forward-looking information. Often but not always, forward-looking statements can be identified by the
use of forward-looking terminology such as “plans”, “targets”, “expects”, “is expected”, “an opportunity exists”,
“budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”,
“anticipates”, “believes”, or positive or negative variations of such words and phrases or state that certain actions,
events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur”, "continue", or “be achieved”.
Forward-looking statements are based on information currently available to management and on estimates and
assumptions, including assumptions about future economic conditions and courses of action. Examples of material
estimates and assumptions and beliefs made by management in preparing such forward looking statements
include, but are not limited to:
–
anticipated growth across our retail and eCommerce channels,
–
anticipated growth in the United States and Canada,
–
general economic and geopolitical conditions, including the imposition of any new, or any material changes
to applicable duties, tariffs and trade restrictions or similar measures (and any retaliatory measures),
–
changes in laws, rules, regulations, and global standards,
–
our competitive position in our industry,
–
our ability to keep pace with changing consumer preferences,
–
no public health related restrictions impacting client shopping patterns or incremental direct costs related to
health and safety measures,
–
our future financial outlook,
–
our ability to drive ongoing development and innovation of our exclusive brands and product categories,
–
our ability to realize our eCommerce 2.0 strategy and optimize our omni-channel capabilities,
–
our expectations for optimized inventory composition,
–
our ability to recruit and retain exceptional talent,
–
our expectations regarding new boutique openings, repositioning of existing boutiques, and the timing
thereof, and growth of our boutique network and annual square footage,
–
our ability to mitigate business disruptions, including our sourcing and production activities,
–
our expectations for capital expenditures,
–
our ability to generate positive cash flow,
–
anticipated run rate savings from our smart spending initiative,
–
availability of sufficient liquidity,
–
warehousing costs and expedited freight costs, and
–
currency exchange and interest rates.
Given the current challenging operating environment, there can be no assurances regarding: (a) the
macroeconomic impacts on Aritzia's business, operations, labour force, supply chain performance and growth
strategies; (b) Aritzia's ability to mitigate such impacts, including ongoing measures to enhance short-term liquidity,
contain costs and safeguard the business; (c) general economic conditions and impacts to consumer discretionary
spending and shopping habits (including impacts from changes to interest rate environments); (d) credit, market,
currency, commodity market, inflation, interest rates, global supply chains, operational, and liquidity risks generally;
(e) geopolitical events including the imposition of any new, or any material changes to applicable duties, tariffs and
trade restrictions or similar measures (and any retaliatory measures); (f) public health related limitations or
restrictions that may be placed on servicing our clients or the duration of any such limitations or restrictions; and (g)
other risks inherent to Aritzia's business and/or factors beyond its control which could have a material adverse
effect on the Company.
Many factors could cause our actual results, performance, achievements or future events or developments to differ
materially from those expressed or implied by the forward-looking statements, including, without limitation, the
factors discussed in the "Risk Factors" section of this MD&A and the Company's annual information form for Fiscal
2025 (the "AIF") which are incorporated by reference into this document. A copy of the AIF and the Company's
other publicly filed documents can be accessed under the Company's profile on the System for Electronic Data
Analysis and Retrieval + ("SEDAR+") at www.sedarplus.com.
The Company cautions that the foregoing list of risk factors and uncertainties is not exhaustive and other factors
could also adversely affect its results. We operate in a highly competitive and rapidly changing environment in
which new risks often emerge. It is not possible for management to predict all risks, nor assess the impact of all risk
factors on our business or the extent to which any factor, or combination of factors, may cause actual results to
20 |
differ materially from those contained in any forward-looking statements. 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. The forward-looking information contained in this document represents our
expectations as of the date of this document (or as of the date they are otherwise stated to be made) and are
subject to change after such date. We disclaim any intention, obligation or undertaking to update or revise any
forward-looking information, whether written or oral, as a result of new information, future events or otherwise,
except as required under applicable securities laws.
BASIS OF PRESENTATION
Our audited annual consolidated financial statements and unaudited condensed interim consolidated financial
statements (together, the “consolidated financial statements”) have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting
Standards") and International Accounting Standard ("IAS") 34, respectively, using the accounting policies described
therein. All amounts are presented in thousands of Canadian dollars unless otherwise indicated. We manage our
business on the basis of one operating and reportable segment.
All references in this MD&A to “Q4 2025” are to our 13-week period ended March 2, 2025, and to “Q4 2024” are to
our 14-week period ended March 3, 2024. All references in this MD&A to "Fiscal 2027" are to our 52-week period
ending February 28, 2027, to "Fiscal 2026" are to our 52-week period ending March 1, 2026, to “Fiscal 2025” are to
our 52-week period ended March 2, 2025, to “Fiscal 2024” are to our 53-week period ended March 3, 2024, and to
"Fiscal 2023" are to our 52-week period ended February 26, 2023.
The audited annual consolidated financial statements and accompanying notes for Fiscal 2025 and this MD&A were
authorized for issue by Company’s Board of Directors (the "Board of Directors") on May 1, 2025.
Documents referenced herein are not incorporated by reference into this MD&A, unless such incorporation by
reference is explicit.
OVERVIEW
Aritzia is a design house with an innovative global platform. We are creators and purveyors of Everyday Luxury™,
home to an extensive portfolio of exclusive brands for every function and individual aesthetic. We’re about good
design, quality materials and timeless style — all with the wellbeing of our People and Planet in mind.
Founded in 1984 in Vancouver, Canada, we pride ourselves on creating immersive, highly personalized shopping
experiences at aritzia.com and in our 130 boutiques throughout North America — for everyone, everywhere.
Our Approach
Aritzia means style, not trend, and quality over everything. We treat each in-house label as its own atelier, united by
premium fabrics, meticulous construction and an of-the-moment point of view. We handpick fabrics from the world’s
best mills for their feel, function and ability to last. We obsess over proportion, fit and that just-right silhouette. From
hand-painted prints to the art of pocket placement, our innovative design studio considers and reconsiders each
detail to create essentials you’ll reach for again, and again, and again.
Everyday Luxury. To Elevate Your World.™
RECENT EVENTS
Normal Course Issuer Bid ("NCIB")
The NCIB approved by the Toronto Stock Exchange ("TSX") on January 18, 2024 (the "2024 NCIB") allowed the
Company to repurchase and cancel up to 3,515,740 of its subordinate voting shares over the twelve-month period
commencing January 22, 2024 and ending January 21, 2025. On February 21, 2024, the Company announced it
had also entered into an automatic share purchase plan (the "2024 ASPP"), which commenced immediately and
terminated upon the expiry of the 2024 NCIB.
During the year ended March 2, 2025, the Company repurchased a total of 134,200 subordinate voting shares for
cancellation under the 2024 NCIB at an average price of $44.00 per subordinate voting share for total cash
consideration of $5.9 million (including commissions). Under the NCIB which commenced on January 20, 2023 and
expired January 19, 2024, the Company repurchased a total of 1,089,641 subordinate voting shares for
cancellation at an average price of $27.51 per subordinate voting share for total cash consideration of $30.0 million
(including commissions).
Fiscal 2025 Annual Report | 21
The Company intends to file with the TSX a notice of intention to commence an NCIB for its subordinate voting
shares for a one-year period (the "2025 NCIB"), which, if accepted by the TSX, would permit the Company to
purchase for cancellation up to 5% of the public float of the Company's issued and outstanding subordinate voting
shares during the 12 months following such TSX approval. Subject to TSX acceptance, Aritzia anticipates the 2025
NCIB commencing on or about May 7, 2025, and in any event, at least two trading days after the TSX acceptance
of the 2025 NCIB. The exact amount of subordinate voting shares subject to the 2025 NCIB will be determined on
the date of acceptance of the notice of intention by the TSX. In connection with the 2025 NCIB, the Company may
also enter into an automatic share purchase plan (the "2025 ASPP") with a designated broker for the purpose of
permitting the Company to purchase its subordinate voting shares under the 2025 NCIB during predetermined
blackout periods. The 2025 ASPP would terminate upon the termination of the 2025 NCIB.
Completion of Secondary Offering
On February 11, 2025, the Company announced a secondary offering (the “2025 Secondary Offering”) on a bought
deal basis of its subordinate voting shares through a secondary sale of shares by certain entities owned and/or
controlled, directly or indirectly, by Brian Hill, Founder and Executive Chair of Aritzia, or Brian Hill and his immediate
family (collectively, the “Selling Shareholders”). The 2025 Secondary Offering of 1,045,000 subordinate voting
shares raised gross proceeds of $73.0 million for the Selling Shareholders, at a price of $69.85 per subordinate
voting share and was completed on February 28, 2025. The Company did not receive any proceeds from the 2025
Secondary Offering. Immediately following the closing of the 2025 Secondary Offering, Brian Hill remained the
Company’s largest shareholder with an approximately 17.2% equity interest.
Tariffs and Trade Restriction Uncertainties
The continued changes to, deferral of, and announcement of the imposition of new tariffs by the U.S. administration
and other foreign governments, and retaliatory actions by the Canadian government, continue to create economic
uncertainty, and could negatively impact the Canadian economy, potentially increasing costs, disrupting supply
chains, weaken the Canadian and/or U.S. dollar, and other potential negative impacts. The Company continues to
assess the direct and indirect impacts to its business of such tariffs, retaliatory tariffs or other trade protectionist
measures implemented as this situation continues to develop, and such impacts could be material.
FINANCIAL HIGHLIGHTS
We refer the reader to the section entitled “How We Assess the Performance of Our Business” of this MD&A for the
definition of the items discussed below and, when applicable, to the table entitled “Reconciliation to Non-IFRS
Measures” for reconciliations of non-IFRS measures (as defined herein) with the most directly comparable IFRS
Accounting Standards financial measure.
Q4 2025
For the thirteen weeks of Q4 2025, compared to the fourteen weeks of Q4 2024:
–
Net revenue increased 31.3% to $895.1 million, with comparable sales1 growth of 26.0%
–
United States net revenue increased 48.5% to $548.0 million, comprising 61.2% of net revenue
–
Retail net revenue increased 24.2% to $517.1 million
–
eCommerce net revenue increased 42.4% to $378.1 million, comprising 42.2% of net revenue
–
Gross profit margin1 increased 420 bps to 42.5% from 38.3%
–
Selling, general and administrative expenses as a percentage of net revenue decreased 140 bps to 27.5%
from 28.9%
–
Adjusted EBITDA1 increased 121.8% to $160.9 million. Adjusted EBITDA1 as a percentage of net revenue
increased 740 bps to 18.0% from 10.6%
–
Net income increased 311.6% to $99.6 million, or 11.1% from 3.5% as a percentage of net revenue. Net
income per diluted share was $0.84 per share, compared to $0.21 per share
–
Adjusted Net Income1 increased 156.5% to $98.0 million. Adjusted Net Income per Diluted Share1 was
$0.83 per share, compared to $0.34 per share
1 See the sections below entitled “How We Assess the Performance of our Business”, “Selected Financial Information” and “Non-IFRS Measures
and Retail Industry Metrics” for further details concerning gross profit margin, comparable sales, constant currency, Adjusted EBITDA, Adjusted
EBITDA as a percentage of net revenue, Adjusted Net Income and Adjusted Net Income per Diluted Share including definitions and
reconciliations of each non-IFRS measure to the relevant reported IFRS Accounting Standards financial measure. Non-IFRS measures and non-
IFRS ratios do not have a standardized meaning under IFRS Accounting Standards, which is used to prepare the Company's financial
statements and might not be comparable to similar financial measures presented by other entities.
22 |
Fiscal 2025
For Fiscal 2025, compared to Fiscal 2024, with Fiscal 2024 benefiting from the 53rd week:
–
Net revenue increased 17.4% to $2.74 billion, with comparable sales1 growth of 11.0%
–
United States net revenue increased 29.0% to $1.58 billion, comprising 57.8% of net revenue
–
Retail net revenue increased 15.5% to $1.79 billion
–
eCommerce net revenue increased 21.1% to $951.0 million, comprising 34.7% of net revenue
–
Gross profit margin1 increased 460 bps to 43.1% from 38.5%
–
Selling, general and administrative expenses as a percentage of net revenue increased 20 bps to 30.6%
from 30.4%
–
Adjusted EBITDA1 increased 87.2% to $406.3 million. Adjusted EBITDA1 as a percentage of net revenue
increased 550 bps to 14.8% from 9.3%
–
Net income increased 163.8% to $207.8 million, or 7.6% from 3.4% as a percentage of net revenue. Net
income per diluted share of $1.78 per share, compared to $0.69 per share
–
Adjusted Net Income1 increased 118.4% to $230.5 million. Adjusted Net Income per Diluted Share1 of $1.98
per share, compared to $0.92 per share
Strategic Accomplishments for Fiscal 2025
–
Drove a 19% increase in net revenue (excluding the 53rd week in Fiscal 2024), resulting in a strong 5-year
compound annual growth rate ("CAGR") of 23%
–
Optimized the composition and quality of the Company's inventory position, which fueled an acceleration in
comparable sales2 growth in each quarter of the fiscal year and helped generate meaningful gross margin
expansion
–
Increased investments in digital and brand marketing to help protect and propel the Aritzia brand, grow awareness
and generate new client acquisition
–
Opened 12 new boutiques and repositioned three existing boutiques, including three iconic, brand-propelling
flagship locations - two in Manhattan and one in Chicago
–
Launched an improved aritzia.com, featuring an elevated client experience, including greater personalization and
enhanced product discovery, and facilitating the seamless integration of a planned customer mobile app
–
Delivered a 550 basis point improvement in Adjusted EBITDA2 as a percentage of net revenue, driven by IMU
improvement, lower markdowns, lower warehousing costs and savings from the Company's smart spending
initiative
OUTLOOK
A discussion of management's expectations as to the Company's financial outlook for Fiscal 2026 is contained in
the Company's press release dated May 1, 2025, "Aritzia Reports Fourth Quarter and Fiscal 2025 Financial
Results" under the heading "Outlook". In addition, a discussion of the Company's long-term financial plan is
contained in the Company's press release dated October 27, 2022, "Aritzia Presents its Fiscal 2027 Strategic and
Financial Plan, Powering Stronger". These press releases are available on SEDAR+ at www.sedarplus.com under
the Company's profile and on our website at investors.aritzia.com.
Fiscal 2025 Annual Report | 23
SELECTED FINANCIAL INFORMATION
The following table summarizes our recent results of operations for the periods indicated. The selected
consolidated financial information set out below for Q4 2025 and Q4 2024 is unaudited.
Selected Consolidated Financial Information
(in thousands of Canadian dollars, unless otherwise
noted)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Financial Summary:
Net revenue
$
895,118
$
681,970
$
2,738,112
$
2,332,350
Cost of goods sold
515,014
420,723
1,557,493
1,433,369
Gross profit
380,104
261,247
1,180,619
898,981
Selling, general and administrative
246,015
196,835
837,456
708,783
Stock-based compensation expense
17,376
15,356
48,373
31,784
Income from operations
116,713
49,056
294,790
158,414
Finance expense
10,627
12,429
48,800
49,091
Other income
(29,054)
(478)
(44,463)
(5,287)
Income before income taxes
135,140
37,105
290,453
114,610
Income tax expense
35,498
12,898
82,663
35,830
Net income
$
99,642
$
24,207
$
207,790
$
78,780
Net income per diluted share
$
0.84
$
0.21
$
1.78
$
0.69
Adjusted EBITDA2
$
160,872
$
72,545
$
406,344
$
217,056
Adjusted Net Income2
$
98,025
$
38,223
$
230,549
$
105,557
Adjusted Net Income per Diluted Share2
$
0.83
$
0.34
$
1.98
$
0.92
Weighted average number of diluted shares
outstanding (thousands)
118,395
114,096
116,731
114,194
Cash and cash equivalents
$
285,635
$
163,277
$
285,635
$
163,277
Capital cash expenditures (net of proceeds from lease
incentives)2
$
(66,315)
$
(41,681)
$
(253,490)
$
(155,256)
Free cash flow2
$
65,598
$
22,871
$
95,598
$
99,502
Percentage of Net Revenue:
Gross profit
42.5 %
38.3 %
43.1 %
38.5 %
Selling, general and administrative
27.5 %
28.9 %
30.6 %
30.4 %
Net income
11.1 %
3.5 %
7.6 %
3.4 %
Adjusted EBITDA2
18.0 %
10.6 %
14.8 %
9.3 %
Adjusted Net Income 2
11.0 %
5.6 %
8.4 %
4.5 %
Other Metrics:
Year-over-year net revenue growth
31.3 %
7.0 %
17.4 %
6.2 %
Comparable sales2 growth (decline)
26.0 %
(3.0) %
11.0 %
(1.0) %
2 Please see the sections titled "Selected Financial Information", “How We Assess the Performance of Our Business” and "Non-IFRS Measures
and Retail Industry Metrics" of this MD&A for further details on these financial and operating measures.
24 |
The following tables provide selected consolidated information for the three most recently completed fiscal years.
For a discussion of factors that caused changes in our business between Fiscal 2024 and Fiscal 2023, please refer
to the "Results of Operations" section of our Fiscal 2024 MD&A dated May 2, 2024.
Selected Consolidated Financial Information
(in thousands of Canadian dollars, except per share amounts)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net revenue
$2,738,112
$2,332,350
$2,195,630
Net income
207,790
78,780
187,588
Net income per share
Basic
1.85
0.71
1.70
Diluted
1.78
0.69
1.63
Selected Consolidated Financial Position Information
As at
As at
As at
(in thousands of Canadian dollars, unless otherwise noted)
March 2,
2025
March 3,
2024
February 26,
2023
Total assets
$2,455,814
$1,946,133
$1,836,543
Total non-current liabilities
835,923
727,011
733,456
Fiscal 2025 Annual Report | 25
The following table provides a reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and
Adjusted Net Income per Diluted Share for the periods indicated.
Reconciliation to Non-IFRS Measures
(in thousands of Canadian dollars, unless otherwise
noted)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Reconciliation of Net Income to EBITDA and
Adjusted EBITDA:
Net income
$
99,642
$
24,207
$
207,790
$
78,780
Depreciation and amortization
25,363
18,163
84,415
64,515
Depreciation on right-of-use assets
22,548
28,166
102,238
103,524
Finance expense
10,627
12,429
48,800
49,091
Income tax expense
35,498
12,898
82,663
35,830
EBITDA
193,678
95,863
525,906
331,740
Adjustments to EBITDA:
Stock-based compensation expense
17,376
15,356
48,373
31,784
Rent impact from IFRS 16, Leases3
(32,236)
(39,401)
(146,347)
(145,671)
Unrealized (gain) loss on equity derivative contracts
(10,800)
(6,434)
(16,929)
5,189
Realized (gain) loss on equity derivative contracts
—
(1,048)
—
(1,048)
Fair value adjustments related to CYC Design
Corporation ("CYC") acquisition
(7,500)
500
(7,500)
(14,500)
CYC integration costs
—
1,847
1,732
3,700
Impairment of right-of-use assets, lease exit costs and
other
(196)
5,862
559
5,862
Secondary offering transaction costs
550
—
550
—
Adjusted EBITDA
160,872
72,545
$
406,344
$
217,056
Adjusted EBITDA as a percentage of net revenue
18.0 %
10.6 %
14.8 %
9.3 %
Reconciliation of Net Income to Adjusted Net
Income:
Net income
$
99,642
$
24,207
$
207,790
$
78,780
Adjustments to net income:
Stock-based compensation expense
17,376
15,356
48,373
31,784
Unrealized (gain) loss on equity derivative contracts
(10,800)
(6,434)
(16,929)
5,189
Realized (gain) loss on equity derivative contracts
—
(1,048)
—
(1,048)
Fair value adjustment related to CYC acquisition
(7,500)
500
(7,500)
(14,500)
CYC integration costs
—
1,847
1,732
3,700
Impairment of right-of-use assets, lease exit costs and
other
(196)
5,862
559
5,862
Secondary offering transaction costs
550
—
550
—
Related tax effects
(1,047)
(2,067)
(4,026)
(4,210)
Adjusted Net Income
$
98,025
$
38,223
$
230,549
$
105,557
Adjusted Net Income as a percentage of net
revenue
11.0 %
5.6 %
8.4 %
4.5 %
Weighted average number of diluted shares
outstanding (thousands)
118,395
114,096
116,731
114,194
Adjusted Net Income per Diluted Share
$
0.83
$
0.34
$
1.98
$
0.92
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Depreciation on right-of-use assets, excluding fair value
adjustments
$
(22,481)
$
(28,033)
$
(101,732)
$
(102,992)
Interest expense on lease liabilities
(9,755)
(11,368)
(44,615)
(42,679)
Rent impact from IFRS 16, Leases
$
(32,236)
$
(39,401)
$
(146,347)
$
(145,671)
3 See Rent Impact from IFRS 16, Leases below
26 |
The following table reconciles comparable sales to net revenue for the periods indicated.
