Annual Report 2022

2 |

Fiscal 2022 Annual Report | 3

Aritzia is a vertically-

integrated, innovative

design house and

boutique.

We believe in high-quality, beautifully designed product.

We believe in aspirational environments and experiences.

We believe in personalized and engaging client service.

And we believe that all of this should be attainable.

We call this Everyday Luxury.

4 |

From our Founder,

Chief Executive Officer

& Chairman

Fiscal 2022 Highlights

Fiscal 2022 marked another outstanding

year for Aritzia as our business continued to

accelerate beyond our expectations - across all

geographies and all channels. This year, arguably

our strongest performing year in our 38-year

history, we saw net revenue grow to almost $1.5

billion, an increase of 74% from fiscal 2021 and

52% from fiscal 2020. Our team did a phenomenal

job as they embraced the challenge of keeping

up with our extraordinary demand, while

meticulously navigating the ongoing headwinds

of the global landscape, to deliver exceptional

results for our business and bring our much-loved

Everyday Luxury experience of engaging service,

beautiful product, aspirational environments and

captivating communications to our new and loyal

clients.

SALES CHANNEL GROWTH

Driving this exceptional performance was the

continued investment in our sales channels. In

eCommerce, we further enhanced our digital

and omni-channel capabilities to maintain our

strong momentum. eCommerce net revenue

grew to $564 million, an increase of 33% from last

year and 150% from two years ago. In Retail, we

reopened and expanded our boutique portfolio.

Despite dealing with store closures, capacity

restrictions, and labour shortages, our Retail

business surged. Retail net revenue grew to

$930 million, an increase of 116% from last year

and 23% from two years ago. Of particular note,

our comparable boutiques flourished as they

surpassed pre-pandemic productivity levels in

both Canada and the United States by double-

digits, achieving comparable sales growth

59% from last year and 15% from two years ago.

GEOGRAPHY EXPANSION

Our increased investment into the United

States continues to pay off, as we opened

6 new boutiques in key markets, such as Los

Angeles and Nashville, to a tremendous client

response. As a result, our United States business

accelerated at an unprecedented pace as net

revenue grew to $676 million in Canadian dollars,

an increase of 132% from last year and 100% from

two years ago, and accounted for 45% of net

revenue in fiscal 2022.

PRODUCT EXPANSION

This year, we meaningfully extended our

beautiful product assortment across breadth,

with new styles, and depth, with new colours,

sizes, and lengths. We also laid the foundation

for exciting new products and categories, as

we completed our acquisition and foray into

menswear with Reigning Champ and our first-

ever Swim collection, which launched at the

beginning of fiscal 2023.

BRAND AWARENESS AND CUSTOMER

EXPANSION

Brand awareness and customer expansion

continues to be a priority as we further

accelerated our awareness and brought

Everyday Luxury to significantly more clients

than ever before. We continued to make

significant progress on our path to getting

famous in the United States, as we more than

doubled our active client base.

Please see the sections entitled “How We Assess the Performance of Our Business” and

“Non-IFRS Measures including Retail Industry Metrics” of our MD&A dated May 5, 2022

(as included in this Annual Report and available on SEDAR at www.sedar.com) for further

details concerning comparable sales growth.

Fiscal 2022 Annual Report | 5

Aritzia Community™ | Social and

Environmental Responsibility

It is more important than ever, and our

responsibility as an industry leader and global

corporate citizen, that we continue to prioritize

our commitments to our people and planet. In

fiscal 2022, we remained focused on further

strengthening our environmental and social

contributions to accelerate the positive impact

Aritzia is making across our operations and

wider value chain, to ensure we deliver Everyday

Luxury, today and tomorrow.

As the pandemic continued to evolve throughout

the year, we remained unwavering in our

commitment to ensuring the health and safety

of our people, clients, and communities. We

operated with best-in-class testing frequency

and diligent contract tracing, in close

partnership with government health authorities

to navigate the uncertainty of the pandemic

responsibly. Additionally, we provided financial

continuity for our people through the pandemic

as we paid $7 million in Fiscal 2022 through the

Aritzia Community™ Relief Fund, on top of the

$25 million from fiscal 2021.

We continued to uplift and empower our

people, clients, and communities by prioritizing

diversity, equity and inclusion (DE&I) as well. We

were steadfast in our commitment to listening,

learning, and taking action in fiscal 2022.

This year, we further embedded DE&I into our

organization as we partnered with an external

consultant for strategic support and to serve

as our fractional Chief Diversity Officer. For our

people, we launched a series of events during

key affinity months, introduced training sessions,

and welcomed guest speakers with subject

matter expertise to build allyship from within.

That being said, it was just as important to us

to take action with communities as well. To do

this, we grew Aritzia Community™ and expanded

our partnerships with incredible organizations

throughout the year. In fiscal 2022, we donated

100% of the proceeds from two limited-edition

product capsule collections, 4,000 warm winter

coats valued at over $1 million, and $250,000

to celebrate Giving Tuesday – a global day of

giving, while continuing to deliver on our seasonal

product donation program. To date, Aritzia

Community™ has contributed more than $40

million in product donations, financial support

and volunteer hours to non-profits and partners,

positively impacting the lives of more than

445,000 people, and we are just getting started.

In fiscal 2022, we made significant progress on

our sustainability goals across our business. As

we have expanded our product assortment,

we have also adopted more sustainable

manufacturing practices. Focusing not only

on what we make, but also how we make it.

In fiscal 2022, we grew our use of sustainable

fabrics from 40% in our 2021 collections to 60%

in our 2022 Spring/Summer collection. It is not

just our product but the packaging it comes

in that is more sustainable. In fiscal 2022,

we shifted all of our Retail and eCommerce

paper-based packaging to contain recycled or

sustainably certified materials. Additionally, we

evaluated 98% of our finished goods suppliers

against Aritzia’s environmental criteria using the

Higg Facility Environmental Module to ensure

alignment with business requirements and

through our social impact monitoring program,

conducted third-party assessments at 100% of

our finished goods suppliers against Aritzia’s

Supplier Code of Conduct. Our commitment to

the planet extends into all facets of our business.

For the second consecutive year, Aritzia

achieved carbon neutrality across all our stores,

offices, and distribution centers. We disclosed

through CDP Climate Change for the second

year as well, and received recognition on the

CDP Supplier Engagement Leadership board. We

also joined the United Nations Global Compact,

signaling our commitment to the values of

responsible business.

6 |

Brian Hill

Chief Executive Officer

Looking Forward

As we set our sights on the future, our business

has never been stronger or better positioned

to capitalize on the extraordinary growth

opportunities being presented to us. The

foundation our team has built, since we opened

our first boutique in 1984, continues to empower

our ability to deliver our much-loved Everyday

Luxury experience for new and loyal clients.

In my 38 years with Aritzia, I have not only

gained valuable perspective of our business,

but more so, an incredible appreciation for our

people and the contributions each of them have

made to our tremendous success. No one more

so than Jennifer Wong. Which is why we could

not be more excited for her to lead us into the

future as our next CEO.

Jennifer and I began our partnership 35 years

ago. She knows our business inside and out.

Over those 35 years, Jennifer has run almost all

departments within the organization. She has

been instrumental to our accelerated growth,

and has delivered many of the milestones

that we have shared in these annual reports.

Jennifer’s unparalleled leadership style and

dedication to excellence exemplifies our values,

which she was integral in developing, and she

deeply resonates with and inspires our people. I

believe there is no better time and no one better

to lead Aritzia. With her long-term, lasting

approach to strategic growth, I believe she is

perfect for leading us into the future.

Under Jennifer’s leadership, we will announce

our multi-year growth plan later this year, and

continue to fuel our accelerated growth by

driving digital innovation in our eCommerce

channel and Omni capabilities, growing our

boutique portfolio, expanding our product

assortment across depth, breadth and new

categories, and acquiring new clients, all

while continuing to strategically invest in the

infrastructure required to scale for years

to come.

