TSX:ATZ - Post Discussion
Post by
retiredcf on Oct 27, 2022 12:35pm
TD
Aritzia Inc.
(ATZ-T) C$54.05
ATZ Provides F2027 Financial Targets Ahead of Investor Day Event
This morning, Aritzia ("ATZ") unveiled its initial F2027 strategic and financial plan, "Powering Stronger". The company will be hosting its investor day today in Vancouver, with a webcast beginning at 12:00 pm ET.
Impact: POSITIVE
F2027 Financial Targets (end of F2023 to F2027)
Net Revenue: $3.5-$3.8-billion in F2027, or a 15%–17% CAGR. Driven by 8-10 boutiques per year in the U.S. (to a total of ~150 stores) and 3-5 expansions per year. This implies annual square footage growth in the low double-digits. eCommerce is anticipated to comprise ~45% of net revenue in F2027, up from ~38% in F2022. We estimate that this represents a CAGR of over 20% in eCommerce sales. Combined with square footage growth, we believe this implies a conservative boutique SSSG outlook.
Adjusted EBITDA Margin to be ~19% in F2027. This compares to the F2022 Adjusted EBITDA margin of 19.4% and our F2023E forecast of 18.3%. While there is limited detail provided in this morning's release, we believe ATZ's expansion in the U.S. inclusive of eCommerce (most accretive channel) should aid the gross margin performance. However, as we have previously indicated, ATZ may continue to invest in SG&A to support its brand and future growth.
EPS: Overall, EPS growth is anticipated to outpace revenue growth from F2023-to- F2027.
Net Capex of $500mm from F2024-to-F2027 (or ~$125mm/year). This is essentially in line with F2023 guidance of $110-$120mm including DC (and other) investments.
Key Strategic Levers: Combined with ATZ's strengths (product, real estate, people, etc.): 1) geographic expansion in the U.S.; 2) eCommerce acceleration; and 3) efforts around increasing brand awareness underpin the "Powering Stronger" plan.
Conclusion: Our initial take of ATZ's strategic and financial plan is positive. We believe ATZ will continue to leverage its strengths and momentum it is experiencing in the U.S. market. We expect this will require investments within SG&A and potentially infrastructure, that is not surprising given the recent success of the business. We believe investors will receive ATZ's outlook positively, inclusive of EPS growth of >15-17% through F2027. We will update our thoughts post the investor day presentations.
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