Canadian fashion retailer Aritzia Inc. is rapidly growing its US footprint thanks to a well-timed bet on prime real estate. That gamble is paying off for both the business and its founder. 

The 40-year-old company launched a new flagship store in New York’s trendy Soho neighborhood last month and another on Chicago’s Magnificent Mile on November 30. It has more locations planned for Fifth Avenue and the Flatiron District in the coming months. 

The openings are part of a broader expansion that’s seen Vancouver-based Aritzia add 20 US locations since fiscal 2022, boosting its store count in the country by about 50%. Its American sales surpassed Canadian revenue for the first time last year and made up 56% of the total in its most recent quarter.

The growth has sent shares surging by more than 100% over the past 12 months, which in turn has boosted founder and Chairman Brian Hill’s net worth to $1.1 billion, according to the Bloomberg Billionaires Index, which is valuing his fortune for the first time.

“We have a lot of opportunities in the United States,” Hill, 63, said in an interview from his Vancouver office. “We found that since we’ve gotten into e-commerce and our breadth of product has increased so much, that we need bigger stores.”

Founded in 1984, Aritzia built a loyal Canadian following for its chic but accessible women’s clothing. More recently, it’s drawn the attention of Gen-Zers in the US, helped by social media campaigns with the likes of influencer Nara Smith and viral posts from celebrities sporting its clothes, including Bella Hadid and Sabrina Carpenter.

“Social media and the internet have changed everything,” Hill said. When Aritzia was founded, women in Paris were normally one or two years ahead of those in the US and Canada in terms of fashion trends. “But now it’s instantaneous. When a celebrity in Hong Kong, New York or London wears something, everybody on the planet will see it and want it within hours.”

The online attention has translated into growth in its e-commerce business, where revenue rose more than 10% in its latest quarter. Last year, Aritzia opened a new 562,000-square-foot distribution center outside Toronto to accommodate its increasing order volume. 

But it’s the new stores that have really given Aritzia a lift: They accounted for roughly half of its US revenue growth in the three months ended September 1, Chief Financial Officer Todd Ingledew said on its earnings call. 

Aritzia signed the leases for some of its new prime locations near the end of the Covid era when traffic and sales were still depressed. That allowed it to secure more square footage while paying “significantly less” than its pre-pandemic rents, Karen Janes, the company’s executive vice president of real estate development, told investors in 2022.

“Opening new stores is one of the biggest drivers for their customer acquisition,” said Mary Ross Gilbert, senior analyst at Bloomberg Intelligence. “All Aritzia’s boutiques are at good real estate sites and some of them can break even in 10 months, beating their targets.” 

Even as US sales have surged, Aritzia has seen slowing momentum at home. Chief Executive Officer Jennifer Wong warned of a “softer consumer environment” in Canada during the October earnings call, and the company also trimmed the top end of its full-year revenue guidance. Shares fell 12% in the days following the announcement but have largely rebounded since then.

In the longer term, its US expansion is expected to help offset the weaker Canadian market. 

“While the Canadian market certainly matters, a successful scale-up in the US market would buffer any slowdown in Canada,” said Doug Stephens, founder and CEO of Retail Prophet. “For Aritzia, the challenge will be to grow at a pace that doesn’t outrun their ability to properly hire and staff their stores for superior service. If they lose the service component, they become just another fast-fashion brand.”

Retailing Family

Hill was introduced to retailing in elementary school, when he often spent time after school helping out at his grandfather’s dry-goods store in Vancouver. His father later took over the business and expanded it into a department store called Hills of Kerrisdale, where the Aritzia concept was launched. 

After studying economics in university, Hill saw an opportunity for an upscale women’s clothing store in Vancouver and opened the first standalone Aritzia in 1984 with help from his brother and sister.

The company launched its first exclusive brand, Babaton, a decade later and opened its first US store in 2006. It raised C$400 million ($285 million) in 2016 to list on the Toronto Stock Exchange, making it Canada’s largest initial public offering of that year. The retailer now has more than 120 boutiques on both sides of the border.

The retailing DNA might have passed on to the fourth generation of the family. Hill said his daughter, who just graduated from university, recently started working in the product strategy division at Aritzia, but he’s open to whatever she chooses to do in the future.

“I’ve always said to myself, on the days I’m driving home and I’m exhausted, ‘If it was easy, everybody would be doing it,’” Hill said. “Thank god it’s complicated.”