Hold on to your Super Puffs Aritzia fans, the clothier is in a weird place these days.
Driving the news: Canadian clothing retailer Aritzia dropped its quarterly earnings report, posting a net revenue increase of 5%. But the company also saw net income drop a whopping 39% due to more markdowns as it tried to get its inventory in check — rarely a great sign for a popular brand.
Why it matters: The business has seen shares freefall nearly 50% in the past year amid an aggressive U.S. expansion plan. Some experts feel this focus on expanding has taken precedence over debuting new styles that target buyers want.
- However, the company may have course-corrected. Shoppers are reportedly happy with new products, and the company may be able to avoid future markdowns after it cleared house with a successful (if chaotic) archive sale.
Big picture: With lots of buzz, a cult following, and numerous celebrity fans, Aritzia is on the precipice of becoming the next success story of a Canadian retailer thriving in the U.S., à la Lululemon. And unlike Lulu, it hasn’t disavowed its Canadian roots by ditching the TSX.
Yes, but: That’s only if it can stay in fashion. Its latest earnings cast some doubt on whether Aritzia is hot or not — as has backlash from once-loyal fans upset with a perceived dip in quality (the r/Aritzia Reddit is mostly made up of posts like this) and bad press for an allegedly discriminatory and toxic culture.—QH