Fashion, Fame and Employee Pain: Aritzia’s Explosive Growth Comes at a Cost

Few Canadian companies find success in the US. But fashion brand Aritzia has successfully broken in — at the cost of employee sanity (more on that later).

Aritzia is known for its fast fashion and luxury crossover, with in-house brands like its popular Super Puff jackets and Wilfred driving nearly all its sales. Growth has been mostly organic — with its clothing regularly worn by celebrities like Kendall Jenner and Meghan Markle.

Expansion, eh?: The fashion retailer quickly extended into the US — and has now become larger than its Canadian division after opening 48 new US stores since 2007.

• Per their CEO, “growth in the coming years will be primarily from the US,” — with plans to open 8-10 US stores each year and a goal to reach 150 by 2027.
• GlobalData’s Analyst Neil Saunders believes that Aritzia can challenge US-based retailers if it maintains “its trajectory of success” (BBG).

“Everyday luxury” at a discount: After more than doubling sales over the past two years, economic pressures and a lack of new products have sent its stock down 43% this year — with sales growth slowing from its 2022 peak of 121% — down to 13% in the most recent quarter.

The stock currently trades at an 18x price-to-earnings ratio, compared to its fellow Canadian retailer Lululemon’s (NASDAQ:LULU) 51x. But now, the company is facing another issue.

Skeletons in the fitting room

This week, an Insider investigation revealed a toxic work culture of racism and abusive work environments. Aritzia’s previous CEO and Founder Brian Hill allegedly ruled by fear and intimidation — and has been described as a “megalomaniac in an ascot.” According to former employees:

• The work environment was “inhospitable for Black women,” and some described it as being “psychologically abused.”
• Hill had instilled a cutthroat and harmful culture where these practices had become “accepted,” and employees were expected to “devote their lives to Aritzia.”

The company defended itself, saying “The company’s success has been a direct result of its high-performance culture.” Last year, Aritzia brought in a new CEO, Jennifer Wong, who started as a style advisor in 1987, with Hill stepping into an Executive Chair role. Whether that can fix its culture or its sales decline is yet to be determined.