Aritzia Inc. saw its net income for the first quarter fall to $17.5 million, almost half of its net income of $33.3 million a year earlier, amid inflationary headwinds and economic pressures on shoppers.
The Vancouver-based retailer said net revenue for the quarter was $462.7 million, up 13.4 per cent from $407.9 million during the same quarter last year.
The company said its gross profit margin was lower due to higher product-related costs amid inflationary pressures, temporary warehousing costs related to inventory management, and other headwinds partially offset by lower expedited freight costs.
Aritzia said it saw a deceleration in traffic beginning in June, likely reflecting macroeconomic pressures on consumers amid higher interest rates, “as well as opportunities in the level of newness in its product assortment.”
Net income per diluted share was 15 cents, down from 29 cents a year earlier.
The company saw its retail net revenue increase 13.8 per cent to $327.6 million, while e-commerce net revenue was up 12.5 per cent and made up more than 29 per cent of overall net revenue for the quarter.
“Results continued to be fuelled by our business in the United States,” said CEO Jennifer Wong in the press release Tuesday.
Net revenue from the U.S. was up 21.8 per cent, making up more than 54 per cent of overall net revenue.
“While we are seeing a more challenging consumer environment to start the second quarter … we remain disciplined in making further progress against our Fiscal 2024 priorities,” Wong said.
These priorities include scaling Aritzia’s infrastructure to match the company’s “recent, unprecedented growth,” said Wong, among other goals.
Aritzia said it expects net revenue in the second quarter of fiscal 2024 to be flat or slightly down compared with a year earlier, noting it saw strong growth in its past two second quarters.
It also expects its gross profit margin to decrease further in the next quarter, as is expecting net revenue for the full fiscal year to range between $2.25 billion and $2.35 billion.