Aritzia, the Canadian women's fashion brand, recorded a modest increase in revenue for the fiscal second quarter. Despite this, the company acknowledges the need to adapt to evolving consumer preferences.
During the three months ended August 27, Aritzia reported a net loss of 6 million Canadian dollars ($4.4 million), equivalent to 5 Canadian cents a share. This is a significant decrease compared to the profit of C$46.3 million, or 40 cents a share, during the same period last year. Analysts surveyed by FactSet had predicted a loss of 7 cents, making Aritzia's reported loss slightly better than expected.
The company's selling, general, and administrative expenses saw a 16% increase to reach C$171.1 million. This rise can be attributed to higher labor costs and expenses related to distribution center projects. As a result, Aritzia's gross profit margin decreased by 15%, amounting to C$186.8 million.
Despite these challenges, Aritzia's revenue experienced a growth of 1.6%, totaling C$534.2 million. Analysts' expectations were surpassed as they had predicted revenue of C$519 million, according to FactSet.
Earlier predictions from July had stated that Aritzia anticipated flat to slightly decreased revenue for the second quarter compared to the previous year. Additionally, it expected a 750 basis point decrease in gross margin due to a 550 basis point increase in selling, general, and administrative expenses.
Chief Executive Jennifer Wong commented on the situation, stating, "We believe our top line trend is being impacted by missed opportunities in the level of new styles in our product assortment as well as a mixed consumer environment."
Aritzia's determination to adapt and grow despite challenges proves its commitment to serving its customers and remaining competitive in the ever-changing fashion industry.
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