I would like to thank our investors, our almost

7,000 extraordinary team members, and our

clients for their enduring loyalty to Aritzia. I have

been privileged to lead this team and could

not be more excited to continue working on

Aritzia’s long-term growth, as Executive Chair,

maintaining full-time functional area leadership

of Product, Marketing, Real Estate Development,

and Business Development, while supporting

Jennifer as she leads our people and business

into the future, where our outlook has never

been brighter.

Sincerely,

Fiscal 2022 Annual Report | 7

8 |

Aritzia is an innovative design house and boutique. We

conceive, create, develop and retail fashion brands

with a depth of design and quality that provides

compelling value. Each of our exclusive brands has

its own vision and distinct aesthetic point of view. As

a group, they are united by an effortless appeal, a

focus on fit and an of-the-moment point of view. Our

expansive range of fashion apparel and multi-brand

strategy enables us to appeal to our clients across

multiple aspects of their lifestyles and life stages,

producing strong and enduring client loyalty. Exclusive

brands currently represent 95% of Aritzia’s net revenue.

Brands and Products

Fiscal 2022 Annual Report | 9

We connect our clients to the energy of our culture

through the products we sell and the environments

we create. We sell our products through our boutiques

and aritzia.com, giving us complete control of the

presentation of our brand and the relationships with

our clients.

We carefully consider each Aritzia destination –

physical and digital – individually, taking care to provide

our clients with aspirational shopping experiences and

exceptional service at every interaction.

We believe there are synergies between our boutiques

and aritzia.com, with the success of each channel

benefiting the other through increased brand

awareness and affinity. We continue to build out omni-

channel capabilities to seamlessly provide an Everyday

Luxury experience for our clients to shop wherever,

whenever and however.

Destinations

Dallas

San Jose

San Francisco

Portland

Seattle

Victoria

Vancouver

Whistler

Edmonton

Calgary

Saskatoon

Winnipeg

Chicago

Troy

Toronto

Montreal

Ottawa

Halifax

Boston

Suburban New York

Manhattan

New Jersey

5 Los Angeles

Washington DC

Quebec City

San Diego

Denver

1Minneapolis

Houston

Austin

King of Prussia

Honolulu

Canada

United States

109

boutiques

1 Nashville

Tysons

Columbus

Las Vegas

Miami

10 |

Future Growth

We have a thoughtful approach to growth that is

focused on profitability over the long-term. Supported

by accelerating trends, we continue to make

strategic investments across our people, processes

and technology to capitalize on the unprecedented

opportunities.

1. eCommerce and Omni Innovation

Our eCommerce business was launched in fiscal

2013, quickly surpassing our growth expectations.

Annual increases in online traffic drove eCommerce

revenue growth of more than 36% on a compounded

annual basis from fiscal 2016 to 2020. Our eCommerce

business grew 33% in fiscal 2022 on top of the 88%

growth in fiscal 2021. eCommerce revenue was 38%

of total net revenue in fiscal 2022, compared to 23%

in fiscal 2020, pre-pandemic. Going forward, we will

continue to invest in digital capabilities to provide a

seamless Everyday Luxury experience for our clients

to drive accelerated eCommerce and omni-channel

growth.

2. Geographic Expansion

Operating as our most effective yet profitable

marketing tool, boutique openings are a key pillar of

Aritzia’s growth strategy. Our boutiques drive sales,

build brand awareness, propel significant client

acquisition, and fuel our eCommerce channel. Payback

on our new boutiques continue to accelerate, trending

between 12 to 24 months.

We are seeing unprecedented opportunities for us to

acquire prime real estate. We believe that we have

a meaningful opportunity to expand our boutique

network, particularly in the United States, where

we have identified a minimum of 100 locations that

meet our exacting criteria. We will continue to take

a disciplined approach to boutique openings, with a

fastidious focus on location selectivity.

Fiscal 2022 Annual Report | 11

3. Product Expansion

Product innovation is a core competency for us and

has been critical to our success. We always look

beyond what ‘is’ to what ‘could be’ by continuously

monitoring the evolving fashion landscape, our brand

portfolio, our product mix and our client base to

identify opportunities for innovation and growth. With

the accelerated shift to digital and as our eCommerce

channel reaches critical mass, our product strategy

can now be based on the unlimited opportunities that

online provides. We see meaningful potential to double

our product offering by fiscal 2025 through:

— Depth (sizes, lengths, colours)

— Breadth (new style development)

— New categories (including swim, intimates

and men’s)

We believe our innovation strategy drives traffic to our

boutiques and aritzia.com and increases brand loyalty

by guiding our mix of brands and products to meet our

clients’ needs. It also allows us to reinforce the appeal

of our brands across a broader range of fashion needs,

increasing our addressable market and ‘share of our

client’s closet’.

4. Brand Awareness and Customer Expansion

Increased brand awareness is driven through real

estate and marketing strategies designed to attract

new clients and deepen loyalty of existing clients.

These strategies are propelling our brand with our

active client base more than doubling in the United

States during fiscal 2022. Our premier real estate

locations, aspirational boutique designs and high-

touch service highlight the unique ethos and aesthetic

of our exclusive brands and Aritzia’s overall dedication

to delivering Everyday Luxury. We extend this

experience online, through digital marketing, reaching

beyond our retail footprint to acquire customers in

relevant segments and keep them engaged with

digitally native content experiences.

12 |

Our Philosophy

Our Priorities

ENVIRONMENT, SOCIAL & GOVERNANCE

Aritzia recognizes that social and environmental

factors are integral to our long-term success.

We’re committed to supporting all the people our

organization touches, while protecting the planet

that communities and our business rely on. In order

to deliver Everyday Luxury, today and tomorrow, our

goal is to continue strengthening our positive impact

socially and environmentally across our operations and

wider value chain.

Aritzia’s social and environmental priorities span across

our value chain. From raw material sourcing, third party

manufacturing suppliers, product use and end-of-life,

as well as across our boutiques and offices to our

Distribution Centres. These initiatives are embedded

throughout our organization with oversight shared

across multiple departments. To ignite meaningful

change, we take an evidence-based approach with

a focus on delivering long-term impact. As part of our

social and environmental strategy, we have identified

the following priorities:

1. Attract, develop and retain a high performing team

of world-class talent

2. Deliver positive social impact through our products

and supply chain

3. Drive sustainable practices and solutions across the

product lifecycle

4. Build sustainable and efficient infrastructure across

our boutiques, cafes, offices, DCs and logistics

Fiscal 2022 Annual Report | 13

Key Achievements in Fiscal 2022

ENVIRONMENT

— Adopted more sustainable fabrics across 40% of

our 2021 collections and 60% of our Spring/Summer

2022 collections, including organic and recycled

cotton, recycled polyester and nylon, amongst

others;

— Evaluated 98% of our finished goods suppliers

against Aritzia’s environmental criteria through

the Higg Facility Environmental Module to ensure

alignment with business requirements;

— For the second consecutive year, Aritzia has

achieved carbon neutrality across our operations

(boutiques, offices and distribution centres),

which account for 100% of Aritzia’s Scope 1 and 2

emissions – this is achieved by reducing energy

use, sourcing renewable energy credits in the

equivalent of our electricity consumption, and

offsetting remaining emissions;

— Completed our second CDP Climate Change

submission and received recognition on the CDP

Supplier Engagement Leadership board; and

— Added Sustainable Product filters on aritzia.com

for our clients.

GOVERNANCE

— Published Aritzia’s ESG Executive Summary,

outlining our priorities on investors.aritzia.com;

— Formally approved and formed an Environmental

and Social Board Committee to guide and

have oversight of key social and environmental

considerations; and

— Signed on as a participant to the United Nations

Global Compact.

