Bullboard - Stock Discussion Forum Aritzia Inc T.ATZ

Alternate Symbol(s): ATZAF

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... see more

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TSX:ATZ - Post Discussion

Aritzia Inc > TD Raise Target

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Post by retiredcf on Oct 13, 2022 8:10am

TD Raise Target

Aritzia Inc.

(ATZ-T) C$48.62

Q2/F23 Results: A Bright Spot in the Retail Landscape Event

Yesterday after market close, Aritzia (ATZ) reported Q2/F23 financial results that exceeded our forecasts/consensus. F2023 EPS guidance was increased.

Impact: POSITIVE

Q2/F23 Summary: ATZ achieved net revenue growth of ~50% y/y, ahead of our forecast/guidance. As it expands its client base and footprint, strength in the U.S. market has continued in both channels. This was complemented by double-digit SSSG in Canada. The strong top-line performance likely resulted in the gross margin being ahead of our forecast (albeit declining y/y). Overall, Adjusted EPS of $0.44 was ahead of our forecast/consensus of $0.32/$0.34. In our view, ATZ's results are welcome news in a challenged retail environment, that should be reflected in the share price this morning.
Outlook a Show of Strength: In Q3/F23-to-date, demand for ATZ's product is not being deterred by macro headwinds. Its product offering is resonating with new and existing consumers, as demonstrated by strength across its KPIs. It is growing its U.S. presence both physically and through its expanded customer base. The F2023 top-line (and EPS) outlook has been raised, with potential upside should these trends persist into Q4/F23, in our view. As the operating environment "normalizes" y/y, higher markdowns are to be expected in H2/F23 that we see as a prudent assumption in the current macro environment.
Investor Day Targets to Come: Management reiterated that it will communicate its multi-year strategic plan at its investor day on October 27. This will include financial targets. We believe that the disclosure of these targets should act as a positive catalyst to the share price as investors navigate transitory factors. In our view, management's strategic plan will turn investor focus back to the attractive, long-term growth potential of the business.

TD Investment Conclusion

We maintain our positive view of ATZ's runway for growth in the U.S., internationally, and in new product categories/segments. We are increasing our target price to $62.00 from $57.00 and maintaining our BUY recommendation.