And with that, it is my pleasure to introduce our Founder and Executive Chairman, Brian Hill.
Thank you, Beth, and thank you everybody for coming today. Hopefully those of you who are with us could enjoy the tour today. As I mentioned, Jen put me in the cellar to do my stuff where I specialize in. Anyway, 42 years ago today, we opened our first store, and our strategy at that point was simple, and it was that for quite some time. People asked all these complicated questions about our strategy and what the insight was, and it was to make sure our revenues exceeded our expenses. That was the big strategy. Shortly thereafter, three years in, it was a seminal moment for Aritzia as Jennifer Wong joined. As many of you know, I did not hire her. She actually applied, and I actually turned her down.
She persisted and went down to our other store that we had and applied for a job there, and they hired her. That was really important that that person hired her at the other store, because I cannot get any credit for that. Our strategy has evolved, but we got quite good at the first part, making sure that our revenues exceeded our expenses at this point in time. You all met Pippa today, and in 1992, she joined us, along with many others that are still with us today. Our dream at the time was just to have enough stores that we could become vertical with our product and meet manufacturing minimums. At that time, the dream was we could have three or four stores in Vancouver, one in Calgary, four or five in Toronto, and one or two in Montreal.
That was sort of our strategy at the time. I cannot even think about the time we were manufacturing all our own product and things like that. In 2007, we became vertical. We opened a couple test stores in Seattle and in San Jose, and shortly thereafter, around 2010, we decided we were going to take on New York. We knew exactly where we wanted to be. It was in SoHo, and we wanted to be on the corner of Spring and Broadway next to Balthazar. The problem was The Gap was in there at that point in time, so it was a small, minor detail. I picked up the phone somewhat naively, and I called Karen Janes, who was running The Gap's real estate at the time, and she is going to talk to you today.
I knew Karen as the hardest working person in real estate. I used to see her at the trade shows. She'd be the first one in there, the last one to leave. It turned out when I called her that day, I also determined that she was probably the hardest negotiator in the industry as well. I worked through a deal, and we opened up our store there. The conclusion was we really wanted that store, but also at that point, we really wanted Karen Janes working for us as well. I tried to recruit her for almost a decade. She turned me down a bunch more times, and then she eventually joined about a decade ago. She actually only came on as contract initially because she didn't think there'd be enough work for her here at Aritzia.
She's going to discuss all the work she's doing now, but she doesn't complain to me anymore about that, I can tell you that. Right around that time, about a decade ago, Jennifer had met and sourced Todd Ingledew, who you know really well, most of you now. June 6th was his start here. At the time, as he's walking out the door, Jennifer Wong casually, Oh, yeah, one other thing, Todd, we're going public in 12 weeks, when he hired him. That was a whole another chapter. Todd's been with us ever since and steering our ship financially ever since then. Margot has joined quite recently.
She's been with us a few years, but she's had a wildly successful run so far, launching our app, which ironically, yesterday was probably the first day in that last 1,000 days we didn't have a positive comp because we were coming up against our app launch yesterday. We woke up today to see this is our first negative comp on a day we've had in probably the last 1,000. It wasn't a good start to the day for me, but that's fine. It was a big thing. Margot has launched that. She's put a whole performance marketing tool in place. She has a whole list of a bunch of other initiatives she's working on. I think she's sharing some of those with you today. Full circle, here we are back in Manhattan.
I touched on everybody that's presenting today because I feel so proud that I'm working with a world-class team here. If it wasn't for the team here, then we wouldn't be here. All led by Jennifer Wong, who I think is the best CEO in the industry. It's a privilege to be here. It's a privilege to work with the team when I do. It's a privilege to walk around and see that we have the busiest and most beautiful, arguably the busiest and most beautiful stores in Manhattan. When I think of our journey from 1984, it's really surreal. Enjoy today. Jen's painting a picture for what the next five years and beyond is going to look like. Hopefully, I think we have some Q&A then after. Enjoy that and thank you all for coming again.
Thanks, Brian. It's great to see everyone here. Thank you all for coming in today. To those of you on the webcast, thank you for tuning in. Four years ago, at our last Investor Day, I had just accepted the role of CEO, and at that time I knew we could get more famous in the U.S. I knew we could accelerate digital, and I knew we could be an admired place for top talent to reach their full potential. I had goals of achieving $5 billion in revenue, which was the number at the time, a triple-digit stock price. I had envisioned a global footprint. I stand here today, and it's so gratifying to be standing here today, four years later, where we've checked off so many of those aspirational boxes that we all had envisioned.
I guess I would say we're pretty much famous in the U.S. Digital is leading our growth, and we have more clients than ever before who love Aritzia. Today, I'm proud to say that our path is clear for the next phase of growth. I am happy to share those ambitions that we have for Aritzia, and as Brian said, for the next five years and beyond. We don't actually have a title for today, but if I was to give a title for today's presentation and for our plan, I would call it Beyond, because it is how we think about our business. We do think about the business for the long term. Here's the fashion landscape. There you see Aritzia, uniquely positioned in the global fashion landscape. It's Everyday Luxury.
We offer beautiful product, luxury-level service, and a luxury brand, all of it at an attainable price. It's who we are, it's our competitive advantage, and it sets us apart. We created Everyday Luxury. It means our product is fashionable and elevated, and everything we do is through a luxury lens. Our products feel luxurious, our fabrics feel luxurious, our marketing feels luxurious, our service is best-in-class. Our environments are aspirational, whether it's digital or our boutiques. We source from luxury mills. We work in the best production facilities in the world. There's Everyday Luxury in everything our clients hear, read, see, and experience. We created a unique category, one that we're not just leading in, but one that we actually have all to ourselves. Everyday Luxury is what we're known for, and what we're building is a world of Aritzia.
We make every decision through the lens of Everyday Luxury, and it's the asset that creates enduring value. Aritzia is more than a retailer. We're a brand, a brand that shapes how our clients shop and dress and experience culture. It's our boutiques, the app, the website, and many other passions. We've created a platform for long-term global growth. As we enter our next phase, brand remains a driving tenet of our multi-year plan. Staying true to founding principles and philosophies originating from Brian has demonstrated and generated tremendous results. We excel and are balanced across all areas of our business, whether it's creative, operations. It allows us to drive growth and performance, even with external curveballs and external factors, which we all know happens.
It can happen with the flight of a tweet any week, you name it, and it ensures that we can support our phenomenal growth. We over-delivered, and what we've done is quite phenomenal. in 2022, we set a clear roadmap. What we've done is unprecedented. No peer of ours is doing what we're doing at the moment. We lead in growth, both top and bottom line, store productivity, digital growth. I mean, look at the numbers. We're on track to beat our net revenue target by more than $1 billion. That's net revenue growth of 21%-22% a year against a target of 15%-17%. Adjusted EBITDA margin is 20% against a target of 19%. We got here a whole year early. The last Investor Day, a few of us, we had a bit of a debate on the EBITDA margin.
All to say, as it turns out, some of us were more right than others. Over the last four years, we focused on three growth levers: geographic expansion, digital growth, and increased brand awareness. All of these levers work together. Digital and retail work synergistically together. Opening boutiques and driving digital has propelled our expansion in the U.S. It's enabled us to reach more and more clients. You'll hear from Margot and Karen, digital drives traffic to our boutiques, and our boutiques have a halo effect on digital. Last but not least, brand awareness powers both. Boutique expansion and digital growth are fueled by awareness, and awareness grows because of them, so vice versa. Clearly, Everyday Luxury is resonating, and we've created meaningful momentum as we enter our next multi-year plan. The next years is about doubling down.
Doubling down on what has driven our success and keeping the flywheel turning. The opportunity ahead is significant, and the U.S. remains our primary growth market through fiscal 2032. Our long-term goal goes further, to become world-famous. Here's how we amplify the core. Increase brand awareness through our brand and performance marketing. Boutiques, with an accelerated build-out in the U.S. In digital, we'll offer Everyday Luxury at every touch point. Expanding our assortment, we will capture more of their closet. The next years will be focused on both executing our existing proven growth strategies with discipline and excellence, as well as building the platform that will unlock our potential beyond fiscal 2032. The success we've had to date has set the stage for us to successfully execute on the next five years and beyond. As we look beyond, we keep building for the future.
Two things. We will build the foundation for growth beyond the next five years and expand into the most promising global markets. We will continue to make investments in infrastructure to enable our growth. Scale the enterprise. That's the next chapter. We execute our proven strategies with discipline and excellence, and we build the platform that unlocks our potential beyond fiscal 2032. Bring Aritzia to the world. What does this all mean? By fiscal 2032, we expect to roughly double our revenue. $9.5 billion-$10.5 billion. We expect to expand our margin to an adjusted EBITDA of 21%. Growth and profitability. Let's go deeper on the four growth levers. You'll hear from, as we've said, some of our leaders today, Karen on boutiques, Margot on digital, and Brian on capturing more of her closet. I'll start with awareness because it all starts with the brand.
Okay, since we opened our first two stores in the U.S., it has always been our aspiration to get famous in the U.S. We opened our first two stores in the U.S. within weeks of each other. I remember it well. It was right before Black Friday in 2007. Our goal was to achieve the same level of love for our brand in the U.S. that we already had in Canada. I get emails all the time from clients, and recently, more and more from the U.S., whether it is raving about our service, loving our Super Puff. Some actually outright ask me if I will give them the Super Puff. Some just simply telling me how inspired they are by what we do. Our marketing starts with one thing, our brand. Our marketing is integrated into almost everything we do. We integrate it into existing functions.
