Stifel Raises Target Stifel analyst Martin Landry sees Aritzia Inc. poised for a strong end to its current fiscal year and “well positioned” for the following 12 months.
“We attended the ICR conference held in Orlando, where several apparel retailers presented, including Aritzia,” he said. “Most of the apparel retailers appear to have had a strong holiday period, four of them increasing their guidance ahead of the conference. Aritzia could be the retailer with the strongest growth rate for Q4 (ending February 2025) with revenues expected to increase by 28-31 per cent year-over-year.”
“FY25 was a big year for Aritzia with the roll-out of a new large DC [distribution centre] in Toronto, the opening of three large flagship stores in the United States, leading to the company’s largest annual square footage growth since the company’s IPO. Hence, with several of the company’s large projects completed ATZ’s story appears de-risked for FY26, in our view. In conjunction with reduced execution risks, the company’s momentum is increasing with comparable sales expected in the high teens for Q4FY25, perhaps the fastest organic growth rate amongst publicly traded peers. Hence, it is not difficult to see why investors have pushed ATZ’s shares to all-time highs in the last month. However, with only 61 stores in the U.S. and no stores oversea, we see a long growth runway for ATZ.”
In a research note released Thursday, Mr. Landry thinks the Vancouver-based clothing retailer is poised to benefit from accelerating digital investments, which could set the stage for notable international expansion.
“With the arrival of Chief Digital Officer, Margot Johnson, hired a little over a year ago, ATZ has increased its investments in digital marketing,” he said. “Previously, the company had essentially no paid digital marketing. Investments have paid off, especially in Canada, where customer response has been strong. This translated into and acceleration of sales in Canada each month throughout Q3FY24 and finishing strong in November. In addition, ATZ expects to launch its mobile app within the next 10-12 months.”
“The enhancement of ATZ’s international e-commerce site, set to launch this spring, marks the company’s next step towards global expansion. This upgrade will enable ATZ to better evaluate the strength of its international markets, including Great Britain, Germany, France, Taiwan, Hong Kong, China, and Australia. ATZ’s next multi-year plan (which we think could be announced in 18 months) should include setting specific targets for international expansion.”
Noting recent credit card data also suggests continued momentum, the analyst thinks square footage growth will drive revenue growth again in its next fiscal year.
“ATZ is on track to increase its square footage by 25 per cent in FY2025 by adding 12 new stores and repositioning 3 existing ones,” he said. “Since most new openings skewed towards the end of the fiscal year, there is a spillover effect into FY2026. In FY2026, square footage is expected to grow in high teens in FY2026 with a minimum of 10-12 new stores and 4-5 expansions and repositions planned. Hence, FY2026 should again be a year of strong revenue growth which could exceed 20 per cent year-over-year, absent any major hiccups. This suggests potential upside to our FY2026 forecasts calling revenue growth of 19 per cent.”
Given that increased confidence in his 2026 estimates, he increased his valuation multiple slightly, resulting in an increase of $3 to his target price for Aritzia shares to $73 with a “buy” recommendation. The average is $72.25.
“Despite ATZ’s strong share performance recently, we see further upside as valuation is in-line with historical averages despite strong momentum and cash building on the balance sheet,” he concluded.