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Comparable sales4
$
776,038
$
579,413
$
2,438,190
$
2,034,717
Non-comparable sales
119,080
102,557
299,922
297,633
Net revenue
$
895,118
$
681,970 $
2,738,112
$
2,332,350
The following table reconciles constant currency changes in net revenue:
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
%
change
Fiscal 2025
Fiscal 2024
%
change
Constant currency net revenue
$
863,151
$
681,970
26.6 % $ 2,692,557
$ 2,332,350
15.4 %
Foreign exchange impact
31,967
—
45,555
—
Net revenue
$
895,118
$
681,970
31.3 % $ 2,738,112
$
2,332,350
17.4 %
The following table reconciles cash used in investing activities to capital cash expenditures (net of proceeds from
lease incentives) for the periods indicated.
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Cash used in investing activities
$
(79,532)
$
(47,236)
$
(277,116)
$
(182,964)
Contingent consideration payout, net relating to the
acquisition of CYC
—
—
—
6,303
Acquisition of trademarks
13,099
—
13,099
—
Proceeds from lease incentives
118
5,555
10,527
21,405
Capital cash expenditures (net of proceeds from
lease incentives)
$
(66,315)
$
(41,681)
$
(253,490)
$
(155,256)
The following table reconciles net cash generated from operating activities to free cash flow for the periods
indicated.
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Net cash generated from operating activities
$
158,476
$
99,688
$
455,637
$
358,823
Interest paid
797
984
3,883
6,132
Repayments of principal on lease liabilities
(27,360)
(36,120)
(110,432)
(110,197)
Capital cash expenditures (net of proceeds from lease
incentives)
(66,315)
(41,681)
(253,490)
(155,256)
Free cash flow
$
65,598
$
22,871
$
95,598
$
99,502
SUMMARY OF FACTORS AFFECTING PERFORMANCE
We generally believe that our performance and future success depend on a number of factors that present
significant opportunities for us. These factors are also subject to a number of inherent risks and challenges, some
of which are discussed below. See also the “Risk Factors” section of this MD&A, and in our AIF.
Our Brand and Products
Our exclusive mix of fashion brands offer a strategic and thoughtfully conceived, designed, and developed
collection of products. In addition to our exclusive fashion brands, we also position product under the Aritzia brand.
Aritzia-branded products are beloved fabrics and styles that — of everything we make — are the most iconically
Aritzia. We believe that a key area of differentiation for us is that we design apparel and accessories to enable us to
reach many different groups of clients. Our sourcing and manufacturing strategy gives us control over our supply
chain and provides us with the flexibility to optimize our brand mix as needed to address changes in client demand
and fashion preferences. This has been critical to our ability to grow while also reducing risk.
4 Comparable sales in each respective period reflects total combined net revenue from eCommerce and established boutiques that fall within the
comparable sales base during the respective period. See the section titled "How We Assess the Performance of our Business" and "Non-IFRS
Measures and Retail Industry Metrics" of this MD&A for further details.
Fiscal 2025 Annual Report | 27
Our exclusive mix of fashion brands and products are supported by in-house design and development teams
focused on creating beautiful, elevated, high quality products that align with the unique positioning, look and feel of
each brand. Each of our exclusive fashion brands has its own vision and distinct aesthetic point of view. As a group,
they are united by an unwavering commitment to Everyday Luxury™ product using superior fabrics, meticulous
construction and relevant, effortless design.
Our exclusive mix of fashion brands and products currently represent approximately 96% of Aritzia’s net revenue.
Our broad product assortment includes t-shirts, blouses, sweaters, jackets, coats, pants, shorts, skirts, dresses,
denim, accessories, and Reigning Champ men’s wear for each season. We strive to maintain a flexible mix of
historically successful items and new seasonal styles. Our changing product mix is a blended reflection of client
demands and fashion direction. This strategic mix helps us to drive client conversion by delivering fashion must-
haves, while still generating a meaningful proportion of revenue from our fashion essentials. We complement our
exclusive product mix with a strategically chosen selection of premium denim, accessories and footwear from
leading contemporary, third-party brands. Our expansive and diverse range of fashion apparel and accessories
addresses a broad range of style preferences and lifestyle requirements for our clients, producing strong and
enduring client loyalty.
Product Strategy
We control the design, merchandise planning, sourcing, production and retail functions of our exclusive brands and
complement this with third-party brands as appropriate. Product design and quality are meticulously evaluated and
controlled by us, from fabrics to trims, and styling to fit.
Creative Development
We have talented teams of designers who focus on creating products featuring high quality fabrics, considered
detailing and sophisticated construction. Our product design and development process builds on client favourites
while taking new fashion trends into account with the goal of creating fashion must-haves each season. Our
strategy centers on our ability to create enough new styles to maintain freshness in our assortment over time. Our
technical team ensures all products are executed in a manner that is consistent with our design and delivers
superior fit and sophisticated construction in the production of our exclusive brands. We partner with high quality
mills and suppliers to create and sample garments, which are fit-tested before production. We strive to ensure that
the quality of our raw materials and the finished product are all held to our Everyday Luxury™ standards and the
expectations of our clients.
Merchandise Planning
Our demand-driven merchandise planning, buying and inventory strategies have been developed and evolved for
over 40 years.
We generate a meaningful proportion of revenue from our client favourites while helping to drive excitement through
new seasonal product assortment. We analyze sales data in order to make inventory adjustments and to respond to
the latest trends.
Our inventory management processes and systems provide us with the ability to optimize inventory across
geographies and channels to ensure that each boutique and aritzia.com is merchandised with products that
resonate with local preferences. We actively monitor sell-through rates and manage the mix of product categories in
our boutiques and aritzia.com. We respond to emerging trends in a timely manner, minimize our dependence on
any particular category, style or fabrication and preserve a balanced, coordinated presentation of merchandise
within each boutique while offering our client the entire assortment online. We believe that our disciplined
merchandise planning strategy enables us to optimize inventory levels and maximize full-price sales.
Sourcing and Production
We contract and maintain direct relationships with a diversified base of independent suppliers and manufacturers
for our exclusive brands who provide us with the flexibility to source high quality materials and products at
competitive costs. We believe that our approach of sourcing a majority of our raw materials and working directly
with suppliers and manufacturers enhances our ability to create beautiful and high-quality products in a timely
manner.
We source the majority of our raw materials directly from mills, trim suppliers and manufacturers in overseas
markets, which we believe to be best in class, located primarily in China, India, Italy, Japan, South Korea, and
Taiwan that uphold our standards for quality, lead time and cost. Our finished goods are sourced from
28 |
manufacturers located in countries, including but not limited to, Austria, Cambodia, China, Guatemala, India, Italy,
Philippines, Portugal, Romania, Slovenia, Sri Lanka, Turkey, the U.S. and Vietnam. We continue to monitor and
diversify our supplier base, taking into consideration the geo-political and economic environment to mitigate risk.
“Next Generation Suppliers” are finished goods partners that have implemented succession planning as part of their
strategy, are digitally enabled, manufacture multiple categories of materials and products and have multiple country
of origin footprints and investments in automation. We leverage our “Next Generation Supplier” relationships by
using their multi origin footprint to pivot as geopolitical obstacles arise without interrupting our product lifecycle.
Capacity planning with our manufacturers is done at the beginning of the season to help ensure flexibility. We
engage third parties to inspect our manufacturers’ factories to help maintain quality control and engage
independent expert service providers to conduct factory audits for compliance with local laws and regulations and
global standards. We have launched a vendor self-certification process for quality assurance and inspection. We
believe this will help ensure a greater execution of our quality expectations and to allow for vendors to reduce cycle
time. We have implemented a Supplier Code of Conduct and initiatives to increase transparency with respect to the
origins of our raw materials.
Boutiques
We have developed our boutique network in a measured and disciplined manner. We have a portfolio of boutiques
situated in premier real estate locations in high performing retail malls and high streets in Canada and the United
States. Our strong boutique sales productivity continues to make us a sought-after tenant for top quality locations in
premier shopping destinations. In addition to opening new boutiques, we generate attractive returns on capital by
enhancing elements of our existing boutiques (including footprint, layout and assortment) through carefully
considered boutique repositions, relocations and expansions. We continue to elevate our boutique design and
believe we deliver a fully immersive experience including enhancing the sensory experience by adding A-OK cafes
in select boutiques.
The following table summarizes the change in Aritzia’s boutique count for the periods indicated (excluding Reigning
Champ boutiques).
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Number of boutiques, beginning of year
127
117
119
114
New boutiques
4
3
12
6
Boutique closure
(1)
(1)
(1)
(1)
Number of boutiques, end of year
130
119
130
119
Repositioned boutiques
1
1
3
3
In addition, there were three Reigning Champ boutiques as at March 2, 2025 (four Reigning Champ boutiques as at
March 3, 2024).
Digital Growth
In Fiscal 2025 our eCommerce, Omni channel, Performance Marketing, and Concierge business units evolved into
one broader and cohesive Digital business, which supports our brand pillars and helps to ensure consistent
messaging and a seamless experience for our clients. We continue to invest in our digital capabilities to support our
Digital business, and we plan to fuel Digital growth by delivering against our Aritzia eCommerce 2.0 strategy,
featuring tailored product discovery, creative innovation, and intuitive experiences. We aspire to connect clients to
Everyday Luxury™, offering beautiful product, tailored experiences, and endless inspiration to be a leading Digital
business.
The strategy behind Aritzia eCommerce 2.0 has the following components, which is our value proposition that we
believe highlights our unique competitive advantage:
–
We plan to deliver tailored product discovery: We plan to enable clients to discover all we have to offer,
while personalizing suggestions for their individual taste, style and preferences. We have made significant
progress leveraging advanced business intelligence and behaviour analytics to further enhance our
understanding of our clients. This includes optimizing our online operations to enhance personalization
which we believe will drive higher conversion and client loyalty. Aritzia.com showcases our entire product
assortment, and our brands are designed for a segment of our overall client base. We also plan to increase
Fiscal 2025 Annual Report | 29
our online exclusive assortment, offering unique benefits for our clients to shop online. We aim to inspire
the client to discover our diverse assortment, while content is tailored to their individual style and
preferences to keep them engaged.
–
We plan to deliver creative innovation: With an emphasis on form, creative innovation keeps our Digital
experience at the forefront of cool. This extends to service, operations and technology. We aim to
continuously raise the bar across both form and function. Whether it be aspirational site design, how we
merchandise, captivating content and communications, or coming up with a creative technology solution –
we plan to redefine the norms.
–
We plan to deliver an intuitive experience: Our eCommerce platform aims to provide our clients further
ease of use at all touchpoints. A word that is often used to describe Everyday Luxury™ is effortless, and
this is intended to extend to our Digital presence. We strive to offer a seamless, integrated, and highly
shoppable experience. Aritzia is focused on improving the Digital experience across all devices (e.g.,
desktop, mobile, tablet) to work towards making shopping even more frictionless than it is today. The core
areas of our client’s digital journey including discovery, evaluating, and purchase are continuously
improved.
Distribution Facilities
Our current distribution network consists of three distribution centres, two in Canada and one in the United States,
that are well positioned to service our boutiques and Digital business. Our distribution centres include a 223,000
square foot facility in New Westminster, British Columbia, a newly-opened 550,000 square foot facility in Vaughan,
Ontario, and a 560,000 square foot third-party facility in Columbus, Ohio.
We operate our distribution centres located in New Westminster, British Columbia and Vaughan, Ontario, while the
distribution centre located in Columbus, Ohio is operated by a third-party logistics provider. Our inventory is
centrally managed and shared amongst our boutiques and Digital business.
In Fiscal 2024, we opened our new 550,000 square foot distribution centre in Vaughan, Ontario. This new facility is
in-sourced and replaces our previous 150,000 square foot facility operated by a third-party logistics provider in
Mississauga, Ontario. We have commenced construction of an additional 200,000 square feet space in this facility
which is expected to be operational in Fiscal 2026.
In Fiscal 2024, we expanded and took over the entire building in our Columbus, Ohio distribution centre, resulting in
an additional 305,000 square feet for a total of approximately 560,000 square feet in that facility. We plan to
complete retrofitting work in this facility in Fiscal 2026 to help optimize our operations.
In Fiscal 2025, construction activities commenced on a new 380,000 square foot facility in Delta, British Columbia.
We started finalizing plans for construction and design along with starting some construction activities at the end of
Fiscal 2025. When completed, this new facility will be operated by us and is expected to be operational in early
Fiscal 2027. We plan to retain our current facility in New Westminster, British Columbia for storage and office space
purposes, among other things. We plan on implementing increased automation, including robotic equipment in this
new facility to increase our efficiencies and throughput.
Our current facilities are set up to flexibly manage multi-channel and Omni channel demands, as our business
continues to grow, and these further expansions will also support both our retail and Digital businesses with added
capacity to handle higher levels of throughput.
Omni-Channel Capabilities
In Fiscal 2025, we successfully ramped up Buy Online, Pick-Up In Store and stabilized our Buy Online, Ship From
Store capabilities. These new capabilities enabled us to maximize sales and profitability by offering customers more
order options.
Our Omni channel was built on the foundation of our point-of-sale system and investment in digital selling tools to
enable omni-channel capabilities and optimize our technical systems and architecture. The project brought to life a
new order fulfillment solution, the physical optimization of our backroom spaces, foundational order sourcing
technology, and enhancements to our digital customer experience. The Omni channel capabilities are as follows:
•
Buy Online, Ship From Store – Available in most boutiques in Canada and the U.S., this capability
introduces store inventory online, ensuring our full product assortment is available on aritzia.com. It also
30 |
enables strategic targeting of inventory across our network of boutiques and minimizes delivery time to our
clients.
•
Buy Online, Pick-up In Store – Available in most boutiques in Canada and the U.S., this capability provides
clients with the option to pick up their online order in store. Building on store inventory visibility, this
capability further integrates the online and in-store experiences leveraging the strong service in our
boutiques to deliver an elevated, yet convenient experience. It is expected to also drive traffic to our
boutiques and lead to additional opportunities for purchases upon pick up.
•
Store Inventory Visibility – This functionality enhances the client experience on aritzia.com by providing
visibility of product availability in our boutiques. This initiative drives cross-channel shopping behavior and
reduces contacts to our Concierge team by enabling clients to self-serve on common product availability
related questions.
We’ve also made meaningful improvements to the availability of fulfillment data and analytics as well as tools to
maintain inventory accuracy and management which has resulted in improved fulfillment rates in stores.
Impact and Governance
Reflecting the importance of sustainability-related risks and opportunities to our business and brands, and as a
prominent player in the fashion industry, Aritzia believes it has a role to play in sustainability matters. As our
business grows, so does our potential to create lasting change - we remain dedicated to making year-over-year
progress on our Impact goals and priorities. We are strengthening our efforts to deliver Everyday Luxury™
responsibly and sustainably.
At Aritzia, Impact refers to the contributions we make to People and the Planet. We believe these contributions
matter to our consumers and to our overall business resilience as a whole. The Impact scope spans Aritzia’s full
value chain - from raw material sourcing in our upstream operations, through to product end-of-life in our
downstream operations. With the goal to strengthen our positive impact, initiatives and oversight of these areas are
shared throughout our organization. We seek to take an evidence-based approach and to deliver long-term positive
impact for the benefit of our business resilience and our stakeholders.
Our priorities are aligned with the findings in our materiality assessment - which identifies our material impacts,
opportunities and risks - and have regard to applicable frameworks. In Fiscal 2025, we continued building on our
climate change-related reporting infrastructure, having particular regard to the current Canadian Sustainability
Standards Board's Canadian Sustainability Disclosure Standards and California’s climate reporting requirements in
accordance with Taskforce for Climate-Related Financial Disclosure (TCFD) recommendations.
For a more detailed discussion on our sustainability metrics and key performance indicators, refer to the latest
Aritzia Community Report, available on Aritzia's Environmental and Social Investor Relations page at
investors.aritzia.com (which is not incorporated by reference into this MD&A) and for details on our impacts and
progress refer to the “Impact and Governance: Our Progress on Sustainability” section of the Company’s AIF, which
is available on SEDAR+ at www.sedarplus.com.
Consumer Trends
The apparel industry is subject to shifts in consumer trends, preferences and consumer spending and our revenue
and operating results depend, in part, on our ability to respond to such changes and in a timely manner. Our
differentiated multi-brand strategy gives us control over our products and provides us with the flexibility to optimize
our brand mix as needed to address changes in consumer demand and fashion preferences, which has historically
been a critical driver of our growth. Our revenue is also impacted by discretionary spending by consumers, which is
affected by many factors that are beyond our control, including, but not limited to, general economic conditions,
tariff and international trade policies that could put pressure on our pricing, consumer disposable income levels,
consumer confidence levels, consumer debt, inflation, the cost of basic necessities and other goods and the effects
of weather, natural disasters or global pandemics. We believe that our track record demonstrates the success of
our exclusive brand strategy at responding to changes in fashion demands through all stages of economic cycles.
Seasonality
The apparel industry is seasonal in nature, with a higher proportion of net revenue and operating income generated
in the second half of the fiscal year, which includes the back-to-school and holiday seasons. We also have higher
working capital requirements in the periods preceding the launch of new seasons as we receive and pay for new
inventory. We manage our working capital needs through cash flow from operations and our revolving credit facility.
Fiscal 2025 Annual Report | 31
Average quarterly share of annual net revenue over the last three completed fiscal years is as follows:
First fiscal quarter
19%
Second fiscal quarter
23%
Third fiscal quarter
28%
Fourth fiscal quarter
30%
Yearly total
100%
Weather
Extreme weather conditions in the areas in which our boutiques are located could adversely affect our business and
financial results. For example, frequent or unusually heavy snowfall, ice storms, rainstorms or other extreme
weather conditions over a prolonged period could make it difficult for our clients to travel to our boutiques and
thereby reduce our revenue and profitability. This is potentially mitigated by our clients’ ability to buy our products
through aritzia.com. Our business is also susceptible to unseasonable weather conditions. For example, extended
periods of unseasonably warm temperatures during the winter season or cool weather during the summer season
could render a portion of our inventory incompatible with those unseasonable conditions, which could adversely
affect our ability to execute our strategy to effectively present seasonal inventory. Further, extreme weather
conditions and natural disasters could materially impact our supply chain network.
Competition
We operate in the apparel industry, primarily within the Canadian and United States markets. We are strategically
positioned in the global fashion landscape between fast fashion and luxury. We compete with a diverse group of
specialty apparel retailers, department stores, fast fashion retailers, athletic retailers and other manufacturers and
retailers of branded apparel. Market participants compete on the basis of, among other things, the location of
boutiques, eCommerce experience, the breadth, style, quality, price and availability of merchandise, the level of
client service and brand recognition. We believe that we successfully compete on the basis of several factors that
include our strategic mix of exclusive brands and iconically Aritzia products, offering of a combination of high quality
products at an attainable price point, our refined and evolving merchandise planning strategy, our focus on
providing an aspirational shopping experience and exceptional client service, our premier real estate portfolio,
captivating content and communications, and our market positioning, collectively resulting in a fashion brand loved
by our clients all over the world.
Foreign Exchange
Over half of our net revenue is derived in U.S. dollars and the vast majority of our inventory purchases are
denominated in U.S. dollars. Both our net revenues and cost of goods sold could be impacted significantly by
changes in the value of the Canadian dollar against the U.S. dollar. Fluctuations in the exchange rate of the
Canadian dollar versus the U.S. dollar could materially affect our gross profit margins and operating results. If
needed, we will use foreign currency forward contracts to mitigate risks associated with forecasted U.S. dollar
merchandise purchases sold in Canada, but there can be no assurances that such strategies will prove to be
successful. See the “Risk Factors” section of this MD&A.
NON-IFRS MEASURES AND RETAIL INDUSTRY METRICS
This MD&A makes reference to certain non-IFRS Accounting Standards measures ("non-IFRS measures") and
certain retail industry metrics. These measures are not recognized measures under IFRS Accounting Standards, do
not have a standardized meaning prescribed by IFRS Accounting Standards 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 Accounting Standards measures by providing further understanding of our
results of operations from management’s perspective. Accordingly, these measures should not be considered in
isolation or as a substitute for analysis of our financial information reported under IFRS Accounting Standards. We
use non-IFRS financial measures including “EBITDA”, “Adjusted EBITDA”, and “Adjusted Net Income”; non-IFRS
Accounting Standards ratios ("non-IFRS ratios") including “Adjusted Net Income per Diluted Share”, "Adjusted
EBITDA as a percentage of net revenue", and "Adjusted Net Income as a percentage of net revenue"; and capital
management measures including “capital cash expenditures (net of proceeds from lease incentives)”, and “free
cash flow.” This MD&A also makes reference to “gross profit margin”, "comparable sales", and "constant currency"
which are commonly used operating metrics in the retail industry but may be calculated differently by other retailers.
