Aritzia Inc. (ATZ.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Aritzia Inc., together with its subsidiaries, designs and sells apparels and accessories for women in North America.It offers t-shirts and tops, bodysuits, shirts and blouses, sweaters, jumpsuits and rompers, shirt jackets, skirts, bodysuits, activeware, knitwear, sweatsuits, pants, denims, leggings, bike shorts, dresses, jackets, blazers, jackets and coats, and shoes, as well as accessories, including hats, socks, face masks, intimates, gloves and mittens, belts, scarves, scrunchies, bags, and iphone cases.The company offers its products under the Wilfred, Super World, Babaton, and TNA brands.

As of February 27, 2022, it operates approximately 105 boutiques.In addition, it sells its products through online at aritzia.com.The company was formerly known as Aritzia Capital Corporation and changed its name to Aritzia Inc.

in August 2016.Aritzia Inc.was founded in 1984 and is headquartered in Vancouver, Canada.

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1.b. Last Insights on ATZ

Aritzia's recent performance was driven by strong Q3 fiscal 2025 results, with adjusted profit rising 58% and net revenue increasing 16% year-over-year, fueled by robust U.S. expansion and record-breaking e-commerce performance. The company's guidance for fiscal Q4, citing higher revenue and lower costs, further supports its positive outlook. Additionally, recent analyst ratings from Stifel GMP and RBC Capital Markets have been upgraded, with Stifel maintaining a buy rating and raising its price target to C$66.00, while RBC raised its price target to $65. Aritzia's estimated fair value is CA$81.98 based on 2 Stage Free Cash Flow to Equity.

1.c. Company Highlights

Last Price	127.25
Change Percentage	0.67%
Open	126.09
Previous Close	126.4
Market Cap ( Millions)	12398
Volume	656323
Year High	139.59
Year Low	36.51
M A 50	118.62
M A 200	90.64

FCF Yield	4.10%
Dividend Yield	0.00%
ROE	29.12%
Debt / Equity	77.42%
Net Debt / EBIDTA	65.86%
Price To Book	10.94
Price Earnings Ratio	42.28
Price To FCF	24.39
Price To sales	3.63
EV / EBITDA	20.16

2. Aritzia's Record-Breaking Q3 Earnings: A Strong Momentum Continuation

Aritzia reported an exceptional Q3 fiscal 2026 earnings, with net revenue reaching $1.04 billion, a 43% increase from the previous year, and adjusted net income per diluted share rising 55% to $1.1, beating analyst estimates of $0.985. The strong momentum has continued into Q4, driven by geographic expansion, digital growth, and increased brand awareness. Gross profit was $479 million, up 44% from the previous year, with a gross profit margin expansion of 30 basis points to 46%. Adjusted EBITDA was $208 million, an increase of 52% compared to Q3 last year, with an adjusted EBITDA margin expansion of 120 basis points to 20%.

Publication Date: Jan -09

                                    📋 Highlights
                                    Record Revenue Growth:
                                                Net revenue surged to $1.04 billion (+43% YoY), with e-commerce up 58% to $383 million and retail rising 35% to $657 million.
Margin Expansion:
                                                Gross profit hit $479 million (+44% YoY) with a 46% margin, while SG&A expenses leveraged 170 bps to 27.9% of revenue.
Mobile App Success:
                                                Launched with 1.4 million downloads, driving engagement and projected to contribute 20-40% of e-commerce sales by peers' benchmarks.
Full-Year Guidance Raised:
                                                Net revenue forecast increased to $3.615–$3.64 billion (+32-33% YoY), with adjusted EBITDA margin targeting 16.5–17%.
Geographic Expansion:
                                                Opened 5 U.S. boutiques in Q3, plans 4 more in Q4, and aims for 12-14 openings/repositions in the next two years.

                                

Drivers of Growth

The company's real estate expansion strategy yielded exceptional results, with new and repositioned boutiques performing well. Aritzia opened 5 new boutiques in Q3, all in the United States, and plans to open 4 new boutiques in Q4. The launch of the mobile app achieved exceptional results, with over 1 million downloads and strong adoption. The company's product collaborations, including partnerships with Nike and Salt & Stone, drove traffic online and in boutiques.

Valuation and Outlook

Given Aritzia's strong performance, its valuation metrics appear reasonable, with a P/S Ratio of 3.86 and an EV/EBITDA of 24.98. The company's sustained momentum and proven operating model give it confidence in its ability to sustain strong momentum in its business and create long-term value for shareholders. Aritzia has a long-term sustainable runway for growth, with plans to open a minimum of 12 to 14 boutiques in the next two years, including repositions.

Digital Initiatives and Inventory Management

Aritzia's e-commerce 2.0 efforts are about 1/3 to halfway through execution, with a focus on digital styling, content creation, and integrating the app with in-store experiences. The company has done significant work on inventory management and optimization, and this has been a key driver of the strong results. International e-commerce growth is driven by increased conversion, and the company sees potential for this to triple in two years.

Guidance and Future Plans

The company raised its net revenue forecast for the full fiscal year to $3.615 billion to $3.64 billion, representing growth of 32% to 33% from last year. Aritzia expects margin expansion next year, despite the startup costs of a new distribution center in Vancouver. The guidance for Q4 assumes a comp in the high teens, delivering 23-26% revenue growth, and the company is trending slightly ahead of that. Analysts estimate next year's revenue growth at 14.5%, indicating a potential slowdown, but Aritzia's confidence in its execution and strategy is evident.