Statement fo Financial Position
Aritzia Inc.
Consolidated Statements of Financial Position
As at March 1, 2020 and March 3, 2019
(in thousands of Canadian dollars)
1-Mar-20 1-Mar-19
Assets
Cu
ent assets
Cash and cash equivalents 117,750 100,897
Accounts receivable 6,555 4,355
Income taxes recoverable 2,157 - 0
Inventory 94,034 112,183
Prepaid expenses and other cu
ent assets 10,880 18,422
Total cu
ent assets 231,376 235,857
Property and equipment 184,637 167,593
Intangible assets 63,867 64,427
Goodwill 151,682 151,682
Right-of-use assets 380,360 - 0
Other assets 4,315 2,209
Defe
ed tax assets 20,478 7,606
Total assets $ 1,036,715 $ 629,374
Liabilities
Cu
ent liabilities
Accounts payable and accrued liabilities 57,715 62,736
Income taxes payable 3,198 3,644
Cu
ent portion of lease liabilities 63,440 - 0
Defe
ed revenue 29,490 24,231
Total cu
ent liabilities 153,843 90,611
Lease liabilities 447,087 - 0
Other non-cu
ent liabilities 9,451 69,828
Defe
ed tax liabilities 19,529 20,002
Long-term debt 74,740 74,624
Total liabilities 704,650 255,065
Shareholders’ equity
Share capital 219,050 199,517
Contributed surplus 57,221 65,806
Retained earnings 56,476 109,339
Accumulated other comprehensive loss - 682 - 353
Total shareholders’ equity 332,065 374,309
Total liabilities and shareholders’ equity $ 1,036,715 $ 629,374
Statement of Operations
Aritzia Inc.
Consolidated Statements of Operations
As at March 1, 2020 and March 3, 2019
(in thousands of Canadian dollars)
1-Mar-20 1-Mar-19
Net revenue 980,589 874,296
Cost of goods sold 577,165 531,383
Gross profit 403,424 342,913
Operating expenses
Selling, general and administrative 243,362 215,297
Stock-based compensation expense 7,790 11,540
Income from operations 152,272 116,076
Finance expense 28,319 4,821
Other income - 2,185 - 395
Income before income taxes 126,138 111,650
Income tax expense 35,544 32,922
Net income $ 90,594 $ 78,728
Net income per share
Basic $ 0.84 $ 0.70
Diluted $ 0.81 $ 0.67
Weighted average numbe
of shares outstanding (thousands)
Basic 108,411 113,015
Diluted 112,128 117,358
Annual Report 2020
Aritzia is a
vertically integrated,
innovative design
house and fashion boutique.
We believe in high-quality, beautifully designed product.
We believe in aspirational environments and experiences.
We believe in personalized and knowledgeable client service.
And we believe that all of this should be attainable.
We call this Everyday Luxury.
4 |
To support our growth, we continued to hire top talent from
around the globe, building on our world-class team. And, we
further invested in our technology infrastructure, including a new
marketing platform enabling advanced client communications,
a customer 360 repository giving us a significantly more
comprehensive view of our clients, and Concierge technology
that expanded our call center servicing capabilities.
The Aritzia team and I could not be more pleased that we
delivered yet another strong year nor more confident in our
potential. Our consistent performance reflects Aritzia’s growing
and awareness and affinity in the United States, enduring
customer loyalty in Canada, commitment to continued business
and infrastructure investments, and our ability to execute on our
powerful business model.
COVID-19 RESPONSE
As we entered fiscal 2021, and on the heels of last year’s
success, we have been navigating through the global
pandemic of COVID- 19. The impact of the virus on the global
economy has put an unprecedented amount of pressure on
usinesses all over the world. Although some sectors are
largely immune, the fashion business is not. As COVID-19
spread across North America, we experienced a meaningful
decline in our sales in the first two weeks of March, before
temporarily closing all 96 of our boutiques.
Over the past several months our teams have been working
tirelessly in response to the dynamic nature of the pandemic.
Our priority, from the beginning of this crisis, was to protect
the health and safety of our people, our clients and our
communities. Upon the closure of our boutiques, we took
immediate action to drive eCommerce revenue, adjusting our
product, marketing, and operational strategies appropriately.
Despite the challenges, our beautiful product assortment,
est-in-class Distribution Centre, aspirational website, and
esponse from our loyal clientele lead to eCommerce growth
in excess of 150% through the end of May.
As numerous companies were forced to lay off and furlough
millions of employees across North America, we worked hard
to keep our people employed. Thanks to the dedication of our
team and our loyal clientele who continued to purchase with
us online, we paid out $20 million in salaries to non-working
employees through the Aritzia Community™ Relief Fund. To
show our heartfelt gratitude for those on the virus’ frontline,
we launched our Aritzia Community™ Care Program, gifting
100,000 frontline healthcare workers in Canada and the U.S.
with custom clothing packages, over $10 million in retail
value.
