This is the conference operator. Welcome to Aritzia's First Quarter twenty twenty Earnings Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
I will now turn the conference over to Helen Kelly, Vice President of Investor Relations. Please go ahead.
Thank you, Carl, and thank you all of you for joining us for Aritzia's first quarter twenty twenty earnings conference call. My name is Helen Kelly, and I recently joined Aritzia as Vice President of Investor Relations. I look forward to working with all of you. Joining me today are Brian Hill, our Founder and CEO and Chairman Jennifer Wong, President and COO and Todd Ingledew, our CFO. We will begin today's call with management's discussion followed by a question and answer period open to analysts and investors.
Please note that remarks on this conference call may provide certain information regarding our expectations, future plans and intentions that may constitute forward looking statements. We would refer you to our most recently filed management's discussion and analysis, which includes a summary of the material assumptions as well as certain material risks and factors that could affect our future performance and our ability to deliver on these forward looking statements. The first quarter twenty twenty conference call, the earnings release, the related financial statements and the MD and A are available on SEDAR as well as the Investor Relations section of our website at aritzia.com. Finally, all figures discussed on this conference call are in Canadian dollars unless otherwise noted. I will now turn the call over to our Founder, CEO and Chairman, Brian Hill.
Thank you, Helen, and thank you everyone for joining us today. On behalf of the entire Aritzia team, we'd like to give a warm welcome to Helen Kelly, our new VP of Investor Relations. I would also like to take this opportunity to welcome John Maltobano as our newest member of our Board of Directors. He has impressive background with over 30 extensive experience in capital markets, international commerce and corporate affairs. We look forward to drawing on his broad range of knowledge and expertise.
With the addition of John, Aritzia's Board of Directors now has eight of 10 of his directors who are independent members. Turning to business, we're extremely pleased to have started the fiscal year with an exceptional first quarter. We delivered 17.8% growth in revenue and 24.8% increase in adjusted EBITDA, reflecting the sustained strength in our incredible business. This was our nineteenth consecutive quarter of comparable sales growth. Comparable sales increased 7.9% following an increase of 10.9% in the first quarter of last year.
The increase in comparable sales was driven by meaningful growth in our e commerce business and consistently positive performance in our boutiques. Our growth continues to be fueled by increased affinity to our unique brand of everyday luxury, beautiful high quality products, exceptional client service and an aspirational omni channel shopping experience. Our balanced spring and summer product assortment was well received by our clients and drove revenue in the quarter, despite unseasonably weather across Morrison, North America. However, a strategically aggressive initial buy for our spring and summer merchandise combined with the inclement weather resulted in higher inventory levels at the end of the first quarter. We expect the additional inventory to drive revenue during the quarter, although coupled with ongoing higher revenue raw material costs will put some pressure on our gross profit margin.
The new expanded and repositioned boutiques that we've opened since the end of the first quarter last year contributed to revenue growth in this quarter. We're extremely pleased with the performance of these boutiques, which continue to meet or exceed our expectations. In the first quarter, we opened a new boutique in Hudson Yards in Manhattan and repositioned our Maple Leaf boutique in Greater Toronto. Overall, we continue to see robust incremental client acquisition through our boutiques and our online channel. This success was reflected in our U.
S. Business with revenues growing by 38%. The sustained momentum in The U. S. Reflects accelerating brand awareness, driven largely by our new boutiques and the ongoing benefits of our influencer strategy and social media efforts.
The list of celebrities and fashion influencers wearing Aritzia products continues to expand. This led to an increasing this led to an increase in highly visible organic placements this quarter. We've also seen increased product exposure in a wide range of publications including Vogue, In style and The Wall Street Journal. In summary, we are very pleased with the strong start to the fiscal twenty twenty. Looking forward, our boutique network remains a key component of our growth strategy.
