A Business Plan For

A BUSINESS PLAN FOR AN ARITZIA STORE IN SASKATOON

Client: Dragon’s Den

Aritzia LP Ratika Chaudhary Candace Hodgins Sarah Jesberger Client: Dragon’s Den

TABLE OF CONTENTS 1.0 EXECUTIVE SUMMARY...... 1 2.0 INTRODUCTION TO ARITZIA...... 3

2.1 DESCRIPTION OF ARITZIA...... 3 2.2 ARTIZIA’S OPERATIONAL GOALS AND OBJECTIVES...... 5 3.0 STRATEGIC MARKETING CONSIDERATIONS...... 7

3.1 INDUSTRY OVERVIEW AND MARKETING RESEARCH...... 7 3.2 SWOT ANALYSIS...... 8 3.3 MARKETING PLAN – 4 P’S, EXPENSES, SEGMENTATION...... 9 4.0 OPERATIONS PLAN...... 13

4.1 LEGAL STRUCTURE...... 13 4.2 ORGANIZATIONAL STRUCTURE AND FLOOR PLAN...... 13 4.3 OPERATING HOURS OF ARITZIA SASKATOON...... 13 4.4 INVENTORY SUPPLIERS...... 14 5.0 HUMAN RESOURCES PLAN...... 15

5.1 JOB DESCRIPTIONS...... 15 5.2 TRAINING PROGRAMS AND HR STRATEGY...... 17 5.3 SHAREHOLDER AGREEMENT...... 18 6.0 FINANCIAL PLAN...... 19

6.1 CAPITAL BUDGET...... 19 6.2 FINANCIAL PLAN...... 20 6.3 FINANCIAL GOALS:...... 21 6.4 EVALUATION OF FINANCIAL GOALS:...... 21 CONCLUSION...... 23

Aritzia LP Page | 2 Client: Dragon’s Den

1.0 Executive Summary

We are three MPAcc entrepreneurs presenting today on an exciting idea to expand the fashion offering for Saskatoon residents. Our goal is to pique the interest of an investor group that is prepared to partner with Aritzia LP specifically to fund the opening of an Aritzia location in Saskatoon, Saskatchewan. This will enhance the shopping experience for those living in and visiting the city and will allow for the availability of a far greater variety of styles and labels than those currently available in Saskatoon. The target audience is young women aged 14-30 and anyone who might be purchasing clothes for this segment. We strongly believe an Aritzia Saskatoon location will thrive based upon the growing population and the increased disposable income. We anticipate that agreements would be reached such that a store opening of Christmas 2010 would be feasible.

2.0 Introduction to Aritzia

2.1 Description of Aritzia

History of Aritzia

Jim Hill founded Aritzia, and opened its first retail store in Vancouver in 1984. The Hill family had a strong background in retail sales; Jim’s father was a senior executive for the Hudson’s Bay Company and Jim founded the Kerrisdale department store, which continues to operate in Vancouver. It was the company’s success in young-woman’s clothing sales that inspired Hill to create a business that specialized in clothing for this unique customer-group. His son Brian, who was a graduate of Queens University with a degree in Economics was appointed as the store manager; today he is the CEO of the privately-owned Aritzia LP.

The company has grown steadily since the early 1980’s, first in Vancouver and then nationally in the late 1990’s. Today it is a retail powerhouse with over 40 stores in operation. The majority of these stores are in Canada, however expansion into the United States began in 2007 and there are now 7 retail locations in various cities across the U.S. The company manages its growth by limiting it to certain centres and locations in order to preserve an image of exclusivity.

The company has established several in-house brands, and some of the brands, such as the TNA brand have grown to have their own retail locations. The planning for these brands is done in Vancouver. The company is vertically-integrated, with over 70% of their revenues being generated from their in-house brands – this helps us to be able to modify product design and production and be up-to-speed on meeting customer demands.

Today, Aritzia is known throughout Canada as a necessary experience for the fashion-forward. Our stores are always busy and full of the latest fashions, from basics to special stylish items just waiting to be incorporated into a customer’s personal style.

Mission

At Aritzia, we seek to inspire our customers by establishing a connection for them to the elements of urban culture. This is done by bridging fashion with elements of urban culture– specifically, clothing, accessories, and music.