For further details, please visit: https://www.

aritzia.com/en/aritzia/corporateresponsibility/

sustainability.html

SOCIAL

— Conducted third party assessments at 100% of

finished goods suppliers against Aritzia’s Supplier

Code of Conduct through our social impact

monitoring program;

— Ensured financial continuity for our people through

the COVID-19 pandemic, by paying $25 million in

fiscal 2021 and $7 million in fiscal 2022 through the

Aritzia Community™ Relief Fund;

— Continued our investment in DE&I and secured

an external consultant to support strategic DE&I

implementation into our organization and serve

as our fractional Chief Diversity Officer, and

continued to emphasize internal engagement

of our employees with a series of affinity month

activations, training sessions and guest speakers

with subject matter expertise in DE&I;

— Donated 4,000 warm winter coats valued at over

$1 million to our Aritzia Community

™ partner

organizations across the U.S. and Canada; and

— Celebrated Giving Tuesday – a global day of

giving – with a commitment to donate $10 of every

purchase on that day to Aritzia Community™

partner organizations; we reached our $250,000

donation goal.

14 |

Proven Results

(1)

Adjusted EBITDA and Adjusted Net Income are non-IFRS measures, see “Non-IFRS Measures including Retail Industry Metrics” in our Annual Information Form dated May 5, 2022 for an explanation

of the composition of these non-IFRS measures, how these non-IFRS measures provide useful information to an investor, and the purposes for which management uses these non-IFRS measures.

A quantitative reconciliation of Adjusted EBITDA and Adjusted Net Income to Net Income can be found on page 8 of our annual Management’s Discussion & Analysis (“MD&A”) for Fiscal 2022

dated May 5, 2022, which has been included in this Annual Report, page 7 of our annual MD&A for Fiscal 2021 dated May 11, 2021, page 15 of our annual MD&A for Fiscal 2020 dated May 28, 2020,

page 12 of our annual MD&A for Fiscal 2019 dated May 9, 2019, and page 13 of our annual MD&A for Fiscal 2018 dated May 10, 2018, filed on SEDAR at www.sedar.com, which reconciliations are

incorporated herein by reference.

$133

$161

$173

$77

$289

FY2018 FY2019 FY2 020 FY2 021 FY2 022

$981

$857

$1,495

$874

$743

FY2018 FY2 019 FY2 020 FY2 021 FY2 022

$76

$95

$97

$26

$177

FY2018 FY2 019 FY2 020 FY2 021 FY2 022

Net Income ($ millions)

Net Revenue ($ millions)

Adjusted EBITDA

(1)

($ millions)

17.6% 9.0%

eCommerce

Retail

19%

CAGR

Adjusted Net Income

(1)

($ millions)

24%

CAGR

9.9% 3.0%

19.4%

11.8%

$57

$79

$91

$19

$157

FY2018 FY2019 FY2 020 FY2021 FY2022

29%

CAGR

22%

CAGR

18.4%17.9%

10.2%

10.8%

Fiscal 2022 Annual Report | 15

Operational and Financial Summary

(1)

These measures are non-IFRS financial measures. Please see the sections entitled “How We Assess the Performance of Our Business”, “Selected Consolidated Financial Information” and “Non-

IFRS Measures including Retail Industry Metrics” of our annual MD&A dated May 5, 2022 (as included in this Annual Report), our annual MD&A for fiscal 2021 dated May 11, 2021, our annual MD&A

for fiscal 2020 dated May 28, 2020, our annual MD&A for fiscal 2019 dated May 9, 2019, and our annual MD&A for fiscal 2018 dated May 10, 2018, and all available on SEDAR at www.sedar.com, for

further details concerning Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per Diluted Share, capital cash expenditures (net of proceeds from lease incentives), and free cash flow,

including definitions and reconciliations to the relevant reported IFRS measure.

(in thousands of Canadian dollars,

unless

otherwise noted)

Fiscal 2022

52 Weeks

Fiscal 2021

52 Weeks

Fiscal 2020

52 Weeks

Fiscal 2019

53 Weeks

Fiscal 2018

52 Weeks

Financial Summary:

Net revenue

1,494,630

857,323

980,589

874,296

743,267

Cost of goods sold

839,678

544,818

577,165

531,383

447,776

Gross

profit

654,952

312,505

403,424

342,913

295,491

Operating expenses

Selling, general and administrative

392,802

250,726

243,362

215,297

183,857

Stock-based compensation expense

26,131

10,691

7,790

11,540

17,240

Income from operations

236,019

51,088

152,272

116,076

94,394

Finance expense

25,202

28,420

28,319

4,821

5,221

Other expense (income)

(8,783)

(3,534)

(2,185)

(395)

1,890

Income before income taxes

219,600

26,202

126,138

111,650

87,283

Income tax expense

62,683

6,975

35,544

32,922

30,190

Net income

156,917

19,227

90,594

78,728

57,093

Net income per diluted share

1.36

0.17

0.81

0.67

0.49

Adjusted EBITDA

(1)

289,385

76,812

172,572

161,045

132,716

Adjusted Net Income

(1)

176,736

26,028

97,388

94,543

75,934

Adjusted Net Income

(1)

per Diluted Share

1.53

0.23

0.87

0.81

0.65

Weighted average number of diluted

shares outstanding (thousands)

115,784

112,844

112,128

117,358

116,280

Cash and cash equivalents

265,245

149,147

117,750

100,897

112,475

Capital cash expenditures (net of

proceeds from lease incentives)

(1)

(52,607)

(42,529)

(36,253)

(49,862)

(59,253)

Free cash flow

(1)

221,937

36,306

117,246

38,874

44,342

Percentage of Net Revenue:

Net revenue

Cost of goods sold

100.0%

56.2%

100.0%

63.5%

100.0%

58.9%

100.0%

60.8%

100.0%

60.2%

Gross

profit

43.8%

36.5%

41.1%

39.2%

39.8%

Operating expenses

Selling, general and administrative

26.3%

29.2%

24.8%

24.6%

24.7%

Stock-based compensation expense

1.7%

1.2%

0.8%

1.3%

2.3%

Income from operations

15.8%

6.0%

15.5%

13.3%

12.7%

Finance expense

1.7%

3.3%

2.9%

0.6%

0.7%

Other

expense (income)

(0.6%)

(0.4%)

(0.2%)

(0.0%)

0.3%

Income before income taxes

14.7%

3.1%

12.9%

12.8%

11.7%

Income tax expense

4.2%

0.8%

3.6%

3.8%

4.1%

Net income

10.5%

2.2%

9.2%

9.0%

7.7%

Adjusted EBITDA

(1)

19.4%

9.0%

17.6%

18.4%

17.9%

Adjusted Net Income

(1)

11.8%

3.0%

9.9%

10.8%

10.2%

Other Performance Metrics:

Year-over-year net revenue growth

(decline)

74.3%

(12.6%)

12.2%

17.6%

11.4%

Comparable sales growth

(1)

Boutiques:

Number of boutiques, end of period

n/a

106

n/a

101

7.6%

9.8%

6.6%

New

boutiques

Boutiques repositioned into a

flagship boutique

(1)

Boutique closure

(1)

Boutique closed due to

mall redevelopment

(1)

Boutiques expanded or repositioned

(1)

These measures are non-IFRS financial measures. Please see the sections entitled “How We Assess the Performance of Our Business”, “Selected Consolidated

Financial Information” and “Non-IFRS Measures including Retail Industry Metrics” of our MD&A dated May 5, 2022 (as included in this Annual Report and available

on SEDAR at www.sedar.com) for further details concerning Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per Diluted Share, capital cash

expenditures (net of proceeds from lease incentives), and free cash flow, including definitions and reconciliations to the relevant reported IFRS measure.