Our boutiques drive sales and meaningful profits, build brand awareness, drive significant client acquisition and fuels our e commerce sales. All six of our new boutiques planned for fiscal twenty twenty are located in The United States. Two of these locations are in existing markets, including Hudson's Yards Manhattan, which opened in the first quarter and American Dream in East Rutherford that will open in the second half of the year. Four other locations will be new markets for us, including Cherry Creek in Denver, Mall of America in Minneapolis, The Galleria in Houston and The Domain in Austin. All six of these new boutiques are located in AAA locations with top tier shopping in top tier shopping destinations.
Our growing brand awareness and strong sales performance allows us to obtain premier locations and negotiate terms to deliver highly attractive returns. Our real estate pipeline remains strong and we are making great progress in our lease negotiations for fiscal twenty twenty one boutiques. Our consistent financial performance illustrates our commitment to executing our powerful business model and our ability to drive both top and bottom line growth. We are incredibly well positioned within the fashion industry and remain committed to driving forward with our strategic investments as we continue to capitalize on the opportunities ahead. Before I turn the call over to Jennifer, I want to share some exciting news about our enhanced partnership with SAP to execute on an integrated and expansive digital platform.
This new initiative will enhance our omni channel capabilities and elevate our client experience to a world class level across all channels with the potential to drive significant revenue growth. Through our partnership with SAP, we will leverage client data and increase personalization to drive accelerated retail and e commerce growth over the next several years. With that, I'll turn the call over to Jennifer, who will provide more details around some of these initiatives. Thank you.
Thank you, Brian, and good afternoon, everyone. As Brian just mentioned, let me give you further details on the investments we're making to advance two of our e commerce and omni channel initiatives. To grow our clienteling program and develop our omni channel capabilities, we've recently entered into an expanded strategic partnership with SAP to develop a comprehensive customer program, which we believe will be transformative for Aritzia. This is the first time Aritzia has invested in this way on front of house systems and processes. The program is designed to provide a seamless, consistent and personalized approach towards how we engage and service our clients to deliver an unparalleled experience when engaging with our brand.
Through advanced business intelligence and behavior analytics, we will be able to tailor unique shopping experiences both in our boutiques and online while driving higher sales and client loyalty. The program is comprised of four projects: Customer three sixty, Marketing Communications Platform, Digital Sales Tools and Concierge. I'll discuss each in turn. The Customer three sixty project builds on our new enhanced data and analytics platform. It will enable us to store, view and edit client information from all of our front end systems in real time.
We'll be able to gather an enhanced view of our clients and their preferences to help us create more personalized communications and recommendations across all channels. Second, we are updating our marketing communication platform. While the project is primarily focused on replacing our existing email service provider, it will deliver so much more for our clients. Once it's up and running, it will allow us to personalize communications with our clients by creating campaigns targeting specific segments based on their attributes and preferences. Third, we will be launching a new and exciting app for our 3,000 style advisors.
The digital sales tool will equip them with real time enriched client information and product data. Our style advisors will be able to curate looks based on client characteristics, build recommendations, and set up and manage personal shopping appointments. The tool will allow us to maximize each and every client interaction. Our style advisors will be able to access our e commerce site, add items to our clients' baskets on their behalf and receive credit for the sale when the client checks out. This powerful tool is expected to generate significant revenue opportunities across all of our channels and elevate the overall shopping experience for our clients.
And lastly, we will be implementing Concierge to replace the case management system for our contact center. This newer integrated solution will take our client experience to a new level. The concierge team will know who is calling or emailing and route it based on client type, language or other characteristics we set in place. This project aims to connect to the heart of our clients, providing them with a personalized and efficient experience through the life cycle of their concerns or questions. Next, we have also embarked on an omni foundations project with SAP.