32 |
Gross profit margin, comparable sales and constant currency are considered supplementary financial measures
under applicable securities laws. These non-IFRS measures and 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 Accounting Standards measures. We believe that
securities analysts, investors and other interested parties frequently use non-IFRS measures and retail industry
metrics in the evaluation of issuers. Our management also uses non-IFRS measures and 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. For definitions of these non-IFRS
measures and retail industry metrics and reconciliations of these non-IFRS measures to the relevant reported
measures, please see the “How We Assess the Performance of Our Business” and “Selected Financial Information”
sections of this MD&A.
HOW WE ASSESS THE PERFORMANCE OF OUR BUSINESS
In assessing the performance of our business, we consider a variety of financial and operating measures that affect
our operating results.
Net revenue reflects our sale of merchandise, less returns and discounts. The Company recognizes revenue when
control of the goods or services has been transferred to the customer which generally occurs when the product is
delivered to the customer and therefore may be subject to deferral. Revenue is measured at the fair value of
consideration to which the Company expects to be entitled to, including variable consideration, if any, to the extent
it is highly probable that a significant reversal will not occur. Revenues are measured net of discounts and an
estimated allowance for returns. Revenues are reported net of sales taxes collected for various governmental
agencies. Receipts from the sale of gift cards are treated as deferred revenue. When gift cards are redeemed for
merchandise, the related revenue is recognized.
Comparable sales is a retail industry metric used to explain our total combined revenue growth (decline) (in
absolute dollars or percentage terms) in eCommerce and established boutiques over the comparative reportable
period. Comparable sales from established boutiques is calculated based on revenue from boutiques that have
been opened for at least 56 weeks, and excludes boutiques that were repositioned, boutiques in centres where we
opened a new additional boutique and boutiques significantly impacted by nearby construction and other similar
disruptions during this period. Our comparable sales calculation excludes the impact of foreign currency
fluctuations. We apply the relevant prior year comparative’s average foreign currency exchange rate for the period
to both current year and prior year comparable sales to achieve a consistent basis for comparison (i.e., on a
constant currency basis).
Constant currency change in net revenue assumes the average foreign currency exchange rates for the period
remained constant with the average foreign currency exchange rates for the same period of the prior year. The
constant currency change helps provide investors an understanding of the underlying growth rate of net revenue
excluding the impact of changes in foreign currency exchange rates.
Gross profit reflects our net revenue less cost of goods sold. Cost of goods sold includes inventory and product-
related costs, occupancy costs, and depreciation expense for our boutiques and distribution centres. Our cost of
goods sold may include different costs compared to other retailers. Gross profit margin is impacted by the
components of cost of goods sold, product mix and markdowns. We define gross profit margin as our gross profit
divided by our net revenue.
Selling, general and administrative (“SG&A”) expenses consists of selling expenses that are generally variable
with net revenue and general and administrative operating expenses that are primarily fixed. Our SG&A expenses
also include depreciation and amortization expenses for all support office assets and intangible assets.
SG&A expenses as a percentage of net revenue, excluding strategic investments in technology and infrastructure,
are usually higher in the lower net revenue volume first and second quarters, and lower in the higher net revenue
volume third and fourth quarters because a portion of these costs are relatively fixed. Our SG&A expenses may
include different expenses compared to other retailers.
EBITDA is defined as consolidated net income before depreciation and amortization, finance expense and income
tax expense. We believe this measure is useful as it is used by management as a component of reconciliation
between other non-IFRS measures and their most comparable IFRS Accounting Standards measure.
Fiscal 2025 Annual Report | 33
Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful measures of operating
performance, as we believe they provide a more relevant picture of operating results in that the measures exclude
the effects of financing and investing activities by removing the effects of interest, depreciation and amortization
expenses that are not reflective of underlying business performance and other one-time or non-recurring expenses.
We use Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue to facilitate a comparison of our
operating performance on a consistent basis from period-to-period and to provide for a more complete
understanding of factors and trends affecting our business. We define Adjusted EBITDA as consolidated net income
before depreciation and amortization, finance expense and income tax expense, adjusted for the impact of certain
items, such as a deduction of interest expense and depreciation relating to our leases to reflect an estimate of rent
expense and including non-cash items and/or items we consider non-recurring and not representative of our
ongoing operating performance, such as stock-based compensation expense, unrealized gains or losses on equity
derivative and forward contracts and other similar fair value adjustments. Because Adjusted EBITDA excludes
certain non-cash items, we believe that it is less susceptible to variances in actual performance resulting from
depreciation and amortization and other non-cash charges. We define Adjusted EBITDA as a percentage of net
revenue as the percentage obtained by dividing Adjusted EBITDA by net revenue.
Adjusted Net Income (and per Diluted Share) and Adjusted Net Income as a percentage of net revenue are
useful measures of performance, as we believe they provide a more relevant picture of results by excluding the
effects of expenses that are not reflective of underlying business performance and other one-time or non-recurring
expenses. We use Adjusted Net Income, Adjusted Net Income per Diluted Share, and Adjusted Net Income as a
percentage of net revenue to facilitate a comparison of our performance on a consistent basis from period-to-period
and to provide for a more complete understanding of factors and trends affecting our business. We define Adjusted
Net Income as consolidated net income adjusted for the impact of certain items, including non-cash items and/or
other items we consider non-recurring and not representative of our ongoing operating performance, such as stock-
based compensation expense, unrealized gains or losses on equity derivative and forward contracts and other
similar fair value adjustments, net of related tax effects. We define Adjusted Net Income per Diluted Share by
dividing Adjusted Net Income by the weighted average number of diluted shares outstanding. We define Adjusted
Net Income as a percentage of net revenue as the percentage obtained by dividing Adjusted Net Income by net
revenue.
Capital cash expenditures (net of proceeds from lease incentives) is a measure we believe to be a useful
indicator of the net cash capital investment relating to our boutiques and infrastructure. We define capital cash
expenditures (net of proceeds from lease incentives) as cash used in investing activities, excluding cash used in
business combinations and other acquisitions, less proceeds from lease incentives.
Free cash flow is a useful metric because it is an indicator of how much cash is available for business acquisitions,
debt repayment, share repurchases and other investing and financing activities. Our sustained ability to generate
free cash flow is an indicator of the financial strength of our business, as we require regular capital expenditures to
build and maintain boutiques and invest in infrastructure. We define free cash flow as net cash generated from
operating activities excluding interest paid on credit facilities, less repayments of principal on lease liabilities and
capital cash expenditures (net of proceeds from lease incentives).
34 |
RESULTS OF OPERATIONS
Analysis of Results for Fourth Quarter Fiscal 2025
Consolidated Statements of Operations
(unaudited, in thousands of Canadian dollars, unless otherwise noted)
Q4 2025
Q4 2024
% of net
revenue
% of net
revenue
Net revenue
$
895,118
100.0 %
$
681,970
100.0 %
Cost of goods sold
515,014
57.5 %
420,723
61.7 %
Gross profit
380,104
42.5 %
261,247
38.3 %
Selling, general and administrative
246,015
27.5 %
196,835
28.9 %
Stock-based compensation expense
17,376
1.9 %
15,356
2.3 %
Income from operations
116,713
13.0 %
49,056
7.2 %
Finance expense
10,627
1.2 %
12,429
1.8 %
Other income
(29,054)
(3.2) %
(478)
(0.1) %
Income before income taxes
135,140
15.1 %
37,105
5.4 %
Income tax expense
35,498
4.0 %
12,898
1.9 %
Net income
$
99,642
11.1 %
$
24,207
3.5 %
Net income per diluted share
$
0.84
$
0.21
Adjusted EBITDA1
$
160,872
18.0 %
$
72,545
10.6 %
Adjusted Net Income1
$
98,025
11.0 %
$
38,223
5.6 %
Adjusted Net Income per Diluted Share1
$
0.83
$
0.34
Net revenue increased 31.3% to $895.1 million, compared to $682.0 million in Q4 2024, or increased 26.6% on a
constant currency1 basis. Excluding net revenue of $32.5 million from the 53rd week of Fiscal 2024, net revenue
increased 37.8% in Q4 2025. Comparable sales2 grew 26.0%, as all channels and all geographies comped
positively, driven by a strong client response to the Company's product offering and the Company's optimized
inventory position.
In the United States, net revenue increased 48.5% to $548.0 million, compared to $369.1 million in Q4 2024.
Excluding net revenue from the 53rd week of Fiscal 2024, net revenue in the United States increased 56.2%. This
was fueled by further acceleration in eCommerce growth and the Company's real estate expansion strategy. Net
revenue in Canada increased 10.9% to $347.1 million, compared to $312.8 million in Q4 2024, driven by
accelerated momentum in both eCommerce and retail. Excluding net revenue from the 53rd week of Fiscal 2024,
net revenue in Canada increased 16.2%.
–
Retail net revenue increased 24.2% to $517.1 million, compared to $416.4 million in Q4 2024. Excluding net
revenue from the 53rd week of Fiscal 2024, retail net revenue increased 31.2%. In addition to a positive
response to Winter and Spring products and the optimized inventory position, the increase was driven by strong
performance of the Company's new and repositioned boutiques and the Company's investment in digital
marketing. Comparable sales growth in existing boutiques was double-digit positive in both countries. In the last
12 months, the Company opened 12 new boutiques and repositioned three boutiques. Boutique count5 at the
end of Q4 2025 totaled 130 compared to 119 boutiques at the end of Q4 2024.
–
eCommerce net revenue increased 42.4% to $378.1 million, compared to $265.6 million in Q4 2024.
Excluding net revenue from the 53rd week of Fiscal 2024, eCommerce net revenue increased 48.0%. In
addition to the positive response to Winter and Spring products and the optimized inventory position, the
5 CYC had three Reigning Champ boutiques as at March 2, 2025 (four boutiques as at March 3, 2024) which are excluded from the boutique
count. There was one Aritzia boutique closure in both Fiscal 2025 and Fiscal 2024.
Fiscal 2025 Annual Report | 35
continued acceleration in eCommerce was supported by the Company's investment in digital marketing which
fueled strong traffic growth.
The following table provides net revenue by channel and geographic location for the periods indicated.
(unaudited, in thousands of Canadian dollars)
Q4 2025
Q4 2024
Retail net revenue
$
517,061
$
416,406
eCommerce net revenue
378,057
265,564
Net revenue
$
895,118
$
681,970
Q4 2025
Q4 2024
United States net revenue
$
548,045
$
369,121
Canada net revenue
347,073
312,849
Net revenue
$
895,118
$
681,970
Gross profit increased 45.5% to $380.1 million, compared to $261.2 million in Q4 2024. Gross profit margin1 was
42.5%, compared to 38.3% in Q4 2024. The 420 bps increase in gross profit margin was primarily driven by IMU
improvements, lower markdowns, lower warehousing costs, savings from the Company's smart spending initiative
and tailwinds from store occupancy costs, partially offset by higher freight costs.
SG&A expenses increased 25.0% to $246.0 million, compared to $196.8 million in Q4 2024. SG&A expenses were
27.5% of net revenue, compared to 28.9% in Q4 2024. The increase in SG&A expenses was primarily driven by
variable selling costs associated with the increase in net revenue, as well as investments in digital marketing to
protect and propel the Aritzia brand and investments in infrastructure projects, technology initiatives and flagship
locations to support the Company's growth.
Depreciation and amortization increased $1.6 million to $47.9 million, compared to $46.3 million in Q4 2024
primarily due to the depreciation and amortization for new and repositioned boutique openings partially offset by
capitalization of depreciation on right-of-use assets related to certain boutiques and distribution centres under
construction. The following table provides the depreciation and amortization expense for the periods indicated.
(unaudited, in thousands of Canadian dollars)
Q4 2025
Q4 2024
Depreciation on right-of-use assets
$
22,548
$
28,166
Depreciation and amortization
25,363
18,163
Total depreciation and amortization
$
47,911
$
46,329
Stock-based compensation expense increased $2.0 million to $17.4 million, compared to $15.4 million in Q4
2024. The following table provides details of the stock-based compensation expense for the periods indicated.
(unaudited, in thousands of Canadian dollars)
Q4 2025
Q4 2024
Equity-settled plans
Stock options
$
4,959 $
5,245
Restricted Share Units
3,730
1,899
Performance Share Units
510
1,458
Cash-settled plans
Restricted Share Units
2,592
3,895
Deferred Share Units
5,585
2,859
Stock-based compensation expense
$
17,376 $
15,356
36 |
The Company uses equity derivative contracts to offset our cash flow variability of the expected payment
associated with our cash-settled deferred and restricted share units. Realized and unrealized gains and losses
related to these equity derivative contracts are recorded in other income.
Finance expense decreased $1.8 million to $10.6 million, compared to $12.4 million in Q4 2024. The decrease in
finance expense was primarily due to capitalization of lease interest relating to certain boutiques and distribution
centres under construction in Q4 2025.
Other expense (income) was $(29.1) million, compared to $(0.5) million in Q4 2024. The following table provides
details of other income for the periods indicated.
(unaudited, in thousands of Canadian dollars)
Q4 2025
Q4 2024
Realized foreign exchange loss (gain)
$
(11,611) $
1,734
Unrealized foreign exchange loss (gain)
3,165
(413)
Fair value adjustments related to CYC acquisition
(7,500)
500
Unrealized (gain) loss on equity derivative contracts
(10,800)
(6,434)
Realized (gain) loss on equity derivative contracts
—
(1,048)
CYC integration costs
—
1,847
Impairment of right-of-use assets, lease exit costs and other
(196)
5,862
Secondary offering transaction costs
550
—
Interest and other income
(2,662)
(2,526)
Other expense (income)
$
(29,054) $
(478)
As a result of the Company's early acquisition of the remaining 25% CYC ownership interest on May 26, 2023, the
Company recognized an embedded derivative relating to shares issued to exchangeable shareholders. During Q4
2025, the Company recognized an unrealized gain of $7.5 million relating to the embedded derivative (Q4 2024 -
unrealized loss of $0.5 million). See Note 12 of the Fiscal 2025 audited consolidated financial statements for further
details.
Income tax expense is recognized based on management’s best estimate of the weighted average annual income
tax rate expected for the full fiscal year. To the extent that forecasts differ from actual results, adjustments are
recognized in subsequent periods. The statutory income tax rate for Q4 2025 and Q4 2024 was 26.8% and 26.7%,
respectively.
Income tax expense was $35.5 million, compared to $12.9 million in Q4 2024 and the effective tax rates for Q4
2025 and Q4 2024 were 26.3% and 34.8%, respectively. The effective tax rates are driven largely by the
proportionate amount of non-deductible stock-based compensation expense on equity-settled plans relative to net
income before income taxes and in Q4 2025 the non-taxable fair value adjustments related to CYC acquisition.
Net income was $99.6 million, an increase of 311.6% compared to $24.2 million in Q4 2024. Net income per
diluted share was $0.84 per share, an increase of 300.0% compared to $0.21 per share in Q4 2024. The increase
in net income and net income per diluted share were primarily attributable to the factors discussed above.
Adjusted EBITDA1 was $160.9 million, or 18.0% of net revenue1, an increase of 121.8% compared to $72.5
million, or 10.6% of net revenue in Q4 2024. The increase in Adjusted EBITDA and Adjusted EBITDA as a
percentage of net revenue was attributable to the factors discussed above.
Adjusted Net Income1 was $98.0 million, an increase of 156.5% compared to $38.2 million in Q4 2024. Adjusted
Net Income per Diluted Share1 was $0.83 per share, an increase of 144.1% compared to $0.34 per share in Q4
2024. The increase in Adjusted Net Income and Adjusted Net Income per Diluted Share was primarily attributable to
the factors discussed above.
Cash and cash equivalents at the end of Q4 2025 totaled $285.6 million compared to $163.3 million at the end of
Q4 2024. See "Analysis of Cash Flows for the Fourth Quarter Fiscal 2025" and "Analysis of Cash Flows for Fiscal
2025" for further details.
Fiscal 2025 Annual Report | 37
Inventory at the end of Q4 2025 was $379.3 million, an increase of 11.5% compared to $340.1 million at the end of
Q4 2024.
Capital cash expenditures (net of proceeds from lease incentives)1 were $66.3 million in Q4 2025, compared
to $41.7 million in Q4 2024. The increase in capital cash expenditures is primarily due to capital investments in new
and repositioned boutiques (including flagship boutiques) and the Company's new distribution centre in British
Columbia.
Analysis of Results for Fiscal 2025
Consolidated Statements of Operations
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025
Fiscal 2024
% of net
revenue
% of net
revenue
Net revenue
$
2,738,112
100.0 % $
2,332,350
100.0 %
Cost of goods sold
1,557,493
56.9 %
1,433,369
61.5 %
Gross profit
1,180,619
43.1 %
898,981
38.5 %
Selling, general and administrative
837,456
30.6 %
708,783
30.4 %
Stock-based compensation expense
48,373
1.8 %
31,784
1.4 %
Income from operations
294,790
10.8 %
158,414
6.8 %
Finance expense
48,800
1.8 %
49,091
2.1 %
Other income
(44,463)
(1.6) %
(5,287)
(0.2) %
Income before income taxes
290,453
10.6 %
114,610
4.9 %
Income tax expense
82,663
3.0 %
35,830
1.5 %
Net income
$
207,790
7.6 % $
78,780
3.4 %
Net income per diluted share
$
1.78
$
0.69
Adjusted EBITDA1
$
406,344
14.8 % $
217,056
9.3 %
Adjusted Net Income1
$
230,549
8.4 % $
105,557
4.5 %
Adjusted Net Income per Diluted Share1
$
1.98
$
0.92
Net revenue increased 17.4% to $2.74 billion, compared to $2.33 billion in Fiscal 2024, or increased 15.4% on a
constant currency1 basis. Excluding net revenue of $32.5 million from the 53rd week of Fiscal 2024, net revenue
increased 19.1% in Fiscal 2025. Comparable sales2 grew 11.0%, fueled by positive client response to the
Company's products, the Company's optimized inventory position and investments in digital and brand marketing.
Results continue to be driven by performance in the United States, where net revenue increased 29.0% to $1.58
billion, compared to $1.23 billion in Fiscal 2024. Net revenue in Canada increased 4.6% to $1.16 billion, compared
to $1.11 billion in Fiscal 2024. Excluding net revenue from the 53rd week of Fiscal 2024, net revenue in the United
States increased 30.9% and net revenue in Canada increased 5.9%.
–
Retail net revenue increased 15.5% to $1.79 billion, compared to $1.55 billion in Fiscal 2024. Excluding net
revenue from the 53rd week of Fiscal 2024, retail net revenue increased 17.2%. The increase in net revenue
was primarily driven by strong performance of the Company's new and repositioned boutiques, as well as
positive comparable sales growth in its existing boutiques.
–
eCommerce net revenue increased 21.1% to $951.0 million, compared to $785.3 million in Fiscal 2024.
Excluding net revenue from the 53rd week of Fiscal 2024, eCommerce net revenue increased 22.7%. The
increase was primarily driven by inventory optimization and traffic growth in the United States, fueled by the
Company's investments in digital marketing.
38 |
The following table provides net revenue by channel and geographic location for the periods indicated.
(in thousands of Canadian dollars)
Fiscal 2025
Fiscal 2024
Retail net revenue
$
1,787,084
$
1,547,046
eCommerce net revenue
951,028
785,304
Net revenue
$
2,738,112
$
2,332,350
Fiscal 2025
Fiscal 2024
United States net revenue
$
1,581,821
$
1,226,476
Canada net revenue
1,156,291
1,105,874
Net revenue
$
2,738,112
$
2,332,350
Gross profit increased 31.3% to $1.18 billion, compared to $899.0 million in Fiscal 2024. Gross profit margin1 was
43.1%, compared to 38.5% in Fiscal 2024. The 460 bps increase in gross profit margin was primarily driven by IMU
improvements, lower markdowns, lower warehousing costs and savings from the Company's smart spending
initiative, partially offset by higher freight costs.
SG&A expenses increased 18.2% to $837.5 million, compared to $708.8 million in Fiscal 2024. SG&A expenses
were 30.6% of net revenue, compared to 30.4% in Fiscal 2024. The increase in SG&A expenses was primarily
driven by variable selling costs associated with the increase in net revenue, investments in digital marketing to
protect and propel the Aritzia brand and investments in infrastructure projects and technology initiatives to support
the Company's growth.
Depreciation and amortization increased $18.6 million to $186.7 million, compared to $168.0 million in Fiscal
2024 primarily due to the increase in leased assets, new and repositioned boutique openings, and the opening of
our Vaughan, Ontario distribution centre part-way through Q2 2024, partially offset by capitalization of depreciation
on right-of-use assets related to certain boutiques and distribution centres under construction. The following table
provides the depreciation and amortization expense for the periods indicated.
(in thousands of Canadian dollars)
Fiscal 2025
Fiscal 2024
Depreciation on right-of-use assets
$
102,238
$
103,524
Depreciation and amortization
84,415
64,515
Total depreciation and amortization
$
186,653
$
168,039
Stock-based compensation expense increased $16.6 million to $48.4 million, compared to $31.8 million in Fiscal
2024. The increase in stock-based compensation expense was primarily due to the effect of share price changes
(i.e., mark-to-market) on our cash-settled restricted and deferred share units. The following table provides details of
the stock-based compensation expense for the periods indicated.
