Aritzia $ATZ.TO $ATZAF just released their quarterly and as usual, they smashed.

One blemish: Inventory levels are up 188%.

But I spoke to my wife who is an avid shopper as well as a friend who has worked there for many years.

Here is why I don't think it's much of an issue.

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My wife checks online regularly for specific product lines and colours.

She says that they are literally always sold out of some of the items she wants.

This means Aritzia is getting rid of its inventory that is in demand.

Small sample size, I know, but still relevant.

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My friend who has worked there says that the business was constantly out of inventory during COVID.

So she thinks they might be trying to make sure this doesn't happen.

She also says "We always sell out and have special orders on items that are coming back at a later date."

The Christmas season, which was not reported on in this quarter is not included.

This one quarter usually ends up being about 1/3 of year sales.

So part of the increased inventory could have been in preparation for a big holiday season.

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The business continues to grow, so higher inventory levels are probably to be expected.

Look at $LULU inventory levels. They've doubled in the past 3 years.

Lululemon has 24.5% Revenue CAGR over the last 3 years vs. 28.3% for Aritzia over the same time period.

So as long as:

• Revenue continues growing at a high rate

• Inventory levels grow steadily

I think this will be a non-issue in the long term.