To support omni channel growth and capture existing synergies, we are creating a platform to provide our clients a seamless experience whether they shop online or in our boutiques. Building on the foundation of our new point of sale system, this SAP platform will allow for a centralized view of inventory availability to improve cross channel activities such as buy online, pick up in store and buy online, fulfill from store. Together, we are confident these tools will continue to set Aritzia apart and keep us on the forefront of providing exceptional client service and an aspirational shopping experience for which we are well known. I'll now turn the call over to Todd to discuss our financial results and outlook.
Thank you, Jennifer, and good afternoon, everyone. This is our first quarter reporting under IFRS 16, the new leasing standard. The net impact of IFRS 16 adoption to our net income in the 2020 was a reduction of only $77,000 We do not expect the standard to have a material impact on net income for the remainder of the year. Figures on a reported basis include the adoption of IFRS 16. However, we have also provided certain metrics for fiscal twenty twenty excluding the impacts of the new standard.
We will provide these comparable figures each quarter as we report our results during the fiscal year. In my review of our financial results, I will focus my commentary on the comparative figures, which exclude the impact of IFRS 16. Turning to our results for the first quarter, we saw continued momentum in our business and are pleased with the strong start to fiscal twenty twenty. Net revenue grew 17.8% to $196,700,000 compared to $167,000,000 in the first quarter last year. This growth was driven by both e commerce as well as our boutiques, particularly in The United States where we saw sustained momentum.
Comparable sales increased 7.9% on top of the 10.9% increase in the first quarter last year. Net revenue also benefited from the addition of six new boutiques and three expanded or repositioned boutiques since the end of the first quarter last year. Gross profit margin excluding the impact of IFRS 16 was 40.6% as compared to 40.4% in the first quarter last year. The 20 basis point increase in gross profit margin was primarily due to leverage on occupancy costs and benefits from our ongoing sourcing initiatives. This increase was largely offset by 130 basis point impact related to the weakening of the Canadian dollar compared to the first quarter last year.
SG and A expenses excluding the impact of IFRS 16 as a percent of net revenue were 27.7%. This is a 40 basis point improvement from 28.1% in the first quarter last year. The improvement was primarily due to leverage on fixed costs, partially offset by continued investments in people, technology and infrastructure. Adjusted EBITDA excluding the impact of IFRS 16 increased by 24.8% to CAD35.4 million or 18% of net revenue compared to CAD28.4 million or 17% of net revenue in the first quarter last year. Adjusted net income grew 21.3% to $18,500,000 compared to $15,200,000 in the first quarter last year.
Adjusted net income per diluted share grew 30.8% to $0.17 compared to $0.13 in the first quarter last year. Our cash balance totaled $35,800,000 at the end of the quarter as compared to $122,300,000 at the end of the first quarter last year. Over the past year, we used free cash flow to repurchase $107,000,000 of subordinate multi voting shares concurrent with the March 2019 secondary offering, repay $43,700,000 in long term debt and repurchase $9,400,000 of subordinate voting shares under our previous NCIB. As you saw in our press release, we announced the intention to renew our normal course issuer bid through the facilities of the TSX to repurchase and cancel up to 5% or 3,600,000.0 of our subordinate voting shares. Having an NCIB facility in place allows us to buy shares opportunistically as market conditions warrant and in the short term offset the dilution of option exercises.
As our cash balance grows in the second half of the year, we will reevaluate our options for the use of excess cash. Turning to our outlook, we expect positive comparable sales growth in the second quarter, driven by our strong brand momentum and the sell through of the aforementioned springsummer purchases. We expect the flow through of positive comparable sales will be impacted by higher markdowns and ongoing higher raw material costs, resulting in lower gross profit margin percentage for the second quarter compared to the same period last year. For the full year in fiscal twenty twenty, we continue to expect to deliver low double digit revenue growth. Removing revenue from the additional week in fiscal twenty nineteen, net revenue in fiscal twenty twenty is expected to grow in the low to mid teens.