Vision

As emphasized by CEO Brian Hill, “We connect our clientele to the energy of the culture. Our primary focus is fashion but we consider all elements: the music we play, the design of our stores, the artists we feature. Culture is ever-changing, as are we." We aim to create a unique experience for our customers and ultimately we want customers to leave feeling great about their purchases.

Core Values

o Ensure the customer experience is second-to-none

o Assist customers in creating their own distinctive style

o Aim for a varied product offering, some of which is unique to Aritzia

o Strive to be the best and have fun doing it!

Market Awareness

Aritzia is well-known in larger Canadian cities, with locations (sometimes multiple locations) in major centres from Vancouver to Montreal. "It's the hot Canadian retail property right now," says David Gray, President of Vancouver's Sixth Line Solutions, a retail information and strategy company. "I was at an International Council of Shopping Centres conference recently and people there were all bending over backwards to get Aritzia into their malls. They're Canadian and they're different." As Saskatoon is growing into a major Canadian centre, we feel that the Saskatoon market is ready for Aritzia.

2.2 Artizia’s Operational Goals and Objectives

Short-Term Goals

Our short term goals relate to accomplishments which we will work to realize in one-year.

o A short term goal of the Saskatoon store will be to attract the clientele who will most benefit from the Aritzia experience by creating a distinct ‘Saskatoon flavor’ for the store, especially using local talent

o To meet the specific demands of the Saskatoon market by ensuring adequate levels of stock to meet demand for popular products. Our SAP system will enable us to do this, and is able to determine inventory levels throughout Canada, such that a certain style, color or size that is sold-out in Saskatoon could be brought in from another location

o To have happy, satisfied customers. A link to a brief survey on the Aritzia experience can be accessed from each sales receipt printed or upon request.

Long-Term Goals Longer-term goals are those which we will work to achieve in a one-to-four year period. o As previously mentioned, Aritzia is vertically-integrated and some of our in-house brands also have retail outlets. It would be our longer-term goal for Aritzia to achieve a level of success and demand for its product whereby a TNA store would be opened in Saskatoon. As well, if successful, there may be the possibility of opening another corporate location. o To increase our customer list by 65%: names and e-mails are taken at each point of sale and used to track customer spending. As well, it is our goal to significantly increase annual sales per customer each year as we establish our position as a fashion leader in the Saskatoon market.

Key Success Factors o Product variety relative to the retail clothing market in Saskatoon o Product availability o Expressing fashion beyond simply clothing; linking fashion to culture o Friendly, Fastidious and Fashionable staff

3.0 Strategic Marketing Considerations

3.1 Industry Overview and Marketing Research Fashion Industry

It’s no secret that the fashion industry is one of the most lucrative out there – fuelled by conflicting desires to conform to a certain trend or to look as unique as possible. People everywhere fall prey to the desire to look good and the fashion industry is the ultimate provider of all things that allow this to happen. While the recession has caused a cut-back in discretionary spending, magazines such as People’s and In-Style’s monthly issues show North American’s at any age what the celebrities are wearing, where it came from and where ‘the rest of us’ can find it. This has created a frenzy to be fashionable and Aritzia is able to provide this need, with designers adapting their in-house designs and buyers adjusting orders from suppliers to ensure the latest demands are going to be available to customers.

Saskatoon, Saskatchewan

Saskatoon is growing while the rest of the continent is feeling the effects of a recession. The population of Saskatoon and the immediate surrounding area is estimated to be 250,000 in 2009. This is attributable in part to the growth of Saskatchewan as a whole. Indeed, Saskatoon and Regina are some of the only Canadian cities to have an increase in consumer spending in 2009. Retail sales growth was 11% in 2008 and 6% in 2009 (Colliers).

The housing market in Saskatoon shows that the average house price has jumped from approximately $160,000 in 2006 to around $300,000 in 2010. This combined with multiple consecutive periods of net in-migration, increased tourism and an increase in the events taking place in the city are all positive indicators of growth and signal a trend towards the selection of more expensive products and that people would be willing to pay for these items.

At present, Saskatoon has few suppliers for fashionable women’s clothing. Those who are in the market have limited supplies and are able to mark-up their products higher than in other locations since they have a monopoly. A recent shopper commented that the same jeans in Saskatoon were on average $20-40 more than we sold them for at Aritzia. At an average price of $200 a pair in our stores, that’s getting pretty pricey! While Aritzia is not interested in being known for inexpensive shopping, there are people in the city who are willing to spend money on clothing, they’ll just be spending a little bit less by shopping at our store.