We began a phased reopening of our boutiques on May
7th, with almost all of our boutiques reopened to date. We
ecognized, upon temporarily closing our boutiques, that
significant changes to our in-store experience would be
equired in response to COVID-19. This has included reduced
outique capacity, physical distancing protocols, new health
and sanitization standards, an upgraded cleaning program,
and dedicated Health and Safety Advisors on site. Since we
From our Founder,
Chief Executive Officer & Chairman
TO MY FELLOW SHAREHOLDERS,
This year we cele
ated Aritzia’s 35th anniversary. Throughout
our history, we have delivered our clients everyday luxury
through exceptional service, beautiful product, aspirational
environments in stores and online, with captivating
communications throughout. Since opening our first boutique
in Vancouver’s Oakridge Mall in 1984, our net revenues have
grown to nearly $1 billion. This has been driven by our growth
to 96 boutiques across Canada and the United States and our
accelerating ecommerce business. We now have over 3500
employees, and serve millions of clients annually. As we reflect
on this journey, I am incredibly proud of what we have achieved;
a foundation built to capture the limitless opportunities that lay
ahead.
FISCAL 2020 HIGHLIGHTS
Every year at this time, I have the responsibility and privilege
of looking back over our successes and more
oadly our
strengths, weaknesses, opportunities, and threats. Fiscal 2020
concluded another exceptional year for Aritzia. We delivered
same-store sales increases in both Canada and the United
States and continued accelerated growth in eCommerce,
closing the year with our 22nd consecutive quarter of
comparable sales growth. In line with our five-year target, we
opened five boutiques in the United States and expanded
three boutiques in Canada. In product, we saw exceptionally
strong sales across all
ands and categories while successfully
launching a new
and, Ten by Babaton. And, we expanded
our Super Puff™ program with Mr. Super Puff - our first and
highly successful foray into menswear. During the year, our
and awareness also grew through engaging and innovative
marketing campaigns including an enviable list of paid and
unpaid influencers. We are particularly pleased with the
momentum of our
and in the United States where we finished
the year with revenue growth of 27%.
Fiscal 2020 Annual Report | 5
egan reopening our clients have shown excitement to return
to shopping in our boutiques, reconnecting with their style
advisors, and enjoying the exceptional service and Everyday
Luxury experience they love and expect from us. While we are
not yet able to maximize the demand for in-store shopping
due to the health and safety measures we have put in place,
we are both encouraged and reassured by our clients return.
In addition to our COVID-19 response, the past few months
have seen businesses across the globe be called upon to
lead and be allies of the social justice and racial equality
movement. This deserves our attention, our support, and
significant action. Aritzia continues our support through
external donations and more importantly, by investing $1
million in our own Diversity and Inclusion program to effect
meaningful change from within.
Over the past few months, our processes and systems have
een tested, and our people challenged and stretched to
new levels of performance. Our team’s resilience and creative
efforts have preserved our strong financial position and
successfully safeguarded our business. The closure of all our
outiques for most of the first quarter of fiscal 2021, and the
co
esponding decline in our revenues and our profitability
has been the most challenging period of our history, yet it has
also been a time of tremendous learning and growth and is
presenting us with new compelling opportunities.
LOOKING FORWARD
Although we have earned a unique loyalty in our clients’
closets, we have shared some of that coveted space with
others. As a result of the pandemic’s devastating impact
on many businesses, many
ands we shared her closet
will either not exist or will be a fraction of their size and
scope. The pandemic has not only
ought about change
to the competitive landscape moving forward, it has
also accelerated the shift to the omni-channel shopping
experience. With the closures of our boutiques, our clients
immediately and seamlessly shifted from retail to online.
Now that our boutiques have reopened, our clients have
enthusiastically returned, while also continuing to shop
online. This multi-channel client relationship presents
oundless opportunity to continue to drive revenue both in
out boutiques and online.
ECOMMERCE GROWTH
We continue to invest in compelling and innovative
functionality on aritzia.com, rollout our new Clientele App (a
digital selling tool used by style advisors across our boutique
network), and expand our omni-channel capabilities. We have
een building our digital capabilities for several years and are
well positioned to capitalize on our accelerating eCommerce
usiness.
NEW BOUTIQUE OPENINGS
We are progressing with our pre-COVID boutique opening
plans. Our boutiques continue to be highly profitable as
well as our most effective marketing tool to grow
and
awareness and, with many in North America shuttering
outiques, the real estate opportunities and co
esponding
financial terms are unprecedented. As we are cu
ently
understored, with more premier locations becoming
available, we will continue to explore and capture new
opportunities in prime real estate.
PRODUCT EXPANSION
Prior to COVID-19, our boutiques comprised approximately
77% of our sales, and our entire product strategy was based
on physical and merchandising limitations of our retail
four-walls. Now, our eCommerce channel has achieved a
critical mass such that our product strategies can be based
on the unlimited opportunities of the online environment.
Specifically,