(in thousands of Canadian dollars)
Fiscal 2025
Fiscal 2024
Equity-settled plans
Stock options
$
19,961 $
19,115
Restricted Share Units
10,242
6,134
Performance Share Units
3,768
5,090
Cash-settled plans
Restricted Share Units
4,943
917
Deferred Share Units
9,459
528
Stock-based compensation expense
$
48,373 $
31,784
The Company uses equity derivative contracts to offset our cash flow variability of the expected payment
associated with our cash-settled deferred and restricted share units. Unrealized gains and losses related to these
equity derivative contracts are recorded in other income.
Fiscal 2025 Annual Report | 39
Finance expense decreased $0.3 million to $48.8 million, compared to $49.1 million in Fiscal 2024. The decrease
in finance expense was primarily due to a decrease in interest expense on the revolving credit facility partially offset
by higher interest expense on lease liabilities.
Other income was $(44.5) million, compared to $(5.3) million in Fiscal 2024. The following table provides details of
other income for the periods indicated.
(in thousands of Canadian dollars)
Fiscal 2025
Fiscal 2024
Realized foreign exchange loss (gain)
$
(13,374) $
22
Unrealized foreign exchange loss (gain)
(3,012)
(19)
Fair value adjustments related to CYC acquisition
(7,500)
(14,500)
Unrealized (gain) loss on equity derivative contracts
(16,929)
5,189
Realized (gain) loss on equity derivative contracts
—
(1,048)
CYC integration costs
1,732
3,700
Impairment of right-of-use assets, lease exit costs and other
559
5,862
Secondary offering transaction costs
550
—
Interest and other income
(6,489)
(4,493)
Other income
$
(44,463) $
(5,287)
As a result of the Company's early acquisition of the remaining 25% CYC ownership interest on May 26, 2023, the
Company revalued the non-controlling interest in exchangeable shares liability to $20.5 million as at May 26, 2023
based on a Monte Carlo simulation which resulted in a $15.0 million gain recorded in other income during Fiscal
2024. As part of the early acquisition, the Company recognized an embedded derivative relating to shares issued to
the exchangeable shareholders. During Fiscal 2025, the Company recognized an unrealized gain of $7.5 million
relating to the embedded derivative (Fiscal 2024 - unrealized loss of $0.5 million). See note 12 of the Fiscal 2025
audited consolidated financial statements for further details.
Income tax expense is recognized based on management’s best estimate of the weighted average annual income
tax rate expected for the full fiscal year. To the extent that forecasts differ from actual results, adjustments are
recognized in subsequent periods. The statutory income tax rates for Fiscal 2025 and Fiscal 2024 were 26.8% and
26.7%, respectively.
Income tax expense was $82.7 million, compared to $35.8 million in Fiscal 2024 and the effective tax rates for
Fiscal 2025 and Fiscal 2024 were 28.5% and 31.3%, respectively. The effective tax rates are driven largely by the
proportionate amount of non-deductible stock-based compensation expense on equity-settled plans relative to net
income before income taxes and the non-taxable fair value adjustments related to the CYC acquisition.
Net income was $207.8 million, an increase of 163.8% compared to $78.8 million in Fiscal 2024. Net income per
diluted share was $1.78, an increase of 158.0%, compared to $0.69 in Fiscal 2024. The increase in net income
and net income per diluted share was primarily attributable to the factors discussed above.
Adjusted EBITDA1 was $406.3 million, or 14.8% of net revenue1, an increase of 87.2%, compared to $217.1
million, or 9.3% of net revenue in Fiscal 2024. The increase in Adjusted EBITDA and Adjusted EBITDA as a
percentage of net revenue was primarily attributable to the factors discussed above.
Adjusted Net Income1 was $230.5 million, an increase of 118.4%, compared to $105.6 million in Fiscal 2024.
Adjusted Net Income per Diluted Share1 was $1.98, an increase of 115.2%, compared to $0.92 in Fiscal 2024.
The increase in Adjusted Net Income and Adjusted Net Income per Diluted Share was primarily attributable to the
factors discussed above.
Capital cash expenditures (net of proceeds from lease incentives)1 were $253.5 million in Fiscal 2025,
compared to $155.3 million in Fiscal 2024. The increase in capital cash expenditures is primarily due to capital
investments in new and repositioned boutiques, including three flagship boutiques that opened in Fiscal 2025.
40 |
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal uses of funds are for operating expenses, capital expenditures and debt service requirements. We
believe that cash generated from operations, together with amounts available under our revolving credit facility and
revolving line of credit, are expected to be sufficient to meet our future operating expenses, capital expenditures,
debt service requirements and return to shareholders (share buybacks). Our ability to fund future operating
expenses, capital expenditures, debt service requirements and return to shareholders (share buybacks) will depend
on, among other things, our future operating performance, which will be affected by general economic, financial and
other factors, including factors beyond our control. See “Summary of Factors Affecting Performance”, “Recent
Events” and “Risk Factors” of this MD&A for additional information. We review investment opportunities in the
normal course of our business and may make select investments to implement our business strategy when suitable
opportunities arise. Historically, the funding for any such investments has come from cash flows from operating
activities and/or our revolving credit facility and revolving line of credit.
Revolving Credit Facility and Revolving Line of Credit
As at March 2, 2025, we have a $300.0 million revolving credit facility and a US$10.0 million revolving line of credit
issued by a member of the lending syndicate in connection with the revolving credit facility. The revolving credit
facility bears interest at Canadian Overnight Repo Rate Average ("CORRA"), Secured Overnight Financing Rate
("SOFR") or Canadian prime or base rate, plus a marginal rate between 0.75% and 2.75% (March 3, 2024 – 0.75%
and 2.75%). The revolving line of credit bears interest at the daily SOFR, plus a marginal rate between 1.75% and
2.75% (March 3, 2024 – 1.75% and 2.75%). The revolving credit facility matures on October 27, 2026. No amounts
were drawn on the revolving credit facility nor the revolving line of credit as at March 2, 2025.
The revolving credit facility agreement (including the revolving line of credit by extension) contains restrictive
covenants customary for credit facilities of this nature, including restrictions on us and each credit facility guarantor,
subject to certain exceptions, to incur indebtedness, grant liens, merge, amalgamate or consolidate with other
companies, transfer, lease or otherwise dispose of all or substantially all of its assets, liquidate or dissolve, engage
in any material business other than the fashion retail business, make investments, acquisitions, loans, advances or
guarantees, make any restricted payments, enter into transactions with affiliates, repay indebtedness, enter into
restrictive agreements, enter into sale-leaseback transactions, ensure pension plan compliance, sell or discount
receivables, enter into agreements with unconditional purchase obligations, issue shares, create or acquire a
subsidiary or make any hostile acquisitions.
In addition, as at March 2, 2025, we also have letters of credit facilities of CAD$30.0 million and US$25.0 million
(March 3, 2024 - CAD$50.0 million and US$40.0 million), secured pari passu with the revolving credit facility and
the revolving line of credit. The interest rate for the letters of credit is between 1.17% and 2.75%.
See “Off-Balance Sheet Arrangements” for details regarding the letters of credit issued.
Cash Flows
The following table presents cash flows for the periods indicated.
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Net cash generated from operating activities
$
158,476 $
99,688 $
455,637 $
358,823
Net cash used in financing activities
(3,642)
(29,769)
(60,373)
(98,670)
Cash used in investing activities
(79,532)
(47,236)
(277,116)
(182,964)
Effect of exchange rate changes on cash and cash
equivalents
3,326
(210)
4,210
(422)
Change in cash and cash equivalents
$
78,628 $
22,473 $
122,358 $
76,767
Fiscal 2025 Annual Report | 41
Analysis of Cash Flows for the Fourth Quarter Fiscal 2025
Net Cash Generated From Operating Activities
For Q4 2025, net cash generated from operating activities totaled $158.5 million, compared to $99.7 million in Q4
2024. This change was primarily attributable to an increase in income from operations and a decrease in income
taxes paid partially offset by an increase in the use of working capital primarily due to the timing of inventory
purchases and payments, and an increase in interest paid.
Net Cash Used In Financing Activities
For Q4 2025, net cash used in financing activities totaled $3.6 million, compared to $29.8 million in Q4 2024. The
decrease is mainly due to a reduction in repayment of principal on lease liabilities, a reduction in the repurchase of
subordinate voting shares, and an increase in the proceeds received from options exercised, partially offset by a
reduction in proceeds received from lease incentives.
Cash Used In Investing Activities
For Q4 2025, cash used in investing activities totaled $79.5 million, compared to $47.2 million in Q4 2024. Investing
activities in Q4 2025 primarily relate to capital investments in new and repositioned boutiques (including flagship
boutiques), the Company's new distribution centre and technology infrastructure. In Q4 2024, investing activities
primarily relate to capital investments in new and repositioned boutiques, support office expansion and technology
infrastructure.
Analysis of Cash Flows for Fiscal 2025
Cash Flows Generated From Operating Activities
For Fiscal 2025, net cash generated from operating activities totaled $455.6 million, compared to $358.8 million in
Fiscal 2024. This change was primarily attributable to the increase in income from operations, timing of payments
and increase in deferred revenue, partially offset by the timing of inventory purchases and an increase in interest
paid on lease liabilities.
Cash Flows Used In Financing Activities
For Fiscal 2025, net cash used in financing activities totaled $60.4 million, compared to $98.7 million in Fiscal 2024.
The decrease is mainly due to a reduction in the repurchase of subordinate voting shares and a decrease in
proceeds from lease incentives, partially offset by an increase in proceeds from options exercised.
Cash Flows Used In Investing Activities
For Fiscal 2025, cash used in investing activities totaled $277.1 million, compared to $183.0 million in Fiscal 2024.
Investing activities in Fiscal 2025 primarily relate to capital investments in new and repositioned boutiques
(including flagship boutiques) and the Company's new distribution centre. Investing activities in Fiscal 2024
primarily relate to new and repositioned boutiques, support office expansion, technology infrastructure and
distribution center projects as well as a $6.3 million contingent consideration payout to CYC's shareholders.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table summarizes our significant undiscounted maturities of our contractual obligations and
commitments as at March 2, 2025.
(in thousands of Canadian dollars)
Less than 1
year
1 to 5 years
More than 5
years
Total
Accounts payable and accrued liabilities
$ 293,412
$
—
$
—
$
293,412
Lease liabilities
158,367
549,192
475,752
1,183,311
Minimum lease commitments with future
commencement dates
5,347
61,586
119,249
186,182
Total contractual obligations and commitments
$ 457,126
$
610,778
$ 595,001
$ 1,662,905
42 |
As at March 2, 2025, the Company also had approximately $97.1 million remaining on issued purchase orders for
expected future capital expenditures. Capital expenditures are generally funded from the Company's operating
cash flows and, if needed, from the available revolving credit facility.
OFF-BALANCE SHEET ARRANGEMENTS
Our third party manufacturers purchase raw materials on our behalf to be used for future production. As at March 2,
2025, we had purchase obligations of $$157.2 million, which represent commitments for fabric expected to be used
during upcoming seasons, made in the normal course of business.
We enter into trade letters of credit to facilitate the international purchase of inventory. We also enter into standby
letters of credit to secure certain of our obligations, including leases and duties related to import purchases. As at
March 2, 2025, letters of credit totaling $8.3 million have been issued.
FINANCIAL INSTRUMENTS
Financial instruments related to the acquisition of CYC
In connection with the acquisition of CYC in June, 2021 we entered into two financial instruments that were
revalued on a recurring basis in the consolidated financial statements: contingent consideration and non-controlling
interest in exchangeable shares liability. Changes in the fair value of these two financial instruments were recorded
in net income. On May 26, 2023, the Company and the selling shareholders agreed to the Company’s early
acquisition of the remaining 25% interest in CYC held through CYC's exchangeable shares which resulted in the
extinguishment of the existing non-controlling interest in exchangeable shares liability and a net derivative asset of
$1.5 million (recorded in other non-current assets). As at March 2, 2025, the value of the net derivative asset was
$8.5 million (March 3, 2024 - $1.0 million).
The details of, and significant assumptions made in determining the fair value of our financial instruments, including
those related to the acquisition of CYC, are disclosed in note 12 to our Fiscal 2025 audited annual consolidated
financial statements.
Equity derivative contracts
We have equity derivative contracts to hedge the share price exposure on our cash-settled deferred and restricted
share units. These contracts are not designated as hedging instruments for accounting purposes. Changes in the
fair value of equity derivative contracts are recorded in other expense (income). The following table provides details
of realized and unrealized losses (gains) for the periods indicated.
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Unrealized (gain) loss for the change in fair value of
equity derivative contracts
$
(10,800) $
(6,434) $
(16,929) $
5,189
Realized (gain) loss arising from the settlement of
equity derivative contracts
—
(1,048)
—
(1,048)
As at March 2, 2025, the equity derivative contracts had a positive fair value of $21.2 million (March 3, 2024 - $4.3
million) which are recorded in prepaid expenses and other current assets in the consolidated statements of financial
position. The increase in the fair value of the equity derivative contracts was mainly due to the increase in the
Company's share price in Q4 2025.
RELATED PARTY TRANSACTIONS
During Fiscal 2025, we made payments of $10.1 million (Fiscal 2024 - $9.9 million) for lease of premises and
management services and $1.5 million (Fiscal 2024 - $0.7 million) for the use of an asset and other operational
items to companies, that are owned wholly or partially by directors and/or director and officer of the Company. As at
March 2, 2025, $0.6 million was included in accounts payable and accrued liabilities (March 3, 2024 - $0.5 million)
and $0.8 million was included in prepaid expenses and other current assets for the lease of premises or for other
operational items (March 3, 2024 - $0.8 million). As at March 2, 2025, the outstanding balance of lease liabilities
owed to these companies was $40.5 million (March 3, 2024 - $45.6 million). These transactions were measured at
the amount of consideration established at market terms.
Fiscal 2025 Annual Report | 43
TRANSACTIONS WITH KEY MANAGEMENT
Key management includes our directors and executive team. Compensation awarded to key management includes:
(in thousands of Canadian dollars)
Q4 2025
Q4 2024
Fiscal 2025
Fiscal 2024
Salaries, directors’ fees and short-term benefits
$
1,849 $
1,374
$
6,668 $
5,149
Stock-based compensation
7,591
5,920
18,369
10,055
Key management compensation
$
9,440 $
7,294
$
25,037 $
15,204
The increase in stock-based compensation for key management for Q4 2025 and Fiscal 2025 compared to Q4
2024 and Fiscal 2024 was primarily due to the increase in the fair value of the deferred share unit liability. In
addition to the compensation presented above, certain key management received a retroactive adjustment to
compensation relating to Fiscal 2023, resulting in an additional expense of $0.8 million during Fiscal 2024.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements in accordance with IFRS Accounting Standards requires
management to make judgments, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Estimates and assumptions are continuously
evaluated and are based on management’s best judgments and experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods affected. Actual
results may differ from these estimates.
The following discusses the most significant accounting judgments and estimates made by management in
preparation of the consolidated financial statements:
Return Allowances
Recognizing provisions for sales return allowances requires the use of estimates of the return rate of merchandise
based on historical return patterns.
Valuation of Finished Goods Inventory
Inventory is stated at the lower of cost and net realizable value. We periodically review our inventories and make
provisions which requires the use of estimates related to product quality, damages, inventory shrinkage for lost or
stolen items, future demand, selling prices, and market conditions.
Impairment of Goodwill and Indefinite Life Intangible Assets
Goodwill and indefinite life intangible asset impairment testing requires the use of estimates in the impairment
testing model. On an annual basis, we test whether goodwill and indefinite life intangible assets are impaired. The
recoverable value is determined using discounted future cash flow models, which incorporate estimates regarding
future events, specifically future cash flows, growth rates and discount rates. We use judgment in determining the
grouping of assets to identify our cash generating units ("CGUs") for purposes of testing for impairment. In testing
for impairment, goodwill acquired in a business combination is allocated to the group of CGUs that are expected to
benefit from the synergies of the business combination, which involves judgment.
Leases
We estimate the incremental borrowing rate used for calculating lease liabilities and right-of-use assets. We
estimate the incremental borrowing rate of each leased asset as the rate of interest that we would have to pay to
borrow, over a similar term with a similar security, the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment.
We exercise judgment in determining the appropriate lease term at the lease commencement date. We exercise
judgment on whether we will exercise available renewal or termination options, and thus include such options in the
lease terms. We consider all facts and circumstances that create an economic incentive to exercise a renewal or
termination option.
44 |
ACCOUNTING POLICY DEVELOPMENTS
International Accounting Standards ("IAS") 1 - Presentation of Financial Statements
The International Accounting Standards Board ("IASB") issued amendments to IAS 1 - Presentation of Financial
Statements to clarify the criteria for classifying liabilities with covenants as current or non-current. The amendments
also require companies to provide additional note disclosure on non-current liabilities with covenants. The
amendments also indicate the classification of a liability between current and noncurrent includes the determination
of whether a substantive right to defer settlement for at least 12 months exists and is unaffected by the likelihood
that the entity will exercise its right to defer settlement of the liability for at least 12 months after the reporting
period. The amendments are effective for annual periods beginning on or after January 1, 2024 and the Company
determined there was no material impact to the consolidated financial statements. As required by IAS 1, the
Company revised its March 3, 2024 balance sheet to report the previously reported deferred shares units liability of
$8.2 million from noncurrent to current for comparative purposes.
IFRS 18 - Presentation and Disclosure in the Financial Statements
The IASB issued IFRS 18 - Presentation and Disclosure in the Financial Statements, in April 2024 which is effective
for annual reporting periods beginning on or after January 1, 2027. The new standard will establish a revised
structure for the consolidated statements of comprehensive income and improve comparability across entities and
reporting periods. The standard will be applied retroactively, with certain transition provisions. The Company is
currently assessing the impact of IFRS 18 on the consolidated financial statements.
IFRS 7 and IFRS 9 - Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9 - Financial Instruments and IFRS 7 - Financial Instruments:
Disclosures to clarify the date of recognition and derecognition of some financial assets and liabilities, with a new
exception for some financial liabilities settled through an electronic cash transfer system, clarify and add further
guidance for assessing whether a financial asset meets the solely payments of principal and interest ("SPPI")
criterion, add new disclosures for certain instruments with contractual terms that can change cash flows (such as
instruments with features linked to the achievement of environmental and social targets), and update the disclosure
of equity instruments designated at fair value through other comprehensive income ("FVOCI"). These amendments
are effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently
assessing the impact of these amendments on the consolidated financial statements.
Other
A number of other new accounting standards, amendments to standards and interpretations of standards have
been issued by the IASB but are not yet effective for the year ended March 2, 2025. The Company does not expect
the implementation of these accounting pronouncements to have a significant impact to its accounting policies and
consolidated financial statements.
RISK FACTORS
For a detailed description of risk factors associated with the Company, refer to the “Risk Factors” section of the
Company’s AIF, which is available on SEDAR+ at www.sedarplus.com.
In addition, we are exposed to a variety of financial risks in the normal course of operations including geopolitical
and macroeconomic, foreign exchange, interest rate, credit, liquidity and equity price risk, as summarized below.
Our overall risk management program and business practices seek to minimize any potential adverse effects on our
consolidated financial performance.
Risk management is carried out under practices approved by our Audit Committee. This includes reviewing and
making recommendations to the Board of Directors on the adequacy of our risk management policies and
procedures with regard to identifying the Company’s principal risks and implementing appropriate systems and
controls to manage these risks. Risk management covers many areas of risk including, but not limited to,
geopolitical and macroeconomic conditions, foreign exchange risk, interest rate risk, credit risk, liquidity risk and
equity price risk.
Geopolitical and Macroeconomic Risk
We source the majority of our raw materials and merchandise from various suppliers in Asia, Europe and Central
America and generate over half of our net revenues from the United States and so are dependent on international
Fiscal 2025 Annual Report | 45
trade relations, agreements and regulations. Recent executive orders have been issued by the U.S. President,
directing the U.S. to impose new or increased tariffs on certain of its trading partners, including Canada, Mexico
and China, and on other countries in which our products are produced or sold. It remains unclear the extent to
which additional quotas, duties, tariffs, sanctions and/or other trade restrictions or other similar or retaliatory
measures may be imposed by Canada, the United States or other countries, whether and if any changes to the
currently announced tariffs will be applied, how long they may be in effect, the extent to which further retaliatory
measures will be imposed, the nature of the goods that will be subject to such tariffs and whether other factors will
support a pass through of all or a part of the tariffs to the market. The disruptions caused by the threat of, the
potential or actual imposition of, and increases in the rate or scope of, such quotas, duties, tariffs, sanctions and
other trade restrictions or other similar measures (and any retaliatory measures) could adversely impact the
profitability of our business, financial condition and results of operations.
General economic conditions in Canada, the United States and other parts of the world, including lower levels of
consumer spending, economic volatility, and international trade policies and tariffs, can affect consumer confidence
and consumer purchases of discretionary items, including fashion apparel and related products such as ours.