3.2 SWOT Analysis Strengths

- Aritzia is a well known, established brand amongst its target audience - There is a proven demand for our product in all major cities across Canada - Exclusive brand of clothing in the store Weaknesses

- Merchandise is expensive in comparison to competitors - Our market is limited to young females Opportunities

- There is a young population in Saskatoon - Retail forecasts for upcoming years is strong - Retail market has increased in the last five years - There are limited competitors in the market. Additionally, of those competitors most of our brands are not carried by them Threats

- There are limited clothing retailers in our target market – this could mean increased competition in upcoming years with others wanting to capitalize on the untapped market - Currently, many Saskatoon females do not shop in the city and instead travel to other destinations as there is a limited selection in Saskatoon - With the exception of our in house brands, other retail stores could carry the same brands

3.3 Marketing Plan – 4 P’s, Expenses, Segmentation

Product

We are not proposing to sell clothes. Aritzia is selling an experience that begins at the store and is recaptured every time our customer wears our clothing. Aritzia provides our customers with a medium to enhance their image. Fashion has been globalized and Aritzia allows for women to express their fashion personality without travelling to Paris.

Our company employs a technical team to create apparel that reflects our company’s personality. We have four distinctive lines: Talula Babaton, Talula, TNA, and Wilfred which account for about 70% of the store sales. These lines are very diverse, ranging from T-shirts and blouses to sweaters, jackets and coats. The Talula brand fits our target market’s budget while the Talula Babaton and Wilfred products are a little pricier and are sized for a more mature clientele. TNA addresses the need for a sportier and more casual aspect of our client’s lifestyle. Additionally, our buyers work with young designers and brands to bring in clothing that enhances our customer’s closet.

Aritzia stores are distinctive

Aritzia’s strategy is to be available in select cities. Our real estate strategy is sound and proven. Unlike our competitors, we are not interested in being readily available and in every mall. This concept adds to our marketing strategy – of being the “it” store. For our Saskatoon location, we have targeted the downtown core, specifically a lease space on 2nd Avenue between 22nd and 23rd street, a prime retail location at The York Building. This area is consistent with our approach of being in the trendiest, most upscale shopping district.

The store will have the feel and ambience of our other stores. However, as in the case with each city, the décor and product will be customized to the Saskatchewan environment. Aritzia stores break the mold of traditional retail locations by incorporating attractive forest inspired materials. Flooring and walls will incorporate mostly wood materials, plants will be used as

Aritzia LP Page | 10 Client: Dragon’s Den accessories, and there is a focus to use natural light whenever possible – a very urban, fashionable feel. Further, music is a part of our mission and is incorporated into our stores. In line with our vision, top 40 hits are not played within the store. Instead, we work with a small independent record company that has alliances with major recording labels. As this new store will be inspired by the Saskatchewan environment, we look forward to featuring local DJs both in store and on our playlist.

Retail store fitting rooms are where buying decisions are made. As such, we focus a large amount of energy on making this space inviting and relaxing. Further, we financially commit to this area. Our fitting rooms are spacious, attractive and comfortable. More importantly, a purchaser’s guest has an area to sit, and participate in the buying decision. Allowing our customer to spend more time and become more comfortable with their purchase. Finally, the natural lighting of the store provides our customer with ideal lighting and an ability to envision themselves wearing our clothes outside of the store.

Aritzia sells a distinct image and ensures that this image cannot be duplicated. Since we are vertically integrated and internally design and produce the majority of our inventory, we cannot be undercut by department stores or other locations in the mall. In other words, we have control of the merchandise and the mark downs. As such, our average product selling price is $90. Within the fashion world, our product is at the mid-range when considering price. Since our competitive advantage is our vertical integration and in-house design and production, we can charge higher margins and prices on our clothing.

Promotion

Aritzia sells an image. Our product is recognizable amongst our target market. Our upscale clothing does not have any branding on it – however, our target audience still recognizes where it is from. Our TNA brand features significant branding on the product and serves as a form of advertising and recognition from those outside of our target market. Due to the current brand

Aritzia LP Page | 11 Client: Dragon’s Den recognition, advertising channels are limited to only those that incorporate our mission and vision. Thus, our promotion is accomplished through word of mouth, store locations, and celebrity use of our merchandise. Aritzia is continuously being featured in both local and National magazines, and web based blogs.