16 |

Management’s Discussion

& Analysis

18 |

Aritzia Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Fiscal Year Ended February 27, 2022

May 5, 2022

The following Management’s Discussion and Analysis (“MD&A”) dated May 5, 2022 is intended to assist readers in

understanding the business environment, strategies and performance and risk factors of Aritzia Inc. (together with its

consolidated subsidiaries, referred to herein as “Aritzia”, the “Company”, “we”, “us” or “our”). This MD&A provides the

reader with a view and analysis, from the perspective of management, of the Company’s financial results for the

thirteen-week and fifty-two week periods ended February 27, 2022. This MD&A should be read in conjunction with

the Company’s audited annual consolidated financial statements and accompanying notes Fiscal 2022 (as

hereinafter defined).

FORWARD-LOOKING INFORMATION

Certain statements made in this MD&A may constitute forward-looking information under applicable securities laws.

Forward-looking statements are based on information currently available to management and on estimates and

assumptions made by management regarding, among other things, general economic and geopolitical conditions

and the competitive environment within the retail industry, in light of its experience and perceptions of historical trends,

current conditions and expected future developments, as well as other factors that are believed to be appropriate and

reasonable in the circumstances. These statements may relate to our future financial outlook, our leadership transition

and its impact on our business, people and growth, our plans relating to our distribution facilities and digital

infrastructure, and anticipated events or results and include, our ability to sustain momentum in our business and

advance our strategic growth drivers, continued focus on driving digital innovation and eCommerce and Omni

capabilities, accelerating boutique growth and expanding our product assortment, acquiring new clients and investing

in our infrastructure and growing team, the Company’s response to mitigate anticipated supply chain disruptions,

geopolitical risks, inflationary pressures and labour shortages, repurchases under our normal course issuer bid, our

outlook for: (i) net revenue in the first quarter of Fiscal 2023, (ii) net revenue in Fiscal 2023, (iii) gross profit margin in

Fiscal 2023, (iv) SG&A as a percent of net revenue in Fiscal 2023, (v) net capital expenditure in Fiscal 2023 and (vi)

new boutiques and expansion or repositioning of existing boutiques in Fiscal 2023 . Particularly, information regarding

our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking

information. As the context requires, this may include certain targets as disclosed in the prospectus for our initial

public offering, which are based on the factors and assumptions, and subject to the risks, as set out therein and

herein. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology

such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”,

“estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”,

“believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”,

“would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations,

intentions, projections or other characterizations of future events or circumstances contain forward-looking

information. Statements containing forward-looking information are not historical facts but instead represent our

expectations, estimates and projections regarding future events or circumstances.

Implicit in forward-looking statements in respect of the Company's expectations for: (i) net revenue of approximately

$375 million for the first quarter of fiscal 2023, representing just over a 50% increase compared to last year, (ii) net

revenue of approximately $1.8 billion in Fiscal 2023, representing an increase of approximately 20% from Fiscal

2022, (iii) gross profit margin to decrease by approximately 100 bps compared to last year, (iv) SG&A as a percent

of net revenue to increase approximately 50 bps to 100 bps compared to last year and (v) net capital expenditures in

the range of $110 million to $120 million, are certain current assumptions including the continued acceleration of

sales in the United States both in retail and eCommerce channels as well as continued momentum of the Company’s

eCommerce business in Canada. The Company’s forward-looking information is also based upon assumptions

regarding the overall retail environment, the COVID-19 pandemic and related health and safety protocols and

Fiscal 2022 Annual Report | 19

currency exchange rates for Fiscal 2023. Specifically, we have assumed the following exchange rates for Fiscal 2023:

USD:CAD = 1:1.26.

Given this unprecedented period of uncertainty, there can be no assurances regarding: (a) the limitations or

restrictions that may be placed on servicing our clients in reopened boutiques or potential re-closing of boutiques or

the duration of any such limitations or restrictions; (b) the COVID-19-related impacts on our business, operations,

labour force, supply chain performance and growth strategies, (c) our ability to mitigate such impacts, including

ongoing measures to enhance short-term liquidity, contain costs and safeguard the business; (d) general economic

conditions related to COVID-19 and impacts to consumer discretionary spending and shopping habits; (e) credit,

market, currency, commodity market, inflation, interest rates, global supply chains, operational, and liquidity risks

generally; (f) geopolitical events; and (g) other risks inherent to our business and/or factors beyond our control which

could have a material adverse effect on the Company.

Many factors could cause our actual results, level of activity, performance or achievements or future events or

developments to differ materially from those expressed or implied by the forward-looking statements, including,

without limitation, the factors discussed in the “Risk Factors” section of this MD&A and in the Company’s annual

information form dated May 5, 2022 for Fiscal 2022 (the “AIF”). A copy of the AIF and the Company’s other publicly

filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and

Retrieval (“SEDAR”) at www.sedar.com.

The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other

factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions

carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such

information. The forward-looking information contained in this MD&A represents our expectations as of the date of

this MD&A (or as the date they are otherwise stated to be made), and are subject to change after such date. However,

we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as

a result of new information, future events or otherwise, except as required under applicable securities laws.

BASIS OF PRESENTATION

Our audited annual consolidated financial statements and unaudited condensed interim consolidated financial

statements (together, the “consolidated financial statements”) have been prepared in accordance with International

Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), using

the accounting policies described therein. All amounts are presented in thousands of Canadian dollars unless

otherwise indicated. We manage our business on the basis of one operating and reportable segment.

All references in this MD&A to “Q4 2022” are to our 13-week period ended February 27, 2022, to “Q4 2021” are to

our 13-week period ended February 28, 2021 and to “Q1 2023” are to our 13-week period ended May 29, 2022. All

references in this MD&A to “Fiscal 2022” are to our 52-week period ending February 27, 2022, to “Fiscal 2021” are

to our 52-week period ended February 28, 2021, to “Fiscal 2020” are to our 52-week period ended March 1, 2020

and to “Fiscal 2023” are to our 52-week period ending February 26, 2023.

The audited annual consolidated financial statements and accompanying notes for Fiscal 2022 and this MD&A were

authorized for issue by the Company’s Board of Directors.

OVERVIEW

Aritzia is a vertically integrated design house with an innovative global platform, home to an extensive portfolio of

exclusive brands for every function and individual aesthetic. We’re about good design, quality materials and timeless

style that endures and inspires — all with the wellbeing of our People and Planet in mind. We call this Everyday

Luxury.

Founded in 1984, in Vancouver, Canada, we create and curate products that are both beautiful and beautifully made,

cultivate aspirational environments, offer engaging service that delights, and connect through captivating

communications. We pride ourselves on providing immersive, and highly personal shopping experiences at

aritzia.com and in our 100+ boutiques throughout North America to everyone, everywhere.

Everyday Luxury. To Elevate Your World.™

20 |

RECENT EVENTS

Completion of Secondary Offering

On May 13, 2021, the Company announced a secondary offering (the “Secondary Offering”) on a bought deal basis

of its subordinate voting shares through a secondary sale of shares by certain entities owned and or controlled directly

or indirectly by Brian Hill, Chief Executive Officer and Chairman of the Company, or Brian Hill and his immediate

family (the “Selling Shareholders”). The Secondary Offering of 3,040,700 subordinate voting shares raised gross

proceeds of $91.2 million for the Selling Shareholders, at a price of $30.00 per subordinate voting share and was

completed on June 1, 2021. The Company did not receive any proceeds from the Secondary Offering. As part of the

Secondary Offering, during the 13-week period ended May 30, 2021, the Selling Shareholders exchanged 2,600,000

of their multiple voting shares for subordinate voting shares. Following the Offering, Brian Hill remains the Company’s

largest shareholder with an approximately 20% equity interest. Underwriting fees were paid by the Selling

Shareholders, and other expenses related to the Secondary Offering of $0.5 million were paid by the Company.

Closed Acquisition of CYC Design Corporation

On June 25, 2021, the Company successfully completed its acquisition of CYC Design Corporation (“CYC”), a leading

designer and manufacturer of premium athletic wear, Reigning Champ. The Company acquired 75% of CYC based

on a total enterprise value of approximately $63.0 million, with the remaining 25% equity interest held by CYC’s

management shareholders to be converted into the Company’s subordinate voting shares in up to three instalments

from 2024 to 2026.