Therefore, demand for our products may be impacted by general macroeconomic conditions, which could worsen
as a result of the imposition of new duties, tariffs and other trade restrictions or other similar measures. Our
sensitivity to economic cycles and any related fluctuation in consumer demand may adversely affect our results of
operations and financial condition.
Foreign Exchange Risk
We source the majority of our raw materials and merchandise from various suppliers in Asia, Europe and Central
America with the vast majority of purchases denominated in U.S. dollars. This risk is partially mitigated with over
half of our net revenues generated in U.S. dollars. Our foreign exchange risk is primarily with respect to the U.S.
dollar but we have limited exposure to other currencies as well. We may use foreign currency forward contracts to
mitigate risks associated with forecasted U.S. dollar merchandise purchases sold in Canada. As at March 2, 2025,
we have no foreign currency forward contracts outstanding and none were utilized during Fiscal 2025.
Interest Rate Risk
We have a revolving credit facility and related revolving line of credit which provides available borrowings in an
amount up to $300.0 million and US$10 million, respectively. Because the revolving credit facility and revolving line
of credit bear interest at variable rates, we are exposed to market risks relating to changes in interest rates on
outstanding balances. As at March 2, 2025, no amounts were drawn under the revolving credit facility and the
revolving line of credit.
Credit Risk
Credit risk refers to the possibility of an unexpected event if a counterparty to a financial instrument fails to meet
their contractual obligations. Financial instruments that potentially subject us to credit risk consist of cash and cash
equivalents, accounts receivable, and derivative contracts used to hedge market risks. We are exposed to minimal
credit risk. We deposit our cash and cash equivalents with major financial institutions that have been assigned high
credit ratings by internationally recognized credit rating agencies. We are exposed to credit risk on receivables from
our landlords in relation to tenant improvement allowances. To reduce this risk, we enter into leases with landlords
with established credit history, and for certain leases, we may offset rent payments until accounts receivable are
fully satisfied. We only enter into derivative contracts with major financial institutions, as described above and as
needed, for the purchase of foreign currency forward contracts.
Liquidity Risk
Liquidity risk is the risk that we cannot meet a demand for cash or fund our obligations as they come due. We
manage liquidity risk by continuously monitoring actual and projected cash flows, taking into account the
seasonality of our revenue, income, working capital and capital expenditure needs. The revolving credit facility and
related revolving line of credit are used to maintain liquidity. As at March 2, 2025, no amounts were drawn under the
revolving credit facility and revolving line of credit.
Equity Price Risk
We are exposed to risk arising from the cash settlement of our deferred and restricted share units, as an
appreciating subordinate voting share price increases the potential cash outflow. We record a liability for the
46 |
potential future settlement of our deferred and restricted share units by reference to the fair value of the liability. We
may use equity derivative contracts to offset our cash flow variability of the expected payment associated with our
deferred and restricted share units. We only enter into equity derivative contracts with major financial institutions. As
at March 2, 2025, the fair value of the equity derivative contract was in an asset position of $21.2 million.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Management is responsible for designing and evaluating the effectiveness of disclosure controls and procedures for
both financial and non-financial information regarding the Company. These controls ensure timely recording,
processing and reporting of information, required to be disclosed in filings, to senior management, including the
Chief Executive Officer and the Chief Financial Officer.
As required by CSA National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings
(“NI 52-109”), an evaluation of the adequacy of the design and effective operation of the Company’s disclosure
controls and procedures was conducted under the supervision of management, including the CEO and CFO, and
they concluded that, as at March 2, 2025 the design and operation of its disclosure controls and procedures was
effective in providing reasonable assurance that material information regarding this MD&A, the consolidated
financial statements and other disclosures was made known to them on a timely basis.
Management is also responsible for establishing and maintaining adequate internal controls over financial reporting
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
reports for external purposes in accordance with IFRS Accounting Standards. The Company’s internal controls over
financial reporting include, but are not limited to, detailed policies and procedures relating to financial accounting
and reporting, and controls over systems that process and summarize transactions. The Company’s procedures for
financial reporting also include the active involvement of qualified financial professionals, senior management and
its Audit Committee.
As also required by NI 52-109, management, including the CEO and CFO, evaluated the adequacy of the design
and the effective operation of the Company’s internal control over financial reporting as defined in NI 52-109, as at
March 2, 2025. In making this assessment, management, including the CEO and CFO, used the framework set
forth in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Based on that evaluation, the CEO and the CFO have concluded that the design and
operation of the Company’s internal control over financial reporting, as defined by NI 52-109, were effective as at
March 2, 2025.
In designing such controls, it should be recognized that due to inherent limitations, any control, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives and may
not prevent or detect misstatements. Additionally, management is required to use judgment in evaluating controls
and procedures. Therefore, even when determined to be designed effectively, disclosure controls and internal
control over financial reporting can provide only reasonable assurance with respect to financial statement
preparation and presentation.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during Q4 2025 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
CURRENT SHARE INFORMATION
As of April 30, 2025, an aggregate of 94,751,567 subordinate voting shares, 19,679,244 multiple voting shares and
no preferred shares are issued and outstanding. All of the issued and outstanding multiple voting shares are,
directly or indirectly, held or controlled by Brian Hill, our principal shareholder, Founder and Executive Chair. As of
April 30, 2025, an aggregate of 7,239,752 options, 550,644 performance share units and 1,065,714 restricted share
units to acquire subordinate voting shares are outstanding.
ADDITIONAL INFORMATION
Additional information relating to the Company, including the Company’s AIF, is available on SEDAR+ at
www.sedarplus.com. The Company’s subordinate voting shares are listed for trading on the TSX under the symbol
“ATZ”.
Fiscal 2025 Annual Report | 47
SUMMARY OF CONSOLIDATED QUARTERLY RESULTS AND CERTAIN PERFORMANCE MEASURES
The following table summarizes the results of our operations for the eight most recently completed quarters. This
unaudited quarterly information, other than Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per
Diluted Share, capital cash expenditures (net of proceeds from lease incentives), free cash flow and comparable
sales, has been prepared in accordance with IFRS Accounting Standards. Due to seasonality, the results of
operations for any quarter are not necessarily indicative of the results of operations for the fiscal year.
Consolidated Quarterly Results6
(interim periods unaudited, in thousands
of Canadian dollars, unless otherwise
noted)
Fiscal 2025
Fiscal 2024
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Financial Summary:
Net revenue
$
895,118
$
728,701
$
615,663
$
498,630
$
681,970
$
653,524
$ 534,191
$ 462,665
Cost of goods sold
515,014
395,216
368,177
279,086
420,723
382,587
347,345
282,714
Gross profit
380,104
333,485
247,486
219,544
261,247
270,937
186,846
179,951
SG&A
246,015
215,649
199,502
176,290
196,835
187,373
171,116
153,459
Income from operations
116,713
107,592
34,558
35,927
49,056
74,115
13,679
21,564
Net income (loss)
99,642
74,068
18,247
15,833
24,207
43,093
(5,990)
17,470
Net income (loss) per share
$
0.88
$
0.66
$
0.16
$
0.14
$
0.22
$
0.39
$
(0.05)
$
0.16
Net income (loss) per diluted share
$
0.84
$
0.63
$
0.16
$
0.14
$
0.21
$
0.38
$
(0.05)
$
0.15
Adjusted EBITDA7
$
160,872
$
136,428
$
55,167
$
53,877
$
72,545
$
91,763
$
21,160
$
31,588
Adjusted Net Income6
$
98,025
$
83,000
$
24,536
$
24,988
$
38,223
$
52,701
$
3,415
$
11,218
Adjusted Net Income6 per Diluted Share
$
0.83
$
0.71
$
0.21
$
0.22
$
0.34
$
0.47
$
0.03
$
0.10
Weighted average number of diluted shares
outstanding (in thousands)
118,395
116,836
116,035
114,745
114,096
113,332
114,295
114,793
Cash and cash equivalents
$
285,635
$
207,007
$
103,983
$
100,671
$
163,277
$
140,804
$
76,516
$
58,793
Capital cash expenditures (net of proceeds from
lease incentives)6
$
(66,315)
$
(81,948)
$
(49,670)
$
(55,557)
$
(41,681)
$
(41,368)
$ (45,703)
$ (26,504)
Free cash flow6
$
65,598
$
103,996
$
(5,727)
$
(68,269)
$
22,871
$
171,607
$ (75,047)
$ (19,929)
Percentage of Net Revenue:
Gross profit
42.5 %
45.8 %
40.2 %
44.0 %
38.3 %
41.5 %
35.0 %
38.9 %
SG&A
27.5 %
29.6 %
32.4 %
35.4 %
28.9 %
28.7 %
32.0 %
33.2 %
Net income (loss)
11.1 %
10.2 %
3.0 %
3.2 %
3.5 %
6.6 %
(1.1) %
3.8 %
Adjusted EBITDA6
18.0 %
18.7 %
9.0 %
10.8 %
10.6 %
14.0 %
4.0 %
6.8 %
Adjusted Net Income6
11.0 %
11.4 %
4.0 %
5.0 %
5.6 %
8.1 %
0.6 %
2.4 %
Other Metrics:
Net revenue growth
31.3 %
11.5 %
15.3 %
7.8 %
7.0 %
4.6 %
1.6 %
13.4 %
Comparable sales6 growth (decline)
26.0 %
6.6 %
6.5 %
2.0 %
(3.0) %
0.5 %
(4.3) %
4.1 %
Boutiques:4
Number of boutiques, beginning of period
127
122
119
119
117
116
115
114
New boutiques added
4
5
3
—
3
1
1
1
Repositioned to a flagship boutique
—
—
—
—
—
—
—
—
Boutique closure
(1)
—
—
—
(1)
—
—
—
Number of boutiques, end of period
130
127
122
119
119
117
116
115
Repositioned boutiques
1
1
—
1
1
1
1
—
6 For a discussion of the factors that have caused variations in our business over the last eight quarters, please refer to the "Results of Operations" sections in this
MD&A, our Q3 2025 MD&A dated January 9, 2025 for the 13-week period ended December 1, 2024, our Q2 2025 MD&A dated October 10, 2024 for the 13-week
period ended September 1, 2024, Q1 2025 MD&A dated July 11, 2024 for the 13-week period ended June 2, 2024, our Fiscal 2024 MD&A dated May 2, 2024 for the
14-week period ended March 3, 2024, our Q3 2024 MD&A dated January 10, 2024 for the 13-week period ended November 26, 2023, our Q2 2024 MD&A dated
September 28, 2023 for the 13-week period ended August 27, 2023, and our Q1 2024 MD&A dated July 11, 2023 for the 13-week period ended May 28, 2023, which
are available on SEDAR+.
7 See “How We Assess the Performance of Our Business” for definitions of Adjusted EBITDA and Adjusted Net Income which are non-IFRS measures, Adjusted Net
Income per Diluted Share, Adjusted EBITDA as a percentage of net revenue and Adjusted Net Income as a percentage of net revenue which are non-IFRS ratios,
capital cash expenditures (net of proceeds from lease incentives) and free cash flow which are capital management measures, and comparable sales which is a
supplementary financial measure. See also “Non-IFRS Measures and Retail Industry Metrics”.
48 |
Financial
Statements
Fiscal 2025 Annual Report | 49
PricewaterhouseCoopers LLP
PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T.: +1 604 806 7000, F.: +1 604 806 7806, Fax to mail: ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of Aritzia Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Aritzia Inc. and its subsidiaries (together, the Company) as at March 2, 2025 and
March 3, 2024, and its financial performance and its cash flows for the years then ended in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards
Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at March 2, 2025 and March 3, 2024;
the consolidated statements of operations for the years then ended;
the consolidated statements of comprehensive income for the years then ended;
the consolidated statements of changes in shareholders’ equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
50 |
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended March 2, 2025. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Inventory
Refer to note 2 – Material accounting policies,
note 4 – Judgments and estimates and note 5 –
Inventory to the consolidated financial statements.
As at March 2, 2025, the Company held inventory
of $379.3 million including finished goods in transit
of $64.5 million. Inventory is carried at the lower of
cost and net realizable value. Cost is determined
using weighted average costs. Cost of inventory
includes the cost of merchandise and all costs
incurred to deliver inventory to the Company’s
distribution centres.
We considered this a key audit matter due to the
magnitude of the inventory balance and the audit
effort involved in testing the inventory.
Our approach to addressing the matter included the
following procedures, among others:
Tested the operating effectiveness of relevant
controls relating to the accounting for inventory,
including the mathematical accuracy of the
weighted average cost method.
Tested a sample of inventory items to purchase
invoices.
Observed the inventory count process for a
sample of distribution centres and for a sample
of boutiques near year-end and performed
independent test counts.
Tested on a sample basis, the finished goods in
transit as at year-end by agreeing to third party
shipment documents, receipt of inventory to
distribution centres, and purchase invoices.
Tested on a sample basis, inventory received
post year-end to receiving documents to assess
whether inventory was recorded appropriately
as at year-end.
Tested how management determined net
realizable value, which included testing a
sample of inventory items to the most recent
retail prices of the inventory items.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information,
Fiscal 2025 Annual Report | 51
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
52 |
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Company as a basis for forming an opinion on
the consolidated financial statements. We are responsible for the direction, supervision and review of
the audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Fiscal 2025 Annual Report | 53
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Paulina Prokop.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
May 1, 2025
54 |
Note
March 2,
2025
March 3,
2024
Assets
Cash and cash equivalents
$
285,635 $
163,277
Accounts receivable
26,311
18,473
Income taxes recoverable
4,342
7,055
Inventory
5
379,316
340,145
Prepaid expenses and other current assets
12
61,239
37,270
Total current assets
$
756,843 $
566,220
Property and equipment
6
656,966
431,365
Intangible assets
7
104,221
84,975
Goodwill
7
198,846
198,846
Right-of-use assets
8
722,558
632,291
Other assets
12
11,564
5,164
Deferred tax assets
18
4,816
27,272
Total assets
$
2,455,814 $
1,946,133
Liabilities
Accounts payable and accrued liabilities
9, 12
$
293,412 $
221,030
Income taxes payable
12,983
1,606
Current portion of lease liabilities
8
107,755
107,322
Deferred revenue
111,158
81,669
Total current liabilities
$
525,308 $
411,627
Lease liabilities
8
811,468
698,564
Other non-current liabilities
10
3,829
5,256
Deferred tax liabilities
18
20,626
23,191
Total liabilities
$
1,361,231 $
1,138,638
Shareholders’ equity
Share capital
13
$
383,482 $
307,737
Contributed surplus
101,568
96,249
Retained earnings
609,695
407,337
Accumulated other comprehensive loss
(162)
(3,828)
Total shareholders’ equity
1,094,583
807,495
Total liabilities and shareholders’ equity
$
2,455,814 $
1,946,133
Commitments and contingencies
20
Approved on behalf of the Board of Directors
Brian Hill
Director
John Currie
Director
Aritzia Inc.
Consolidated Statements of Financial Position
As at March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Fiscal 2025 Annual Report | 55
Note
March 2,
2025
March 3,
2024
Net revenue
16, 19
$
2,738,112 $
2,332,350
Cost of goods sold
17
1,557,493
1,433,369
Gross profit
1,180,619
898,981
Selling, general and administrative
837,456
708,783
Stock-based compensation expense
14, 17
48,373
31,784
Income from operations
294,790
158,414
Finance expense
8, 11, 17
48,800
49,091
Other expense (income)
12, 17
(44,463)
(5,287)
Income before income taxes
290,453
114,610
Income tax expense
18
82,663
35,830
Net income
$
207,790 $
78,780
Net income per share
Basic
15
$
1.85 $
0.71
Diluted
15
$
1.78 $
0.69
Weighted average number of shares outstanding (thousands)
Basic
15
112,551
110,653
Diluted
15
116,731
114,194
Aritzia Inc.
Consolidated Statements of Operations
For the years ended March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, except number of shares and per share amounts)
The accompanying notes are an integral part of these consolidated financial statements.
56 |
March 2,
2025
March 3,
2024
Net income
$
207,790 $
78,780
Other comprehensive income
Items that are or may be reclassified subsequently to net income:
Foreign currency translation adjustment
3,666
(144)
Comprehensive income
$
211,456 $
78,636
Aritzia Inc.
Consolidated Statements of Comprehensive Income
For the years ended March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
Fiscal 2025 Annual Report | 57
Multiple
Subordinate
voting shares
voting shares
Shares
Amounts
Shares
Amounts
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
loss
Total
shareholders’
equity
Balance, February 26, 2023
20,437,349 $
14,774
90,005,261 $ 250,745 $
68,682 $
355,270 $
(3,684) $
685,787
Net Income
—
—
—
—
—
78,780
—
78,780
Options exercised (note 14)
—
—
1,388,360
30,139
(9,418)
—
—
20,721
Stock-based compensation expense on equity-
settled plans (note 14)
—
—
—
—
30,339
—
—
30,339
Shares repurchased for cancellation (note 13)
—
—
(1,089,641)
(3,275)
—
(26,713)
—
(29,988)
Shares issued to settle non-controlling interest in
exchangeable shares liability (note 12)
—
—
419,047
15,354
6,646
—
—
22,000
Foreign currency translation adjustment
—
—
—
—
—
—
(144)
(144)
Balance, March 3, 2024
20,437,349 $
14,774
90,723,027 $ 292,963 $
96,249 $
407,337 $
(3,828) $
807,495
Net Income
—
—
—
—
—
207,790
—
207,790
Shares issued for equity settled plans (note 14)
—
—
3,355,720
76,219
(30,781)
—
—
45,438
Stock-based compensation expense on equity-
settled plans (note 14)
—
—
—
—
33,972
—
—
33,972
Shares exchanged at secondary offering (note
13)
(758,105)
(548)
758,105
548
—
—
—
—
Shares repurchased for cancellation (note 13)
—
—
(134,200)
(474)
—
(5,432)
—
(5,906)
Tax impact related to stock-based compensation
—
—
—
—
2,128
—
—
2,128
Foreign currency translation adjustment
—
—
—
—
—
—
3,666
3,666
Balance, March 2, 2025
19,679,244 $
14,226
94,702,652 $ 369,256 $
101,568 $
609,695 $
(162) $
1,094,583
Aritzia Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the years ended March 2,2025 and March 3, 2024
(in thousands of Canadian dollars, except number of shares)
The accompanying notes are an integral part of these consolidated financial statements.
58 |
Note
March 2,
2025
March 3,
2024
Operating activities
Net income for the period
$
207,790 $
78,780
Adjustments for:
Depreciation and amortization
84,415
64,515
Depreciation on right-of-use assets
8
102,238
103,524
Impairment of right-of-use assets
8, 17
—
5,043
Finance expense
17
48,800
49,091
Stock-based compensation expense
14, 17
48,373
31,784
Unrealized (gain) loss on equity derivative contracts
12, 17
(16,929)
5,189
Income tax expense
18
82,663
35,830
Fair value adjustments related to acquisition of CYC Design
Corporation ("CYC")
12, 17
(7,500)
(14,500)
Other
649
(1,090)
Cash generated before non-cash working capital balances and interest
and income taxes
550,499
358,166
Net change in non-cash working capital
22
4,173
97,002
Cash generated before interest and income taxes
554,672
455,168
Interest paid
(3,883)
(6,132)
Interest paid on lease liabilities
8
(49,949)
(42,679)
Income taxes paid
(45,203)
(47,534)
Net cash generated from (used in) operating activities
455,637
358,823
Financing activities
Payment of financing fees
11
—
(611)
Repayment of principal on lease liabilities
8
(110,432)
(110,197)
Proceeds from lease incentives
10,527
21,405
Proceeds from options exercised
14
45,438
20,721
Shares repurchased for cancellation
13
(5,906)
(29,988)
Net cash generated from (used in) financing activities
(60,373)
(98,670)
Investing activities
Purchase of property and equipment
6
(256,031)
(173,687)
Purchase of intangible assets
7
(21,085)
(2,974)
Contingent consideration payout, net relating to the acquisition of CYC
12
—
(6,303)
Cash generated from (used in) investing activities
(277,116)
(182,964)
Effect of exchange rate changes on cash and cash equivalents
4,210
(422)
Change in cash and cash equivalents
122,358
76,767
Cash and cash equivalents – Beginning of year
163,277
86,510
Cash and cash equivalents – End of year
$
285,635 $
163,277
Supplemental cash flow information
22
Aritzia Inc.
Consolidated Statements of Cash Flows
For the years ended March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars)
The accompanying notes are an integral part of these consolidated financial statements.
Fiscal 2025 Annual Report | 59
1
Nature of operations and basis of presentation
Nature of operations
Aritzia Inc. and its subsidiaries (collectively referred to as the “Company”) are a vertically integrated design
house. The Company is a creator and purveyor of Everyday Luxury™, home to an extensive portfolio of
exclusive brands for every function and individual aesthetic. The Company provides immersive and highly
personal shopping experiences at aritzia.com and in 130 boutiques throughout Canada and the United States.