Marketing Expenses

As our promotional channels are limited to only those that fit with our image, marketing expenses are not large. Additionally, marketing is handled by our head office with costs being allocated amongst all store locations.

Segmentation

Aritzia caters to a demographic of females aged 14 to 30. These individuals are prepared to spend money to look good. Unlike the recent boom in the retail clothing industry, we are not catering to the teen or tween market. Aritzia passionately believes that the true untapped market is those females between the ages of 14 to 30. Our younger demographic of 14-16 year olds want to look older and are prepared to purchase the clothing 18-19 year olds are wearing. While our older teens experience a merging of their tastes with those in the twenties. Finally, those women in their mid to late 20s like to dress down, or wear fashion that makes them look younger. As a result, our clothing attracts a clientele spanning the age range of 14 to 30.

Targeting

Within the 14-30 female age demographic we are segmenting, we are targeting the young, professional unmarried woman. Women in the category are in the marriage market and image and style are very important. Further, once women get married, their per capita spending on clothing drops tremendously. Thus, Aritzia has segmented the market to cater to 14-30 year old women while within this segment we have target the professional, unmarried woman.

Positioning (branding) Our brand is positioned in line with our vision. We are in line with our consumer’s changing tastes as evidence of our 14 years in business. With the globalization of the fashion industry, our consumers in Vancouver are choosing the same fashions as those in Quebec, Denver, Winnipeg and all over the world. We are confident in our determination that our brand in Saskatoon will be consistent with the rest of North America. Customer Value Proposition Please refer to Appendix 2 for our customer value proposition. Our customer value proposition identifies the characteristics upon which our customer’s will rank us. Specifically, we believe the following attributes are of importance to our customers: - Quality - Price - Customer Service - Diversity in Product - Brand Recognition We identified our indirect and direct competitors and outlined each party based on the applicable characteristics. These parties, including ourselves, were ranked on a scale of 1 – 4 with 4 being best.

As outlined in the graph, Aritzia performed extremely well on all fronts. Aritzia has high quality, customer service, diversity in product, and brand recognition. However, all of these characteristics result in a higher price point than some of our competitors. Based upon the fact that we consistently perform superior to our competitors on all other fronts, and we have a vertical integration competitive advantage that prevents our competitors from undercutting our prices, we strongly believe we can price our clothing higher than that of our competitors.

4.0 Operations Plan

4.1 Legal Structure

Consistent with other Aritzia locations we would be a corporately-owned location, operated under Aritzia, LP. As with all locations, upper management would be those from the Aritzia head-office, who would perform the business development, external ordering and accounting functions for the store. A store manager would be on-site to manage operations and order inventory from internal buyers; shift supervisors being responsible for closing duties and cash reconciliations.

4.2 Organizational Structure and Floor Plan

. Although each store is unique, the layout of the stores is essentially the same, with some in-house brands scattered throughout the store; typically the more fashionable and expensive items are at the front of the store, with more athletic wear concentrated at the rear of the store. The sale desk would be located mid-store, where some sales associates would be, with others on the floor.

. The perimeter of the store will have multiple shelving units – mainly to house hanging items. There are low tables throughout the store that have less-delicate items ranging from flip-flops to tank tops in the summer or scarves and mittens in the winter.

4.3 Operating Hours of Aritzia Saskatoon

Artizia will be open 7 days a week. Mondays through Saturdays the store will be open from 10- 6; Sunday’s hours of operation will be 12-5. The hours are consistent with those of competitors and with other businesses in the neighbourhood, allowing us to take advantage of the high volumes of pedestrian/shopper traffic during this time.

4.4 Inventory Suppliers

. Artizia, LP for in-house brands such as TNA, Wilfred, Talula Babaton

. Designer Denim Suppliers

. Various other brands – varies with location and consumer demand Refer to Appendix 1

5.0 Human Resources Plan

5.1 Job Descriptions

The location would be of medium-size, and we would anticipate a manager/supervisor being on-duty at all times, with several (5) non-commissioned sales associates who would be allocated among various tasks such as fitting rooms, merchandising, cash, assisting customer’s on the floor etc. We have thus identified the following staffing needs:

. 1 full-time store manager

. 2-3 full-time Staff Supervisors

. 15 Sales Associates (staff), (both full- and others part-time)

Store Manager

. The store manager will be required to manage the shift supervisors and sales associates as well as be the main point of contact between the store and Head Office.

o Managing staffing needs and creating staff schedules;

o Preparing the daily accounting reports from their system and ensuring that cash, credit slips, etc are complete and properly remitted.

o Approval of staff hours and submission to Head Office

o Managing inventory levels; re-ordering inventory as necessary

o Solid understanding of the products carried and close monitoring of what is popular

. The manager will be responsible for any new staff hiring decisions, and managing current staff training

. The manager will be responsible for implementing marketing activities as provided by Aritzia Canada.

