Aritzia Inc.'s net income fell by 58 per cent in its latest fiscal year, which the retailer's chief executive said was spent laying the groundwork for the business's rebound. 

"After two years of exceptional growth in our business — 74 per cent in fiscal 2022 and 47 per cent in fiscal 2023 — fiscal 2024 was a year of building infrastructure and rightsizing our inventory," Jennifer Wong told analysts on a Thursday call.

Those efforts proved costly to the Vancouver-based apparel company, which is also behind the Babaton, TNA, Wilfred and Golden brands. Aritzia reported Thursday its 2024 fiscal year ended with a net income of $78.7 million, down from $187.5 million in its fiscal 2023.

In its fourth quarter, which ended March 3, net income fell 35 per cent to $24.2 million compared with $37.3 million a year ago. That amounted to 21 cents per diluted share, down from 32 cents per diluted share.

Aritzia partially attributed the drops to an increase in stock-based compensation expenses, but also noted the business was affected by inflation and pre-opening lease amortization costs for its flagship boutiques.

Despite the headwinds, Wong maintained that the company had made "substantial progress" toward setting "the stage for our next phase of expected growth."

That progress included the expansion of its distribution centre network, which now has a 550,000 square-foot facility in Vaughan, Ont., and moves to revamp its inventory strategy and digital sales channels.

Aritzia also uncovered $60 million in annualized run-rate savings and developed a "pipeline" of boutiques, mostly in the U.S., that have opened or will open soon.

The company has long focused its expansion efforts south of the border, and Aritzia's fourth quarter showed it has reaped some of the benefits.

During the quarter, its net revenue linked to its U.S. business rose 9.4 per cent to $369.1 million, as overall net revenue reached $682 million, up seven per cent from the year prior.

However, Aritzia's e-commerce net revenue fell 3.2 per cent to $265.6 million in the quarter.

Store openings can help with e-commerce, Wong said. 

"When we open a new store in a new market, we see a 70 per cent halo e-commerce lift," she said.

"So the new store openings ... are a proven consistent, most predictable driver of sales."

Over Aritzia's fiscal 2024, its net revenue increased by 6.2 per cent to $2.33 billion, with roughly $1.5 billion attributable to in-store sales and the rest coming from its e-commerce business.

Its adjusted net income for the year was $105.6 million, a decrease of 50.9 per cent compared with $214.8 million in fiscal 2023.

Aritzia's net revenue results matched analysts' expectations. The company's adjusted net income beat the $103.37 million analysts had predicted, according to financial markets data firm Refinitiv.

RBC Capital Markets analyst Irene Nattel described the results as "a thread above forecast," noting Aritzia has been hampered by "weaker consumer spending."

This report by The Canadian Press was first published May 2, 2024.