Aritzia says higher product costs and lower consumer traffic caused by inflation are affecting profitability
reported slowing revenue growth and a 47.5 per cent drop in profit in the first quarter, and downgraded its sales forecast for this fiscal year as the popular clothing retailer has begun to see consumer traffic slow down amid ongoing inflation.
The company has now revised its outlook for this fiscal year to reflect expectations of lower sales and gross profit margin.now expects revenue to increase by 2 to 7 per cent this year, down from a previous forecast of 10 to 14 per cent sales growth. Aritzia’s revenue outlook for the current fiscal year marks a sharp deceleration in growth, after revenue shot up by about 2.5 times over the previous two fiscal years while profits soared.
“In hindsight, this did cause us to be overly focused on existing items and developing newness through variations on these items,” Ms. Wong told analysts on a conference call Tuesday to discuss the financial results. “While many of our key programs have continued to perform well, we’ve identified opportunities in the level of newness across our product assortment.
Aritzia is also offering more product promotions than it has in recent years, as it sells off some of the inventory it has built up. Executives noted, however, that markdowns are still below pre-pandemic levels.
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