On June 25, 2021, the Company acquired 75% of the common shares in CYC Design Corporation ("CYC") and
on May 26, 2023 the Company acquired the remaining 25% interest in CYC (note 12). The results of
operations, financial position, and cash flows of CYC, which owns the Reigning Champ brand, have been
included in the Company's consolidated financial statements since the date of the 75% acquisition. CYC has
three boutiques in Canada.
Aritzia Inc. is a corporation governed by the Business Corporations Act (British Columbia). The address of its
registered office is 1055 Dunsmuir Street, Suite 3000, Vancouver, B.C., Canada, V7X 1K8.
The Company’s subordinate voting shares are listed on the Toronto Stock Exchange ("TSX") under the stock
symbol “ATZ”.
Basis of presentation
Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting
Standards”).
Fiscal year
The Company's fiscal year-end is the Sunday closest to the last day of February, typically resulting in a 52-
week year, but occasionally giving rise to an additional week, resulting in a 53-week year. Fiscal 2025 is a 52-
week year and Fiscal 2024 was a 53-week year. All references to Fiscal 2025 represent the fiscal year ended
March 2, 2025 and all references to Fiscal 2024 represent the fiscal year ended March 3, 2024.
Principles of consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries, including
Aritzia LP and CYC, domiciled in Canada, and United States of Aritzia Inc., domiciled in the United States. All
intercompany transactions and balances are eliminated on consolidation and consistent accounting policies are
applied across the Company.
Functional and presentation currency
The consolidated financial statements are presented in Canadian dollars. The functional currency for each
entity included in these consolidated financial statements is the currency of the primary economic environment
in which the entity operates. The functional currency of the parent corporation and its Canadian operations is
the Canadian dollar. The functional currency of the Company's U.S. operations is the U.S. dollar.
Cost of goods sold
Cost of goods sold includes inventory and product-related costs, occupancy costs, and depreciation expense
for the Company’s boutiques and distribution centres.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
60 |
Selling, general and administrative
Selling, general and administrative expenses consist of selling expenses that are generally variable with
revenues and general and administrative operating expenses that are primarily fixed. Selling, general and
administrative expenses also include depreciation and amortization expense for all support office assets and
intangible assets.
Seasonality of operations
The Company’s business is affected by the pattern of seasonality common to most retail apparel businesses.
Historically, the Company has recognized a significant portion of its operating profit in the third and fourth
quarters of each fiscal year as a result of increased net revenue during the back-to-school and holiday
seasons.
These consolidated financial statements were authorized for issue on May 1, 2025 by the Company’s Board of
Directors (“Board”).
2
Material accounting policies
Foreign currency translation
Transactions denoted in foreign currencies are translated into the functional currency for the respective entity at
the exchange rates at the date of the transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation of monetary assets and liabilities denominated in
foreign currencies at the reporting date exchange rates, are recognized in profit or loss. Other non-monetary
items on the consolidated statement of financial position denominated in foreign currencies are translated into
the functional currencies using the exchange rates at the date of the transaction.
The Company's U.S. operations with a functional currency of U.S. dollars are translated into Canadian dollars
at each reporting date. Assets and liabilities are translated into Canadian dollars at the exchange rate in effect
at the reporting date. Revenues and expenses are translated into Canadian dollars at average exchange rates
during the reporting period. The resulting translation adjustments are included in other comprehensive income.
Inventory
Inventory, consisting of finished goods and raw materials, is carried at the lower of cost and net realizable
value. Cost is determined using weighted average costs. Cost of inventories includes the cost of merchandise
and all costs incurred to deliver inventory to the Company’s distribution centres including freight and duty.
Property and equipment
Property and equipment are measured at cost less accumulated depreciation and any accumulated impairment
losses. Cost includes expenditures that are directly attributable to the acquisition of the asset, including any
costs (e.g., right-of-use assets depreciation and borrowing costs) directly attributable to bringing the asset to a
working condition for its intended use. Purchased software that is integral to the functionality of the related
equipment is capitalized as part of that equipment.
Costs and related accumulated depreciation for property and equipment are removed from the accounts upon
their sale or disposition and the resulting gain or loss is reflected in the results of operations.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 61
Depreciation is recognized on a straight-line basis over the estimated useful lives of each component of an
item of property and equipment, commencing when the assets are ready for use, as follows:
Computer hardware and software
3 - 7 years
Furniture and equipment
3 - 10 years
Leasehold improvements
shorter of lease term and estimated useful life
Estimates of useful lives, residual values and methods of depreciation are reviewed annually. Any changes are
accounted for prospectively as a change in accounting estimate.
Intangible assets
Intangible assets are recorded at cost and include trade names, trademarks, non-competition agreements and
internally developed computer software.
Costs to purchase any trademarks from third parties are capitalized and amortized over the useful lives of the
assets. Costs include all expenditures that are directly attributable to the acquisition or development of the
asset.
The Company capitalizes, in intangible assets, direct costs incurred during the application and infrastructure
development stages of developing computer software for internal use. All costs incurred during the preliminary
project stage, including project scoping, identification and testing of alternatives, are expensed as incurred.
The Aritzia and Reigning Champ trade names have been determined to have an indefinite life and are not
amortized. The remaining intangible assets are amortized on a straight-line basis over their estimated useful
lives as follows:
Other trade names and trademarks
term of registration or
up to a maximum of 20 years
Non-compete agreements
5 years
Computer software
3 - 7 years
Estimates of useful lives, residual values and methods of amortization are reviewed annually. Any changes are
accounted for prospectively as a change in accounting estimate.
Impairment of non-financial assets
General
Impairment testing compares the carrying values of the assets or cash-generating units ("CGU") being tested
with their recoverable amounts (the recoverable amount being the greater of an asset's or CGUs value in use
or fair value less costs of disposal). To the extent that the carrying value of an asset or CGU exceeds its
recoverable amount, the excess amount would be recorded as an impairment loss. Should the recoverable
amounts for impaired assets or CGUs subsequently increase, the impairment losses previously recognized
(other than in respect of goodwill) may be reversed.
Property, plant and equipment, intangible assets, and right-of-use assets with finite lives
Assets that are subject to depreciation or amortization are periodically reviewed for indicators of impairment.
Whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, the
asset or CGU is tested for impairment.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
62 |
Goodwill and intangible assets with indefinite lives
Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. The Company has selected the first day of the fourth quarter as the time of the annual impairment
test. The recoverable amount of goodwill is based on value in use, calculated using discounted cash flows over
five years with a terminal value generated from continuing use of the group of CGUs.
The fair value methodologies used by the Company in testing goodwill and indefinite-lived intangible assets
include assumptions related to financial forecasts, sales trends, discount rates, terminal growth rates, royalty
rates and other assumptions that are judgmental in nature. If future economic conditions or operating
performance, such as declines in sales or increases in discount rates, are different than those projected by
management in its most recent impairment tests for goodwill and indefinite-lived intangible assets, future
impairment charges may be required. See note 7 for further details.
Leases
The Company assesses whether a contract is or contains a lease at the inception of the contract. Leases are
recognized as a right-of-use asset and corresponding lease liability at the lease commencement date. The
lease liability is measured at the present value of the future fixed and in-substance fixed payments and variable
lease payments that depend on an index or rate over the lease term, less any lease incentives receivable,
discounted using the lessee’s incremental borrowing rate, unless the implicit interest rate in the lease can be
easily determined. Lease liabilities are subsequently measured at amortized cost using the effective interest
rate method.
Lease terms applied are the contractual non-cancellable periods of the lease, plus periods covered by renewal
or termination options, if the Company is reasonably certain to exercise those options. Lease liabilities are
remeasured (with a corresponding adjustment to the right-of-use asset) when there is a change in the lease
term, a change in the future lease payments resulting from a change in an index or rate used to determine
those payments, or when the lease contract is modified and the lease modification is not accounted for as a
separate lease.
The right-of-use assets include the initial measurement of the corresponding lease liabilities, lease payments
made at or before the commencement date, any initial direct costs, less any lease incentives received before
the commencement date. The right-of-use assets are subsequently measured at cost and are depreciated on a
straight-line basis from the date the underlying asset is available for use over the lease term.
Lease payments for assets that are exempt through the short-term exemption and variable lease payments that
do not depend on an index or rate are not included in the measurement of the lease liabilities. Lease incentives
received for variable payment leases are deferred and amortized as a reduction in recognized variable rent
expenses over the related lease terms. Proceeds from lease incentives are recognized as financing cash flows
in the consolidated statement of cash flows.
Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provision of the financial instrument. Financial assets are derecognized when the contractual rights to receive
cash flows from the financial asset expire and financial liabilities are derecognized when obligations under the
contract expire, are discharged or cancelled. The Company’s financial assets, which includes cash and cash
equivalents and accounts receivable, are classified as amortized cost. The Company’s financial liabilities, which
includes accounts payable and accrued liabilities, lease liabilities and long term debt, are classified as
amortized cost. The Company’s equity derivative contracts, contingent consideration and non-controlling
interest in exchangeable shares liability are classified as fair value through profit or loss (“FVTPL”).
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 63
Financial assets are initially measured at fair value and subsequently measured at amortized cost using the
effective interest method if both of the following conditions are met and they are not designated as FVTPL:
(i)
the financial asset is held within a business model whose objective is to hold financial assets to collect
contractual cash flows; and
(ii)
the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely
payments of principal and interest on the principal amount outstanding. All financial assets not
classified as amortized cost as described above are measured at FVTPL.
Financial liabilities are initially measured at fair value, less any directly attributable transaction costs, and
subsequently measured at amortized cost using the effective interest method.
Changes of the fair value of financial instruments classified as FVTPL are recorded in profit or loss in the period
in which they arise. Gains and losses on financial instruments classified at amortized cost are recognized in
profit or loss when the financial instruments are derecognized, modified or impaired.
Financial assets and financial liabilities are measured at fair value using a valuation hierarchy for disclosure of
fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or
liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which
the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs
that market participants would use in pricing the asset or liability based on market data obtained from
independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market
participant assumptions using the best information available. The hierarchy is broken down into three levels
based on the reliability of inputs as follows:
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that a company
has the ability to access at the measurement date.
Level 2 - Valuations based on quoted inputs other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly through corroboration with observable market
data.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value
measurement.
Share capital
Multiple voting shares and subordinate voting shares are classified as shareholders’ equity. Incremental costs
directly attributable to the issuance of shares are shown in equity as a deduction, net of tax, from the proceeds
of the issuance. When share capital recognized as equity is re-purchased for cancellation, the amount of
consideration paid, which includes directly attributable costs, net of tax, is recognized as a deduction from
share capital. The excess of the purchase price over the carrying amount of the shares is charged to retained
earnings.
Revenue recognition
The Company recognizes revenue when control of the goods or services has been transferred to the customer.
Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits
from, the product. This generally occurs when the product is delivered to the customer and therefore may be
subject to deferral until delivered to or received by the customer. Revenue is measured at the fair value of the
amount of consideration to which the Company expects to be entitled to, including variable consideration, if any,
to the extent that it is highly probable that a significant reversal will not occur. Revenues are measured net of
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
64 |
discounts and an estimated allowance for returns. Shipping fees charged to customers are recorded as
revenue.
Revenues are reported net of sales taxes collected for various governmental agencies.
Receipts from the sale of gift cards are treated as deferred revenue. When gift cards are redeemed for
merchandise, the Company recognizes the related revenue. The Company estimates gift card breakage, to the
extent there is no requirement for remitting card balances to government agencies under unclaimed property
laws, and recognizes revenue in proportion to actual gift card redemptions.
Employee benefits
Short-term employee benefit obligations, which include wages, salaries, compensated absences and bonuses
are expensed through cost of goods sold or selling, general and administrative expenses as the related service
is provided.
Termination benefits are recognized as an expense when the Company has demonstrated commitment, without
realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal
retirement date.
Income tax expense
Current and deferred income taxes are recognized in the Company’s net income, except to the extent that they
relate to a business combination or items recognized directly in equity or other comprehensive income.
Current taxes are recognized for the estimated taxes payable or receivable on taxable income or loss for the
current year and any adjustment to income taxes payable in respect of previous years. Current income taxes
are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end
date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from
its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary
differences arising on the initial recognition of an asset or liability in a transaction that is not a business
combination, and at the time of the transaction affects neither accounting nor taxable income or loss. In
addition, deferred tax liabilities are not recognized for taxable temporary differences arising on investments in
subsidiaries, associates and joint ventures where the reversal of the temporary difference can be controlled and
it is probable that the difference will not reverse in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realization or settlement of the carrying amount of the asset and liability,
using tax rates enacted or substantively enacted at the year-end date.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to
the extent that it is probable that future taxable profits will be available against which they can be utilized. The
carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax
levied by the same taxation authority on either the taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 65
Stock-based compensation expense
General
For stock-based compensation which vests in its entirety at one future point in time (cliff-vesting), the Company
recognizes the expense on a straight-line basis over the vesting period. For stock-based compensation which
vests in tranches, the Company recognizes the expense using the graded vesting method. An estimate of
forfeitures during the vesting period is made at the date of grant, which is adjusted to reflect actual forfeitures.
For stock-based compensation that is subject to performance criteria, it is earned only if certain performance
targets are achieved, as established by the Board, along with any other vesting conditions over the vesting
period and can decrease or increase if minimum or maximum performance targets are achieved.
Equity-settled plans
Stock option expense is initially recognized based on the fair value of the option at the grant date using the
Black-Scholes option-pricing model, with a corresponding increase in contributed surplus. When stock options
are exercised, the exercise price proceeds together with the amount initially recorded in contributed surplus are
reclassified to share capital.
Compensation expense related to other equity-settled plans is measured based on an estimated fair value at
the grant date, with a corresponding increase in contributed surplus. Upon settlement, the amount initially
recognized in contributed surplus is reclassified to share capital.
Cash-settled plans
Compensation expense related to cash-settled plans is measured based on the market value of the Company’s
shares at grant date, with a corresponding liability. The liability is subsequently remeasured at each reporting
date based on the market value of the Company's shares, with changes in fair value recognized as stock-
based compensation expense over the vesting period.
Net income per share
Basic net income per share is calculated by dividing the net income for the fiscal year attributable to
shareholders of the Company by the weighted average number of multiple voting shares and subordinate
voting shares outstanding during the year. As all the classes of shares are subject to the same distribution
rights, the Company performs the net income per share calculations as if all shares are a single class.
Diluted net income per share is calculated by dividing the net income for the fiscal year attributable to
shareholders of the Company by the weighted average number of multiple voting shares and subordinate
voting shares outstanding during the year, plus the weighted average number of subordinate voting shares that
would be issued on exercise of dilutive stock options granted, as calculated under the treasury stock method,
and the dilutive impact of equity-settled restricted and performance share units granted and the non-controlling
interest in exchangeable shares liability.
3 Accounting policy developments
International Accounting Standards ("IAS") 1 - Presentation of Financial Statements
The International Accounting Standards Board ("IASB") issued amendments to IAS 1 - Presentation of
Financial Statements to clarify the criteria for classifying liabilities with covenants as current or non-current. The
amendments also require companies to provide additional note disclosure on non-current liabilities with
covenants. The amendments also indicate the classification of a liability between current and noncurrent
includes the determination of whether a substantive right to defer settlement for at least 12 months exists and is
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
66 |
unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability for at least 12
months after the reporting period. The amendments are effective for annual periods beginning on or after
January 1, 2024 and the Company determined there was no material impact to the consolidated financial
statements. As required by IAS 1, the Company revised its March 3, 2024 balance sheet to report the
previously reported deferred shares units liability of $8.2 million from noncurrent to current for comparative
purposes.
IFRS 18 - Presentation and Disclosure in the Financial Statements
The IASB issued IFRS 18 - Presentation and Disclosure in the Financial Statements, in April 2024 which is
effective for annual reporting periods beginning on or after January 1, 2027. The new standard will establish a
revised structure for the consolidated statements of comprehensive income and improve comparability across
entities and reporting periods. The standard will be applied retroactively, with certain transition provisions. The
Company is currently assessing the impact of IFRS 18 on the consolidated financial statements.
IFRS 7 and IFRS 9 - Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9 - Financial Instruments and IFRS 7 - Financial
Instruments: Disclosures to clarify the date of recognition and derecognition of some financial assets and
liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system,
clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal
and interest ("SPPI") criterion, add new disclosures for certain instruments with contractual terms that can
change cash flows (such as instruments with features linked to the achievement of environmental and social
targets), and update the disclosure of equity instruments designated at fair value through other comprehensive
income ("FVOCI"). These amendments are effective for annual reporting periods beginning on or after January
1, 2026. The Company is currently assessing the impact of these amendments on the consolidated financial
statements.
Other
A number of other new accounting standards, amendments to standards and interpretations of standards have
been issued by the IASB but are not yet effective for the year ended March 2, 2025. The Company does not
expect the implementation of these accounting pronouncements to have a significant impact to its accounting
policies and consolidated financial statements.
4 Judgements and estimates
In preparing these consolidated financial statements, management has made judgements and estimates about
the future that affect the application of the Company's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Estimates and assumptions are reviewed on an ongoing basis and are based
on management’s best judgements and experience and other factors. Revisions to accounting estimates are
recognized prospectively. Actual results may differ from these estimates.
Significant judgements and estimates made by management in the process of applying accounting policies and
that have the most significant effect on the amounts recognized in the consolidated financial statements include
the following:
Judgements
•
Lease terms: whether the Company is reasonably certain, at the lease commencement date or before lease
expiration, it will exercise available renewal or termination options and thus include such options in the lease
terms (note 8).
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 67
•
Impairment testing: judgement in determining the grouping of assets to identify its CGUs for purposes of
testing for impairment.
Estimates
•
Return allowances: estimates of expected returns based on historical return patterns.
•
Inventories: estimates of inventory net realizable value (note 5), which requires the Company to utilize
estimates related to product quality, damages, inventory shrinkage for lost or stolen items, future demand,
selling prices, and market conditions. The Company periodically reviews its inventories and records a write-
down if the cost exceeds net realizable value of inventory, based on the above factors.
•
Goodwill and indefinite life intangible asset impairment testing: estimates in the impairment testing model,
which incorporate estimates regarding future events including future cash flows, growth rates and discount
rates (note 7). On an annual basis, the Company tests whether goodwill and indefinite life intangible assets
are impaired using discounted future cash flow models.
•
Incremental borrowing rate: estimates of the incremental borrowing rate used for calculating lease liabilities
and right-of-use-assets. The Company estimates the incremental borrowing rate of each leased asset as the
rate of interest that the Company would have to pay to borrow, over a similar term with a similar security, the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment (note 8).
•
Tariffs: Beginning February 1, 2025, the U.S. President issued executive orders directing the U.S. to impose
new tariffs on goods imported from Canada, Mexico and China. On March 4, 2025, the 25% tariff on almost
all goods imported from Canada and Mexico took effect with China subjected to an additional 10%. On
March 6, 2025, the U.S. exempted products covered by the United States, Mexico and Canada trade
agreement from the new tariffs. On April 2, 2025, the U.S. government announced numerous tariffs on
goods imported to the U.S. including a new baseline tariff of 10% and higher country specific tariffs. On April
9, 2025, the specific country tariffs were paused for 90 days with the exception of total tariffs of up to 145%
applicable to imports from China. China has retaliated with tariffs of up to 125% on imports from the U.S.
The new U.S. tariffs, to the extent permanent and applicable for an extended time period, may have a
material impact on the Company's results of operations and carrying amounts of certain assets and liabilities
in the next fiscal year depending on the final tariffs applied to affected goods.
•
Other: other estimates include determining the useful lives and depreciation methods applied to property,
plant and equipment and intangible assets with definite lives for the purposes of depreciation and
amortization; in accounting for and measuring items such as deferred revenue, provisions, and purchase
price adjustments on business combinations; and in measuring certain fair values, including those
relating to the valuation of assets and liabilities acquired in a business combinations, share-based
payments, and financial instruments.
5 Inventory
March 2,
2025
March 3,
2024
Finished goods
$
310,234 $
253,095
Finished goods-in-transit
64,469
77,924
Raw materials
4,613
9,126
Inventory
$
379,316 $
340,145
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
68 |
The Company records a reserve to value inventory to its estimated net realizable value. This resulted in an
expense to cost of goods sold of $12.0 million for the year ended March 2, 2025 (March 3, 2024 - $20.2
million). No inventory write-downs recorded in previous periods were reversed.
All of the Company’s inventory is pledged as security for the Company's revolving credit facility (note 11).