For example, our boutiques are our primary marketing vehicle. It showcases Everyday Luxury at every customer touch point, everything our client sees, hears, and feels. Boutiques are our top client acquisition tool. They drive traffic to our digital channels. Of course, what we love is they are highly profitable at the same time. Everyday Luxury also speaks to a broad customer set. We do more than sell clothes. We build relationships. You probably heard that from Pippa this morning. We offer an exceptional experience. The great thing about Everyday Luxury is everybody loves it. I will tell you a story. It was over a year ago.
I walked into the SoHo store, and I saw a bunch of bags being packed up and kind of organized. The style advisor was behind the cash desk or the service desk, and she was putting them into the closet, and I asked, What is going on? She is like, Well, we just had this young lady in, a client in with her mom and her grandma. They had come from Alabama. They were in the city, visiting the city. They came into Aritzia, and between the three of them, spent over CAD 8,000 one morning. This was before we opened the store in Birmingham, so now they have a store nearby to go to. We had taken the bags and we were going to ship them to their hotel so that they were not walking around the city with a whole bunch of bags.
I am starting to see this more and more, and I think it is so wonderful that we are cool with the younger generation, and we resonate with the moms, and they can spend time together in our stores. Since speaking to you four years ago, we have continued to introduce Everyday Luxury to more and more clients. We have nearly doubled our active client base, and that is a 16% CAGR from fiscal 2023 to fiscal 2027. You can see we are getting more famous, and you can see the universal love building in these numbers. In addition to growing our boutique footprint, our marketing initiatives have helped fuel this sustained growth. In fiscal 2025, we began to strategically invest in performance marketing. We also intensified our focus on brand marketing. Brand marketing to maximize our reach and impact.
Our full-funnel marketing tactics are expanding our reach and creating significant audience engagement.
We are amplifying our brand and introducing new customers to Aritzia, engaging clients throughout this customer journey, as well as driving traffic and conversion and ultimately advocacy. We will continue to hone our tactics and further propel the brand. That said, marketing spend will remain a low single-digit percentage of sales, and obviously, it will grow commensurate with our business. In Canada, we are very well-known and loved. We have been in business there for over 40 years. Three years ago, the awareness in Canada was three times that of the U.S. Today, it is two times. That gap is closing. There is so much more to go. Where do we go from here? Looking forward, we will continue to build on our much-loved Everyday Luxury brand. We will double our client count by fiscal 2032, and we will do this through four consistent drivers.
It includes optimizing our full-funnel marketing investment, boutique expansion, digital initiatives, and loyalty initiatives. All of these things, the beauty is that they work together. We will keep building on the Everyday Luxury brand our clients love. One of the things I find Brian and I are always on the same page, he has taken all my intros that I pre-wrote last night and has pretty much shared them already with you. I have the pleasure of introducing Karen Janes, our Executive Vice President of Real Estate. I was going to say that we first approached her 20 years ago, but you already know that story. She finally joined us. It has been nearly 10 years. She was not just the head of real estate for The Gap, but she was also Global Head of Real Estate for brands like Ralph Lauren.
She is a Trustee of the International Council of Shopping Centers, and she is one shrewd negotiator. She has shaped Aritzia's real estate portfolio, the best real estate in the business. Karen, over to you.
Thank you, Jen and Brian, for all your kind words. I have to live up to that now. It was great to see everybody at the store today. As I said, I have been here almost 10 years, and there has been no shortage of work to do. Real estate plays an important role in bringing Everyday Luxury to life. Our boutiques are where our clients experience the brand physically, and our focus is on great real estate, exceptional environments, strong economics, and strong partnerships. Those partnerships, both within Aritzia and across the broader real estate development community, have been an important part of how we built and scaled our portfolio. Today, I am excited to share what we have built, the progress we have made, and the significant opportunity ahead.
We believe we built one of the strongest real estate portfolios in North America, and we are just getting started.
Our real estate strategy is designed to support Aritzia's long-term growth. Our goal is simple, to build the best real estate portfolio in the best locations with the best positions and compelling long-term economics. This means being highly selective about where we invest and securing real estate that allows us to best serve our clients while supporting the long-term growth of our business. Design is also fundamental to our strategy. Our boutiques are the physical expression of Everyday Luxury, creating distinctive environments, like you saw today in Flatiron, that elevate the client experience and propel our brand. As we continue to grow, we are building a portfolio that can scale with us. We are not simply opening more boutiques, we are building the real estate portfolio for Aritzia's next chapter of growth.
Over the past four years, we have strategically expanded our boutique network while remaining highly selective of where and how we grow. Our total boutique count has grown at a 7% CAGR, while our total square footage has grown at 14%. That difference between boutique count and square footage is important. It reflects the evolution of our portfolio as we open new boutiques and invest in our existing portfolio through strategic reposition. We are continuing to deepen our presence in markets where we have established demand while opening boutiques in new markets. While we have accomplished a lot over the past four years, what is most exciting is the opportunity that is still ahead. In 2022, we established meaningful five-year real estate targets, and we have delivered against them. Actually, we have beaten them.
By the end of FY27, we are forecasted to open an average of 11 new boutiques annually, enter into 19 new markets, grow our square footage by approximately 70%, and reposition an average of four boutiques a year. Just as important is how we delivered it. We progressed from opening four to six boutiques annually to today's cadence by scaling our people, our capabilities, our processes, and partnerships alongside the portfolio. We have built and proven the execution platform needed for the next phase of growth. The U.S. represents our most significant boutique growth opportunity, and by the end of FY27, we project to have 87 boutiques open in the U.S., and by FY32, we expect that number to reach 160, with the potential for 200 more at maturity. Our opportunity is broad.
We can deepen our presence in proven markets while continuing to introduce Aritzia to new ones. In Canada, where our presence is well-established, the focus is on optimizing the portfolio and concentrating demand behind our strongest Aritzia boutiques. Together, these strategies allow us to capture substantial U.S. growth while continuing to strengthen our Canadian business. Growth only works if we secure the right real estate and execute well. Aritzia is highly sought after as a tenant, which gives us access to strong opportunities and allows us to be thoughtful about the real estate we pursue. Our partnerships excel well beyond our landlords. We have built strong relationships across the entire real estate and development ecosystem, from our landlords to our general contractors, subtrades, and the many partners who help us bring our boutiques to life. These relationships are incredibly important.
As we grow, having partners who understand Aritzia, understand our expectations, and understand the quality we expect, allows us to execute consistently and at scale. Those partnerships work both ways. We want to be a great tenant, a great client, and a great partner to work with. That reputation matters as we continue to grow. Ultimately, the strength of our real estate platform is not only about the locations we secure, it is also about the relationships and the capabilities we built around them that allow us to deliver. As we look ahead to FY 2032, we plan to open 12- 14 new boutiques annually across the U.S. We have built the capabilities to support that pace of growth, and our discipline around site selection, investment, economics remain unchanged. We continue to target a 12- 18-month payback period for new boutiques, which remains an important measure as we grow.
What gives us the confidence is the depth of opportunity we continue to see ahead of us. We have the runway, we have the capabilities, and the economics to support a meaningful pace of growth for years to come. Also, an important part of our growth opportunity is continuing to enter new markets. By FY32, we plan to enter 15- 18 additional markets across the U.S. What makes this particularly exciting is what happens beyond the four walls of the boutique. When we open a new boutique in a market, we see an average lift of approximately 65% of digital sales in that market. That demonstrates the power of our physical and digital channels working together.
A new boutique does not simply add a physical location, it extends the overall Aritzia opportunity in that market, and that gives us confidence that as we continue to grow our boutique network, we are also creating a much broader opportunity for Aritzia. Also, we have repositions. There is also meaningful growth opportunity within our existing portfolio. We plan to reposition five to seven existing boutiques annually, focusing our investment where we have established client demand and see the opportunity to do more. As you saw today in Flatiron. Our reposition allows us to take on an established boutique and improve the real estate, whether through a better location, improved layout, or greater capacity. What makes this opportunity particularly compelling is that we already know the client, and we already understand the market. We are taking that established demand and giving it better real estate.
As we grow through new boutiques and new markets, we also have meaningful opportunity to drive growth from the portfolio we already have. The opportunity ahead translate into meaningful growth for our boutique network. New boutiques, new markets, and continuing reposition of our existing portfolio gives us multiple levers to drive growth. Through FY32, we expect our total square footage to grow annually in the mid-teens, approximately doubling our real estate footprint while growing our U.S. portfolio to 160 boutiques. What is important is that this growth is not dependent on any single area. We can grow by expanding our boutique network while continuing to invest in and strengthen the portfolio we already have. We are approaching that growth with the same discipline that brought us where we are today. We built significant momentum, and we intend to keep building on it.
We have a clear runway ahead and the discipline, experience, and partnerships to continue scaling our portfolio the right way. Bringing it all together, we have a significant real estate opportunity ahead of us, supported by a strategy and an execution platform that we've already demonstrated that can scale. Over the past several years, we invested not only in our boutiques but in our people, our capabilities, our processes, and partnerships behind them. We have built the infrastructure to support a greater pace of growth, and importantly, we've proven our ability to deliver. As we enter our next period of growth, we do so from a position of strength. We have experienced teams, a proven approach, and the capabilities in place to continue scaling thoughtfully.