As the manager is the only employee at the location with this level of responsibility, they will be paid accordingly and will be on Salary. The successful candidate will have at minimum a Bachelor of Commerce and previous experience working with numbers.

Staff Supervisors

o The staff supervisors will be on-site for daily operations and will provide guidance to sales-associates

o Supervisors must have an in-depth knowledge of inventory levels and be able to handle special orders or stock transfers from other locations for customers

o Supervisors are responsible for performing the cash-out and reconciliation of amounts at the close of business; the manager will review this

o Beauty supervisors must be able to effectively manage the team and resolve any conflicts arising involving customers and/or other employees.

o Candidates are expected to have previous experience in retail and demonstrate leadership qualities.

Sales Associates

o The sales associates will work on a full or part time basis

o These associates represent the initial client contact point for customers and must be friendly, helpful and innovative to assist the customer in finding a style that suits their individual needs

o Some associates will be trained to handle sales transactions/cash transactions. Supervisors would be required to authorize some returns under unusual circumstances (without receipt etc) and for transactions on layaway.

o Sales associates will be required at the fitting rooms and will need to lock up customer’s bags before they use the fitting room, as well as retrieve them after

o Sales associates will be responsible for merchandising the store and maintaining a presentable shopping environment throughout the day. This may involve folding and re- hanging items as well as moving items back to their proper locations. As well, at times the associates will be required to re-merchandise the entire store; this is typically done outside of store hours.

o It is expected that some sales associates will be students, therefore there is no minimum education level so long as they are of-age and eligible to work in Canada.

5.2 Training Programs and HR Strategy In the hiring process, Aritzia seeks candidates that are passionate about fashion, have their own unique sense of style, and are friendly and personable. As such, Aritzia’s staff training costs are low at the store-level. Staff will be trained on merchandising the store, tips on customer interaction and trained on the point of sale and cash systems as necessary. Product education seminars will be held after store closings from time to time to help educate staff on new and exciting lines offered by the company. As the mix of brands offered changes so frequently, it will be important for all staff to be up-to-date on what is offered at their location.

Labour Costs The details of staffing and related costs can be found in the Staffing and Operating Expenses tabs of the financial plan. The store manager will be on salary, while the sales associates and shift supervisors will be paid on an hourly basis. We have included costs for an employee health

Aritzia LP Page | 18 Client: Dragon’s Den plan; it is difficult to recruit and maintain staff in a retail position and this helps to attract quality staff and reduce turnover.

Human Resources Strategy The organizational structure can be found in Appendix 3. In-store, the sales associates will report to the shift supervisors, with both levels reporting to the store manager. The store manager will report to the regional manager (designated as being for the Prairie Provinces) who, in-turn will report to the executive sales team. Aritzia encourages open lines of communication between staff at all levels.

Since the shopping experience Aritzia aims to offer is so unique, the staff is an essential component. The staff will be integral to the success of the company and staff must embody the culture or Aritzia and project this to customers; as CEO Brian Hill notes, “It takes a certain type of someone to do the work here. Not only do they have to have a sense of fashion, but a youthful energy and confidence are also essential”

All employees working in the store should be wearing at least one Aritzia piece at all times. They are encouraged to incorporate pieces from the store into their own unique wardrobes- this helps to give shoppers a sense of how to wear the clothes. As such, employees are offered a 30% discount on all merchandise. While sales will be tracked by sales associate, this will be for monitoring purposes only; no commissions will be paid.

5.3 Shareholder Agreement A shareholder agreement will be drafted by a lawyer and will outline the ownership interest as follows: - Aritzia LP will have a 70% ownership interest with an initial investment of $500,000 - Angel Investor will have a 30% silent ownership interest with an initial investment of $200,000 - Profit sharing through common stock

When a share sale takes place, the share price will determined according to the value assessed by a Certified Business Valuator.