Gross margin expectations for the second half of the year have not changed. We continue to expect gross margin in the second half of the year to be lower than last year due to ongoing higher raw material costs. This combined with the gross margin pressure in the second quarter will translate into a moderately lower gross profit margin for fiscal twenty twenty compared to 2019. We continue to expect SG and A to grow faster than revenue in fiscal twenty twenty as we make strategic investments in technology and infrastructure. These investments will predominantly be cloud based and are now expensed where they previously would have been capitalized.
Incremental SG and A expenses related to these initiatives in fiscal twenty twenty are expected to be approximately 7,000,000 to $8,000,000 and occur primarily in the second and third quarters. We continue to plan net capital expenditures of 45,000,000 to $50,000,000 which include costs related to new and expanded or repositioned stores in addition to infrastructure investments. In conclusion, we are pleased with the strong quarter and the continued momentum in our business. We are confident our strategic investments we are making to advance our growth strategies will enable us to continue to deliver consistent revenue and profitable growth as we remain on track to achieve or exceed our fiscal twenty twenty one financial targets. With that, we will now welcome questions.
Operator?
Thank you. We will now begin the question and answer session. Session. The first question comes from Mark Petrie of CIBC. Please go ahead, sir.
Hey, good afternoon. Just regarding the higher inventory and the change to the gross margin outlook, how much of that inventory overhang have you progressed through to date in the second quarter? And Brian, you noted that the inventory overhang was obviously somewhat weather driven, but also driven by an aggressive approach to buying for springsummer. Would you have any reason to take a different stance in terms of your approach in buying for fallwinter?
I'll be able to tell you that after the quarter because although it puts pressure on our gross margin percent, we've yet to determine if that actually adds gross margin dollars. We think it might be adding gross margin dollars. We don't want to sustain this over a long period of time. But we went into the spring summer season understandably bullish with our product offering, business has been great and continues to be. And so we're quite aggressive with our initial buy.
Despite strong regular price season, which we had in the quarter, we ended the quarter obviously with elevated inventory levels and it was partially resulting from the unseasonable weather. But we've been selling through the springsummer product extremely well so far this quarter and expect this will contribute to our top line revenue growth as we mentioned. Of course, to bottom, we're going to put pressure on our gross margin, But we're pretty confident in about another two to three weeks we're going to be exactly the same position we were last year. So it'll be so we're going to be looking to see in hindsight. I mean, if you have inventory because you had a bad early season, that's a problem, but that means you had a bad season.
We didn't have a bad season, we had a fabulous season. So we just have a bit of an overbuy and therefore we're going to work through And as I mentioned, I think we're going to be through most of it in the next two to three weeks. And then at that point in time, we'll be able to reflect back on our next call how that went. But I'm not losing any sleep over it at this point in time.
Okay, thanks. And in the past, you've sort of given a sense of how the current quarter was tracking relative to the previous quarter on comps. This time you just said your outlook is for positive. How should investors interpret that?
Mark, it's Todd. We're pleased with the current performance of our business, but we're only five weeks into the quarter. So as Brian said, we still have a couple of months ahead of us here. So we do expect the momentum we've seen to continue, but too early in the quarter to put a stake in the ground.
Okay. Thanks. And then just last, Brian, thanks for the color on the store opening plans for the rest of this year. But wondering if you could just sort of give us a bit of an update in terms of how the negotiations are progressing for fiscal twenty twenty one and what your expectations would be in terms of store opening pace?
Yes. Things are rolling along pretty good both on new stores and repositioned stores. I just want to clarify something. So thanks for bringing this up. I want to make sure everybody understands why we're opening boutiques and continuing to open boutiques because there is a lot of obviously, everybody's talking about online sales and our boutiques drive meaningful profits for us.
Every single store we've been opening certainly since we've gone public and almost every single store we have drives meaningful profits for us. It helps us build brand awareness in our new markets. It drives significant client acquisition. Quite frankly, we get more client acquisition from our stores than we do our e commerce channels and it fuels our e commerce sales. And so the net benefit of opening the stores is incredible.
