Aritzia, the Canadian women’s fashion brand, has revised its outlook for the year, citing a slowdown in traffic trends and macroeconomic pressure on consumers since the first week of June.
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Revenue Guidance: Aritzia now expects revenue for the year ending in February to be in the range of 2.25 billion Canadian dollars to 2.35 billion Canadian dollars ($1.69 billion-$1.77 billion). This is a decrease from the previous forecast of C$2.42 billion to C$2.5 billion.
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Analyst Expectations: Analysts polled by FactSet have forecasted revenue of C$2.48 billion.
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Gross Profit Margin: The company anticipates a decrease in full-year gross profit margin of about 300 basis points, up from a prior outlook of about 200 basis points. This is primarily due to higher selling, general, and administrative expenses.
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Rising Costs: Aritzia’s costs are projected to rise by 300 basis points, doubling its previous forecast.
For the second quarter, Aritzia expects revenue to remain relatively flat or slightly decrease compared to the previous year. Additionally, gross profit margin is predicted to decline by 750 basis points during this period.
These revised expectations come after Aritzia reported a drop in profit and margin in the fiscal first quarter. This decline was driven by higher inventory levels, increased expenses, and higher discounts.
“While investing for the future, we are also focused on optimizing our processes to more efficiently manage our current business, helping ensure we are positioned to deliver profitable growth for the long term,” said Chief Executive Jennifer Wong.