The acquisition meaningfully accelerates the Company’s product expansion into men’s while bringing incremental

growth to the Company’s already surging women’s eCommerce and U.S. businesses. Capitalizing on the Company’s

world-class operational expertise and infrastructure, men’s, merchandised independently, will become a meaningful

part of the Company’s platform through the CYC acquisition.

Following the close of the transaction on June 25, 2021, Fiscal 2022 results include the consolidation of CYC.

Refinanced Credit Facility

On July 13, 2021, the Company refinanced its term loan and revolving credit facility, extending the term to July 13,

2025. As part of the refinancing, the Company repaid its term loan of $75.0 million and increased its existing revolving

credit facility from $100.0 million to $175.0 million.

Normal Course Issuer Bid

On January 12, 2022, the Company announced the commencement of a normal course issuer bid (“NCIB”) through

the facilities of the Toronto Stock Exchange to repurchase and cancel up to 3,732,725 of the Company’s subordinate

voting shares, representing approximately 5% of the public float of 74,654,507, during the twelve month period

commencing January 17, 2022 and ending January 16, 2023. During Fiscal 2022, the Company repurchased 164,200

Shares for cancellation at an average price of $54.79 per subordinate voting share for total cash consideration of

$9.0 million.

Appointment of Daniel Habashi to the Board of Directors

On January 12, 2022, the Company announced that Daniel Habashi will join Aritzia’s Board of Directors effective

January 14, 2022. Mr. Habashi is the General Manager of TikTok Canada, overseeing content and operations for the

market. Mr. Habashi is recognized by Report on Business Magazine as one of Canada’s best executives. He served

as Chief Marketing Officer of Soho House & Co from 2018 to 2020 and has held leadership positions at Instagram,

Facebook and Microsoft from 2005 to 2017. Mr. Habashi holds a Business Administration Management (Honours)

Degree from Wilfrid Laurier University and an International Management degree from LIUC – Università Cattaneo.

With the addition of Mr. Habashi, Aritzia’s Board of Directors has eight out of ten directors who are independent under

Canadian securities laws.

COVID-19 PANDEMIC

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a worldwide pandemic. Since

the outbreak, Aritzia’s priorities have been the well-being of our people, clients and supporting the community while

safeguarding the long-term financial strength of our business. In order to ensure the health and safety of our people,

Fiscal 2022 Annual Report | 21

clients and communities, we implemented stringent protocols across our boutiques, distribution centre and support

offices.

First quarter Fiscal 2022

At the start of the first quarter, 18 boutiques were temporarily closed. Retail revenue performance in the first quarter

continued to be impacted by the closure of 34, or half of the Company’s 68 boutiques in Canada for approximately

two-thirds of the quarter. This compares to the closure of all boutiques at the outset of the pandemic on March 16,

2020. At the end of the first quarter in Fiscal 2022, 33 of our boutiques remained temporarily closed. Sales productivity

of open boutiques in the first quarter trended, on average, at 99% of pre-COVID-19 levels in the first quarter of Fiscal

2020 despite occupancy restrictions and limited operating hours. Our eCommerce business delivered 19% revenue

growth compared to the same period last year, on top of the 125% increase in the first quarter of Fiscal 2021 when

all of our boutiques were closed.

Second quarter Fiscal 2022

As at July 12, 2021, all of the Company’s boutiques had reopened. Our eCommerce business revenue continues to

surge with 49% growth over the same period last year on top of the 82% growth that we saw in the second quarter

of Fiscal 2021. Sales in our boutiques were exceptional, exceeding pre-pandemic levels with comparable sales

growing

(1)

14% from two years ago in the second quarter of Fiscal 2020.

Third quarter Fiscal 2022

For the first time since the start of the pandemic, all of our boutiques were open for the entire duration of the quarter.

Our net revenues for the third quarter grew 63% over the same period last year, driven by sales growth across all

geographies and all channels. Sales growth in the United States sustained unprecedented momentum, increasing

115% over the same period last year and representing 44% of our total revenue in the third quarter. Our eCommerce

business continued to surge, increasing 47% on top of the 79% increase in the third quarter of Fiscal 2021. Our retail

revenue increased by 72% over the same period last year, achieving comparable sales growth

(1)

of 58% compared

to last year, while continuing to exceed pre-pandemic levels with comparable sales

(1)

growth of 26% from two years

ago in the third quarter of Fiscal 2020.

Fourth quarter Fiscal 2022

Our strong performance continued, with all of our boutiques opened, despite the emergence of the COVID-19

Omicron variant and reintroduction of capacity restrictions in our Ontario and Quebec boutiques. Our net revenues

for the fourth quarter grew 66% over the same period last year, driven by ongoing strength in our business across all

geographies and all channels. Revenue growth in the United States increased 109% over the same period last year,

representing 49% of our total revenue in the fourth quarter. Our eCommerce business grew 21% on top of a strong

81% increase in Q4 2021. Our retail revenue increased by 123% over the same period last year, achieving

comparable sales growth

(1)

of 60% compared to last year, while continuing to exceed pre-pandemic levels with

comparable sales growth

(1)

of 13% from two years ago in the fourth quarter of Fiscal 2020.

In addition, we undertook initiatives in support of our people during the pandemic, including paying $25 million in

Fiscal 2021 and $7 million in Fiscal 2022 through the Aritzia Community

Relief Fund to ensure financial continuity

for our people during boutique closures and to enable seamless boutique reopening.

The extent of the impact of COVID-19 on future periods will depend on future developments, including the duration

or resurgence of the pandemic, the related government responses and any resulting health and safety measures or

directives put in place by public health authorities, which are uncertain and cannot be predicted. Aritzia believes its

eCommerce business is well-positioned to moderate these impacts.

See also the “Forward-Looking Information” and “Risk Factors” sections of this MD&A and in our AIF.

22 |

FINANCIAL HIGHLIGHTS

We refer the reader to the section entitled “How We Assess the Performance of Our Business” of this MD&A for the

definition of the items discussed below and, when applicable, to the table entitled “Selected Consolidated Financial

Information” for reconciliations of non-IFRS measures with the most directly comparable IFRS measure.

Q4 2022

⎯ Net revenue increased 66.1% to $444.3 million from Q4 2021

⎯ USA revenue increased by 108.8% to $216.8 million from Q4 2021 and 127.9% from Q4 2020, comprising

48.8% of net revenue in Q4 2022

⎯ eCommerce revenue increased by 21.4% to $182.0 million from Q4 2021, comprising 41.0% of net revenues in

Q4 2022

⎯ Retail revenue increased by 123.0% to $262.4 million from Q4 2021, achieving comparable sales growth

(1)

60% compared to Q4 2021

⎯ Gross profit margin

(1)

increased to 40.4% from 38.5% in Q4 2021

⎯ Net income increased to $34.2 million, from $16.1 million in Q4 2021

⎯ Adjusted EBITDA

(1)

increased to $66.3 million from $35.2 million in Q4 2021

⎯ Adjusted Net Income

(1)

of $0.34 per diluted share, compared to $0.16 per diluted share in Q4 2021

Fiscal 2022

⎯ Net revenue increased 74.3% to $1.5 billion, compared to $857.3 million in Fiscal 2021