Our discipline remains the same, secure the best real estate, create exceptional boutiques, deliver compelling economics, and invest where we see the greatest opportunity for Aritzia. We have multiple levers to drive that growth, from new boutiques and new markets to high-performing repositions and select flagships. Each play a distinctive role, and together, they create a powerful platform for our future. We invested in our people, built the capabilities, and proven we can deliver. We are ready for the next period of growth with discipline, experience, and a real estate strategy to capture the opportunity ahead. As Aritzia grows beyond North America, our standards won't change. We intend to build the best real estate portfolio in every geography we enter. I couldn't be more excited about what's next, and we're just getting started. I want to thank everybody. I'd like to introduce Margot.
I'm pleased to introduce and hand it over to Margot Johnson, our Chief Digital Officer, who oversees digital commerce, omnichannel, concierge. With more than 20 years of experience in digital and retail, particularly in fashion and beauty. Margot has been instrumental in growing our e-commerce business and elevating our digital experience, including the launch and evolution of our fantastic app. Welcome, Margot.
Thank you so much, Karen. Good morning, all. I joined Aritzia nearly three years ago, and I am so proud to be part of the team and here with you to share more about digital. Since launching digital nearly 15 years ago, it's been a strong driver of growth and profitability while extending the reach of the Aritzia brand. Today, I'll share three things, what we've accomplished, the growth pillars that have powered those results, and how we're going to build on that same playbook, those same growth pillars, to sustain our digital growth. As you can see here, we've had tremendous growth in our digital business.
By the end of this fiscal, we expect to generate more than double the revenue compared to just four years ago, exceed the high end of the revenue commitments we made at our last Investor Day, and finally, deliver an estimated 35% compounded annual growth rate over the last Wait. Okay. We're going to wait for the siren, and then we're going to repeat that awesome punchline for you. Yeah. Just give it a sec.
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All right, let's run that back. Okay. Our digital results have been incredible. And three key stats to share with you over this last 10 years. The first is we will double the digital revenue we did compared to just four years ago. We'll exceed the high end of the revenue commitments we made at our last Investor Day. And then finally, we estimate we'll deliver a 35% compounded annual growth rate over the last decade. Importantly, while remaining Aritzia's most profitable channel. So I'll just share a few highlights that double-click on digital's reach and engagement. Over the last four years, you're seeing here, traffic has grown by 23% CAGR. And at the same time, we've doubled the number of clients that transact with us digitally. Even at that greater scale, we've been able to sustain industry-leading conversion.
But as we know, as Jen talked about, Karen talked about, digital goes beyond what we can do within the commerce channel. A few examples here of what that looks like. Karen talked about when we open a new boutique in a new city, the impact that has on digital. We see digital's impact on retail as well. For example, clients who are acquired through digital are twice as likely to shop across our channels. And we know those cross-channel shoppers have a higher propensity to shop with us more frequently. Finally, we also know that about half of our boutique transactions are influenced by a digital interaction and touchpoint right before that boutique purchase. Together, these really show how connected this business is, each part strengthening the other. When we think about our digital success, I'd say it starts with Everyday Luxury.
It's the components, the elements, the pillars that Jen talked about. These are so foundational to the digital success we've had. But in addition to that, over the last four years, we've complemented that by adding a digital playbook. And this playbook's really about amplifying what makes Aritzia so special, as you've heard today, you've seen with your own eyes, and translating that into the digital world. What you can see here is our playbook, which is built on five strategic growth pillars. First, meet the client where they are. Second, deepen client relationships. Third, create digital destinations. Fourth, unify our channels. And finally, underpinning all of this is our continued investment in world-class infrastructure. Complemented by amazing brand strength, our boutique openings, our exceptional product, it's been our deep and successful focus on these growth pillars that fuels our digital acceleration.
As we look ahead to the next five years, we expect approximately half of our future growth to come from investments we've already made and launched in these growth pillars. Given its importance to this historical success we've seen, but also our future growth, I'm going to walk you through a few highlights from the last four years. Again, our first growth pillar is around meeting the clients where they are. Karen just shared with us how Aritzia excels in using exceptional boutique locations to build awareness, help us shape brand perception, and of course, acquire new clients. Over the last four years, we've taken that same strength and extended that into the digital world, establishing ourselves across premier digital real estate, and equally importantly, doing that with Everyday Luxury creative in these spaces. By doing so, what we've done is built a powerful full-funnel marketing program.
We've reached clients across every stage of their journey, from awareness and inspiration, to engagement and retention. As a result of these efforts, traffic has more than doubled while marketing investment has remained a low single-digit percentage of sales. Once a client discovers Aritzia, our second growth pillar, again, is deepening that relationship over time. We know product is the foundation of every client relationship. It's what keeps our client coming and helps us earn their loyalty. This has shaped our approach in digital. We built digital experiences, services, and marketing all around heroizing our exceptional product. We're helping clients discover more of it, fall in love with even more of it. We're really connecting with our clients through product. We then further leverage our post-purchase experience to connect with clients.
Think about our things like our world-class fulfillment, our beautiful packaging, the thoughtful communication that happens after that product arrives. All examples of deep, thoughtful ways we are in service to deepening that client relationship. Our third strategic growth pillar, as I said, is to create digital destinations. Over the last four years, our focus has been elevating and expanding our digital commerce channels. Last year, if you did not hear already, we launched an app. This is really for us, a new destination for clients to discover Aritzia. As you have heard, the response was immediate. Immediately, number one in the App Store in both U.S. and Canada. We had over 2.5 million downloads before we even reached our first anniversary, and as you heard on a recent earnings call, delivering roughly a third of our digital business.
Beyond that, we are incredibly proud that the app has served as a powerful bridge between boutiques and digital. We were just in Flatiron, and the team there telling me how often clients come in with the app open and inspiration. I think an incredible example of turning digital inspiration and engagement into an amazing, thoughtful in-person experience. The data backs this up. In fact, approximately 50% of our retail clients who have the app use it just before making a boutique transaction. Again, I think it really illustrates the app has helped us, supported us, strengthened us in creating an Aritzia experience regardless of where that client is choosing to shop. Our fourth growth pillar is unifying our channels. Our clients do not think of themselves as a digital channel shopper or a boutique shopper. They are just an Aritzia client.
To support that, our focus these last four years has been creating a connected commerce engine. We unlocked boutique inventory online by enabling programs like buy online, pick up in store, and ship from store. Clients now have greater access to product, and we have even more ways to support our inventory productivity. Finally, underpinning these growth pillars is a world-class foundation ready to scale. We did this in a few ways, modernizing technology, strengthening data, and of course, building an exceptional team. I think our recent back-end website modernization is a great example here. We improved the back end, it cut load times by roughly half for our clients, and when we did that, we saw increased sales. Again, I think underscores just how foundational investments also drive growth.
In thinking about the last four years, we are incredibly proud of what we have delivered for two reasons. It shows a strong track record of success, and because the investments we have already made are going to drive half of our future growth. The other half is going to come from what we do next. We are going to look ahead now to the next five years, where we will deliver sustained digital growth. We more than doubled digital revenue since our last Investor Day. Over the next five years, we are going to do that again. In FY32, we project that digital will deliver between $4.1 billion and $4.5 billion in U.S. and Canadian digital revenue. To contextualize that is roughly the size of all of Aritzia today.
When we do this, we expect to hit a CAGR of approximately 20% over this period, and as a result, will deliver approximately half of Aritzia's total growth while remaining committed to profitability. To do that, we are doubling down on the exact same playbook that got us here. Let me show you how we plan to do that. Again, our first strategic growth pillar remains meeting the client where they are. As I shared earlier, we have seen tremendous success in growing our client base, but we know a great opportunity is ahead, and I will give you an example of that. Our U.S. digital business is about twice the size of our Canadian digital business, despite a market that is 10 times larger. To capitalize on that, our focus is building on the proven marketing program we already have to introduce even more clients to Aritzia.
We are going to do this by expanding our presence, creating bigger brand moments across digital, and very importantly, staying nimble to where clients are shopping and discovering. We know, particularly now in this environment, how much and how quickly that is changing. We will continue to activate along the full-funnel marketing, particularly moving up funnel in support of creating even more brand awareness and understanding. I would say our track record on this one is clear. When we show up in the right digital real estate with Everyday Luxury creative, our clients respond. Deepening client relationships is then our second growth pillar that will remain over the next five years. As Brian Hill will share more on shortly, we see continued opportunity to grow through product expansion. Digital continues to serve as this really important infinite shelf for our clients.
It brings that expanded assortment to life as we earn a greater share of her closet. On top of that, though, we are going to give clients even more reasons to come back to us, and that is through a new and differentiated loyalty program. This program will extend across digital and boutiques, recognizing and rewarding them, and importantly, giving them unique access to Aritzia. Loyalty, again, is extending across our entire ecosystem, but digital is going to serve as a key important gateway in that new experience. When I think about our history, it is so much about valuing our clients. The next chapter for us is about finding even more ways to recognize those clients and helping them find even more of what Aritzia has to offer. Again, our third growth pillar is to continue to create digital destinations.
Over the next five years, we will take what we have done with the app and extend that across the digital ecosystem. Our focus is creating entertainment, immersive digital experiences. These are destinations clients will choose to spend time in, not just simply transact. I think a lot about how we are going to enrich the digital shopping experience so it feels unmistakably Aritzia, from transformative new features to small but equally important details. Every image, every interaction, every pixel will reflect the same care, creativity, craftsmanship that defines our entire brand. As Jennifer shared recently on a call, we will redesign our website, and we will do that so it remains a strong expression of our brand with equally a strong commerce engine. We are excited to continue to push creative ambition with commercial discipline equally and do both best. Our fourth growth pillar is about unifying our channels.