So we're going to continue to open stores and we think it's a core competency of ours obviously and how much profit they drive and we think it's a strategic advantage we have over a lot of pure plays out there. So we're continuing to open stores. In the following year, our pipeline looks super healthy as I mentioned both on new stores and repositioned stores, primarily new stores in The United States, repositioning stores in Canada. But we have a long way to go in The United States and the landlords there's no shortage of landlords and locations clamoring to have an Aritzia store in their market. So our pipeline looks super healthy for next year and some of them are finalized.
I don't wish to share them at this point, but and some of them are still in negotiations, but we're not going to have any problem fulfilling our objectives next year.
Okay. Appreciate the color. Thank you.
The next question comes from Irene Nattel of RBC Capital Markets. Please go ahead.
Thanks and good afternoon everyone. First of all, impressed to see that same store sales number notwithstanding the weather. But I really was intrigued by the partnerships that you guys were talking about and the investments you're making around customer experience and e commerce and this three sixty view. And I was just wondering if you could kind of elaborate a little bit, walk us through how that actually plays out from the perspective of the customer and over what time period we're going to see you roll out these initiatives?
Irene, it's Jennifer. And we are very excited about the customer program because we do think it has the ability to transform the way we do business and ultimately set us apart from from our competitors. And so I would say of all of the you know, there's four four work four work streams in the overall program. We don't are not disclosing a hard date, but we do expect to see some of that up and running in the next fiscal year. And so I think what you'll see on the front end is you'll see the aspirational shopping experience, and it will cross over onto online.
Okay. Okay. Got it. And if I am a customer going into your store, with what you're gonna do in the next year, how am I going to see how am I going to experience this? And I guess is what I'm really getting at.
Well, it's Jennifer Irene. Hi, Brian. So
this is we're trying to get because I think this is really cool.
Yes. And we think it's really cool too. And actually on a side note, not only we're mentioning SAP and I don't know if they'll mention in their earnings call, but they phoned us this week and asked us if in the SAP earnings call next week, if they can talk about Aritzia and the partnership with Aritzia, which is pretty specialized because SAP is a pretty big organization and the CEO wants to talk about us in their call. So we'll see if it manifests itself in that. But yes, so the way we looked at it is we have between 3,004 frontline style advisors and we need to empower them and give them the data and the tools to be able to really excel at their job and fulfill that everyday luxury goal that we have as an organization.
So what we're giving them is data, and that data will start off with just knowing exactly who their customer is, when they've communicated with those customers, what that customer has purchased, all the data necessary around them having all the facts at their disposal. As we start to develop those, it allow us to give product recommendations, communicate with them on product recommendations, communicate them on events and things that are happening at Aritzia, as well as then the next tier would probably be more artificial intelligence around recommendations on product based on their past purchase history and and and other items that they have in their wardrobes and how we can wardrobe and bring in the whole AI thing. So, we're looking at this as a multi phased approach and we just think that from a customer perspective, it'll it'll allow them through our our style advisers to be able to have a whole different level of experience in our stores because it'll be cognizant of their time and they give recommendations that we think will resonate with them more. It'll allow us to track communication so they're getting communicated at the appropriate times, and just allow us to make better informed decisions when we're communicating them, whether it be offline and and they're outside of the store, whether when they come into the store and, know, such somebody such as yourself walks in the store and you see your your, you know, your preferred style adviser, and, they will know all about what you purchased, not just in the store, but online as well.
And this will allow us to help things online and eventually personalize online and allow us to have personalized online experiences as well. So we're super excited. It's not going to happen overnight. It's a big commitment on our part. And quite frankly, it's a big commitment on SAP's part and where it's obviously an important client for SAP because we've done such a great job of implementing all their the previous work streams we've done with them.
