Operator: Thank you for standing by. This is the conference operator. Welcome to Aritzia's Second Quarter 27 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press *1 on your telephone keypad. I will now turn the conference over to Beth Reed, Vice President, Investor Relations. Please go ahead.

Beth Reed: Thanks, operator, and thank you all for joining Aritzia's second quarter fiscal 27 earnings call. On the call today, I am joined by Jennifer Wong, our Chief Executive Officer and Todd Ingledew, our Chief Financial Officer. As a reminder, please note that remarks made on this call may include our expectations, future plans and intentions that may constitute forward looking information. Such forward looking information is based on estimates and assumptions made by management regarding, among other things, general economic and geopolitical conditions as well as the competitive environment. Actual results may differ materially from the conclusions, forecasts, or projections expressed by the forward looking information. We would refer you to our most recently filed management discussion and analysis and our Annual Information Form, which include a summary of the material assumptions as well as risks and factors that could affect our future performance and our ability to deliver on the forward looking information. Our earnings release, the related financial statements and the MD&A are available on SEDAR plus as well as the Investor Relations section of our website. I will now turn the call over to Jennifer.

Jennifer Wong: Thanks, Beth, and good afternoon, everyone. Thank you for joining us today. We sustained exceptional momentum in the second quarter. Delivering 44% net revenue growth and a 35% increase in comparable sales. This combined with disciplined execution and our profitability initiatives, drove a 590 basis point increase in our adjusted EBITDA margin. Reaching a second quarter record of 21%. In addition, adjusted EPS more than doubled compared to last year. These results, which exclude the benefit of $97 million in tariff refunds, demonstrate the tremendous earnings power of our business model as we continue to scale. Strength was broad based across geographies, channels, and product categories underscoring the wide appeal of our brand. We generated high demand for our summer and fall collections, and supported this with optimal inventory positioning. In addition, strategic investments in digital, real estate, and marketing continued to expand our reach. In The United States, Q2 net revenue growth accelerated to an outstanding 60% This was fueled by widespread demand for our brand across our digital channel existing boutiques, and new boutiques. In digital, momentum continued to build propelled by our mobile app and full funnel marketing initiative. In our US retail channel, we delivered robust double digit comparable sales gains across our existing boutique network. In addition, we added 15 highly productive new and repositioned boutiques over the trailing 12 months growing US square footage by approximately 20%. Our performance in Canada also remains strong. With net revenue up 20%. Our growth was driven by momentum in digital, fueled by meaningful client acquisition, and greater purchase frequency. In addition, we generated double digit comparable sales growth in our Canadian retail business. Turning to our retail channel, we delivered another quarter of outstanding results. Net revenue increased 34% marking an impressive 6-quarter streak of top line growth exceeding 30%. Comparable store sales remained exceptional. Primarily driven by strong traffic gains. Our strategic marketing initiatives are working. They are building deeper brand loyalty and generating sustained demand into our boutiques. Our growth was also driven by our real estate expansion strategy, which continues to yield phenomenal results. We opened a total of 19 new and repositioned boutiques over the trailing 12 months, yielding square footage growth in the mid teens. New store productivity and paybacks remain exceptional. In Q2, we expanded into 3 new markets. Birmingham, New Orleans, and St. Louis. Our bespoke boutique activations continue to yield great results. Generating awareness and community engagement. This drove strong traffic and sales when we opened our doors. In addition to fueling a robust omnichannel halo effect, these boutiques are already generating highly attractive unit economics. In digital, our momentum continued to accelerate. Net revenue surged 68% over last year. Again led by strong traffic trends. As a percentage of net revenue, digital increased nearly 500 basis points