We are excited about continuing to bring client insights and capabilities from digital into boutique and vice versa, with the goal here of creating a more seamless, connected experience across every touch point on behalf of clients. Whether they are in our boutique, whether shopping website, app, or through concierge, our clients will be recognized, understood, and continue their journey, each interaction they have building on the last. Our vision here is simple, one client, one relationship, and one seamless Aritzia journey. Finally, underpinning these growth pillars is continued investment in our foundation. Over the next five years, you are going to continue to see us invest in technology, data, AI, and new client experiences, all to make even more possible for our clients. This pillar for us is about scaling digital with excellence.
I will close today by reiterating our five-year ambition, that we expect digital in the U.S. and Canada to deliver between CAD 4.1 billion and CAD 4.5 billion in revenue and contribute approximately half of Aritzia's growth. Our confidence in this comes from three factors. First, our historical success. Second, the great scaled opportunity that is ahead of us, and third, the exciting plans I just shared. Again, approximately half of our growth will come from investments you have already seen from us. The rest is going to come from the balanced set of initiatives I just walked through, each building on and reinforcing the other. We know our playbook has worked, and we believe the greatest opportunity is still ahead. In other words, we are just getting started. Thank you so much. With that, I have the privilege of welcoming Brian Hill back to the stage.
Thanks, Margot. We good? Yeah. Oh, yeah. You can take it away. Now for something far less polished, here I come. I got asked today when I was in the cellar what I am still involved with at Aritzia, and I was fortunate enough to be able to choose after 40 years what I got to involve myself in, and one of the areas I have always been extremely passionate was product. I still run our product division, with the planning and purchasing and everything of our goods, the creativity that goes into all our product and ensuring what it is and what it looks like, and then finally, the manufacturing, and then also the integration and holding all that together. So that is what I do. That is one of my passions, and that is what I spend an inordinate amount of time doing at Aritzia.
We have heard over the years that you are only as good as your last season and everything else, and so products are a constant challenge as it is trying to speak with whoever is sirens. Should I wait, Jen, for a second? Who thought Karen Janes, where is she? She is right there. Who thought we should ask when we are picking an office how many sirens go by at a certain time? Never knew that was a factor, but it clearly is. Our number one thing is Everyday Luxury as we have talked about, but our number one thing is to try and continually elevate our product, and there are just ways we can elevate it, and I was talking earlier today about whether it is fabrications, whether it is styling, whether it is fit, whether it is construction, all these various elements.
We try to elevate that every day. It is a constant work in progress. Ensuring that product we envision, that product we work on, it manifests itself all the way through to the manufacturing process and into our clients' hands. We are constantly doing that, constantly elevating. At the same time, we are trying to make sure that what we are doing is on brand, but also is on trend, per se, based on our customer and what they are trying to achieve. Without any expansion or anything else, the daily focus of our product and my daily focus is to ensure that we are delivering season after season, year after year, and that is what we are trying to do there.
There are some opportunities that we have, and when we look at our collection, and I will get to that in a minute, we are probably 95% ready to wear.
An opportunity within that ready to wear is denim. A lot of our competitors are running 20% to 25% to 30% of their product is denim, and some are even as high as low 40s, high 30s. Right now at Aritzia, we have a huge opportunity for that. We are less than 5% denim right now. At one point in time, if I go back in our history, we were actually closer to 20% of our product sales were denim. That was third-party brands, but at one point in time, 15, 20 years ago, we were 20% denim. So we feel we have a huge opportunity in denim. We have assembled a team over the last two and a half years, and we are launching this next spring calendar 2027, with a brand new denim collection.
It is not the full denim collection, and there are aspects to this launch, but we will be launching that with the second half of that launch happening in fall 2027. Stay tuned, you will see that. We think we have assembled the best team in the industry, and we think we are going to be coming in with some of the best denim in the industry. That denim and the market position will be Everyday Luxury in the same position we are now, and it will be consistent with our existing ready-to-wear and our existing product and positioning, both from a price point and a quality of fit, fabric, everything else. We are looking forward to that. Next on the line is when we talk about that is all going to add to our ready-to-wear.
If we look at the industry and we look at what the industry does, and I also mentioned this this morning, if you look at the luxury market, in some cases, less than 20% of their product mix is ready-to-wear. We are looking at luxury being in some cases, 80% non ready-to-wear. That list starts with handbags, shoes, jewelry, beauty products, and of course, warm weather accessories. When we are looking at those, we see there is a huge opportunity for that for Aritzia. That right now makes up 5% of our sales right now, which is minuscule. We have set some targets here. We are not going to try and tackle them all at once. We prioritize what it is that we are going to tackle.
I'm not right now privy to be able to discuss exactly what's happening with those, but I can say that a lot of this is already in place right now. We have teams that we've been building, teams that have been brought on, and we're putting all the basic foundations together to start tackling this opportunity here. Finally, as we've opened more and more stores, as Margot's penetration continues with the digital penetration and Karen's continued to open stores in the U.S., we've moved more and more down into warmer climates. We have an opportunity there. I think we've done actually a pretty phenomenal job with our warm weather collections, but we have a lot more we can do right now. It's not just about color, it's not just about style, but it's also about fabric and construction and timing of these things.
We're probably at 1.0 in warm weather product climate in our journey there, and we think we can go to 2.0 and then 3.0. What exactly that looks like, it's more complicated. We have obviously more styles, more fabrics, where the seasons change quite a bit, colors, prints, all those sorts of things. At this point in time, we actually see standing up a whole new internal team to deal with our warm weather climate opportunities there. All in all, we think that from just product selection and assortment, we think this is a CAD 2 billion opportunity of the growth that Todd and Jen are going to share today. I got asked today, how much of that, you can't put a bunch of product in the stores without pulling something out. We think about CAD 1.5 billion of that will be incremental by fiscal 2032. Okay.
That's all I have for you. Thank you, and I'll take questions later. Thank you.
Wonderful. Thank you very much, Brian. As you can see, we'll be taking a short 10-minute break. We'll be pausing on the webcast for 10 minutes. You'll see a countdown clock when we're two minutes away. Thank you. For those of you that are in the room.
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We're going to resume the presentation. Thank you all. For those of you in the back of the room, we're going to get started. If we could have everyone take their seats. Brian. All right. We're just going to give a minute or so for those that are out of the room to get back to their seats, and then we will be resuming our presentation. Thank you all. We'll give a minute for our webcast to rejoin us. Hi, everybody. Welcome. All right. Back from the break and excited to continue on. Please welcome back to the stage, CEO, Jennifer Wong. Jen?
Thank you, Tom. Welcome back, everyone. One question that I get more than any other, and some of you ask me this, are people asking me, You're doing so well in North America, when are you going international? It is the next logical next step. For years, our focus has been on building the world of Aritzia, the next chapter is bringing Aritzia to the world. We are now ready to take international expansion beyond an aspiration and commit to international as part of our plans. Here is the picture. Over the next five years, 85% of our growth comes from the U.S., and international will be about 10%. What is international then for the next five years? Foundation. Building the foundation to do it well.
It is about seeding the infrastructure and beginning to invest in international for the long term, for beyond the next five years. Hear a theme? We will approach it as we do everything: measured, consistent, quality first. While we successfully execute on expanding in the U.S., we will build the foundation for growth beyond the next five years. As we begin to address this opportunity, we are not starting from zero. Customers around the world have already discovered Aritzia. Last year, I was on a flight to Dubai with a couple of the team members. We were on an Emirates flight, and we were chatting up with the flight attendant, and we just so happened to ask the flight attendant if she had heard of Aritzia. Keep in mind, she was originally from Thailand.
I think she had spent some years living in the U.K., and obviously, at the time, she was presently living in the U.A.E. She thought about it for a moment, and she is like, Oh, yeah. Aritzia, the bags? We are like, Yes, you recognize the shopping bags, and which we are very proud of. She knew exactly who we were, and it was just amazing to know that a global citizen halfway around the world knew of Aritzia. Here is what we are seeing already. Roughly 40% of our social followers live outside Canada and the U.S., and they are not just following, they are engaging. They create one in five of the earned posts about Aritzia. In Mexico, the U.K., and Brazil, for instance, engagement is up more than 10 times in two years. We built this organically.
No international boutiques yet, no meaningful international advertising, no local social presence outside North America yet. They found us through product, through social, word of mouth, and our boutiques when they were traveling. Everyday Luxury resonates across borders, and when they find us, they fall in love with the brand, just like our North American clients do. Likes and follows are just one thing. The real test is whether this interest turns into purchases. International clients are buying. We have shipped to 171 out of the 180 countries we serve around the world. Since we have launched our new international website, we have shipped over 162,000 orders. Sales outside Canada and the U.S. have more than doubled. Every order is a live test of Everyday Luxury.
These sales tell us where demand is concentrated, what clients are looking to buy, what they expect, whether it is from pricing to the client service. These insights will inform our international expansion playbook, where we enter, how we bring Aritzia to life in these markets. Over the last 12 months, I and some of our team members have traveled to several countries around the world. We are walking major cities, including markets where we are interested, and I see clients everywhere. I see clients walking on the streets. I see our peers there, and I feel like Aritzia is missing. It does remind me of how big the world is and how much runway we have. Where do we go first? We will start with markets that best fit our brand and our operations.