6.0 Financial Plan

6.1 Capital Budget

Store Space In line with contributing to the ‘Aritzia experience’, the ideal location for the boutique is a prime retail space in the Saskatoon downtown core. A stand-alone boutique retail location is preferable to mall space in a high-end mall such as Midtown Plaza as the stand-alone location would allow Aritzia to target its market and get the required foot traffic it requires to make sufficient sales. The identified lease space is on 2nd Avenue, across the street from Saskatoon’s prestigious 2nd Avenue Lofts and King George at the York Building, in the heart of downtown.

Equipment The most significant start-up costs involve shelving equipment, displays tables and racks, counters, changing room equipment and mirrors, a sufficient security system to mitigate against shoplifting and chairs and mirrors required for a retail boutique. Other equipment is comprised of network computers and the SAP system that is linked to the overall Aritzia inventory and business operating system. This includes the standardized accounting software utilized by all Aritzia locations, worldwide. The system allows for the generation of various reports that assist in performance measurement in terms of sales tracking by product, style and brand to assist in inventory management for the Saskatoon location. Refer to Appendix 7 for all capital expenditures required over the next five years. Leasehold improvements include costs that will be incurred to create the ‘unique Aritzia experience’ at the leased space in downtown Saskatoon. Examples of the necessary leasehold improvements include specialized flooring, lighting, installation of signage and décor.

Operating Expenses Appendix 8 shows a five year projection of the expected operating costs for Aritzia Saskatoon. Corporate Administration Costs are calculated at 5% of annual sales for the Saskatoon location and relate to general corporate administration overhead charges. Expected annual operating

Aritzia LP Page | 20 Client: Dragon’s Den costs are approximately $1.1M with the largest charges relating to payroll and corporate administrative charges (as a % of annual sales).

Labor Costs Labor charges are outlined in Appendix 9 and range from approximately $330K - $440K annually (allowing for growth and inflation). Growth is determined at 5% as increased demand for products will require more staff on hand and will increase payroll costs in the upcoming years. Additional training costs have been included to introduce new employees to the Aritzia brand and train them so they are well-versed in the products, both in-house and contemporary brands. These training costs have been reduced in latter years as it is expected that once Aritzia becomes a household name as the desired location for women’s clothing in Saskatoon, training on the Aritzia brand will not be as intensive for new employees.

6.2 Financial Plan

Aritzia has developed a unique name that commands a specific level of prestige in the women’s retail industry. Accordingly, with marketing a promotion of the grand opening in downtown Saskatoon and Aritzia’s proven history of strong sales in the first year of introduction in other cities worldwide, sales are expected to be high in the first year and to continually improve in subsequent years.

Sales: Aritizia CEO, Brian Hill, reports $200M in sales over 40 stores, with some stores reporting a ‘whopping $2,000 per square foot, reportedly four times the industry average’1Our base case projection for sales has been assessed at $400 per square foot, worst-case at $250 and best- case scenario assessed at $600 per square foot. We have significantly decreased our sales per sq. ft. for the downtown Saskatoon location in comparison to other locations in Canadian and

1 Amed, Imran. “CEO Talk: Brian Hill, Chief Executive Officer, Aritzia”. The Business of Fashion, August 25, 2009. http://www.businessoffashion.com/2009/08/ceo-talk-brian-hill-chief-executive-officer-aritzia.html#more-5968

American cities as this will be one of the first premium women’s retail boutiques in Saskatoon, sales therefore, will not be at comparable levels to those in Vancouver or Toronto, for example.

Aritzia’s margins range between 50-70% depending on own-label product (70% margin) in comparison to contemporary brands sold at the boutique. We have calculated an average gross margin on sales at 60%, resulting in a mark-up of 40% on all product. These mark-ups are the result of low-production costs from economies of scale and the ability to charge a premium for prestigious brand names.

6.3 Financial Goals:

1. To earn, at minimum, a 25% return on investment in Aritzia

2. To earn profits, at the outset, based on the proven success of the Aritzia brand name

3. Have monthly inventory turnover to ensure that Aritzia is providing its customers with the latest fashions

4. To eliminate long-term debt within five years

Financial statements for Aritzia for the following 10 year period have been provided in Appendix 10.

6.4 Evaluation of Financial Goals: 1. A minimum 25% return on investment

Scenario Worst Case Base Case Best Case IRR 9% 67% 134%

Provided sales projections under the base-case scenario are met, the required rate of return under the base-case greatly exceeds our expectation for a minimum 25% return on investment.