year over year. Growth was fueled by exceptional demand for our product. Our strong inventory position, our mobile app, and our full funnel marketing initiative. Balanced investments across owned and paid marketing channels continue to introduce new high value clients to our brand and reengage existing ones. We further enhanced our marketing tactics across existing channels while launching new channels to fuel ongoing brand awareness. Our mobile app also delivered outstanding results. With sustained monthly downloads and deep client engagement. It continued to drive higher conversion, higher average monthly sessions, and repeat purchase behavior. In addition, the improvements to our international digital experience continued to pay off. With sales up 165% over last year. Turning to product, our commitment to offering high quality styles across a diverse assortment of categories continues to drive outstanding results. Widespread demand across all regions reflected the growing love for everyday luxury and deep loyalty of our core client base. Our strong inventory position ensured we had the right product in the right place at the right time. This enabled us to fuel robust demand and achieve a meaningful year over year improvement in our markdown rate. Growth was driven by the combined strong performance of our new styles as well as the iconic franchises for which were well known and loved. We drove continued client engagement from our end of summer events through to the launch of fall. Our fall collections were extremely well received across many different categories such as t shirts, blouses, wet fleece, shorts, and pants. Among many others. In marketing, we continue to promote our world of everyday luxury, which expanded brand awareness and drove traffic to Aritzia. This fueled another strong wave of new client acquisition. At the same time, we continued increasing loyalty and share of closet with our existing client base, client growth was in the double digits in all channels and geographies. During our FIFA World Cup campaign, we extended our styling authority into sport during this year's most watched global event. We reached new audiences through spectator styling, product placement, and paid media in host cities and key sport markets. Looking ahead, our strong momentum has continued into the third quarter. This is driven by exceptional client response to our fall product and the growing love for our brand. This quarter, we are introducing new and exciting styles and colors across cooler weather categories such as tailored outerwear, sweaters, and The Super Puff. Our inventory remains well positioned to support upcoming holiday demand. In our retail and digital channels, we are executing on several key initiatives to support ongoing omnichannel momentum. This fiscal year, we have a strong pipeline of 12 to 13 new boutiques in premier locations and 4 to 5 repositions. In Q3, we are on track to open 6 new US boutiques, 1 each in Florida, Georgia, Massachusetts, and Nevada and 2 in Texas. We are also opening 2 repositions 1 in California and 1 in Quebec. Our real estate expansion strategy is a proven, multiyear lever to help scale the Aritzia brand across The United States. In digital, our focus is on channel expansion and digital marketing optimization. Near term priorities include, continuing to embed AI into how we work and support clients, ongoing website enhancements, releasing new mobile app features and upgrades, honing our digital marketing tactics, and optimizing our omnichannel infrastructure. As always, we continue to strategically invest in core infrastructure to help ensure our business is built for scalable, profitable, long term growth. This includes world class talent to continue fueling our growth and execute on our digital and technology initiatives as well as the expansion of our distribution center network in The US. We remain exceptionally well positioned to capitalize on our long runway for growth, in The U. S. And beyond. This opportunity is underpinned by proven enduring strength of the Aritzia brand, our disciplined execution and our healthy financial foundation. In closing, I am incredibly proud of our people and their impeccable execution. This continues to differentiate Aritzia. Their commitment to delivering exceptional experiences for our clients and advancing our strategic priorities has positioned us well for the future. I look forward to sharing how we will build on this momentum and unlock our next chapter of growth at our Investor Day on October 27. With that, I will now hand it over to Todd to discuss the details of our financial performance