By brand fit, I mean prioritizing markets with strong demand signals, similar fashion tastes, and similar expectations of our client service. Operation fit means markets with similar cultural and working norms. In other words, to sum it all up, we will prioritize confidence in our execution for our initial entree. This ensures that we start our expansion in markets where we have the greatest right to win. This lets us enter more complex markets from a position of experience and strength, maximize our likelihood of success. We see a path to CAD 500 million in annual net revenue by the end of fiscal 2032, and we get there by expanding judiciously with an eye on the long-term potential of the brand. More importantly, we are building a durable engine for long-term growth, one that will become increasingly important as North America matures.
International is not simply about entering countries, it is actually about building Aritzia's future while protecting the brand, the culture, and the operational excellence that got us here. That is what it means to bring Aritzia to the world, and we are all excited to get started. Okay. Next. You have now heard how we will amplify the core in North America and how we begin bringing Aritzia to the world. Delivering that growth requires more than ambition. It requires an enterprise capable of supporting it. I have spent a lot of my career leading operations and building operations to enable our growth. Many companies do not invest in infrastructure like we do, in lockstep and sometimes ahead of the growth. They do not insist on tier one solutions like we do.
We build deliberately, we think long term, and we pay close attention to the details that allow our business to perform consistently as it becomes larger and more complex. Growth is only enduring when the infrastructure beneath it is built to last. That is why scaling the enterprise is critical to building our future. I am obviously very passionate about ensuring we continue to build world-class infrastructure and invest in ourselves. As some of you might know, nearly 12 years, well, it is actually 20. Nearly 20 years ago, we were looking to upgrade our point-of-sale system and our product lifecycle system, and I did the research in the marketplace and concluded we were not ready to do that. I went back to Brian and I said, Instead, I think we need an ERP, and I decided it had to be SAP.
This is sort of my claim to fame, I suppose, back in 2007, because I felt that SAP was going to scale with our business and provide the strategic agility for whatever our ambitions. Wherever Brian wanted to go, whenever he wanted to go, we would be ready. I was not going to let the infrastructure be a constraint to his vision. I recall the board meeting that we had with our private equity company, our private equity partner at the time, and suffice to say, they really challenged me. You have to understand that we were CAD 80 million in sales, and they really did question why we needed it. We selected and implemented a platform that was designed not only for the business that we had, but for the business we intended to build.
From under CAD 100 million in revenue to nearly CAD 5 billion today, it enabled our U.S. expansion, it enabled e-commerce, more than 50 times in revenue expansion, and nearly two decades of growth. That is how we operate. We invest thoughtfully, we build with longevity in mind, and we extract the value over many years. Now that platform is entering a new stage of life, so we are applying that same discipline again. The next generation of technology starts with an upgrade to our core ERP platform. Our current platform enabled the Aritzia of today, and the upgrade builds the foundation for a much larger, more complex, increasingly global business. We are also scaling AI across the organization. It will be an enterprise capability, it will elevate our client experience, it speeds up our people, and it strengthens our ability to scale.
It is the same logic as we applied selecting SAP 20 years ago. These investments position Aritzia for sustained growth for possibly another 20 years. We will keep it balanced, investment for the short term and for the long term. Technology is just one part of it. The physical network is the other. In Canada, we have built a significant distribution network. It is approximately 1.2 million sq ft. With growth increasingly coming from the U.S., our next phase of investment goes there. We will expand our distribution capacity by approximately 2 million sq ft by the end of fiscal 2032. It means more capacity, more automation, more technology to support our boutiques and our digital growth, including international. These investments, they are made behind the scenes, but their impact is experienced directly by our clients. Here we are today.
This is another expression of that philosophy, the office that we are in today. New York is now our second-largest support office after Vancouver. It brings our people closer to the critical market, it widens the talent available to us, and it gives us more capacity as we grow. Here is what we envision, a connected network, Vancouver, Toronto, L.A., New York, Seattle, and an international home base as our global business develops. Not disconnected regional organizations. We want to be closer to our clients, to our talent, closer to the markets that we serve. As we grow around the world, our infrastructure and our leadership presence grow with us. That is how we bring Everyday Luxury to the world. Ultimately, I have talked a little bit about this with some of you, ultimately, infrastructure only creates value through the people who lead it and operate it.
Our exceptional people will bring Aritzia's greatest ambitions to life. We have amazing talent. Brian's whole opening remarks were around talent and the talent that we're attracting and the talent that has stayed with us for many, many years. I've said this to a few of you when you asked, we cannot do any of this without people. I talk about leading with brand, about product being at the center of everything that we do, but we cannot have either without exceptionally talented people. We'll keep bringing together two kinds of people, high-potential talent and world-class seasoned professionals, people who grew up with Aritzia, like Pippa, like myself, and know what makes us special, and experienced leaders who bring new capabilities and raise the bar. Everything we've shown you today supports our growth through fiscal 2032. We're not building for just the next five years.
We're building the capacity, capability, and resilience to keep growing beyond this plan. We'll keep investing thoughtfully, and we expect those investments to create enduring value, just as they have throughout our history. Todd started, as Brian mentioned, right before the IPO 10 years ago. You can wish him happy anniversary. I had been courting Todd for about a year, and then, as Brian said, when we confirmed we were doing our IPO, we definitely needed a CFO, and he started five months before we went public. He's a key member of our leadership team, and as Brian said, we're totally on the same page. He's probably the most familiar person to all of you here today. With that, I'll turn it over to Todd to take you through the financials.
Thanks, Jennifer. It's a pleasure to be here with all of you today. You've heard this morning about the strength of our brand, the momentum in our business, and the significant opportunity ahead of us. What I want to do now is bring that all together and translate it into what we expect to deliver financially. I'll start with the track record that gives us confidence in our plans, and then I'll take you through how our strategies come together to drive sustained growth, increasing profitability, and strong cash generation. Together, these are the building blocks of a financial model that has compounded shareholder value for Aritzia, actually, for decades. I was going to point to Brian because he's the one who's benefited the most, but Oh, there he is in the back. There you are. Sorry. And is well-positioned to continue doing so over the long term.
This month marks the 10th anniversary of our IPO, and it's nice to see so many of you in the room that have been with us since then, and then, of course, all of the new faces as well. As a group, we couldn't be more proud of what we've accomplished over the past decade. When we went public, we were a CAD 550 million, primarily Canadian business with high ambitions. Today, we're approaching CAD 5 billion with a brand and a business that are increasingly global. Over that time, the 10 years, we've delivered an exceptional 22% annual revenue CAGR. You've heard throughout this morning about the consistent execution behind that growth, delivering the right product, meaningfully growing our retail square footage while increasing boutique productivity, accelerating digital, and increasing brand awareness.
Underpinning all of this is a business model that has proven to be both highly scalable and cash generative. At our 2022 Investor Day in Vancouver, we laid out an ambitious long-term growth plan. Since then, we have delivered. We have exceeded every financial target we established and are on track to deliver some extraordinary results in fiscal 2027. These are so good I am going to hit them again because I know you saw them earlier. We expect $4.78 billion-$4.88 billion in revenue, more than $1.1 billion or 32% ahead of our original target. Those numbers represent a 21%-22% revenue CAGR from fiscal 2023, driven by approximately 70% growth in retail square footage, which is mid-teens growth annually, exceptional increases in our boutique productivity, and a 24% digital CAGR.
This year, we expect to achieve an adjusted EBITDA margin of approximately 20%, 100 basis points ahead of our target, despite 300 basis points of tariffs and de minimis headwinds that we were not expecting when we laid out the initial plan. These results demonstrate our team's ability to consistently execute against ambitious long-term plans. Our growth has generated significant cash, and since fiscal 2023, we have reinvested approximately CAD 900 million in CapEx, primarily to accelerate our boutique expansion and build the distribution center network that Jen just talked about. At the same time, we have also returned approximately CAD 500 million to shareholders through share repurchases. We have been able to invest aggressively in high-return growth, build the infrastructure required to support our scale, and return significant capital to shareholders, all at the same time. Today, our business has never been better positioned.
Everyday Luxury continues to resonate deeply with our clients.
Our brand momentum continues to accelerate in the U.S., and we see significant white space both here and beyond. Our healthy margin structure and resulting strong cash generation give us the capacity to pursue that opportunity. It is from this position of strength that we have built our next five-year plan, one that allows us to pursue significant growth while maintaining strong profitability and financial flexibility. Our strategic plan provides a path to grow net revenue to $9.5 billion-$10.5 billion by fiscal 2032. Consistent with each of our long-term plans since our IPO, we are targeting a 15%-17% compound annual growth rate. Importantly, we are not relying on any one source of growth. We have multiple complementary revenue drivers across geographies, channels, product categories, and brand awareness. These give us several paths to deliver our plan and confidence in the durability of our growth.
Let me first break down our revenue by geography. Let me first break down our geography, led by the U.S. After growing at a 31% CAGR over the last four years, the U.S. will represent approximately two-thirds of our revenue in fiscal 2027. Despite that significant growth, we are still in the early innings of the opportunity here in the U.S. Almost all of our planned new boutiques will be here in the U.S., and together with digital, we expect our U.S. business to grow annually in the high teens and remain, by far, the largest contributor to our growth over the next five years. Canada is naturally a more mature market for us, with more modest growth assumed going forward.
Internationally, as Jennifer just discussed, we will continue growing digital while opening our first boutiques outside of North America, building towards CAD 500 million in international revenue by fiscal 2032. Put this together, and in the U.S., we expect to generate just over 85% of our incremental growth. It is a playbook that we know extremely well. With international contributing just under 10%, and Canada is expected to deliver approximately 5% of our incremental growth over the next five years. The U.S. remains, by far, our largest near-term opportunity, while international provides an additional runway for growth over the long term. The second cut of our growth is by channel, with digital and retail expected to contribute approximately half of our incremental revenue in North America. In digital, the opportunities Margot discussed are expected to drive annual growth of approximately 20%.