2. To earn profits based on the proven success of Aritzia’s brand name.

Scenario Worst Case Base Case Best Case Year 2 Income $(19,780) $334,222 $792,778

In every situation except the worst-case scenario, Aritzia will be earning positive profits by the second year. This is consistent with Aritzia’s proven success, worldwide, at earning profits 4 times greater than the industry average for retail. By the third year, in all scenarios we will be earning substantial, positive profits.

3. Have monthly inventory turnover to ensure that Aritzia is providing its customers with the latest fashions

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Days in inventory 81.04 28.50 28.50 28.50 28.50 28.50 28.50 28.50 28.50 28.50

The table outlines days in inventory under the best case scenario showing that by the second year, the goal of inventory turnover monthly will be achieved. This is consistent with expectations as we expect the Saskatoon market to take at least a year to fully accept the Aritzia brand and require up-to-date fashions as market conditions and growth in the city improves.

4. To eliminate long-term debt within 5 years

Under all scenarios, a long-term debt repayment within 5 years has been assumed with success and no related cash flow issues to achieve this goal.

Conclusion

As noted above, it will be our key success factors that will contribute to the success of an Aritzia location in Saskatoon’s downtown core. These are:

Key Success Factors o Product Variety relative to the retail clothing market in Saskatoon o Product availability o Expressing fashion beyond simply clothing; linking fashion to culture o Friendly, Fastidious and Fashionable staff

Both our short- and long-term goals are in-line with these points, which will be continuously measured to ensure we are meeting our goals.

The base-case financial projections indicate that a downtown Aritzia location would be viable, providing a 67% return over 10 years. We hope that you consider this presentation and the opportunity to be a part of the next fun, fresh initiative in Saskatoon.

Aritzia will be able to fulfill these financial projects through many competitive advantages as follows: - Proven sales - Brand recognition - Strong management - Retail sales market in Saskatoon

References

Saskatoon Commercial Real Estate Statistics. Retrieved June 25. http://www.buysaskatoon.com/resources/pdfs/SREDA_Saskatoon_Commercial_Real_Estate_St atistics_Jan-07.pdf

Colliers International – Saskatoon. The Knowledge Report. Retrieved June 25.

Saskatoon Real Estate Market. Brunsdon Junor Johnson Appraisals Ltd. Retrieved June 25. http://www.realestateappraisals.com/bjj/saskatoon.shtml

IT World Canada. Aritzia Dresses up in SAP retail software. Retrieved June 25. http://www.itworldcanada.com/news/aritzia-dresses-up-in-sap-retail-software/103589

The Business of Fashion. CEO Talk Brian Hill, Chief Executive Officer, Aritzia. Retrieved June 25. http://www.businessoffashion.com/tag/aritzia

Canadian Retail Institute. Aritzia Rises Above The Fashion Crowd. Retrieved June 25. http://www.retaileducation.ca/index.php? option=com_content&view=article&id=72&Itemid=61

Berkshire Partners Invests in Aritzia LP. Retrieved June 25. http://www.thefreelibrary.com/Berkshire+Partners+Invests+in+Aritzia+LP.-a0139947566

Appendix 1 Brands Carried by Aritzia

*not exhaustive, as brands offered are constantly changing and vary between locations

In-house Brands - Talula - Talula Babaton - TNA - Wilfred

Designer Denim - 7 for all Mankind - Citizens of Humanity - Cheap Monday - J Brand - Paige Premium Denim - Rock & Republic

Other Brands - Acne - Adidas - Central Park West - Community - Ernst Sewn - Habitual - James Perse - Mackage - Marc by Marc Jacobs - MM6 - Park Life - ORION - Quicksilver - See by Chloe

Appendix 2 Customer Value Proposition

Current Boutiques LuluLemon The Bay Aritzia Other Mall Stores

0 Quality Price Customer Service Diversity in Product Brand Recognition

Note: - Current Boutiques include Manhattan Casuals, MINT boutique, VOGE Couture, Sandbox in the City for example - Other mall stores include stores such as Le Chateau, and Ricki’s

Appendix 3 Organizational Chart

Brian Hill (President and CEO)

VP Design VP Sales VP Marketing VP Finance

Regional Sales Marketing and Promotion Design Staff Accounting Staff Managers Associates

(outsourced)

Clothing Production Store Managers Staff

Store Supervisors

Sales Associates

Appendix 4 Market Research – Retail Industry in Saskatoon

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