Todd Ingledew: Thanks, Jennifer, and good afternoon, everyone. Our second quarter results exceeded our expectations on both the top and bottom line. This underscores the continued strength of the Aritzia brand, as well as the disciplined execution across all of our teams. As Jennifer shared, we grew net revenue 44% to $1.17 billion, and delivered comparable sales growth of 35%. This was driven by broad based strength across channels, geographies, and product categories. Excluding tariff refunds, we expanded our adjusted EBITDA margin 590 basis points. While continuing to invest in the capabilities that will drive our long term growth. 4 key drivers continue to fuel our momentum in the second quarter. First, exceptional client demand for our product. Supported by healthy, well positioned inventory levels. Second, strong execution across our digital initiatives led by our mobile app. Third, square footage growth in the mid teens with high productivity in our new and repositioned boutiques. And fourth, strategic brand and digital marketing investments that generated significant traffic growth and attracted new clients. In The United States, second quarter net revenue increased 60% to $779 million. Digital led our performance as strategic investments in full funnel marketing and our mobile app generated exceptional traffic growth and stronger conversion. Our US retail business delivered outstanding double digit comparable sales growth. We also benefited from the strong contribution of our highly productive new and repositioned boutiques. We increased US square footage by approximately 20%. These results demonstrate that our omnichannel expansion is not only driving immediate top line growth, but also building brand awareness and affinity in our highest priority growth market. In Canada, net revenue increased 20% to $390 million. Led by the strength of our digital channel. In addition, retail delivered double digit comparable sales growth. These results reinforce the strength of our Canadian market and the enduring loyalty of our clients. Turning to our sales channels. The momentum in our digital business continued to accelerate. Net revenue increased 68% to $403 million. Strong product demand our mobile app, and our strategic marketing investments drove traffic growth across The United States and Canada. Our performance reinforces our confidence in the significant opportunity to expand digital particularly in The United States. In retail, net revenue increased 34% to $767 million We delivered double digit comparable sales growth in both The United States and Canada. We also benefited from the strong contribution of our 14 new and 5 repositioned boutiques, opened in the trailing 12 months. Our most recent openings continue to perform exceptionally well. New boutiques opened in fiscal 26 are generating higher sales per square foot than prior cohorts and are tracking toward faster payback periods. Excluding the benefit of $97 million from tariff refunds, we delivered second quarter adjusted gross profit of $570 million, an increase of 60%. Adjusted gross profit margin expanded 490 basis points. to 48.7%. The improvement was driven by IMU expansion leverage on store occupancy, other fixed costs. And lower markdowns. SG&A expense was $345 million. Leveraging 130 basis points as a percentage of net revenue to 29.5%. The improvement was primarily driven by expense leverage and savings from our smart spending initiative. Again, excluding the benefit from tariff refunds, adjusted EBITDA was $246 million, an increase of 100% compared to the second quarter last year. As a percentage of net revenue, adjusted EBITDA expanded 590 basis points to 21%. We have now delivered sustained margin expansion for 10 consecutive quarters. This underscores our commitment to optimizing profitability while continuing to invest in our future growth. Turning to the balance sheet. We ended the second quarter with $715 million of inventory. up 36% from last year. We remain pleased with both the composition and quantity of our inventory. Which is well positioned to fuel demand through the back half of the year. Our liquidity position at the end of the second quarter is strong. $528 million in cash, no debt, and zero drawn on our $300 million revolving credit facility. During the quarter, we repurchased approximately 900 thousand shares $125 million Year to date, through October 2, we have repurchased 2.1 million shares. At an average price of $127. Returning $270 million to shareholders. We intend to continue repurchasing shares opportunistically throughout fiscal 27. Turning to our outlook, We have sustained our momentum into the third quarter of fiscal 27. As clients continue to respond well to our fall product. Our performance remains robust in both The United States and Canada. Showcasing the broad strength of our brands. Based on quarter to date trends, and accounting for the exceptional strength of our business in the back half of the last 2-year, we expect third quarter net revenue of $1.275 billion to $1.325 billion This represents growth of 23% to 27% from last year. We expect comparable sales growth in the high teens as well as strong contribution from our new and repositioned boutiques. We expect third quarter gross profit margin to increase 100 to 150 basis points. Primarily driven by continued IMU improvements and occupancy cost leverage. We expect SG&A as percentage of net revenue to increase 50 to 100 basis points in the third quarter compared to last year. Q3 SG&A outlook reflects the timing this year of some of our key strategic infrastructure investments that will power our long term expansion. This timing, however, does not change our SG&A guidance for the full year. Due to our year to date performance and the continued momentum in our business, we are raising our full year net revenue outlook to $4.78 billion to $4.88 billion This represents growth of 29% to 32%. From fiscal 26. Driven by comparable sales growth in the low twenties and strong contribution from 12 to 13 new boutique openings and 4 to 5 repositions. We are also raising our full year adjusted gross profit outlook to an increase of 25 to 75 basis points. We have assumed U. S. Global tariffs of 10% to 12.5%. Our guidance excludes any benefit from tariff refunds. We continue to expect and A as a percentage of net revenue to be flat to down 50 basis points compared to fiscal 26. We now expect adjusted EBITDA as a percentage of net revenue to be approximately 20%. In closing, our business continues to perform exceptionally well. And our core growth drivers are delivering. We have confidence in our momentum, and we remain focused on what comes next. We will continue to invest with discipline, execute our long term priorities, and build the business for sustainable, profitable growth. We look forward to sharing our next multiyear plan at our Investor Day on October 27. Thank you. With that, operator, let's please open up the line for questions.