⎯ USA revenue increased by 131.8% to $676.1 million from Fiscal 2021 and 100.3% from Fiscal 2020,

comprising 45.2% of net revenue in Fiscal 2022

⎯ eCommerce revenue increased by 32.5% to $564.3 million from Fiscal 2021, comprising 37.8% of net revenues

in Fiscal 2022

⎯ Retail revenue increased by 115.6% to $930.3 million from Fiscal 2021

⎯ Gross profit margin

(1)

increased to 43.8% from 36.5% in Fiscal 2021

⎯ Net income increased to $156.9 million from $19.2 million in Fiscal 2021

⎯ Adjusted EBITDA

(1)

increased to $289.4 million from $76.8 million in Fiscal 2021

⎯ Adjusted Net Income

(1)

of $1.53 per diluted share, compared to $0.23 per diluted share in Fiscal 2021

Strategic Accomplishments for Fiscal 2022

⎯ Grew active US clients by over 100% in the 12 month period

⎯ Achieved 131.8% growth in USA revenue, through strength in both our boutiques and eCommerce

⎯ Drove continued momentum growing eCommerce revenue by 32.5% on top of 88.3% growth last year, to

comprise 37.8% of net revenue in fiscal 2022

⎯ Strategically managed global supply chain disruptions to ensure product availability to meet demand

⎯ Opened six new boutiques and repositioned six existing boutiques in premier real estate locations

⎯ Launched store inventory visibility, digital gift cards and other digital capabilities as we accelerated investments

across infrastructure and talent to support future growth

⎯ Advanced initiatives to support Aritzia’s communities, cultivate diversity and enhance sustainability

(1)

See the sections below entitled “How We Assess the Performance of our Business”, “Selected Consolidated Financial Information” and

“Non-

IFRS Measures including Retail Industry Metrics” for further details concerning gross profit margin, comparable sales growth, Adjusted

EBITDA, Adjusted Net Income and Adjusted Net Income per diluted share including definitions and reconciliations to the relevant reported IFRS

measure.

OUTLOOK

The Company’s strong momentum continued into the first quarter of fiscal 2023. Aritzia is on-track to deliver net

revenue of approximately $375 million, representing just over a 50% increase compared to last year. This reflects

continued strength in the United States across both its retail and eCommerce channels, as well as, strong recovery

of the Company’s business in Canada. This revenue range for the first quarter reflects all boutiques opened with no

COVID-19 related restrictions in place, compared to last year when 50% or 34 of the Company’s boutiques in Canada

were mandated to close for approximately two-thirds of the quarter.

For fiscal 2023, Aritzia currently expects the following:

⎯ Net revenue of approximately $1.8 billion, representing an increase of approximately 20% from fiscal 2022. This

is led by continued strength in the Company’s business in the United States across both channels, as well as

Fiscal 2022 Annual Report | 23

continued growth in Canada driven by its eCommerce business and recovery in its boutiques, and contribution

from its retail expansion with:

⎯ Eight to ten new boutiques with all but one in the United States, including Forum Shops in Las Vegas and

Aventura Mall in Miami already opened; and

⎯ Four to five boutique expansions or repositions, including three to four locations in Canada and one in the

United States.

⎯ Gross profit margin to decrease by approximately 100 bps compared to last year, reflecting ongoing impacts from

global supply chain disruptions, inflationary pressure, and discontinued COVID relief subsidies;

⎯ SG&A as a percent of net revenue to increase approximately 50 bps to 100 bps compared to last year, reflecting

ongoing investments to fuel our future growth;

⎯ Net capital expenditures in the range of $110 million to $120 million, comprised of:

⎯ Boutique network growth,

⎯ New distribution centre in the Greater Toronto area, and

⎯ Ongoing investments in technology, infrastructure to enhance the Company’s eCommerce capabilities and

omni-channel experience, and support office expansion.

The foregoing outlook is based on management’s current strategies and may be considered forward-looking

information under applicable securities laws. Such outlook is based on estimates and assumptions made by

management regarding, among other things, general economic and geopolitical conditions and the competitive

environment as well as further COVID-19 resurgences. Readers are cautioned that actual results may vary. See also

the “Forward-Looking Information” and “Risk Factors” sections of this MD&A and in our AIF.

SELECTED FINANCIAL INFORMATION

The following table summarizes our recent results of operations for the periods indicated. The selected consolidated

financial information set out below has been derived from our audited annual consolidated financial statements and

related notes. The selected consolidated financial information set out below for Q4 2022 and Q4 2021 is unaudited.

24 |

Selected

Consolidated Financial Information

(in thousands of Canadian dollars, unless otherwise noted)

Q4 2022

Q4 2021

Fiscal 2022

Fiscal 2021

13 Weeks

52 Weeks

Financial Summary:

Net revenue

444,322

267,525

1,494,630

857,323

Cost of goods sold

264,816

164,600

839,678

544,818

Gross profit

179,506

102,925

654,952

312,505

Operating expenses

Selling, general and administrative

120,221

72,357

392,802

250,726

Stock-based compensation

5,725

4,193

26,131

10,691

Income from operations

53,560

26,375

236,019

51,088

Finance expense

6,092

6,464

25,202

28,420

Other expense (income)

740

(2,129)

(8,783)

(3,534)

Income before income taxes

46,728

22,040

219,600

26,202

Income tax expense

12,503

5,970

62,683

6,975

Net income

34,225

16,070

156,917

19,227

Net income per diluted share

0.29

0.14

1.36

0.17

Adjusted EBITDA

(2)

66,303

35,205

289,385

76,812

Adjusted Net Income

(2)

39,475

17,678

176,736

26,028

Adjusted Net Income

(2)

per Diluted Share

0.34

0.16

1.53

0.23

Weighted average number of diluted shares outstanding

(thousands)

116,774

114,052

115,784

112,844

Cash and cash equivalents

265,245

149,147

265,245

149,147

Capital cash expenditures (net of proceeds from lease

incentives)

(2)

(16,434)

(9,415)

(52,607)

(42,529)

Free cash flow

(2)

(37,047)

(24,936)

221,937

36,306

Percentage of Net Revenue:

Net revenue

100.0%

Cost of goods sold

59.6%

61.5%

56.2%

63.5%

Gross profit

40.4%

38.5%

43.8%

36.5%

Operating expenses

Selling, general and administrative

27.1%

27.0%

26.3%

29.2%

Stock-based compensation expense

1.3%

1.6%

1.7%

1.2%

Income from operations

12.1%

9.9%

15.8%

6.0%

Finance expense

1.4%

2.4%

1.7%

3.3%

Other expense (income)

0.2%

(0.8%)

(0.6%)

(0.4%)

Income before income taxes

10.5%

8.2%

14.7%

3.1%

Income tax expense

2.8%

2.2%

4.2%

0.8%

Net income

7.7%

6.0%

10.5%

2.2%

Adjusted EBITDA

(2)

14.9%

13.2%

19.4%

9.0%

Adjusted Net Income

(2)

8.9%

6.6%

11.8%

3.0%

Other Performance Metrics:

Year-over-year net revenue growth (decline)

66.1%

(2.9%)

74.3%

(12.6%)

Comparable sales growth

(2)

n/a

Boutiques:

Number of boutiques, end of period

106

101

106

101

New boutiques

Repositioned to flagship boutique

(1)

Boutique closure

(1)

Boutique temporarily closed due to mall redevelopment

(1)

Boutiques expanded or repositioned

(2)

Please see “How We Assess the Performance of Our Business” section of this MD&A for further details on these financial and operating

measures.

Fiscal 2022 Annual Report | 25

The following table provides a reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and

Adjusted Net Income per Diluted Share for the periods indicated.