In retail, as Karen laid out, we plan to open 12- 14 new boutiques and complete five to seven repositions annually, driving square footage growth in the mid-teens. Boutique expansion is a predictable and repeatable driver of growth for us. Our new boutiques are currently paying back in less than 12 months, while our plan assumes a slightly more conservative 12- 18 months. Our plan also assumes low to mid-single digit comparable sales growth in retail. Product expansion is an important growth lever that extends across both those geographies and channels. As Brian outlined, we expect to contribute approximately CAD 1.5 billion of incremental revenue, meaningfully contributing to our comp growth and supporting productivity in our new boutiques. With all of our drivers underpinned by our ongoing efforts to propel our brand, both in the United States and beyond.
Put together, again, we have many paths to drive our revenue growth, giving us confidence in our ability to deliver our fiscal 2032 plan. As we scale the business, we also expect to increase profitability. By fiscal 2032, we expect an adjusted EBITDA margin to expand by approximately 100 basis points. That expansion will be supported by gross margin improvement and continued leverage on fixed costs as we scale the business. We expect to deliver this margin expansion while continuing to invest meaningfully in technology, our digital roadmap, and international expansion, all to support our long-term growth. That combination of growth and increasing profitability is expected to generate significant cash. Our capital allocation approach is straightforward. Our first priority remains investing in the business and funding the organic growth opportunities available to us.
After funding these priorities, we intend to return excess capital to shareholders while continuing to build our cash balance. The strength of our cash generation means we have the capacity to do all three. Over the next five years, we expect to invest approximately CAD 2 billion in CapEx or 5%-6% of revenue annually. Approximately CAD 1.1 billion will support the near doubling of our retail square footage. As I have said, given our boutique economics, this remains a highly compelling use of capital, and we expect another CAD 500 million to expand our U.S. distribution network by roughly 2 million sq ft, supporting both our growing boutique network and significant digital growth. And approximately CAD 400 million across technology, our digital roadmap, office expansion, and capital maintenance, ensuring our infrastructure keeps pace with the scale of our business.
Together, these investments provide the capacity and capabilities required to deliver our growth and support a CAD 10 billion plus business. After funding our investments, we expect to accumulate significant excess cash. We plan to return approximately 50% of this free cash flow to shareholders through share repurchases, representing an estimated CAD 2 billion over the next five years. Over the course of the plan, we expect to fully fund our significant growth opportunities, return meaningful capital to shareholders, and build our cash balance to approximately CAD 3 billion by the end of fiscal 2032. Let me bring this all together. We are entering our next stage of growth from a position of significant strength with a proven business model and multiple complementary growth levers.
We are targeting CAD 9.5 billion-CAD 10.5 billion in revenue by fiscal 2032, representing 15%-17% annual growth while expanding adjusted EBITDA margin by approximately 100 basis points.
That means we expect to roughly double the business, grow earnings faster than revenue, and generate significant cash along the way. Strong growth, increasing profitability, significant cash generation, disciplined capital allocation. These are the characteristics of a business model that has served us extremely well for many years, and one we believe can continue compounding shareholder value over the long term. Over the last decade, we have grown from CAD 550 million to revenue of nearly CAD 5 billion. We have accomplished a tremendous amount, but we know the opportunity ahead of us is even greater. Thank you. We will take a quick break, and then we will get into our Q&A.
Great. Thank you, Todd. As Todd mentioned, we will be taking a quick break. For those of you on the webcast, we will be taking approximately a 15-20 minute break while we set up for lunch and our question and answer period. We will hold for the webcast. Thank you.
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We will start in approximately 10 minutes.
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Hi, everyone. Welcome back. For those of you on the live stream, thank you so much for your patience. We are now ready to begin our Q&A period. I would just ask, when we call on you, if you could please stand up, state your name and the name of your firm, that would be excellent. So that we can get to as many questions as possible, if you could please limit yourself to one question and perhaps a related follow-up, that would be excellent. All right. Let's kick it off right here with Irene in the front.
Thank you. Irene Nattel, RBC Capital Markets. First of all, thank you all for an amazing day so far. It's great to see you. It's fascinating, and so thank you. So I figure I'm just going to get this question.
Of course, Irene. Why not?
Just get this over with. Can you walk us through, please—
Yes.
—the cadence of the CapEx spend—
Oh.
—over the FY 2027 to FY 2032 period.
the investment spend and how that ties into
The gross margin performance. Let's get it off the table right now.
Well, starting with the CapEx, I can't tell you exactly the cadence because we don't know when those distribution centers are going to be dropping exactly in the years. What I would assume is that over the FY28 and FY29, we will have slightly heavier CapEx spend, and then equal in the last three years, is how I would do it. As we get closer and we know the timing of the distribution centers, which are the lumpier parts of that spend, we'll let you know. But slightly heavier in years one and two, and then even in the back. Then you have the margin. That's what I thought you were starting with.
Yeah.
Look, at the end of the day, we're extremely pleased with the margin expansion we've delivered over the last three years. We've grown to what we're now targeting for this year, a 20% EBITDA margin. That'll be our highest margin as a public company. That's with the backdrop, as I said, even in my prepared remarks, with 300 basis points of pressure from the tariffs and the de minimis. So we're extremely pleased with that. We also generate meaningful cash flow as we outlined with that margin level. So we think it's a really healthy place to be for the business. We have put in 100 basis points of expansion. That's going to be driven by IMU improvements over the next several years. It'll be driven by leverage.
It'll be driven by a bit of mix shift, whether it be into the digital channel, which is more profitable than the retail, and then also mixing into the U.S., where our business is slightly more profitable as well. So those are the benefits. Then from a spend perspective, we have investments in technology, investments in our digital roadmap that we're making at a level that we haven't made before. So we're going to be investing heavily back into the business. We also have the introduction of international coming, which is uncertain. We don't know, especially in the early days of international, there will be likely more investment, and that will be more than likely not accretive to the 20% margin. It'll likely be below that. So that is going to cause, again, just some conservatism on our part as we think about it.
We want to make sure that we can, through this period, continue to invest in the brand and continue to invest in our people and all of that takes investment. So that is why we have gone out with what we think is achievable, a 100 basis point improvement in our EBITDA margin.
Thanks, Irene. We will go right here to Brian.
Thank you. Brian Morrison, TD Cowen. Two questions. Store base of 106 in the U.S. by fiscal 2032, but a total of 200 beyond that. If there is 65 in Canada, why should we not think of the U.S.A. to be a larger total addressable market? Then second question is, what do you plan on doing with the accumulation of CAD 3 billion on cash on the balance sheet at the end of fiscal 2032?
Well, maybe I will just frame up bigger picture, how we think about Canada versus the U.S. When we entered the U.S., we entered with e-commerce at the same time, more or less. I said we had launched two stores in 2007, November. I believe we launched e-commerce like literally a week around then, too. So we did three in terms of our entree. Our strategy with our growth in the U.S. has been synergistic. You heard us say they play off of each other, and they drive business to both channels, and they work synergistically. So we did not have that in Canada. In Canada, we went 30 some odd years before we launched e-commerce, and we had built out our store footprint. If we were to do it all over again, it may, it may not look the same.
I will let Karen speak to the specifics of the store rollout, but just want to zoom out bigger picture that strategically we entered the U.S. market differently than we started in Canada.
Yeah. I would just say for Canada, when you look at the store count slide that we showed, you will see the store count slightly declining, and that rationale is because we have branded stores. There is Wilfred and Tna and some Babaton stores. Our goal, we should be looking at it as net of that, so like around 50 odd stores, and we are going to keep that cadence and invest in the stores that we have and just make sure they are right-sized in that market. In terms of the U.S., 200 stores at over maturity, compared to some of the peers where we are going to continue, like 200 is our goal. We are going to continue to monitor that and see how it goes.
All the stores that we have opened in new markets and smaller markets have exceeded all of our expectations, and we think we can easily do 200.
Everything we have done to date has proven to be successful, and we are going to take that same discipline approach and just keep applying it.
Great. I will answer the question on the $3 billion. The answer to that is the same as always, that we will continue to invest in the business first and foremost, and then we will look at returning cash to shareholders beyond that. I think if you look back at our last plan, we had $500 million initially as our CapEx. Target, we ended up increasing the number of boutiques that we were opening and expanding faster. We spent $900 million in CapEx, both for the stores and the distribution center network. I am not suggesting that we are going to be double our CapEx number, but I am just saying, as we go, we will evaluate, and if we have investments to make in the business that are beyond the $2 billion, we will make them.
If we do not, we will likely look at increasing our return to shareholders.
Okay. Go to Mauricio.
Great. Good afternoon. Mauricio Serna from UBS. Thank you so much for this presentation and all the insights. I thought it was very interesting how you talked about how you have such a massive following already outside U.S. and Canada earlier. Wanted to ask, how are you thinking about the cadence of international, specifically the opening of a boutique outside North America? Just thinking about that $500 million plan, how much of that should come from digital versus stores?
As I mentioned, and Todd mentioned, 85% of our growth is coming from the U.S. So we're still really focused on the U.S. We want to amplify the core, and expand the core that we have because it is a proven, predictable driver of growth. We know it. I think that that is important for all of us to keep in mind. The international expansion, it is contemplated in the plan in the outer years, as we continue to do our research and build out the plan and build the foundation. Of the $500 million, we see it roughly balanced between digital and boutiques.