Operator: Thank you. To join the question queue, you may press *1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. So that we can get to everyone on the call today, Please limit yourself to 1 question and a related follow-up. The first question comes from Brian Morrison with TD Please go ahead.

Brian Morrison: Question for Jennifer or Todd. Clearly demand remains strong. My question is on an annual basis, do you think about your sustainable top line growth algo as we lap the forthcoming 40% and 50% 2-year tax? And I guess assuming new store grows at about 8% or so, what do you view as a steady state same store sales growth target And any color how you parse that between bricks and mortar and ecommerce? I am just trying to assess here if a sustainable near mid teen revenue growth rate is reasonable.

Jennifer Wong: Hi, Brian. I would like to address that first, and then I will hand it over to Todd. And I would like to zoom out first and just discuss the drivers of the growth of our business. And these are all things that we have gone over already in the past I am going to sound a little bit like a broken record. But these drivers are the same drivers that have grown to that robust growth. Pretty much over the last 8 quarters and will continue to drive our growth. And, you know, first and foremost, it starts with our position in the market. We are in the category of everyday luxury. We offer an everyday luxury value proposition And our brand has never been stronger. And it is the momentum of that brand that has really underpinned our growth. Then, of course, product is at the center of everything that we do. And we have had a phenomenal assortment and range in our product And we continue to innovate in our product. And then that, coupled with our optimized inventory, has really fueled the demand. And we continue to be in a really, really great position on that front. And then the next thing is our boutique openings. We have consistently opened boutiques year-over-year. We are increasing the number of boutiques that we open year this year at 12 to 13. We have repositions with that. So we benefit from new square footage growth from the prior years. They continue to drive traffic to our online our online business. And with that, we have a multitude of digital initiatives underway, a whole roadmap of digital initiatives, whether it be redesigning our website, continuing with features and functionality on our app, on our mobile app, really exciting growth happening in digital. It is our fastest growing channel. And then, certainly, marketing, we continue our strategic investments in marketing. Full funnel marketing. We are at the top of the funnel. We are amplifying our brand and introducing new customers to our brand. As well as driving traffic and conversion at the bottom of the funnel. We are getting better and better at that. And last but not least, it is all wrapped up in talent. We have a phenomenally talented team here that, as I said in my prepared remarks, are executing impeccably. And all of those things together is what is driving our growth and is also what is driving our growth for the rest of the year and beyond that. So I personally could not be more excited about the business. As Todd said in his prepared remarks, the team continues to be excited about our business. For the near and for the long term. And so that hopefully sets the stage for you. I will let Todd go over the details for growth in the back half of the year. So Todd,