6 Property and equipment
Leasehold
improvements
Furniture
and
equipment
Computer
hardware and
software
Construction in-
progress
Total
Cost
Balance, February 26, 2023
$
375,104 $
87,252
$
33,342
$
48,357
$
544,055
Additions
99,695
29,889
9,668
44,582
183,834
Transfers from construction-in-progress
14,436
26,408
5,434
(46,278)
—
Dispositions
(6,360)
(3,400)
(4,626)
—
(14,386)
Foreign exchange
(805)
(152)
(26)
(35)
(1,018)
Balance, March 3, 2024
$
482,070 $
139,997 $
43,792 $
46,626
$
712,485
Additions
208,354
20,743
5,110
60,759
294,966
Transfers from construction-in-progress
39,109
5,758
1,101
(45,968)
—
Dispositions and other
(27,040)
(5,005)
(2,388)
—
(34,433)
Foreign exchange
15,364
3,108
246
2,844
21,562
Balance, March 2, 2025
$
717,857 $
164,601 $
47,861 $
64,261
$
994,580
Accumulated depreciation
Balance, February 26, 2023
$
166,596 $
44,569
$
24,282
$
—
$
235,447
Depreciation
40,741
13,511
6,101
—
60,353
Dispositions
(6,360)
(3,400)
(4,626)
—
(14,386)
Foreign exchange
(237)
(44)
(13)
—
(294)
Balance, March 3, 2024
$
200,740 $
54,636 $
25,744 $
—
$
281,120
Depreciation
55,897
17,874
7,531
—
81,302
Dispositions and other
(26,402)
(4,824)
(2,388)
—
(33,614)
Foreign exchange
6,993
1,640
173
—
8,806
Balance, March 2, 2025
$
237,228 $
69,326 $
31,060 $
—
$
337,614
Net carrying value
Balance, March 3, 2024
$
281,330 $
85,361 $
18,048 $
46,626
$
431,365
Balance, March 2, 2025
$
480,629 $
95,275 $
16,801 $
64,261
$
656,966
Construction-in-progress primarily includes build costs for boutiques not yet opened. Additions include
capitalized right-of-use depreciation and borrowing costs for certain boutiques and distribution centre totaling
$15.1 million for the year ended March 2, 2025 (March 3, 2024 - $nil).
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 69
7 Goodwill and intangible assets
Indefinite
life trade
names
Definite life
trade names
and trademarks
Computer
software
Non-compete
agreements
Construction-
in-
progress
Total
Intangible
assets
Goodwill
Cost
Balance, February 26, 2023
$
72,292 $
19,184 $
35,356 $
1,200 $
4,525 $
132,557 $
198,846
Additions
—
—
719
—
2,036
2,755
—
Transfers from construction in
progress
—
—
4,525
—
(4,525)
—
—
Dispositions
—
—
(2,314)
—
—
(2,314)
—
Balance, March 3, 2024
$
72,292 $
19,184 $
38,286 $
1,200 $
2,036 $
132,998 $
198,846
Additions
—
13,099
7,986
—
1,274
22,359
—
Transfers from construction in
progress
—
—
2,037
—
(2,037)
—
—
Dispositions
—
—
(1,841)
—
—
(1,841)
—
Balance, March 2, 2025
$
72,292 $
32,283 $
46,468 $
1,200 $
1,273 $
153,516 $
198,846
Accumulated amortization
Balance, February 26, 2023
$
— $
15,317 $
30,458 $
400 $
— $
46,175 $
—
Amortization
—
686
3,236
240
—
4,162
—
Dispositions
—
—
(2,314)
—
—
(2,314)
—
Balance, March 3, 2024
$
— $
16,003 $
31,380 $
640 $
— $
48,023 $
—
Amortization
—
904
1,969
240
—
3,113
—
Dispositions
—
—
(1,841)
—
—
(1,841)
—
Balance, March 2, 2025
$
— $
16,907 $
31,508 $
880 $
— $
49,295 $
—
Net carrying value
Balance, March 3, 2024
$
72,292 $
3,181 $
6,906 $
560 $
2,036 $
84,975 $
198,846
Balance, March 2, 2025
$
72,292 $
15,376 $
14,960 $
320 $
1,273 $
104,221 $
198,846
Construction-in-progress includes internally generated computer software not put into use. The Company
acquired trademarks from third parties for $13.1 million, including acquisition costs.
Impairment testing of goodwill and intangible assets with indefinite lives
Goodwill is monitored corporately at the level of the Company’s single operating segment. A pre-tax discount
rate of 9.9% and a terminal growth assumption rate of 2.0% were used in the impairment model.
The Company’s indefinite life trade names include Aritzia and Reigning Champ. As there is no foreseeable limit
to the period over which the assets are expected to generate net cash inflows, these intangible assets are
considered to have indefinite useful lives. For the purposes of intangible assets with indefinite useful lives,
CGUs are grouped at the lowest level that the assets are monitored for internal management purposes and for
which largely independent cash flows are generated. The carrying values allocated to the CGUs' intangible
assets with indefinite useful lives are set out in the following table:
March 2, 2025
March 3, 2024
Aritzia trade name
$
46,092 $
46,092
Reigning Champ trade name
26,200
26,200
Indefinite life trade names
$
72,292 $
72,292
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
70 |
The recoverable amount of the indefinite life trade names is determined based on the relief from royalty
method, calculated using discounted cash flows over five years with a terminal value generated from continuing
use of the group of CGUs. The method considers the projected royalties that would otherwise be paid to the
holder of the trade name, assuming an arm's length owner.
Specific cash flow estimates for the trade names are projected based on approved financial forecasts, annual
growth assumptions, royalty rates, discount rates and a terminal growth rate to extrapolate the cash flow
projections. A pre-tax discount rate of 9.9% and 15.9% for each of the Aritzia and Reigning Champ trade
names, respectively, and a terminal growth assumption rate of 2.0% (based on the Bank of Canada's target
inflation rate) were used in the impairment models for each trade name.
As at March 2, 2025 and March 3, 2024, management has determined that there was no impairment of goodwill
or the indefinite life trade names. The Company believes that any reasonably possible change in the key
assumptions on which the calculation of the recoverable amount of the CGUs is based would not cause the
CGUs carrying values to exceed their recoverable amounts.
8 Leases
The Company has the right to use real estate properties for its boutiques, distribution centers and support
offices under non-cancellable lease agreements, together with periods covered by an option to extend or
terminate, if the Company is reasonably certain it will exercise those options.
The following table reconciles the change in right-of-use assets for the year ended March 2, 2025:
March 2, 2025
March 3, 2024
Cost
Opening balance
$
996,699 $
878,593
Additions, net of lease incentives received
136,594
123,400
Modifications, including impairment of right-of-use assets
33,746
1,939
Lease expirations
(30,236)
(4,637)
Foreign exchange
45,561
(2,596)
Closing balance
$
1,182,364 $
996,699
Accumulated depreciation
Opening balance
$
364,408 $
264,532
Depreciation
101,732
102,992
Amortization of fair value adjustment on CYC leases
507
532
Modifications, including impairment of right of use assets
5,774
—
Lease expirations
(30,056)
(3,255)
Foreign exchange
17,441
(393)
Closing balance
$
459,806 $
364,408
Net carrying value
$
722,558 $
632,291
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 71
The following table reconciles the change in lease liabilities for the year ended March 2, 2025:
March 2,
2025
March 3,
2024
Opening balance
$
805,886 $
772,006
Additions
151,849
142,492
Interest expense on lease liabilities (note 17)
44,615
42,679
Repayment of interest and principal on lease liabilities
(160,381)
(152,876)
Modifications
41,452
3,557
Foreign exchange
35,802
(1,972)
Closing balance
$
919,223 $
805,886
Current portion of lease liabilities
107,755
107,322
Long-term portion of lease liabilities
811,468
698,564
Lease liabilities
$
919,223 $
805,886
The following table summarizes the Company's rent and rent-related expenses (which also approximate the
cash outflow) for the years ended March 2, 2025 and March 3, 2024:
March 2,
2025
March 3,
2024
Depreciation on right-of-use assets, excluding fair value adjustments
$
101,732 $
102,992
Interest expense on lease liabilities (note 17)
44,615
42,679
Variable lease expense
22,261
21,960
Common area maintenance, property taxes and other
69,568
54,704
Lease payments relating to short-term or low value leases
2,004
3,446
Total rent and rent-related expenses
$
240,180 $
225,781
The future undiscounted minimum lease payments for the Company’s leases for its premises, excluding other
occupancy charges and variable lease payments, are as follows:
Less than 1 year
$
158,367
Between 1 and 5 years
549,192
More than 5 years
475,752
Future undiscounted minimum lease payments
$
1,183,311
In addition to the amount disclosed in the table above, as at March 2, 2025, the Company also had future
undiscounted minimum lease payments of $186.2 million for leases committed to but not yet commenced
(March 3, 2024 - $245.5 million).
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
72 |
9 Accounts payable and accrued liabilities
March 2,
2025
March 3,
2024
Trade accounts payable
$
189,222 $
133,676
Employee benefits payable
64,692
53,749
Other non-trade payables
21,790
15,609
Restricted Share Unit ("RSU") and Deferred Share Unit ("DSU") plans liabilities (note
14)
17,708
17,996
Accounts payable and accrued liabilities
$
293,412 $
221,030
10 Other non-current liabilities
March 2,
2025
March 3,
2024
Deferred lease inducements
3,323 $
4,830
Asset retirement obligations
506
426
Other non-current liabilities
$
3,829 $
5,256
11 Bank indebtedness
The Company has a $300.0 million revolving credit facility which bears interest at Canadian Overnight Repo
Rate Average ("CORRA"), Secured Overnight Financing Rate ("SOFR") (prior to June 30, 2023, London Inter-
Bank Offered Rate ("LIBOR")) or Canadian prime or base rate, plus a marginal rate between 0.75% and 2.75%
(March 3, 2024 – 0.75% and 2.75%). Up to $10.0 million of the facility can be drawn upon by way of a swingline
loan. The revolving credit facility matures on October 27, 2026. As at March 2, 2025, no amounts were drawn
under the revolving credit facility (March 3, 2024 - $nil).
The Company also has a revolving line of credit with a limit of US$10.0 million and expiring on December 14,
2025. The revolving line of credit bears interest at the daily SOFR, plus a marginal rate between 1.75% and
2.75% (March 3, 2024 – 1.75% and 2.75%). As at March 2, 2025, no amounts were drawn under the revolving
line of credit (March 3, 2024 - $nil).
The Company also has letters of credit facilities of CAD$30.0 million and US$25.0 million (March 3, 2024 -
CAD$50.0 million and US$40.0 million) secured pari passu with the revolving credit facility and the revolving
line of credit. The interest rate for the letters of credit is between 1.17% and 2.75%. As at March 2, 2025, the
amount available under these facilities was reduced to $57.8 million (March 3, 2024 - $80.8 million) by certain
open letters of credit (note 20).
The revolving credit facility is collateralized by a first priority lien on all property and equipment, leased real
property interests and inventory. In addition, the Company is required to maintain certain financial covenants.
As at March 2, 2025 and March 3, 2024, the Company was in compliance with all financial covenants.
12 Financial instruments
The following tables show the carrying amounts and fair values of financial assets and liabilities, including their
levels in the fair value hierarchy and accounting classification:
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 73
As at
March 2, 2025
As at
March 3, 2024
Classification
Fair Value
Level
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Financial assets
Cash and cash equivalents
Amortized cost
1
$
285,635 $
285,635 $
163,277 $
163,277
Accounts receivable
Amortized cost
2
26,311
26,311
18,473
18,473
Equity derivative contracts
FVTPL
2
21,210
21,210
4,281
4,281
Share Adjustments
FVTPL
3
8,500
8,500
1,000
1,000
Financial liabilities
Accounts payable and accrued
liabilities
Amortized cost
2
$
275,704 $
275,704 $
203,034 $
203,034
Lease liabilities
Amortized cost
2
919,223
919,223
805,886
805,886
There were no transfers between the levels of the fair value of hierarchy for the years ended March 2, 2025
and March 3, 2024.
The carrying value of cash and cash equivalents, accounts receivable and accounts payable and accrued
liabilities approximates their fair value due to the immediate or short-term maturity of these financial
instruments.
Equity derivative contracts
The Company has equity derivative contracts (total return swaps) to hedge the share price exposure on its
cash-settled DSUs and RSUs. These contracts are not designated as hedging instruments for accounting
purposes. During the year ended March 2, 2025, the Company recorded an unrealized gain of $16.9 million
(March 3, 2024 - unrealized loss of $5.2 million) for the change in fair value for these contracts in the
consolidated statements of operations in other expense (income). During the year ended March 2, 2025, the
Company recorded no realized gains or losses (March 3, 2024 - realized gains of $1.0 million) arising from the
settlement of equity derivative contracts. As at March 2, 2025, the equity derivative contracts had a positive fair
value of $21.2 million (March 3, 2024 – $4.3 million) which is recorded in prepaid expenses and other current
assets in the consolidated statements of financial position.
Contingent consideration
The Company had a contingent consideration liability of $13.2 million, payable in two equal instalments, under
the CYC purchase agreement dated June 25, 2021 that was based on CYC's future operating results. During
the year ended March 3, 2024, the Company paid the final instalment to the CYC shareholders net of $0.3
million in indemnities and shared costs.
Non-controlling interest in exchangeable shares liability
In conjunction with the acquisition, CYC issued exchangeable shares to minority shareholders (“exchangeable
shareholders”) in exchange for their 25% share of the total common shares at acquisition. The exchangeable
shares allow the holders to put back their shares to CYC one-third from May 1, 2024 to August 31, 2024, one-
third from May 1, 2025 to August 31, 2025, and one-third from May 1, 2026 to August 31, 2026 (the “put
options”). The Company also had an open-ended call option, but not an obligation, to purchase all of the shares
held by the exchangeable shareholders (the “call option”). The exercise prices of the put options and the call
option were based on certain specific operating results of CYC in the most recently completed fiscal year prior
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
74 |
to exercise, subject to a capped enterprise value of $60.0 million (remaining 25% purchase), and settled
through a variable number of the Company’s shares. The fair value of the non-controlling interest in
exchangeable shares liability was estimated based on a Monte Carlo simulation. The cash flows associated
with the modelled operating results were then discounted back to the valuation date.
As a result of the Company's early acquisition of the remaining 25% ownership interest held through the CYC
exchangeable shares on May 26, 2023, the Company revalued the non-controlling interest in exchangeable
shares liability to $20.5 million as at May 26, 2023 based on a Monte Carlo situation which resulted in a $15.0
million gain recorded in other expense (income).
As at May 26, 2023, subsequent to the remeasurement discussed above, the non-controlling interest in
exchangeable shares liability was settled and reduced to $nil (February 26, 2023 - $35.5 million) in connection
with the early acquisition of CYC exchangeable shares with the offset recorded against share capital,
contributed surplus and other non-current assets (net derivative asset).
Early 100% Acquisition of CYC
On May 26, 2023, the Company and the exchangeable shareholders agreed to the Company's early acquisition
of the remaining 25% ownership interest held through the CYC exchangeable shares. The Company issued
419,047 subordinate voting shares ("Upfront Shares") on May 26, 2023 and the right to receive additional
subordinate voting shares ("Additional Shares") by March 31, 2026 with a value based on certain Fiscal 2026
operational performance metrics of the Reigning Champ brand. Both the Upfront Shares and Additional Shares
are subject to forfeiture rates if the exchangeable shareholder leaves before the end of Fiscal 2026. The
Upfront Shares were recognized in share capital ($15.4 million) and the Additional Shares with an estimated
value up to $9.4 million were treated as compensation for future services with a portion recognized in
contributed surplus ($6.6 million) and the remainder ($2.8 million) to be recognized over the period ending in
Fiscal 2026.
The Upfront Shares are also subject to an escrow agreement with one-third to be released at the end of each of
Fiscal 2024, 2025 and 2026 and subject to future adjustments ("Share Adjustments") based on set minimum
and maximum total values at the end of Fiscal 2026. The Share Adjustments feature are treated as an
embedded derivative within other non-current assets on the consolidated statements of financial position. Given
the increase in the Company's share price in the last quarter of Fiscal 2025, the Share Adjustments value
increased to $8.5 million on March 2, 2025 (March 3, 2024 - $1.0 million) resulting in a $7.5 million unrealized
gain during the year ended March 2, 2025 included in other expense (income) (March 3, 2024 - unrealized loss
of $0.5 million).
13 Share capital
Secondary offering
From time to time, the Company will announce a secondary offering on a bought deal basis of its subordinate
voting shares through a secondary sale of shares by certain entities owned and/or controlled, directly or
indirectly, by Brian Hill, Founder and Executive chair of Aritzia, or Brian Hill and his immediate family
(collectively, the "Selling Shareholders"). The Company does not receive any proceeds from the secondary
offerings. Underwriting fees are paid by the Selling Shareholders and other expenses related to the secondary
offerings are paid by the Company.
On February 11, 2025, the Company announced a secondary offering (the "Secondary Offering"). As part of the
Secondary Offering, the Selling Shareholders exchanged 758,105 of their multiple voting shares for subordinate
voting shares. Details relating to the Secondary Offering are summarized in the following table:
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 75
Completion date
February 28, 2025
Number of subordinate voting shares
1,045,000
Price per subordinate voting share
$
69.85
Gross proceeds to the Selling Shareholders
$
72,993
Other expenses paid by the Company
$
550
Normal course issuer bid ("NCIB")
The NCIB approved by the TSX on January 18, 2024 ("2024 NCIB") allowed the Company to repurchase and
cancel up to 3,515,740 of its subordinate voting shares over the twelve-month period commencing January 22,
2024 and ending January 21, 2025. On February 21, 2024, the Company entered into an automatic share
purchase plan (the "2024 ASPP"), which commenced immediately and terminated upon the termination of the
2024 NCIB.
During the year ended March 2, 2025, the Company repurchased a total of 134,200 subordinate voting shares
for cancellation under the NCIB at an average price of $44.00 per subordinate voting share for total cash
consideration of $5.9 million (53-week period ended March 3, 2024 - 1,089,641 subordinate voting shares for
cancellation at an average price of $27.51 per subordinate voting share for total cash consideration of $30.0
million).
As at March 2, 2025, there were 19,679,244 multiple voting shares and 94,702,652 subordinate voting shares
issued and outstanding. There were no preferred shares issued and outstanding as at March 2, 2025. Neither
the multiple voting shares nor the subordinate voting shares issued have a par value.
14 Stock-based compensation
Details of stock-based compensation expense
Prior to the Company’s initial public offering (the “IPO”) the Company had a legacy equity incentive plan (the
“Legacy Plan”) pursuant to which it had granted stock options to directors, employees, consultants and
advisors. Concurrent with the IPO, the Company implemented a long-term incentive plan (the “Omnibus plan”)
for certain officers, directors, employees or consultants. The Omnibus plan includes stock options, RSUs and
Performance Share Units ("PSUs". The Company also has a DSU plan for non-employee directors.
Details of the Company's Omnibus plan are included in the following table:
Unit type
Vesting
Settled in cash or equity
Stock Options
Five-year graded vesting
Equity
Deferred Share Unit
Immediately at time of grant
Cash (not redeemable until the eligible director
ceases to be a member of the Board)
Restricted Share Unit
Third anniversary of award date
Cash, equity or combination at the discretion of
the Board on the grant date
Performance Share Unit
Third anniversary of award date
Cash, equity or combination at the discretion of
the Board on the grant date
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
76 |
Reflected in the consolidated statements of operations as stock-based compensation expense are the following
amounts:
March 2,
2025
March 3,
2024
Equity-settled plans
Stock options
$
19,961 $
19,115
Restricted Share Units
10,242
6,134
Performance Share Units
3,768
5,090
Cash-settled plans
Restricted Share Units
4,943
917
Deferred Share Units
9,459
528
Stock-based compensation expense
$
48,373 $
31,784
Stock Options
Legacy Plan
Following completion of the IPO in October 2016, no additional options will be granted under the Legacy Plan.
All issued options expire after 10 or 15 years from the date granted.
Transactions for options granted under the Legacy Plan for the years ended on March 2, 2025 and March 3,
2024 were as follows:
March 2, 2025
March 3, 2024
Number
of
stock
options
Weighted
average
exercise
price
Number
of
stock
options
Weighted
average
exercise
price
Outstanding, at beginning of year
1,703,211 $
5.56
1,846,630 $
5.48
Exercised
(1,000,172)
5.09
(143,419)
4.50
Outstanding, at end of year
703,039 $
6.23
1,703,211 $
5.56
Exercisable, at end of year
703,039 $
6.23
1,703,211 $
5.56
The weighted average share price on the dates the stock options were exercised during the year ended
March 2, 2025 was $52.36 (March 3, 2024 - $32.36).
The outstanding and exercisable Legacy Plan stock options as at March 2, 2025 were 703,039 stock options,
with a weighted average remaining contractual life of 0.84 and weighted average exercise price of $6.23.
Omnibus Plan
All issued options expire after 7 or 10 years from the date granted.