Quick follow-up on the comment about the retail comps. I think you mentioned the plan you laid out, it implied low to mid-single-digit retail comps. How did that look versus where you're trending over the last year or so? Is that enough to leverage the store cost? Just very quickly on the—
Yeah.
—Do you have an implied total comps for the plan including digital?
Sure. The implied total comp between retail and digital is in the high single digits, bordering on the low double digits near the high end of the range. We always, from the IPO to our 2022 investor plan, we always plan our retail comps in the low to mid-single digits, because we are being prudent, and it makes sense to do that. Our stores are highly productive, and we have other levers, which we are pulling on to grow, whether that be the digital business, which has a 35% annual CAGR over the last, which I keep telling Margot—
Yeah.
—over the last 10 years, and is a tremendous lever for us. Then we have our boutique expansions and new stores, which is another highly predictable driver of growth. We like to anchor our plans on relying on those two things. Obviously, we have all of the product expansion that Brian talked about, which in theory will drive comp within our boutiques, but we like to be measured in how we look at it, and that is how we build that 15%-17% growth algorithm.
Great. Right here to Steve.
Thank you. Thank you. Stephen MacLeod from BMO Capital Markets. The comment you just made is a segue to my question for Brian. Just around the product assortment, and the expansion, I think that is a very interesting opportunity. Can you talk about just the data you get from your current client base that informs your strategy to expand that product assortment into adjacent categories?
Yeah. We haven't looked at data from our specific clients. We just look at the general market in North America and look at what the spend is on ready-to-wear versus bags versus shoes and everything else. There was an interesting anecdote. We've been interviewing different people, and I was interviewing some bag people. The one guy, super intelligent, very experienced in the bag, and he looked at me and said, There's very few women in North America that need another bag. If I went and snuck into Irene's closet right now, I could tell you she's got enough bags to last her if she lived to about 200 years old before they wore out.
Yes.
Whereas shoes, he pointed out, do wear out, and you do need to buy shoes. I never really looked at it that way. One of them is purely an emotional purchase, and one of them is a necessity. Yet you kind of grab them both at the same time. When we look at the market, it's hard to look at the bag market because if you're not connecting with them emotionally on a bag, they don't really need it. So you're not going to win in that market. Whereas shoes, they're going to go out and need some shoes because they're wearing out or whatever it may be, and therefore you actually have this sort of ongoing live market going on.
We look at, generally speaking, at the whole market itself and in North American market, it's hard to sometimes differentiate what's being spent on our clients that are buying luxury versus not, or maybe some clients that are buying this or that. What you buy for ready-to-wear, what market you shop in, as I tried to point out today, isn't necessarily what you're buying accessories and the market you're buying accessories at. They're different. That said, I think our targets that we put in there are ultra-conservative. As I mentioned, there's a lot of fashion retailers out there, even outside of luxury, a lot more of their product mix is, whether Zara or whoever, a lot more of their product mix is shoes and bags and jewelry and everything else. So we think our estimates are quite low on that count.
We have Martin right here.
Martin Landry from Stifel. In your next five years, you are accelerating boutique openings, you are accelerating repositionings as well. I would like to hear what is the sale uplift that you guys are getting from a store repositioned. Also, there was not a lot of talk about Reigning Champ. I do not know if you can just talk a little bit about what are your plans for that banner.
Brian, why don't you touch on Reigning Champ, and then Karen can answer and fill us.
Reigning Champ has been interesting. First of all, we purchased the brand. At the time, our sales were not growing to the same rate they had been the last five years. If I had known that our ladies' clothing sales were going to accelerate the way they were, I do not know for sure if we would have made the acquisition or not. Our second conclusion was, it is a hell of a lot more work than we anticipated. Just interfacing. Todd spent hours and hours, and his team, interfacing our financial. Margot and her team have had to spend tons of time, and Reigning Champ is still on Shopify, and Aritzia presently is not. Every one of these systems, every one of their processes, they had their own distribution center. We had to bring that over, and some people on Jen's team was working on that.
It was a lot. The second conclusion was these mergers and acquisitions, if you are going to do one, make sure it is worthwhile. But, ironically, we haven't opened any stores, and just by fixing some of the things, we have almost doubled the sales and doubled the sales in our stores, and the stores are actually outperforming at quite a rate. That said, we have this wonderful opportunity with Aritzia, and it is easier for us to execute on that. We have our Reigning Champ sales. We were selling men's Super Puff. As a test recently, somewhere between 5% and 10%, we are not sure, of our fleece was being purchased by men in our stores, and so we recently launched a men's fleece program.
It wasn't this sort of big thing of, This is what we are going to get into. It was really a test just to see what we could do there. It is unclear exactly what we are going to do right now. We are debating if we are going to do men's or not, and if we are going to do it, should it be under Reigning Champ or should it be under Aritzia? They are all high-class opportunities for us, but realistically, our focus is right now, not entirely, but almost entirely on the opportunity that was shared today. There was another question.
Yeah, the reposition question. Look, our repositions is a nice little contributor to our expansion strategy. It is primarily from a brand perspective. We are creating a better environment to display more of our product.
Some kind of better real estate.
Better real estate, et cetera.
Better positioning.
And-
Better prices.
Exactly.
Karen will point out, and their business and economics are better because I negotiated typically those other ones, and Karen's negotiating these ones. So she reminds me all the time, she was kind to me right now, but she reminds me all the time that the economics when she negotiates deals are better than when I negotiate deals.
That would be true.
Exactly.
Yeah. It is a highly compelling component of our growth strategy that sort of dovetails along with the square footage expansion with our new stores.
Great. Can we go to Jon here in the front?
Thank you, guys. Thanks for having us. Talking about the assortment expansion, I am just curious if you can give us an idea of Jon Keypour, Goldman Sachs. How would you think about AUR and margins of those expanded categories? Then it seemed like there was CAD 500 million of cannibalization, I guess, embedded in the net productivity of those new categories. Why is that the case and-
The CAD 500 million?
Yeah.
Okay. I will explain that one first.
All right.
How we looked at it was, we think there is a CAD 2 billion opportunity. If you assume e-commerce is going to be roughly half of it, that will not cannibalize. Fair that, very little cannibalization because we are not limited by aisle. It is unlimited aisle. Then we looked at the stores and felt that perhaps maybe 50% of it is going to be something else coming up and coming in. We do not know if that is 40% or 60% or whatever. We just estimated 50% because we have not done it. That 50% of the CAD 2 billion is in retail, and 50% of that will get cannibalizing something else in there, and then CAD 500 million will be incremental. We landed on a rough CAD 1.5 billion incremental. What was the other part of the question?
AUR and margin contribution from those new categories.
We do not know at this point in time with the margin categories, and I have yet to discuss this at length with Jen and Todd, who will probably tell me otherwise. But I have told our teams initially, one of the things we discovered when we went to the U.S., and I think Jen and I have spent a lot of time working on it, was everybody talks about the operational challenges when we go change the country and things like that. But Jen and I concluded back in the day that if your brand does not resonate to start with, the operational challenges are somewhat a moot point. The same thing with these new categories as we expand. Todd is going to get pissed off at me after this meeting, but I am not really focused on the margin and AUR initially with that.
We have to get our clients thinking that Aritzia is a place
To buy denim, to buy denim again, to buy bags, to buy shoes, and things like that. Because if we do not do that, the margin is somewhat irrelevant. I think initially we will see that. But typically, these areas have better than what we normally once it is mature, we are typically going to see margins better than what we are getting in our ready-to-wear. Not a lot better, but better. I do not think they are going to be even across the board. Obviously, beauty and bags probably have better margins than shoes and something else. Then there is leverage as well. I think we will see that. I guess my point is it is going to be a moving target on IMU and initial markup on all these product expansion, except for denim. We think it is going to be probably pretty consistent.
Dylan?
Thanks. Dylan Carden, William Blair. Todd, can you just touch on how you want us to pace the next five years from a top-line perspective?
Then maybe the lingering IMU opportunity.
It helps understand what is still left there.
Yeah. From a cadence perspective, I would look at it almost evenly, the 15%-17% each year. There will be some nuances based on the cadence of the new store openings. But at this point, looking at it that way. Then the same from a gross profit perspective. That is where we expect the growth to come from. But I think I would measure that out equally through the years, then SG&A, relatively flat. But obviously, we will provide guidance each year as it comes and give you more specifics around the annual cadence then.
IMU.
Yeah. That is the gross profit expansion. I would pace that out evenly.
You see opportunity there still to grow it a bit.
Yeah. Look, we have had, as I said, a number of years now, I think we said 12 quarters in a row on the last call, of gross profit expansion. We are extremely healthy in the position we are at 20% EBITDA margin. We will continue to see IMU expansion. We are not counting on that, driving the bottom line, given all the investments that we are making. Yeah.
It includes investments in the product expansion. If you think about it, we are building a new business, just like we would be building international or putting We are building a new business in terms of new product lines. I view it as an investment in and of itself in the early years, in particular.
Then we have external factors like right now wool prices and cashmere prices are up like 20% next fall. We do have inflationary on raw materials and things like that that are beyond our control. As Todd mentioned, as Jen's talking about investments and Todd's mentioning how we are going to put it in there, another opposite side is we do have some inflation in some areas that we are dealing with on a regular basis. Down feathers are going up and wool, cashmere, and things like that are going up in prices. We do see pressure on that. Then from my perspective, we want to keep on investing in elevating our product. I think I talked about that in my speech, but we get a margin opportunity.
