Aritzia Inc T.ATZ

Alternate Symbol(s): ATZAF

Consumer Cyclical

Aritzia Inc. is a Canada-based vertically integrated design house. The Company is a creator and purveyor of Everyday Luxury, which is home to a portfolio of brands for every function and individual aesthetic. The Company provides personal shopping experiences at aritzia.com and in its 110+ boutiques throughout Canada and the United States. The Company’s products include jackets and coats, sweaters, pants, t-shirts and tops, dresses, shirts and blouses, sweatsuits, bodysuits, skirts, shirt jackets, denim, activewear, leggings, shorts, jumpsuits & rompers, and accessories. The Company offers its products under various brands, including Wilfred, Wilfred Free, Babaton, The Group by Babaton, Babaton 1-01, Ten by Babaton, Tna, Super World, Sunday Best, TnAction, Denim Forum, Little Moon, Auxiliary and Talula.

TSX:ATZ - Post by User

Aritzia Inc

<< Previous

Bullboard Posts

Next >>

Post by retiredcfon Jun 30, 2022 8:42am

191 Views

Post# 34793212

TD

Aritzia Inc.

(ATZ-T) C$34.98

Q1/F23 Preview: Spring/Summer Sale to Shed Light on Markdowns Event

Aritzia (ATZ) is scheduled to report Q1/F23 financial results on July 7 after market close.

Impact: SLIGHTLY NEGATIVE

Q1/F23 Preview: Our top-line growth forecast of ~50% is driven by the lapping of store closures in Canada y/y, ATZ's U.S. expansion, and product innovation. In light of shifting consumer demand, we take a conservative view, in line with management's guidance. With ongoing investments within SG&A to support future growth, we forecast that the Adjusted EBITDA margin will decline y/y. This results in our EPS forecast of $0.31, in line with consensus.
Assessing Key Risks to Our Forecasts: As concerns surrounding a potential recession have taken center stage, we attempt to address the downside risks to our EPS forecast. In this environment, we characterize the greatest "at-risk" elements of our financial forecasts as Retail SSSG and gross margin. In the near term, the benefit of lower markdowns industry-wide could prove transient to a degree. In our view, the launch of ATZ's spring/summer sale (Q2/F23) may provide an indication as to whether this benefit is unwinding.

Potential Positive Catalyst on the Horizon: Looking past these short-term dynamics, we see ATZ as well-positioned to continue to build scale should the macro environment deteriorate. In addition, we believe that ATZ has structurally improved its gross margin profile through its U.S. and eCommerce expansion, with further upside as freight costs ease. The initiation of mid-term targets this fall could underscore this view and return investor focus to the company's attractive mid-term growth potential.

TD Investment Conclusion

We are taking a cautious view ahead of the Q1/F23 financial results. With the launch of ATZ's Spring/Summer sale in early-Q2/F23, we believe investors could get clarity on the direction of markdown rates. We maintain our view that ATZ is well- positioned relative to peers on this front. However, a shifting consumer landscape creates challenging conditions for merchandise/inventory planning. As this does not change our positive view of ATZ's runway for growth in the U.S./internationally, we are maintaining our BUY recommendation. Upon adjusting our applied multiple to reflect the contraction of key peers, our target price declines to $55.00 from $62.00