Transactions for options granted under the Omnibus Plan for the years ended March 2, 2025 and March 3,
2024 were as follows:
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 77
March 2, 2025
March 3, 2024
Number
of
stock
options
Weighted
average
exercise
price
Number
of
stock
options
Weighted
average
exercise
price
Outstanding, at beginning of year
8,239,589 $
26.32
7,336,092 $
24.92
Granted
900,616
48.02
2,425,358
25.94
Exercised
(2,221,721)
18.16
(1,244,941)
16.13
Forfeited
(305,728)
32.88
(276,920)
31.66
Expired
(10,064)
36.33
—
—
Outstanding, at end of year
6,602,692 $
31.72
8,239,589 $
26.32
Exercisable, at end of year
2,276,912 $
28.53
3,179,053 $
21.26
The weighted average share price on the dates the stock options were exercised during the year ended
March 2, 2025 was $52.45 (March 3, 2024 - $31.49).
Information relating to the Company's Omnibus Plan stock options outstanding and exercisable as at March 2,
2025 is as follows:
Stock options outstanding
Stock options exercisable
Range of exercise
prices
Number of
stock
options
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
Number of
stock
options
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
$16.08 to $25.98
2,961,521
6.29 $
23.08
1,071,250
3.91 $
20.36
$25.99 to $35.90
1,260,695
6.45 $
31.74
622,135
6.26 $
31.50
$35.91 to $67.86
2,380,476
8.04 $
42.39
583,527
7.28 $
40.38
6,602,692
6.95 $
31.72
2,276,912
5.41 $
28.53
The weighted average fair value of stock options estimated at the grant date for the year ended March 2, 2025
was $22.82 (March 3, 2024 - $11.68), based on the Black-Scholes option pricing model using the following
assumptions:
Dividend yield
0.0%
Expected volatility
42.2% to 48.0%
Risk-free interest rate
2.9% to 3.6%
Expected life
5.0 to 8.0 years
Exercise price
$35.82 to $67.86
The expected volatility reflects the historical volatility in the price of the Company's shares over the expected
life.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
78 |
Restricted Share Unit Plan
The following table summarizes information related to RSUs for the years ended March 2, 2025 and March 3,
2024:
March 2, 2025
March 3, 2024
Cash-settled
Equity-settled
Cash-settled
Equity-settled
Number of units
Outstanding, at beginning of year
319,699
786,568
496,221
360,588
Granted
3,584
387,246
—
476,328
Settled
(314,195)
(13,401)
(159,758)
—
Forfeited
(8,042)
(85,517)
(16,764)
(50,348)
Outstanding, at end of year
1,046
1,074,896
319,699
786,568
Additional information
Fair value of RSU liability
$
56
$
9,801
The weighted average fair value of the grant price for the year ended March 2, 2025 was $49.08 (March 3,
2024 - $26.16).
Performance Share Unit Plan
The following table summarizes information related to PSUs for the years ended March 2, 2025 and March 3,
2024:
March 2, 2025
March 3, 2024
Number of units
Outstanding, at beginning of year
497,746
229,719
Granted
178,393
268,027
Exercised/Released
(125,495)
—
Outstanding, at end of year
550,644
497,746
Unvested earned PSUs, at end of year
—
28,659
The weighted average fair value of the grant price for the year ended March 2, 2025 was $47.66 (March 3,
2024 - $25.58).
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 79
Director Deferred Share Unit Plan
The following table summarizes information related to DSUs for the years ended March 2, 2025 and March 3,
2024:
March 2, 2025
March 3, 2024
Number of units
Outstanding, at beginning of year
232,207
182,811
Granted
31,973
49,396
Exercised/Released
(24,278)
—
Outstanding, at end of year
239,902
232,207
Vested, at end of year
239,902
232,207
Additional information
Fair value of DSU liability
$
15,986 $
8,195
The weighted average fair value of the grant price for the year ended March 2, 2025 was $45.66 (March 3,
2024 - $28.82).
15 Net income per share
Basic
March 2,
2025
March 3,
2024
Net income attributable to shareholders of the Company
$
207,790 $
78,780
Weighted average number of shares outstanding during the period (thousands)
112,551
110,653
Basic net income per share
$
1.85 $
0.71
Diluted
March 2,
2025
March 3,
2024
Net income attributable to shareholders of the Company
$
207,790 $
78,780
Weighted average number of shares for net income per diluted share (thousands)
116,731
114,194
Net income per diluted share
$
1.78 $
0.69
For the year ended March 2, 2025, 1,503,091 stock options and equity-settled RSUs and PSUs, respectively,
along with the Additional Shares were not included in the calculation of diluted net income per share as they
were anti-dilutive or contingently issuable (year ended March 3, 2024 – 5,471,986 stock options and equity-
settled RSUs, respectively, along with the Additional Shares).
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
80 |
16 Net Revenue
Net revenue disaggregated for boutiques and eCommerce was as follows:
March 2,
2025
March 3,
2024
Retail net revenue
$
1,787,084 $
1,547,046
eCommerce net revenue
951,028
785,304
Net revenue
$
2,738,112 $
2,332,350
17 Expenses by nature
March 2,
2025
March 3,
2024
Cost of goods sold
Inventory and product-related costs and occupancy costs
$
1,397,312 $
1,287,061
Depreciation on right-of-use assets
94,342
95,641
Depreciation on property and equipment
65,839
50,667
Cost of goods sold
$
1,557,493 $
1,433,369
March 2,
2025
March 3,
2024
Personnel expenses
Salaries, wages and employee benefits
$
616,989 $
553,055
Stock-based compensation expense relating to employees (note 14)
38,914
31,256
Personnel expenses
$
655,903 $
584,311
March 2,
2025
March 3,
2024
Finance expense
Interest expense on lease liabilities (note 8)
$
44,615 $
42,679
Interest expense and banking fees
3,882
6,157
Amortization of deferred financing fees
303
255
Finance expense
$
48,800 $
49,091
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 81
March 2,
2025
March 3,
2024
Other expense (income)
Realized foreign exchange loss (gain)
$
(13,374) $
22
Unrealized foreign exchange loss (gain)
(3,012)
(19)
Fair value adjustments related to CYC acquisition (note 12)
(7,500)
(14,500)
Unrealized (gain) loss on equity derivative contracts (note 12)
(16,929)
5,189
Realized (gain) loss on equity derivative contracts (note 12)
—
(1,048)
CYC integration costs
1,732
3,700
Impairment of right-of-use assets, lease exit costs and other
559
5,862
Secondary offering transaction costs (note 13)
550
—
Interest and other income
(6,489)
(4,493)
Other expense (income)
$
(44,463) $
(5,287)
18 Income taxes
Income tax expense
March 2,
2025
March 3,
2024
Current period
$
58,255 $
48,979
Adjustments with respect to prior periods
1,962
(373)
Current tax expense
60,217
48,606
Origination and reversal of temporary differences
25,865
(12,823)
Changes in substantively enacted tax rates
320
292
Adjustments with respect to prior periods
(2,111)
(245)
Share-based compensation tax impacts recorded in equity
(1,628)
—
Deferred tax expense (recovery)
$
22,446 $
(12,776)
Income tax expense
$
82,663 $
35,830
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
82 |
Reconciliation of effective tax rate
The Company’s income tax expense differs from that calculated by applying the combined substantively
enacted Canadian federal and provincial statutory income tax rates for the years ended March 2, 2025 and
March 3, 2024 of 26.8% and 26.7%, respectively, as follows:
March 2,
2025
March 3,
2024
Income before income taxes
$
290,453 $
114,610
Expected income tax expense
77,841
30,601
Increase (decrease) in income taxes resulting from:
Non-deductible stock-based compensation
5,313
7,915
Net non-taxable fair value adjustment of non-controlling interest in
exchangeable shares liability and Share Adjustments
(2,025)
(3,872)
Foreign tax rate differences
977
266
Change in substantively enacted tax rates
320
292
Other
237
628
Income tax expense
$
82,663 $
35,830
Deferred income tax
The tax effects of the significant temporary differences that comprise deferred tax assets and liabilities as at
March 2, 2025 and March 3, 2024 are as follows:
March 2,
2025
March 3,
2024
Leases
$
58,140 $
51,859
Deferred revenue
10,759
7,834
Net operating loss
10,197
2,199
Inventory
9,329
18,035
Accounts payable and accrued liabilities
5,280
3,123
Stock-based compensation
4,676
3,928
Financing and share issuance costs
1,003
951
Deferred lease incentives
926
1,385
Other
227
103
Deferred tax assets
$
100,537 $
89,417
Property and equipment
$
81,702 $
53,169
Goodwill and intangible assets
34,483
31,767
Other
162
400
Deferred tax liabilities
$
116,347 $
85,336
Net deferred tax assets (liabilities)
$
(15,810) $
4,081
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 83
The net change in net deferred income tax assets (liabilities) is recorded as follows:
March 2,
2025
March 3,
2024
Deferred tax expense (recovery) recorded in net income
$
22,446 $
(12,776)
Deferred tax recovery recorded in equity
$
(1,628) $
—
Foreign currency translation adjustment on deferred taxes
(926)
(104)
Net change in deferred tax liabilities
$
19,892 $
(12,880)
Of the deferred income tax balances, the Company expects $35.8 million of the deferred tax assets to be
recovered within 12 months and $33.1 million of the deferred tax liabilities to be settled within 12 months.
The Company intends to indefinitely reinvest the undistributed earnings of its foreign subsidiaries; accordingly,
the Company has not recorded a deferred tax liability on these earnings.
The Government of Canada enacted the Global Minimum Tax Act (the "GMTA") on June 20, 2024, which
implements the Organisation for Economic Co-operation and Development's 15% global minimum corporate
tax regime for certain multinational enterprises ("Pillar Two") in Canada. The GMTA and other corresponding
foreign Pillar Two legislation are effective for the Company's fiscal year beginning March 4, 2024. The
Company assessed its potential exposure to Pillar Two income taxes and determined that Pillar Two effective
tax rates in its jurisdictions (Canada and the United States) are above 15%. The Company has not provided for
current tax expense related to Pillar Two and applied the temporary mandatory exception from the recognition
and disclosure of deferred taxes related to the implementation of Pillar Two model rules.
19 Segment information
The Company defines an operating segment on the same basis that it uses to evaluate performance internally
and to allocate resources by the Chief Operating Decision Maker (the “CODM”). The Company has determined
that the Chief Executive Officer together with the Founder, Executive Chair are its CODM and there is one
operating segment. Therefore, the Company reports as a single segment. This includes all sales channels
accessed by the Company’s clients, including sales through the Company’s eCommerce website and sales at
the Company’s boutiques.
The following table summarizes net revenue by geographic location of the Company’s clients:
March 2,
2025
March 3,
2024
United States
$
1,581,821 $
1,226,476
Canada
1,156,291
1,105,874
Net revenue
$
2,738,112 $
2,332,350
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
84 |
The Company’s non-current, non-financial assets (property and equipment, intangible assets, goodwill, and
right-of-use assets) are geographically located as follows:
March 2,
2025
March 3,
2024
United States
$
891,160 $
653,910
Canada
791,431
693,567
Non-current, non-financial assets
$
1,682,591 $
1,347,477
20 Commitments and contingencies
Product purchase obligations
At March 2, 2025, the Company had purchase obligations of $$157.2 million (March 3, 2024 - $86.6 million),
which represent commitments for fabric expected to be used during upcoming seasons, made in the normal
course of business.
Letters of credit
At March 2, 2025, the Company had open letters of credit of $8.3 million (March 3, 2024 - $23.5 million).
21 Related party transactions
The Company is ultimately controlled by AHI Holdings Inc. and related entities which are controlled by a
director and officer of the Company.
During the year ended March 2, 2025, the Company made payments of $10.1 million (March 3, 2024 -
$9.9 million) for lease of premises and management services and $1.5 million (March 3, 2024 - $0.7 million) for
the use of assets and other operational items to companies, that are owned wholly or partially by directors and/
or director and officer of the Company. As at March 2, 2025, $0.6 million was included in accounts payable and
accrued liabilities (March 3, 2024 - $0.5 million) and $0.8 million was included in prepaid expenses and other
current assets for the lease of premises or for other operational items (March 3, 2024 - $0.8 million). As at
March 2, 2025, the outstanding balance of lease liabilities owed to these companies was $40.5 million
(March 3, 2024 - $45.6 million). These transactions were measured at the amount of consideration established
at market terms.
Key management includes the Company’s directors and executive team. Compensation awarded to key
management includes:
March 2,
2025
March 3,
2024
Salaries, directors’ fees and short-term benefits
$
6,668 $
5,149
Stock-based compensation expense
18,369
10,055
Key management compensation
$
25,037 $
15,204
The increase in stock-based compensation for key management for the year ended March 2, 2025 compared to
the year ended March 3, 2024 was primarily due to the increase in the fair value of the DSU liability. In addition
to the compensation presented above, certain key management received a retroactive adjustment to
compensation relating to Fiscal 2023, resulting in an additional expense of $0.8 million during Fiscal 2024.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 85
22 Supplemental cash flow information
The net change in non-cash working capital balances for the years ended March 2, 2025 and March 3, 2024
were as follows:
March 2,
2025
March 3,
2024
Accounts receivable
$
(3,934) $
(1,554)
Inventory
(29,290)
126,877
Prepaid expenses and other current assets
(6,070)
(12,094)
Other assets
923
(2,094)
Accounts payable and accrued liabilities
18,514
(24,485)
Deferred revenue
24,030
10,352
Net change in non-cash working capital balances
$
4,173 $
97,002
Accrued purchases of property and equipment
$
40,681 $
24,029
Accrued purchases of intangible assets
$
1,274 $
—
23 Financial risk management
The Company is exposed to a variety of financial risks in the normal course of operations including currency,
equity price, credit and liquidity risk, as summarized below. The Company’s overall risk management program
and business practices seek to minimize any potential adverse effects on the Company’s consolidated financial
performance.
Risk management is carried out under practices approved by the Company’s Audit Committee. This includes
reviewing and making recommendations to the Board on the adequacy of the Company’s risk management
policies and procedures with regard to identifying the Company’s principal risks and implementing appropriate
systems and controls to manage these risks. Risk management covers many areas of risk including, but not
limited to, foreign exchange risk, interest rate risk, equity price risk, credit risk and liquidity risk.
Market risk
Currency risk
The Company is exposed to foreign exchange risk on foreign currency denominated transactions, monetary
assets and liabilities denominated in a foreign currency, and net investments in foreign operations. The
Company sources the majority of its raw materials and merchandise from various suppliers in Asia and Europe
with the vast majority of purchases denominated in U.S. dollars. In addition, the Company operates boutiques
in the United States. The Company’s foreign exchange risk is primarily with respect to the U.S. dollar and the
Company has limited exposure to other currencies. Foreign currency forward contracts are used from time to
time to mitigate risks associated with forecasted U.S. dollar merchandise purchases sold in Canada. The
Company did not utilize foreign currency forward contracts during the year ended March 3, 2024.
As at March 2, 2025, a $0.05 variation in the Canadian dollar against the U.S. dollar on net monetary accounts
in U.S. dollars would, with all other variables being constant, have an approximate favourable (or unfavourable)
impact of $1.2 million on net income.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
86 |
Interest rate risk
The Company has a revolving credit facility and revolving line of credit which provide available borrowings in an
amount up to $300.0 million and US$10 million, respectively. Because the revolving credit facility and revolving
line of credit bear interest at variable rates, the Company is exposed to market risks relating to changes in
interest rates on outstanding balances. As at March 2, 2025, no advances were made under the revolving
credit facility and revolving line of credit.
Equity price risk
The Company is exposed to risk arising from cash-settled RSUs and DSUs, as an appreciating subordinate
voting share price increases the potential cash outflow. The Company records a liability for the potential future
settlement of the RSUs and DSUs by reference to the fair value of the liability. The company uses equity
derivative contracts (total return swaps) to offset the cash flow variability of the expected payment associated
with RSUs and DSUs. The Company only enters into equity derivative contracts with major financial
institutions. As at March 2, 2025, an increase (or decrease) in the Company’s share price by $1.00 would result
in an increase (or decrease) of $0.5 million in the fair value of the liability.
Credit risk
Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its
contractual obligations. Financial instruments that potentially subject the Company to credit risk consist of cash
and cash equivalents, accounts receivable, and derivative contracts used to hedge market risks. The Company
offsets credit risks associated with cash and cash equivalents by depositing its cash and cash equivalents with
major financial institutions that have been assigned high credit ratings by internationally recognized credit rating
agencies. The Company is exposed to credit risk on accounts receivable from its landlords for tenant
allowances. To reduce this risk, the Company enters into leases with landlords with established credit history
and, for certain leases, the Company may offset rent payments until accounts receivable are fully satisfied. The
Company only enters into derivative contracts with major financial institutions.
Liquidity risk
Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its obligations as they come
due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable
price. The Company manages liquidity risk through various means, including monitoring actual and projected
cash flows, taking into account the seasonality of its revenue, income, working capital and capital expenditure
needs. The Company’s revolving credit facility and the revolving line of credit are used to maintain liquidity. As
at March 2, 2025 and March 3, 2024, no advances were made under the revolving credit facility and revolving
line of credit. As at March 2, 2025, the Company also has letters of credit facilities of CAD$30.0 million and
US$25.0 million (March 3, 2024 – CAD$50.0 million and US$40.0 million), of which $8.3 million of letters of
credit were outstanding (March 3, 2024 – $23.5 million).
The following table summarizes the undiscounted contractual maturities of the Company’s financial liabilities as
at March 2, 2025:
Less than
1 year
1 to
5 years
More than
5 years
Total
Accounts payable and accrued liabilities
$
293,412
$
—
$
—
$
293,412
Lease liabilities
158,367
549,192
475,752
1,183,311
Total
$
451,779
$
549,192
$
475,752
$ 1,476,723
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
Fiscal 2025 Annual Report | 87
24 Capital management
The Company’s objectives when managing capital are to:
•
ensure sufficient liquidity to enable the financing of capital projects thereby facilitating its growth;
•
provide a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business; and
•
maintain a flexible capital structure that optimizes the cost of capital at an acceptable risk and preserves
the ability to meet financial obligations.
The Company defines capital as its revolving credit facility, revolving line of credit and shareholders’ equity. The
Company’s primary uses of capital are to finance increases in non-cash working capital along with capital
expenditures for new boutique additions, existing boutique expansion and renovation projects, and other
infrastructure investments. The Company currently funds these requirements out of its internally generated
cash flows.
The Company is subject to financial covenants and collateral pursuant to its revolving credit facility presented in
note 11.
25 Subsequent event
NCIB
On May 1, 2025, the Company's Board of Directors approved the Company's intention to file with the TSX its
notice of intention to proceed with an NCIB ("2025 NCIB"), which, if accepted by the TSX, would permit the
Company to purchase for cancellation up to 5% of the public float of the Company's issued and outstanding
subordinate voting shares. Subject to TSX acceptance, Aritzia anticipates the 2025 NCIB commencing on or
about May 7, 2025, and in any event, at least two trading days after the TSX acceptance of the 2025 NCIB. The
exact amount of subordinate voting shares subject to the 2025 NCIB will be determined on the date of
acceptance of the notice of intention by the TSX.
Aritzia Inc.
Notes to Consolidated Financial Statements
March 2, 2025 and March 3, 2024
(in thousands of Canadian dollars, unless otherwise noted)
88 |
Board of Directors and
Executive Officers12
BOARD OF DIRECTORS
EXECUTIVE OFFICERS
Information for
Shareholders
SUPPORT OFFICE
611 Alexander St, Suite 118
Vancouver, British Columbia
V6A 1E1, Canada
aritzia.com
+1 604 251 3132
INVESTOR INQUIRIES
Beth Reed
Vice President, Investor Relations
investor@aritzia.com
+1 646 603 9844
TRANSFER AGENT
TSX Trust
tsxtis@tmx.com
1-866-600-5869
ANNUAL MEETING OF SHAREHOLDERS
July 8, 2025
Virtual meeting details as outlined in
Aritzia’s Management Information Circular
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
STOCK EXCHANGE LISTING
Aritzia’s subordinate voting shares are
traded on the Toronto Stock Exchange
(TSX) under the symbol ATZ.
Aritzia’s financial reports, regulatory
filings and news releases are available
at sedarplus.com and on our website at
investors.aritzia.com.
Aldo Bensadoun
Director
John Currie
Lead Independent Director, Chair
of Audit Committee, Member of
Compensation and Nominating
Committee
Daniel Habashi
Director, Member of
Environmental and Social
Committee
Brian Hill
Chairman of the Board
David Labistour
Director, Member of Audit
Committee, Chair of
Environmental and Social
Committee
Doug Mack
Marni Payne
Director, Member of
Compensation and Nominating
Committee
Glen Senk
Director, Member of
Compensation and Nominating
Committee
Marcia Smith
Director, Member of Audit
Committee, Chair of
Compensation and Nominating
Committee, Member of
Environmental and Social
Committee
Jennifer Wong
Director
Brian Hill
Founder and Executive Chair
Jennifer Wong
Chief Executive Officer
Todd Ingledew
Chief Financial Officer
Christopher Conrad
Chief Technology and
Information Officer
Margot Johnson
Chief Digital Officer
Karen Kwan
Chief People & Culture Officer
Pippa Morgan
Executive Vice President, Retail
Director
12 As of May 26, 2025
Fiscal 2025 Annual Report | 89