And so they're super excited and confident in partnering with us on this. And I think they're really excited as well because of who we are and what we do and what we mean in the fashion business. I think that's important to them too. So we've we've created a great partnership. I know I went in a few weeks ago and went and met met with Bill McDermott in in New York, the CEO, and made a big effort to come see us.
So we're excited about it and think it's going to really propel both our retail and bricks and mortar business, but also our e commerce business for many years to come.
That's great. Thank you. And so it sounds as though, Brian, this is if I was thinking of a three year process, is that reasonable?
Well, think it's going to be ongoing. We look at this as very many phases. I think I'll go back to Jen as far as the phases go.
We do know with the digital selling tools that right now we're planning it to be launched in three phases. And so not unlike many of the other systems that we implement, we do do it over a period of time to make sure that the change is absorbed appropriately because it will introduce a lot of change, particularly with the style advisors in the store. So yes, I would say it's multi year. I don't know if I'd say three or two or four or what, but I think with any system that we implement, we're always optimizing it once it's in.
And then I'll add over for the next several years, I think SAP will have more capabilities and and have more tools at our disposal as they continue to develop too. So there's probably going to be some implementation of further implementation of of products and tools from SAP that they haven't completed even that that we don't even have on our menu yet. So we think that's gonna continue to evolve over a long period of time. And we have a great relationship with SAP. They're an incredible company, and they've fueled our growth up to this point in time and backstopped it.
And we'd like to think they're going to continue to do so for us for many years to come.
That's great. Thank you.
The next question comes from Mark Altschwager of Baird. Please go ahead.
Good afternoon. Thanks for taking my question and nice start to the year. Just circling back on the Q2 outlook, just with respect to the gross margin commentary, any further color on the magnitude of pressure you would expect? And just given that planned pressure, are there any offsets on SG and A we should be thinking of as we adjust our models?
As far as further commentary, I think we provide some specifics around the year in that we expect the gross profit pressure from Q2. We haven't changed our outlook for Q3 and Q4, but we do expect the gross profit decline for the year to be moderately down. We aren't providing specifics on Q2. And we don't we're always ensuring that we're spending appropriately. But as we've discussed, we do have these initiatives that are being expensed in Q2.
So there aren't any offsets beyond where we've already forecasted SG and A.
Thank you. And then the SAP project sound very exciting. Also sounds like a lot of change from a systems perspective. Could you maybe talk about what you're doing from a risk management perspective to protect against disruption in the business and the momentum in the business as these tools are implemented?
Backbone back in 2008, we've had I would say tremendous track record of putting in large scale systems. So if you just go back starting with the SAP implementation, our first WMS implementation, launching e commerce, putting in two point of sale, the last point of sale being probably the most impact fall and one might say highest risk because it affected all of our stores. We have done very successfully. There's one thing that we have honed, it's our project management methodology. We have a fantastic project management team and broader business team that knows how to do these things.
And so whenever we're going about putting in these projects, we apply our project methodology and we take into account all of the different business impacts and we have a running tally of how to mitigate that and we apply basically the what, when, how much philosophy that we do with our entire business and making sure that what we do is right and when we do it is right and how much it costs is appropriate. If we stick to some of our guiding business principles, we usually achieve success.
That's great. And then finally, just a bigger picture, the earnings outlook this year calls for slower growth given some of the heavier investments spend on systems and infrastructure. How should we be thinking about the key drivers to earnings reacceleration in fiscal twenty twenty one, I guess back to the rates implied by your 2021 plan, just between top line, gross margin, SG and A leverage, just how would you characterize the big drivers there?
Well, the big drivers will continue to be what they have been and frankly what they were in Q1. Our new stores are expanded and repositioned boutiques as well as our e commerce continues to show significant strength. We also have our ongoing influencer program that we have been spending or are planning to spend increasing dollars in. And then the Phase one of these investments that we're making this year will benefit us from a revenue growth perspective in fiscal twenty twenty one as well as beyond. And then from a COGS and SG and A perspective, we have been seeing raw material pressures this year and last year.