Todd Ingledew: Okay. Yeah. Sure. Yeah. Maybe I will leave the long term growth algorithm for the investor day. You might hear that a lot today, but we will start with the first question saying it. But I can focus on the back half of this year. So as you said, you know, over the last 3 quarters, we have delivered exceptional revenue growth. And that is on top of more than 30% growth in the previous year in each of those quarters. And that strong momentum that we have been seeing has continued into the third quarter. But as we look towards the back half of Q3, we are anniversarying the launch of our mobile app on October 27, where we drove substantial revenue in its first week last year, And then in November, we will begin to lap not 1, but 2 years of exceptional growth. So, obviously, we felt it was prudent to take this into consideration when providing our guidance. Which is net revenue growth of 23% to 27% for Q3. Reflecting revenue growth for the remainder of the quarter in the high teens to low twenties. And if you work out the math on the implied guide for Q4, it is the same high teens to low twenties. But, yeah, I think, you need to keep in mind, as Jennifer said, you know, we are seeing broad based strength across all channels, and all geographies. And our inventory is in great position to continue meeting client demand.

Operator: The next question comes from Jon Keypour with Goldman Sachs. Please go ahead.

Jonathan Keypour: Hi, guys. Thank you very much. Given that stores are performing so well in light of the online momentum exploding, I am just curious, do you have a sense of what is keeping people coming back to the store? Why there is not cannibalization online? And anything you can tell us about shopping trends of longer term customers in terms of, like, what proportion of your customer book shop both online and in store versus just online?

Jennifer Wong: Yeah. Great question. Plain and simple, our retail experience is second to none in the world. do not hesitate to say that it is world's best. And our in store environment and our in store client experience is something that sets Aritzia apart from everyone else. So I think we offer something that is unique, and it is unique to Aritzia. As we continue to open new stores and new markets. And new stores in existing markets, We continue to have lineups, you know, around the corner on the first day. So we continue to be very encouraged by the performance of our stores. And that said, we, at the same time, have a digital playbook and a strategy to accelerate digital Because right now, we only have 70 as of the end of Q2, we have 79 stores. Todd, we have 82. And so I think there is still a lot of opportunity for store growth, particularly in The US. And all of the things that I said at the beginning of the call to answer Brian's question those are all things that go into what drives the demand for Auryxia.

Operator: The next question comes from Irene Nattel with RBC Capital Markets. Please go ahead.

Irene Nattel: Thanks, and good afternoon, everyone. Clearly, exceptional performance. And it sounds as though the new marketing initiatives, digital and, or otherwise, are really attracting new customers. And so I am wondering if you could talk. And loyal customers have spent. Can you talk about what you are doing differently and where these new customers are coming from and how we should think about the evolution of all of these as we look forward.

Jennifer Wong: We are simply getting better at what we are doing, and we have a we have a culture here of continuous improvement in anything that we do. And marketing is an example of where our marketing is becoming more and more effective. And so, you know, it is not any 1 thing. it is again, it is really a talented team across the board on all fronts. That is contributing to that. Certainly, we are seeing double digit client growth and we are seeing that in both countries. Obviously, US is driving that growth. But it is really positive to see that it is happening in both countries. The nature of the customer that we are attracting is simply the Aritzia customer. And the customers that we are attracting are customers that stay with us. They are returning to us. So we are not just acquiring customers for a 1-and-done. They are they are returning, and, as I said, welcoming them into the world of Aritzia. And I think I think it bodes very well for our future near and long term.

Operator: The next question comes from Luke Hannan with Canaccord Genuity. Please go ahead.

Luke Hannan: Thanks and good afternoon. Todd, I wanted to go back to your prepared remarks. I believe you said that digital in The U. S. In particular is an opportunity And so maybe a 2 part question on that. First, if the inference for that is that as it stands right now, the proportion of Canada within overall digital revenue, if that is higher than your overall business today? Or maybe put differently, if The US penetration for digital is a little bit lower than what you see? And if that is true, what is it that will help close that gap? I guess, for The U. S. Versus Canada?

