Aritzia absorbed 410 basis points of gross margin pressure from trade disruptions in its third quarter, with one-third of that hit tied to the end of the US de minimis exemption and the remainder to tariffs, CFO Todd Ingledew said on a Jan. 8 earnings call.

Despite the drag, gross profit margin still rose 30 basis points year over year. "This pressure was more than offset by leverage on fixed costs, improved markdowns and freight tailwinds," Ingledew said.

How did Aritzia restructure its fulfillment network?

The de minimis exemption, which allowed imports valued below $800 to enter the US duty and tax free, ended in August. The change forced e-commerce supply chains to rethink how they ship direct-to-consumer orders.

While de minimis was in effect, Aritzia used its Canadian supply chain network to fulfill a portion of US e-commerce orders, CEO Jennifer Wong explained during an Oct. 9 earnings call. After the exemption's elimination, the retailer relocated all US order fulfillment to its Ohio distribution center, a facility it expanded in 2024 to more than double its previous size.

"We are now operating at triple the capacity compared to prior to the de minimis removal," Wong said. "And eventually, further optimization will allow us to quadruple our prior capacity."

Wong added that the shift caused no impact on customer service levels and that the Ohio site can handle US order volume for the next two years.

What costs come with the mitigation?

The domestic-fulfillment pivot carries its own expenses. Aritzia booked transitory costs in Q3 from moving all US-bound order fulfillment in-house domestically, Ingledew said on the Jan. 8 call.

The trade headwinds have not run their course. Ingledew guided that Q4 gross profit margins could face roughly 400 basis points of similar pressure from the de minimis elimination and tariffs.

What does this mean for cross-border apparel sourcing?

Aritzia is not alone in reworking its model. Lululemon, which also relied on cross-border shipping for direct-to-consumer orders, has faced comparable fulfillment strain since the exemption ended.

For apparel brands dependent on Canadian or other cross-border e-commerce flows into the US, Aritzia's playbook — consolidating fulfillment into an expanded domestic DC ahead of the policy change — offers a measured template, but one with real transition costs and continued margin exposure of around 400 basis points heading into Q4.