Reconciliation to Non

-IFRS Measures

(in thousands of Canadian dollars, unless otherwise noted)

Q4 2022

Q4 2021

Fiscal 2022

Fiscal 2021

13 Weeks

52 Weeks

Reconciliation of Net Income to EBITDA and Adjusted

EBITDA:

Net income

34,225

16,070

156,917

19,227

Depreciation and amortization

12,110

10,723

44,569

38,871

Depreciation on right-of-use assets

17,593

16,410

68,058

66,278

Finance expense

6,092

6,464

25,202

28,420

Income tax expense

12,503

5,970

62,683

6,975

EBITDA

82,523

55,637

357,429

159,771

Adjustments to EBITDA:

Stock-based compensation expense

5,725

4,193

26,131

10,691

Rent impact from IFRS 16, Leases

(3)

(22,939)

(21,985)

(90,048)

(89,949)

Unrealized loss (gain) on equity derivative contracts

994

(2,640)

(11,192)

(3,701)

Fair value adjustment of NCI in exchangeable shares

liability

- - 2,000

Fair value adjustment for inventories acquired in CYC

1,902

Acquisition costs of CYC

2,633

Secondary Offering transaction costs

530

Adjusted EBITDA

66,303

35,205

289,385

¤ $

76,812

Adjusted EBITDA as a percentage of net revenue

14.9%

13.2%

19.4%

9.0%

Reconciliation of Net Income to Adjusted Net Income:

Net income

34,225

16,070

156,917

19,227

Adjustments to net income:

Stock-based compensation expense

5,725

4,193

26,131

10,691

Unrealized loss (gain) on equity derivatives contracts

994

(2,640)

(11,192)

(3,701)

Fair value adjustment of NCI in exchangeable shares

liability

- - 2,000

Fair value adjustment for inventories acquired in CYC

1,902

Acquisition costs of CYC

2,633

Secondary Offering transaction costs

530

Related tax effects

(1,469)

(2,185)

(189)

Adjusted Net Income

39,475

17,678

176,736

26,028

Adjusted Net Income as a percentage of net revenue

8.9%

6.6%

11.8%

3.0%

Weighted Average Number of Diluted Shares

Outstanding (thousands)

116,774

114,052

115,784

112,844

Adjusted Net Income per Diluted Share

0.34

0.16

1.53

0.23

Note (3) Rent Impact from IFRS 16, Leases

Q4 2022

Q4 2021

Fiscal 2022

Fiscal 2021

13 Weeks

52 Weeks

Depreciation of right-of-use assets, excluding fair value

adjustments

(17,460)

(16,410)

(67,702)

(66,278)

Interest expense on lease liabilities

(5,479)

(5,575)

(22,346)

(23,671)

Rent impact from IFRS 16, Leases

(22,939)

(21,985)

(90,048)

(89,949)

26 |

The following table reconciles cash used in investing activities to capital cash expenditures (net of proceeds from

lease incentives) for the periods indicated.

(in thousands of Canadian dollars)

Q4 2022

Q4 2021

Fiscal 2022

Fiscal 2021

13 Weeks

52 Weeks

Reconciliation of Cash Used in Investing Activities to

Capital Cash Expenditures (Net of Proceeds From

Lease Incentives):

Cash used in investing activities

(20,734)

(11,368)

(99,576)

(50,848)

Acquisition of CYC Design Corporation, net of cash acquired

32,555

Proceeds from lease incentives

4,300

1,953

14,414

8,319

Capital cash expenditures (net of proceeds from lease

incentives)

(16,434)

(9,415)

(52,607)

(42,529)

The following table reconciles net cash generated from operating activities to free cash flow for the periods indicated.

(in thousands of Canadian dollars)

Q4 2022

Q4 2021

Fiscal 2022

Fiscal 2021

13 Weeks

52 Weeks

Reconciliation of Net Cash Generated from Operating

Activities to Free Cash Flow:

Net cash generated from operating activities

733

5,438

338,353

125,628

Interest paid on credit facilities

613

890

2,491

4,651

Proceeds from lease incentives

4,300

1,953

14,414

8,319

Repayments of principal on lease liabilities

(21,959)

(21,849)

(66,300)

(51,444)

Purchase of property, equipment and intangible assets

(20,734)

(11,368)

(67,021)

(50,848)

Free cash flow

(37,047)

(24,936)

221,937

36,306

The following tables provide selected consolidated financial information for the three most recently completed fiscal

years.

Selected

Consolidated Financial Information

(in thousands of Canadian dollars)

Fiscal 2022

Fiscal 2021

Fiscal 2020

52 Weeks

Net revenue

1,494,630

857,323

980,589

Net income

156,917

19,227

90,594

Net income per share

Basic

1.42

0.18

0.84

Diluted

1.36

0.17

0.81

Selected Consolidated Financial Position Data

(in thousands of Canadian dollars)

As at

February 27, 2022

As at

February 28, 2021

As at

March 1, 2020

Total assets

1,424,586

1,140,737

1,036,715

Total non-current liabilities

506,450

531,279

550,807

SUMMARY OF FACTORS AFFECTING PERFORMANCE

Since the outbreak of COVID-19 and the resulting emergency measures put in place by federal, provincial, state and

local governments across North America, we have seen, and expect to continue to see, a direct, material adverse

impact to many of the factors affecting our performance. The extent of the impact of such emergency measures, will

depend on future developments, including the duration and severity of COVID-19 in the local markets in which we

operate, which are uncertain and cannot be predicted.

Fiscal 2022 Annual Report | 27

We generally believe that our performance and future success depend on a number of factors that present significant

opportunities for us. These factors are also subject to a number of inherent risks and challenges, some of which are

discussed below. See also the “Risk Factors” section of this MD&A and in our AIF.

Our Brand and Products

Our exclusive fashion brands offer a strategic mix of exclusive brands that have been thoughtfully conceived, created,

and developed. We believe that a key area of differentiation for us is that we design apparel and accessories for our

collection of exclusive brands. Our multi-brand strategy gives us control over our products and provides us with the

flexibility to optimize our brand mix as needed to address changes in client demand and fashion preferences, which

has been critical to our growth while also reducing risk.

Our exclusive brands are supported by in-house design teams focused on creating beautiful, quality products that

align with the unique positioning, look and feel of each brand. Each of our exclusive brands has its own vision and

distinct aesthetic point of view. As a group, they are united by an unwavering commitment to superior fabrics,

meticulous construction and relevant, effortless design.

Exclusive brands currently represent over 96% of Aritzia’s net revenue. Our broad product assortment includes t-

shirts, blouses, sweaters, jackets, coats, pants, shorts, skirts, dresses, denim, intimates, swimwear, accessories, and

men’s wear (resulting from our acquisition of CYC) for each season. We maintain a flexible mix of historically

successful items and new seasonal styles. Our changing product mix is a blended reflection of client demands and

fashion trends. This strategic mix helps us to drive client conversion by delivering fashion must-haves, while still

generating a meaningful proportion of revenue from our fashion essentials. We complement our exclusive product

mix with a strategically chosen selection of premium denim, accessories and footwear from leading contemporary

third-party brands. Our expansive and diverse range of women’s fashion apparel and accessories addresses a broad

range of style preferences and lifestyle requirements for our clients, producing strong and enduring client loyalty.

Product Strategy

We control the design, merchandise planning, sourcing, production and retail functions of our exclusive brands and

complement this with third-party brands as appropriate. This strategy allows us to ensure that we have the right

product, at the right time, at the right price, in the right quantity and in the right place. Product design and quality are

meticulously evaluated and controlled by us, from fabrics to trims, and styling to fit. In Fiscal 2021 we implemented

our Product Lifecycle Management system to further support our product strategy and processes. This system has

allowed us to consolidate and manage all of our product development data and tools into a single place and improved

our focus on innovation and product quality, increase speed to market where appropriate, and ultimately has

optimized manufacturing costs.

Creative Development

We have talented teams of in-house designers who focus on creating products featuring high quality fabrics,

considered detailing, sophisticated construction and superior fit. Our product design and development process builds

on proven sellers while taking new fashion trends into account with the goal of creating fashion must-haves each

season. Our in-house technical team ensures all products are executed in a manner that is consistent with our design

and delivers superior fit and sophisticated construction in the production of our exclusive brands. We partner with

best in class mills and suppliers to create and sample garments, which are fit-tested twice before production. We

ensure that the quality of our raw materials and the finished product are all held to our high standards and the

expectations of our clients.