Todd Ingledew: Yeah. Thanks, Luke. Our digital penetration is relatively consistent across both countries, but we think therein lies the opportunity. When we look at the boutique footprint that we have in Canada versus the boutique footprint that we have in The United States, we should have meaningfully more opportunity from an ecommerce perspective in The US. And we are seeing that in the performance in the second quarter. The strength. Really, it was across both countries, but particularly in The United States. And on an ongoing basis, we look forward, we do feel there is an opportunity specifically in The US to really expand and grow our digital business.

Operator: The next question comes from Chris Li with Desjardins. Please go ahead.

Chris Li: Good afternoon, everyone. I would love to get an update. On the mobile app in terms of the percentage of digital business that is transacted through the app. Incremental sales growth contribution, the number of downloads, whatever stats you can provide would be very helpful. Thank you.

Operator: Thanks for your question.

Jennifer Wong: As I said in my prepared remarks, the app is well above our initial expectations. In fact, we are coming up on the anniversary of the app, and in just 1 year, we pretty much catapulted to the top standings among our peers. Where some of those peers have actually been operating an app for nearly a decade and, in some cases, more than a decade. So we are exactly where we want to be. Probably there a little bit earlier than we initially anticipated. We are performing at the high end of the range for best in class peers. We said we had over 2.5 million downloads. Strong downloads do continue year over year, so it is it. it is continues to be strong. And at the high end of the range, And we did report 34% of our business was in digital. You can see, you know, what it continues to contribute to our overall business.

Operator: The next question comes from Mauricio Serna with UBS. Please go ahead.

Mauricio Serna: Great. Good afternoon. Thanks for taking my question. Maybe just on the comp sales growth of 35%, pretty outstanding. Could you unpack a little bit more how much of that comes from AUR growth unit--you know, in the last few quarters, you talked about AUR maybe being, like, low single digit. Just wanted to get a sense if that is the case. And then on inventory, I know, like, that is also 1 has been 1 of your strong points. Just wondering if you could elaborate a little bit more on. I see, like, you ended Q2 with inventory up 36% versus know, the expected growth of 23% to 27% for Q3. So just wanted to see if you could reconcile a little bit how's that the high inventory growth versus your expectations for Q3 sales growth? Thank you.

Jennifer Wong: Hi, Mauricio. I will take the first part. And then I will let Todd take the second part on. Of the comp drivers. Obviously, everything is going well on all fronts, as I have said now several times. As it has been in previous quarters, the comp has been primarily driven by traffic. Versus the ticket. Primarily all traffic. So Remains consistent quarter to quarter, including Q2.

Todd Ingledew: Okay. Yeah. And then from an inventory perspective, we are extremely pleased with the composition and quantity of our inventory. As I said in my prepared remarks, which was up 36% at the end of Q2 The growth over the prior year is actually more a reflection of not having quite enough inventory last year. And our strong inventory position, as we have said, repeatedly, continues to be a primary driver of our top line momentum.

Operator: The next question comes from Dylan Carden with William Blair. Please go ahead.

Dylan Carden: Hey, sorry. Catching up a little bit here. But can you unpack some of the infrastructure investments in the third quarter that you are making? And then going back to a question a couple of questions ago, new versus existing, it seems that there is a real driver of some of the business and new customers, new square footage, digital marketing. Have you looked at sort of. Or quantified kinda new versus existing particularly as it relates to your point about being able to sort of convert those same new customers further down. Thanks.

Todd Ingledew: Yeah. I can start with the infrastructure question. Suffice it to say, we have projects underway across all areas of the business. Whether that is you know, the digital road map investments that we are making, our distribution center network, tech and AI enablement, merge planning software, customer initiative, and RFID. So and, frankly, that is really just the start of it. So those are the big projects we are working on. But we do have an even longer list beyond that. And just the way the projects have flowed through the year, the heavier investment is in the back half. So that is what you are seeing in our guidance for SG&A.