Do we put it all and do I give it all to Todd, or do I actually improve the product a little bit? So that is another thing that we struggle with at times, too. Can we elevate our product? Can we take that coat and make it a 10% cashmere coat instead of just a wool coat? These are all the things and the discussions we have in the product division as well.
I had that question, too, actually. Would you be at 22% margin business now or you would still growing that? You talked about the 300 basis points incremental share effect.
Yeah, that is an interesting question. Obviously, it is hard to hindsight. I think we continue to invest in the product. We have been doing that over the last three years. It is not like we stopped.
40 years.
40. Thank you. It's not like we've stopped doing that in order to generate the expansion that we've had. We are constantly reinvesting in the business, and that's what we keep talking about, is that balance between growing our margins and investing in the business, whether it's the product we're talking about right now or whether it's our people, our technology investments, et cetera. It's a balance.
There's a pretty good example in the market right now called luxury, when they kept on pushing their margins up and up and putting their prices up, and sooner or later, you're going to have a straw that breaks the camel's back. That's why all our discussions are around balance.
Can I go to John over here?
Thank you very much. John Zamparo from Scotiabank. I wanted to come back to the product categories. I see the smile on your face. Are these entirely Aritzia's brands or are you considering third party? How do you go to market on this? Do you test it in certain regions? Do you blast it out to consumers? Do you do those categories consecutively or concurrently? I would love to know more about that.
Well, Jennifer mentioned the test and react kind of model. We have done that in everything. All her infrastructure projects she has always built has always been, we roll out a little, we test it a little bit, and I think three out of the four groups today brought up RFID.
Truthfully, I was not even that aware. Jen is going to say I told you a few times, but it was not on my front of my mind about RFID at three out of the four S's. I think Jen and you have pioneered this RFID, and I only learned today that, well, can you talk on that a little bit?
Well-
Because that is kind of what we do.
Yeah, I haven't pioneered RFID, but I will say what we did learn on the SAP project was, we talked about going live with a big bang. We talked about the cutover and what we have learned over the years with a lot of our implementations, like RFID, is pilots. We are really big on pilots, where you do not even know this, but we piloted new credit card machines, just as small as that, where could we flip everything over. We do that to de-risk, and it is a theme that we have throughout our whole enterprise, in all of our different areas. We will take a big bet when we are as sure as we possibly can, and that is part of how we operate in terms of making sure that we make the right decisions, whether they are big or small.
We hate making mistakes, so we truly try not to make mistakes. The test and learn approach is we have done it in technology and all the way through anything that we do in terms of evolving our business. I fundamentally think, I refer to founding principles and sort of founding ways. That is what has kept us in business for 42 years and going strong. If you walk away with anything, there is a thread today, which is we have a long-term view of the business. We are not here reporting to you quarter to quarter. You know that by now. We are not here talking to you in just five-year plans. We are literally talking to you about an enduring business that we see has so much runway and so much momentum, but also has staying power.
Thank you, Jen. Specifically, what was your question again about the product?
Category.
When the launch, you talked about the launch, right? The launch will be the same way we launch everything. Ironically, these projects, when we do them, will be coming out of our project management office, which is actually a very sophisticated office within Aritzia that Jen runs. So she's going to have oversight on all these projects. There was something else in product you asked about those?
[inaudible]
No, it'll be all Aritzia branded.
Good. Joe?
Thanks so much. Joe Civello from Truist. As you are entering more new markets and expanding the category set, does the guidance embed any sort of change in thinking around new store productivity or maturity curve that we should be thinking about?
Todd?
No. There is no change in how we are looking at the new stores. We have, again, seen consistently strong returns and paybacks from our stores. The most recent cohort in FY 2026, that we opened in FY 2026, are actually paying back faster than those in FY 2025. As we get further down into the lower tier markets, maybe I will say it, in the out years, there may be some degradation in the productivity of those stores, but that is still quite a ways out, and we have not seen it at all today.
Michael?
Michael Glen, Raymond James. Jennifer, you have outlined the goal to double your active customer count. Can you talk about how the spending evolves once you secure a new customer? How that spending evolves year one through year five, how much growth there is?
Thank you, Michael. I could answer it a couple of different ways. If I compare it to Canada and the customer that we have in Canada, we have a customer that is very loyal and is a customer that has stayed with us for years. We also see what is happening in the U.S. with the customers that we are acquiring. They are increasingly visiting us more and more, particularly with the app. What I love that is happening is as we acquire the customer, we are seeing them stay with us and we are seeing the retention very similar to Canada. Our goal is to have the same level of success in the U.S. as we have had in Canada. So we absolutely see that happening, and given just the nature of the population, doubling our client count by fiscal 2032 appears to be very straightforward.
Luke? You.
Thank you very much. Luke Hannan, Canaccord Genuity. Margot, this one's for you. You had talked about earlier today the journey that you're on when it comes to loyalty. I'm a little bit curious to know what inspired the decision or the eventual introduction of loyalty later on. What's transpired that's now allowed you to do that? Maybe how, if at all, will it help differentiate you versus, in terms of gaining share of closet, how will loyalty enable you guys to do that?
Yeah. Thanks for the question. I think recognizing and deepening relationships with clients has been so much part of our DNA. It's so important to the brand and how we show up. There's ways we've been doing this over the years, of course, without a formal loyalty program. The way we service our clients in the boutique. Again, the way we follow up with them in email, the way that we invite them into new boutique openings. All of these four are part of our DNA. Now, just like everything we do, we want to be meticulous, and we wait for the right what and not prioritizing when we launch it. I think as you know, we've built a fantastic foundation with all the initiatives you've heard about.
For us, now is the right timing to really formalize and programmatize that, so we can go bigger with it, again, across both our channels. Really excited to see yet another way that we can deepen those relationships, whether it's pulling them through product, an event, an experience, or a digital engagement.
Got it. Todd, maybe just a follow-up for you. One of the margin drivers, bigger margin drivers, I think over the near term is the introduction of that owned DC and moving out of a 3PL. Can you just share with us, roughly speaking, what, I guess, on a maybe on per unit basis, what are the cost savings that you might get from-
an owned DC versus 3PL? We will go from there.
Well, first of all, I would say it is a little early to align exact basis points, but, as we have talked about, our 3PL in Columbus does service us extremely well across the U.S. today. But, the cost of doing so is near, let us call it 50% more, than, say, from our own DC. So we do expect to benefit over time as we take over the distribution center network. We are still actually in the throes of the decision of whether we will insource or not. So it is really early to really comment about that, but it seems like we are leaning that way, but it is not 100%, so it is still too early to comment specifically.
Still to be analyzed, to be sure.
Yeah.
Yeah.
Likely.
What is that, Jen?
It is still to be analyzed, to be sure, want to be sure, but it is likely insource.
Yeah.
Okay. Any more questions? You right here, then Vishal.
Thanks for taking my questions. Vishal Shreedhar, National Bank. The backdrop, it is challenging for consumers. You have the rising rates, you have the oil prices. I am wondering, as you contemplated your plan, and I understand that Aritzia has a history of being conservative and being practical and realistic with its plans, but as you contemplated, what did you think about the backdrop? If there are challenges to this business and to this plan, what do you anticipate the most likely pressures will be?
Well, Vis, we can only control what we can control, and we do everything we possibly can to make sure that we are executing, to the highest level with what we can control. The plan for sure has contemplated external events. I kind of referenced the curveballs that could happen, the things that you cannot even anticipate. There is a lot going on in the world right now, for sure. Our plan does contemplate that. We think that we have been prudent. We think we have been realistic, as well as excited about the future that we have. We, again, balance, we think we have been balanced. No one can predict the future. All we can do is make sure that we are going to execute to the fullest extent that we can. I think we are all very pleased with what we put forward.
Okay. I think we've got time for one more. Chris, did you have your hand up? You good? Right here, Tal? Yeah. Great.
Hey. Tal Woolley from CIBC Capital Markets. I once had a retail CEO say to me over a decade ago that 20%-30% comps will pretty much cover up any magnitude of sin you commit. I think there's some truth to that, and that it was also very difficult when you're growing like that to find where problems are emerging. I'm wondering if you can talk to that a little bit as you go forth. What are some of the mistakes that you guys could make going through this next phase?
Well, I'm going to offer up my point of view. There's no question when things are going really well and you've got a lot of momentum and there's a lot of moving parts, you're going to miss something. You're going to inadvertently miss something. At the same time, it can cover up mistakes. What I do know about our culture, which is something that we haven't really talked about here, but our culture, you've got five perfectionists up here, and as I said a minute ago, we do not like making mistakes, and we loathe making mistakes. We try our best to strive for perfection, and even if the smallest little detail isn't attended to, we'll call it out on ourselves and on each other. I think that is a driving force for why we have had the level of success that we have over 42 years.
It's referencing the founding principles. Brian is still involved in the business, and we're very happy to have him involved because those are some of the things that are part of our heritage. At the same time, we have a culture of continuous improvement. We're looking for these things to continually improve our operations, to continually improve our brand. When the tariff came and hit us kind of out of left field, particularly the elimination of the de minimis, we expanded our margins. That's an example of how we were digging really deep in all areas of our business to make sure that if there was a stone to uncover, we were trying to do that. I think that just speaks more to our mindset and to our culture in terms of how we run this business.
Okay. Thank you all for your questions. Thanks for spending time with us today, and that concludes the webcast.