The Canadian dollar had been working against us. It's starting to strengthen a little bit right now. So depending on how that moves, we could have some see some positive benefits even in the second half of this year from that. And SG and A, while we have the incremental 7,000,000 to $8,000,000 of investments and we'll likely continue to have investments going forward, I'm not anticipating that it would be at that level because of the significance of what we're implementing this year.
Thank you for all the detail and best of luck.
The next question comes from Lorraine Hutchinson of Bank of America Merrill Lynch. Please go ahead.
Thank you. Good afternoon. As you look to your fall and winter receipts, are you happy with the level and content of those?
Once you get through the spring inventory, do you feel like you're back
on track to match that inventory with sales?
Yes. I mean, we've got to keep in
mind that we were kind of on track. We planned for some meaningful increases and we got we received Maybe we got a little ahead of our skis and maybe if the weather was a little cooperated a little bit better, we would have done even better. But I don't want to use weather as an excuse. We always try to avoid it and we had a great quarter.
So I'm not you don't win a championship and then start making excuses on why you may have won the championship. So we had a great quarter. And for fall, we're once again making strategic decisions on our inventory and buying some areas in-depth and we like to think that we're going to be incredibly successful in those areas and hopefully that will continue to fuel our same store positive same store sales growth. So we don't we have a very systemic organized systemic inventory system that's been in place for a long time and how we go operate it and we don't really make oversights or expose ourselves to risk and inordinate amount of risk. And we've talked about that from the get go.
And so I don't see that changing. We don't see our systems changing. We're obviously develop continue to fine tune and hone every system, not just inventory systems and purchasing decisions, but throughout every decision throughout our organization. So we're always improving these things. But the only way I learned a long, long time ago, decades ago, that the only way you're ever gonna get an increase, if you're gonna get an increase, you have to buy for an increase because you're never gonna get an increase if you buy for a decrease.
So we're gonna continue to buy for increases because our business is really great and the momentum is incredible. So we're going to continue to buy for these increases and we have a great system of liquidating any kind of excess purchases through our stores and through our e commerce channels that doesn't cause us enormous amount of problems. But we just thought we'd identify and call out that we were sitting on more inventory than traditionally we have, but that was strategic in nature and we're going to continue to make strategically positive inventory decisions going forward.
Thank you.
The next question comes from Patricia Baker of Scotiabank. Please go ahead.
Thank you very much and good afternoon. I had some key questions around the projects that Jennifer was talking about, but you provided enough of an overview there and I also wanted to ask about the inventory, but that's been covered. But if I may, Brian, you had a 7.9% same store sale comp against quite a nice showing against a very strong comp last year. Can you talk to us about what items or what products might have been particularly successful in the first quarter?
Yes. I I wouldn't say we had any items or products that were success particularly successful in the first quarter. We have certain fabrications that we continue to develop fabrications and partnership with mills in Italy and Japan and places like that. And we've seen the fruits of some of those partnerships and development of some
of those
fabrics pay dividends for us. We're seeing some growth in some of our collections and specifically some of our collections are professional collections and are a little bit more structured and more finely constructed products have trending extremely well for us and which is great because those are a lot harder to duplicate for other organizations that look to us. And so, I think that we didn't necessarily have any products or items that stood out, we just sort of had some categories of fabrications that are doing extremely well and certain direction of clothing and more constructive clothing that's actually performing extremely well for us.
Would you say that that performance is indicative that we would see those fabrications and that structure be in collections going forward for the rest of the year?
Some of them for sure, but other ones are specific to spring and summer. So various linens and things like that, rayons are specific to spring and summer and we'll see a whole new assortment of fabrications and wools and various silks and things like that for fallwinter. So, we'll we'll you know, that changes obviously as the seasons change, and and what's great about our business is that we're not seasonal per se. I mean, we have great spring and summer fabrics and styles, and we have great fallwinter styles and fabrics. As you know, we don't unlike a lot of organizations that excel in one season or into the other, we like to kind of approach it with a balanced view and make sure that we are balanced throughout the course of the year.