Jennifer Wong: And on new customer acquisition, it is growing across all channels and regions. Obviously, the fastest growth is in The US. Historically, our stores and square footage growth has been our primary client acquisition tool, and it continues to be a very strong acquisition tactic. But we are seeing strong growth in new customers in digital alone as well. So what is, again, really great to see is that it is balanced and, again, broad based. And I think what is most encouraging for us is that these are customers that consistently return. And once they have experienced the Aritzia experience. So seeing great productivity in terms of store openings for that as well as our marketing.

Operator: The next question comes from Stephen MacLeod with BMO Capital Markets. Please go ahead.

Stephen MacLeod: Thank you. Good afternoon. Good evening, everyone. Just wanted to focus just a bit more acutely on the Q3 to date trends that you have seen. I know you have talked about momentum continuing into Q3, but wondering if you can give maybe a little bit more guidance or indication around what you are seeing in Canada versus The US specifically, and then, I guess, digital versus new stores as well. Or retail.

Jennifer Wong: Yeah. I think we have already said that our quarter to date trends are. Well, we exited Q2 with the same momentum going into Q3. Our quarter to date trends are consistent with Q2. I want to remind you that we are in our eighth quarter of double digit comp growth, and while the momentum has continued, Todd has talked about the lapping of lapping of exceptional growth from last year, particularly if you were to talk about November, so the last month of this quarter, as well as that last week in October when we launched the app last year. So we are still, you know, feeling very, very positive about the rest of the quarter. And so far, with the consistency of exiting Q2, we are very confident.

Operator: The next question comes from Ike Boruchow with Wells Fargo. Please go ahead.

Juliana: Hi, guys. Thank you. This is Juliana on for Ike. I was wondering if you could give us a little bit more color on your gross margin guide for Q3? And then if possible given all the puts and takes here. Thank you.

Todd Ingledew: Yeah. No problem. So for Q3 specifically, we expect gross margin to increase 100 to 150 basis points and it is driven by continued IMU expansion, which includes lower tariff impact, and as well as occupancy cost leverage, And we expect that 100 to 150 basis points of expansion in Q3 to be relatively consistent In Q4. So, therefore, for the full year, we have raised our guidance for gross profit margin expansion to 225 to 275 basis points. But, you know, going specifically to your question of the moderation of the gross profit margin, in the back half, it is driven by really 3 factors. First, a reduction in leverage. Second, the normalization of markdowns in the back half of the year as we lap extremely low markdowns last year. And then third, the addition of occupancy and depreciation costs from our new distribution center. I think keeping in mind that we are extremely pleased to have delivered 10 consecutive quarters of gross profit margin expansion, and, you know, now to be continuing to forecast meaningful ongoing expansion in the back half of the year.

Operator: The next question comes from Corey Tarlowe with Jefferies. Please go ahead.

Corey Tarlowe: Great. Thanks. Todd, I wanted to ask on margin performance. I think this is the highest second quarter margin in company history. Recognizing that maybe there is some temporary factors that have driven this maybe I am assuming there is a lot of structural elements to this as well. What of the second quarter performance maybe sticks or does not stick as we think about you know, what is ahead?

Todd Ingledew: Yeah. You know, we are extremely pleased with what we delivered at the 21%, which was in fact a record for the second quarter. You know? And that is obviously all in spite of the tariff and de minimis pressure that is underlying within our results. So And we are extremely pleased to be forecasting adjusted EBITDA margin of 20% for the full year, which is 100-basis points obviously, higher than our long range FY 2027 target. Again, despite the tariff and de minimis pressure. And I think the way we would look at it is the benefits that have helped us get there are really things that we have taken action on. So it is the revenue leverage, the gross profit expansion, leverage on SG&A, and the spend management that we have implied in there. So the growth is durable. But I do want to say, you know, at this level, obviously, our business is extremely healthy and generating meaningful cash flow. So as we look forward, you know, we do have. Continue to have significant investments that are required to drive and enable our growth. And, therefore, you know, we will continue to balance investing in that growth and growing our margins. So we are. I guess, we are extremely comfortable with where we are at. And the this level has been achieved through durable components.