Merchandise Planning

Our demand-driven merchandise planning, buying and inventory strategies have been developed and refined for

more than three decades, and are designed to ensure that we have the right product, at the right time, at the right

price, in the right quantity and in the right place.

Each year we develop product in two or four seasonal collections for our exclusive brands. We generate a meaningful

proportion of revenue from our proven sellers while driving excitement through new seasonal product assortment.

We buy in initial quantities that allow us to gauge client demand and follow up with larger orders when proven

successful to maximize revenue. We analyze sales data in order to make inventory adjustments and to respond to

the latest trends. Our inventory management processes and systems provide us with the ability to optimize inventory

across our channels to ensure that each boutique and aritzia.com is merchandised with products that resonate with

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local preferences. By actively monitoring sell-through rates and managing the mix of product categories in our

boutiques and aritzia.com, we are able to respond to emerging trends in a timely manner, minimize our dependence

on any particular category, style or fabrication and preserve a balanced, coordinated presentation of merchandise

within each boutique while being able to offer our client the entire assortment online. We believe that our disciplined

merchandise planning strategy allows us to optimize inventory levels and maximize full-price sales.

Sourcing and Production

We contract and maintain direct relationships with a diversified base of independent suppliers and manufacturers for

our exclusive brands who provide us with the flexibility to source high quality materials and products at competitive

costs. We believe that our approach of sourcing a majority of our raw materials and working directly with suppliers

and manufacturers enhances our ability to create beautiful and high-quality products in a timely manner.

We source the majority of our raw materials directly from mills, trim suppliers and manufacturers, located primarily in

China, Italy, Japan, South Korea, and Taiwan which we believe to be best in class that uphold our standards for

quality, lead time and cost. Our finished goods are sourced from manufacturers located primarily in Cambodia, China,

Peru, Portugal, Romania, Sri Lanka and Vietnam. We continue to monitor and diversify our supplier base, taking into

consideration the geo-political and economic environment to mitigate risk. Capacity planning with our manufacturers

is done at the beginning of the season to ensure flexibility. We engage third parties to inspect our manufacturers’

factories to ensure quality control and engage independent expert service providers to conduct factory audits for

compliance with local laws and regulations and global standards. We have implemented and enforce a Supplier Code

of Conduct and initiatives to increase transparency with respect to the origins of our raw materials.

Boutiques

We have developed our boutique network in a measured and disciplined manner. We have a portfolio of boutiques

situated in premier real estate locations in high performing retail malls and high streets in North America. Our strong

boutique sales productivity continues to make us a sought-after tenant for top quality locations in premier shopping

destinations. In addition to opening new Aritzia and exclusive brand boutiques (e.g. Wilfred, Babaton, Super World,

and TNA), we generate attractive returns on capital by enhancing elements of our existing boutiques (including

footprint, layout and assortment) through carefully considered boutique expansions and repositions.

See also the “COVID-19 Pandemic” section of this MD&A.

The following table summarizes the change in Aritzia’s boutique count for the periods indicated (excluding CYC

boutiques).

Q4 2022

Q4 2021

Fiscal 2022

Fiscal 2021

Number of boutiques, beginning of period

105

101

New boutiques

Repositioned to a flagship boutique

(1)

Boutique closure

(1)

Boutique temporarily closed due to mall redevelopment

(1)

Number of boutiques, end of period

106

101

106

101

Boutiques expanded or repositioned

In addition, CYC had four boutiques as at February 27, 2022.

eCommerce and Omni-Channel Innovation

Launched in fiscal 2013, our eCommerce business quickly surpassed our growth expectations and has continued to

experience growth year over year in online traffic. We continue to invest in our digital capabilities to support our

eCommerce business:

⎯ Drive our omni-channel growth and capabilities – Our clients shop both online and in our boutiques, and we

believe there are synergies between our boutique network and aritzia.com, with the success of each channel

benefiting the other through increased brand awareness and affinity. We launched store inventory visibility to

allow clients to pre-shop our boutiques. Our clients have responded positively and as a result, we are seeing an

improvement in retail sales driven from store inventory visibility as well as a reduction in call volume to our

Concierge team regarding store inventory availability. We are now focusing our efforts on buy online, ship from

store, buy online, pickup from store and omni order history. Due to the growth of our omni-channel client base,

we anticipate significant benefit from the evolution of these omni services.

⎯ Capitalize on digital marketing channels to drive client acquisition and retention – We are directing resources with

a renewed focus on digital marketing, including programs centred on search engine optimization enhancements,

refinement of our email marketing, and further leveraging our social media. We made numerous technical

enhancements to improve our search engine optimization results, including navigation bread crumbs, improved

product descriptions, and data driven category naming. We are pleased with the positive impact this has had on

new client visits.

⎯ Deliver personalized experiences – We are in the early phases of leveraging advanced business intelligence and

behaviour analytics to further enhance our understanding of our clients. This includes optimizing our online

operations to enhance personalization which we believe will drive higher conversion and client loyalty. We have

begun to customize merchandising and content experience based on geography and climate and will continue to

evolve personalized experiences into Fiscal 2023. We are planning on leveraging personalization technology in

Fiscal 2023 which will allow us to be more targeted and nimble as we scale our capabilities.

⎯ Improve the digital experience to enhance the shopping experience online – Aritzia is focused on improving the

digital experience across all devices (e.g., desktop, mobile, tablet) to work towards making shopping frictionless.

We continue to implement a number of core optimizations including user reviews and fit guides, enhancing site

search functionality, landing page templates, and numerous checkout improvements to reduce client friction. The

core areas of our client’s digital journey including discovery, evaluating, and purchase are continuously improved

resulting in increased conversion rate and average order value. We have also re-set our optimization program,

embedding a culture of test and learn on how we go to market with new features and capabilities. For example,

we have tested the optimal placement of visual size and fit guides on our category and product pages.

Distribution Facilities

Our current distribution network consists of three distribution centres, two in Canada and one in the United States,

that are well positioned to service our boutiques and eCommerce business. We operate our distribution centre located

in New Westminster, British Columbia, while the distribution centres located in Mississauga, Ontario and Columbus,

Ohio are operated by third-party logistics providers. Our inventory is centrally managed, and shared amongst our

boutiques and eCommerce business.

Our distribution centre in New Westminster, British Columbia is a 223,000 square foot facility. We continue to upgrade

our warehouse management system to enhance our supply chain system flexibility and scalability. During Fiscal

2020, we completed expansions at both of our third-party distribution centres in Mississauga, Ontario and Columbus,

Ohio, from 75,000 square feet to 150,000 square feet and from 138,000 to 240,000 square feet, respectively. In total,

we added 177,000 square feet of space, representing an approximately 80% increase in size for these facilities. We

have started retro-fitting work in our New Westminster, British Columbia and Columbus, Ohio distribution centres in

order to expand capability and capacity to accommodate the surge of eCommerce growth without having to add more

space. These expansions support both our retail and eCommerce businesses with added capacity to handle higher

levels of throughput. Our current facilities are set up to flexibly manage multi-channel and omni-channel demands,

as our business continues to grow.

In Fiscal 2022 we broke ground on a new facility that we will be operating in Vaughan, Ontario. This new facility will

be in-sourced and will replace our existing 150,000 square feet distribution centre operated by a third-party logistics

provider with a new 552,300 square feet distribution centre operated by Aritzia. It is anticipated that the new facility

will be operational by Fiscal 2024.

Systems and Infrastructure

Our focus on building our digital infrastructure impacts everything we do. In our view, digital is about more than just

our technology and eCommerce operations, it runs through the business all the way from design to the service we

deliver in boutiques. We use best-in-class information systems to support the major functional aspects of our

business. Ongoing upgrades and investments are expected to increase our efficiency and support our growth.

Enterprise Management

Across the organization, we use SAP, a sophisticated enterprise resource planning system, to provide business

process support and intelligence across customer, marketing, Concierge, merchandise planning, inventory

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