Thank you.
The next question comes from Stephen MacLeod of BMO Capital Markets. Please go ahead.
Thank you. Good afternoon. Good evening. I just wanted to follow-up on two things. Brian, you gave a lot of good color around the excess inventory level that you're currently sitting on.
And I just wanted to clarify, I know part of it is related to a higher initial buy, but did you also see a slowdown in traffic, in foot traffic? And if so, have you seen that sort of rebound quarter to date or subsequent to when you saw the when you saw it if you saw traffic weakness peak as it sort of rebounded?
No. We've actually haven't seen it a slowdown in traffic. Our stores continue to see the same traffic in Canada. We actually are seeing it's somewhat anecdotal, but based we're seeing increased traffic in our stores in The United States. And our e commerce channels continue both Canada, The U.
S. And international, we're seeing increased traffic. So we're not seeing any decrease in traffic whatsoever anywhere in our stores or in our e commerce channels at this point in time. I think the weather did affect perhaps maybe we would have seen even more traffic in certain areas and regions if the weather cooperated a little bit more. But at the end of the day, we're seeing increases all right across the map in our business and traffic.
Right. Okay. And when you think about where that excess inventory lies, are there specific categories that are causing it or is it just broad based, guess?
It's kind of broad based. Truthfully, we're spending quite a bit of time talking about the inventory on this call. We suspected we would. We were discussing earlier today that if we had this call and released our financial numbers to date two, three weeks from now, we won't even be in a position of being over inventoried. So this situation of having a little too much inventory ironically was a perfect storm of when it was peaking right around the end of the first quarter.
And if we as I mentioned, if we by the July, we don't expect that we're even going to have any more excess. We're going to be in the exact same inventory position as we were at the same time last year in two weeks, two to three weeks.
Okay. Well, that's an interesting way to think about it. Thank you. And then just finally, in terms of the SAP partnership and some of the investments you're making around customer loyalty, is there some sort of loyalty program that you're expecting to launch? I'll take it.
Yes,
I mean, discussed loyalty programs. We've discussed also, which seems somewhat unrelated, but are related is an Aritzia app and things like that. And so that will be all part of this digital selling tools as a loyalty program. I mean, are we going to have a traditional buy two, get a third one free loyalty program? No, that's not how we do things.
We're everyday luxury. But we're going to define what loyalty what a loyalty program looks like at Aritzia. And I'd like to be sitting here I don't know if it's maybe a year from now is certainly a little aggressive, but maybe a couple of years from now, two, three years from now discussing the strength and the performance of this loyalty program we're putting in. However, regardless, it will reflect whatever that loyalty program is, it will reflect what beyond brand and the everyday luxury that we want to do, it will reflect that. That said, we already do have some forms of loyalty program in our stores.
We have client events and gifting and things like that with clients existing. So we've had a loyalty program and forms of loyalty program in Aritzia for over a decade now. It just isn't fueled by the sales tools SAP is going to help us with. And so we're going to up the ante, so to speak, on a loyalty program at some point in time here. But we already do have one in place right now.
Okay. That's great. Thank you, Brian.
There are no more questions at this time. This concludes the question and answer session. I would now like to turn the conference back over to CEO, Brian Hill for any closing remarks.
Yes. Thank you and thank you everybody for joining us today. In closing, our business continues to be incredible and we're well positioned to capitalize on this next phase of growth we discussed here today. We're extremely excited about the year ahead as we continue to grow our e commerce business, expand our new boutiques, particularly in The United States and drive our exclusive brands and product innovation. And finally, further grow our brand awareness and enhance our long term profitability.
So I'd like to thank everybody for participating on our call today. We look forward to speaking with you again soon. Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.