Aritzia sees fertile ground for growth over the next five to 10 years at least, and will be extending its “everyday luxury” overseas.
Also on the agenda: heady store and digital expansion, and adding categories to widen the assortment, and building upon those categories such as denim and accessories where Aritzia scratches the surface.
“We’re now ready to take international expansion beyond an aspiration and commit to international as part of our plan,” Jennifer Wong, Aritzia’s chief executive officer, said at the company’s investor day in New York on Tuesday, when the brand unveiled its new five-year growth plan.
“Over the next five years, 85 percent of our growth comes from the U.S. and international will be about 10 percent,” said Wong. With international for the next five years, “It’s about building the foundation to do it well. It’s about seeding the infrastructure and beginning to invest for the long term beyond the next five years.” Unlike other CEOs of public companies, Wong prefers to discuss about years well into the future, rather than quarter-to-quarter.
Still, “The U.S. remains our primary growth market through fiscal 2032,” said Wong. “Our long-term goal goes further, to become world-famous.”
Aritzia already ships orders overseas and knows where international demand is strongest. Wong didn’t indicate where stores might open first overseas, but said that in the last 12 months, she has traveled with team members to several countries. “We’re walking major cities, including markets where we’re interested, and I see clients everywhere, on the streets. I see our peers there and I feel like Aritzia is missing … We see a path to $500 million in annual net revenue by the end of fiscal 2032, and we get there by expanding judiciously with an eye on the long-term potential of the brand.”
The $500 million in Canadian dollars would include both store and digital revenues overseas.
Brian James-Beaumont Hill, Aritzia’s founder and executive chairman who runs the product division, discussed growing the product line. “We’re probably 95 percent ready-to-wear. But an opportunity within ready-to-wear is denim. At a lot of our competitors, 20, 25, 30 percent of their product is denim and some as high as low 40s, high 30s. At Aritzia, we have a huge opportunity for that. We are less than 5 percent denim. We’ve assembled the team over the last 2.5 years, and are launching (next) spring a brand-new denim collection. It’s not the full collection. The second half of the launch will happen in the fall.”
Hill said that with certain luxury brands, less than 20 percent of the mix is ready-to-wear; 80 percent is handbags, shoes, jewelry, beauty, and warm-weather accessories. Considering non-apparel, “We see a huge opportunity. We’ve done actually a pretty phenomenal job with our warm-weather collections, but we have a lot more we can do,” as Aritzia enters new geographies. “It’s not just about color. It’s not just about style. It’s also about the fabric, construction, and timing of these things. We actually see standing up a whole new internal team to deal with warm-weather climate opportunities. From just product selection and assortment, this is a $2 billion growth opportunity.”
As reported, Aritzia on Tuesday unveiled a new five-year plan projecting revenue of between $9.5 billion and $10.5 billion in fiscal 2032, representing a 15 to 17 percent compound annual growth rate. That includes North America digital revenue of about $4.1 billion to $4.5 billion, representing a compound annual growth rate of about 20 percent. For the year ended March 1, Aritzia generated just over $3.7 billion in revenue, from $2.74 billion the year before. (All figures are in Canadian dollars.)
Aritzia currently operates 146 stores in North America but targets 220 stores by fiscal 2032, with 12 to 14 openings annually in the U.S. The stores average 10,000 square feet, with flagship locations at least 20,000 square feet.
“We’ve built the capabilities to support that pace of growth, and our discipline around site selection, investment economics remains unchanged,” said Karen Janes, executive vice president of real estate development. Aritzia’s targeted 12-to-18-month payback period for new boutiques remains an important measure, she said.
“What gives us the confidence is the depth of opportunity we continue to see ahead of us. We have the runway. We have the capabilities and the economics to support a meaningful pace of growth for years to come.” When Aritzia opens a new boutique, “We see an average lift of approximately 65 percent of digital sales in that market. That demonstrates the power of our physical and digital channels working together.”
Also planned are five to seven store repositionings, whether through a better location with better economics, improved layout, or greater capacity.
Janes said Aritzia expects store square footage to grow annually in the mid-teens, doubling the real estate footprint. “By fiscal year ’32, we plan to have entered 15 to 18 additional markets across the United States.” She said Aritzia has accelerated store openings from “four to six boutiques annually to today’s cadence by scaling our people, our capabilities, our processes, and partnerships alongside the portfolio … The United States represents our most significant boutique growth opportunity. We can deepen our presence in proven markets while continuing to introduce Aritzia to new ones.”
In Canada, Aritzia’s presence is well established. “The focus is on optimizing the portfolio and concentrating demand behind our strongest Aritzia boutiques,” Janes said. “Together, these strategies allow us to capture substantial U.S. growth while continuing to strengthen our Canadian business.”
Margot Johnson, chief digital officer, said, “In fiscal ’32, we project that digital will deliver between $4.1 billion and $4.5 billion in U.S. and Canadian revenue. To contextualize that, that’s roughly the size of all of Aritzia today. When we do this, we expect to hit a CAGR of approximately 20 percent over this period. And as a result, we’ll deliver approximately half of Aritzia’s total growth while remaining committed to profitability. We have seen tremendous success in growing our client base, but we know a great opportunity is ahead, and I’ll give you an example of that: Our U.S. digital business is about twice the size of our Canadian digital business despite a market that’s 10 times larger.”
Johnson said Aritzia will redesign its website “so it remains a strong expression of our brand, but equally a strong commerce engine.” Bigger “brand moments” across digital will be created, she said.
“We’ll continue to activate along the full marketing funnel, particularly moving up funnel in support of creating even more brand awareness and understanding,” said Johnson. “We see continued opportunity to grow through product expansion … Our focus is creating entertaining, immersive digital experiences. These are destinations clients will choose to spend time in, not just simply transact.” She also said that over the next five years, Aritzia will continue to invest in technology, data, AI, and new client experiences.
Three years after Hill founded Aritzia in 1984, Wong met him at an Aritzia store to apply for a job. “I didn’t hire her,” Hill recalled. “I actually turned her down, and then she persisted and went to our other store, applied for a job there, and they hired her.”
She liked Aritzia’s positioning in fashion. “It’s everyday luxury. We offer beautiful product, luxury-level service, and the luxury brand, all of it at an attainable price. It’s who we are. It’s our competitive advantage, and it sets us apart. It means our product is fashionable and elevated, and everything we do is through a luxury lens. Our products feel luxurious. Our fabrics feel luxurious. Our marketing feels luxurious. Our service is best-in-class. Our environments are aspirational, whether it’s digital or our boutiques. We source from luxury mills. We work in the best production facilities in the world.
“There’s everyday luxury in everything our clients hear, read, see and experience,” Wong said. “We created a unique category, one that we’re not just leading in, but one we actually have all to ourselves.”
