Aritzia continues sales growth streak, reports nearly 32% jump in income

VANCOUVER — Aritzia Inc. plans to create a formal loyalty program as the clothing retailer works to better use data to drive sales.

"We're going to up the ante so to speak on a loyalty program at some point in time here," said CEO Brian Hill on Thursday during a conference call with analysts after the company released its most recent financial results.

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Hill noted the Vancouver-based company has rewarded loyalty for more than a decade, with events, gifting and other promotions for existing clients.

However, the women's fashion maker plans to incorporate it into its planned new digital sales tools, he said.

Aritzia announced an enhanced partnership with SAP, a German-based software company, that consists of four projects centred around better using client data.

It includes creating an app for the company's style advisers to use. The app will allow them to access client information in real time, give them access to Aritzia's e-commerce site, enable them to add items to client baskets and receive credit if the client makes the purchase, said president Jennifer Wong

Hill cautioned it would not be a traditional program, where a customer purchases two items and receives a third for free.

"That's not how we do things. We're every day luxury."

The comments came as the company reported continued sales growth in its most recent quarter with its 19th straight quarter of comparable sales growth — a key retail metric —with a 7.9 per cent jump for the 13 weeks ending June 2.

Net income increased 31.5 per cent to $16.2 million for the first quarter of its 2020 financial year, compared with $12.3 million in the same quarter the previous year.

Aritzia's adjusted net income moved up 21.3 per cent to $18.5 million from $15.2 million or to 17 cents per share from 13 cents per share.

Net revenue increased 17.8 per cent to $196.7 million from $167 million.

The company was expected to earn 15 cents per share in adjusted profits on $190.4 million of revenues, according to analysts polled by Thomson Reuters Eikon.

Although the results beat expectations, management notes that quarter-end inventories were higher than usual due to larger buying and unseasonable spring weather across most of North America, said analyst Irene Nattel or RBC Capital Markets.

"Consequently, investors should expect some gross margin pressure during the second quarter due to higher markdowns, and previously flagged higher raw material costs," she wrote in a report.

Follow @AleksSagan on Twitter.

Companies in this story: (TSX:ATZ)

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