Operator: The next question comes from Martin Landry with Stifel. Please go ahead.

Martin Landry: Hi. Good evening, everyone. Jennifer, you did mention that your comp sales are driven mostly by traffic, and I think that is been the case for several quarters now. So the question I am trying to understand a little bit your boutique capacity. Right? I mean, if traffic has been growing and steadily for several years now, obviously, you know, traffic in your boutique is not smooth over the week, you know, there is peak period. So how much more capacity do you have in your boutique to welcome new customers?

Jennifer Wong: Well, if I take us back to 2016, when we talked about opening boutiques that are on average, 6 thousand-square-foot. And then go to our last Investor Day I think we said it was 6 thousand-square-foot, then we grew to 8 thousand-square-foot. And then at our last Investor Day, we talked about having 10 thousand-square-foot stores I think that right there indicates our ability to increase our capacity as our comps continue to grow. Obviously, we have stores. Luke, our flagships are much larger than that, 30 thousand-square-foot plus. But, you know, at right now with our you know, current economics at 10 thousand square feet, that right there is what allows us to have more fitting rooms, more space, to showcase our product, obviously invite just more higher volume of people into the store, This is how we have, over time, grown with our growth of our business.

Operator: The next question comes from Michael Glen with Raymond James. Please go ahead.

Michael Glen: Hey. Jennifer, you. You are clearly winning market share. Where do you think the market share has come from, and what categories are you winning the most in?

Jennifer Wong: Well, as we have been saying. Thank you for your question. As we have been saying, it is very broad based. The beautiful thing about Aritzia and our Everyday Luxury is that it has broad appeal to a broad customer base. I have said before in the past how it spans 3 generations. It might even be spanning 4 now. Of customers. We have a breadth of an assortment that can cater to almost any profile of a client. And so I think you know, it is not. Again, it is not any 1 segment that we are gaining market share. And I think it is it is across the board. Anyone who values high quality product with a depth of design and impeccable construction such as our product, at an attainable price point is going to is going to resonate with our product. And our service. And all of the experiential aspects that go with it. I think what we have is something that is very, very special and we are getting more and more recognized for that. And again, I could not be more excited about the business. So I think you know, the other point is seeing how we are growing here is that there is still a lot more potential whether you look at it from the lens of the number of stores that we can open, Somebody asked a question earlier about digital penetration in The US. I mean, I think that there is just so much more runway for us, and it is very positive.

Operator: The next question comes from Joseph Civello with Truist. Please go ahead.

Joseph Civello: Hey. Thanks so much, and, congratulations on more exceptional results. Wanted to check-in on the IMU process. What inning are we in there and what are the key opportunities remaining? And then separately, I know you guys have been really successful at optimizing inventory, but still have a planning system implementation underway. Can you give us an update on progress there and what we should expect to see from that initiative?

Todd Ingledew: Yeah. Thanks, Joseph. From the IMU perspective, we continue to have opportunities You know, we are incredibly pleased with the work the team has done and continues to do. Both, you know, obviously, elevating our product and at the same time driving improvements in margin. it is really 2 primary drivers First, cost savings. Where we are leveraging our growing scale. And then also we are continuing to optimize our country mix. So both of those are driving the cost side. from an IMU perspective. And then secondly, we continue to review our pricing on a seasonal basis. So there is some benefit from that as well, but the majority of our IMU improvements have been coming through the cost savings. And, yeah, you know, as I said, we are continuing to expect IMU improvement in the back half of the year. And we will be providing more information about how that will continue when we give our guidance for our investor day.

Operator: This concludes the question and answer session and today's conference call. Thank you for joining, and have a pleasant day. You may now disconnect your lines.