In response to Thursday’s post-market release of better-than-anticipated third-quarter 2025 results and “impressive” guidance for the fourth quarter, Stifel analyst Martin Landry thinks Aritzia Inc.’s “success drivers appear broad-based” and now sees international expansion as the “logical next step.” “Management has executed an impressive turnaround over the last year and now the company is reaping the benefits,” he said. “Success appears broad-based with a balanced assortment of new styles and client favorite, the right amount of inventory limiting out-of-stock positions, a record pace of store opening, capitalizing on the flagship openings to re-energize the brand, savvy digital marketing, favorable weather which turned cold at the right time, all of that during the most important shopping period of the year. We do not expect that comparable sales growth in the high teens is sustainable, but recent momentum could carry early into fiscal 2026.”
“Aritzia already ships its products to more than 180 countries, despite the company only having stores in Canada and the United States. We believe that international expansion outside of North America is not too far out for the company. As such, Aritzia’s flagship location in New York City’s 5th avenue, which attracts international tourists, could be helpful in increasing ATZ’s exposure to international customers. Current investments in the digital platform and the eventual launch of mobile app would also be essential in enabling ATZ to increase its focus to international sales.”
The Vancouver-based women’s clothing retailer reported quarterly revenue of $729-million, up 11.5 per cent year-over-year and exceeding both Mr. Landry’s estimate of $709-million and the Street’s projection of $700-million. Comparable sales grew by 6.6 per cent year-over-year, well ahead of both the analyst’s 1.4-per-cent expectation of 1.4 per cent and consensus of 1.5 per cent. With gross margin also improving at a faster rate than anticipated, adjusted earnings per share landed at 71 cents, up 53 per cent from the same period a year ago and higher than both Mr. Landry’s forecast of 60 cents and the Street’s 62-cent expectation.
Aritzia’s profit soars 72% as retailer reports record holiday sales
The company also introduced fourth-quarter guidance that was deemed “strong” by the analyst, calling for revenue growth of 28-31 per cent year-over-year, adjusting for an extra week, driven by impresssive comparable sales growth in the high teens. He thinks that should translate into revenues of $830-850-million, higher than Mr. Landry’s previous forecast of $786-million and the Street’s estimate of $776-million.
“The magnitude of the Q4FY25 revenue boost should be enough to consolidate the recent gains and send the shares higher [Friday],” he said. “Aritzia has had a strong performance during the Black Friday period and this momentum continued unabated into December. Success appears broad based with good traction for new styles, good inventory availability, increased brand awareness with the new company’s flagships stores and strong performance online. Hence, we expect to see upward revision to consensus estimates reflecting Aritzia’s momentum. Management also reiterated its confidence in attaining the FY27 long-term financial targets calling for revenues of $3.6-3.8 billion and EBITDA margins of 19 per cent.”
Mr. Landry raised his fiscal 2026 and 2027 revenue and earnings projections, leading him to increase his target for Aritzia shares by $4 to $70 while reiterating a “buy” recommendation. The average target on the Street is $69.93, according to LSEG data.
“In October 2022, at the company’s investor day, management established a four-year plan which called for revenues to reach $3.5 to $3.9 billion by FY27 and for EBITDA margin to stand at 19 per cent,” he said. “Given the missteps which occurred in FY24, investors became septic on the company’s ability to hit the targets discussed at the investor day. However, with the recent sales performance and margin recovery, these targets now appear more realistic and attainable. As we get more visibility on these targets, earnings estimates and valuation should increase.”
Elsewhere, other analysts making target adjustments include:
* Raymond James’ Michael Glen to $65 from $58 with a “market perform” rating.
“Heading into the F3Q results, Aritzia stock traded had traded well, and we believe investors were expecting a beat-and- raise scenario,” he said. “And while we had some concerns surrounding the ‘raise’ part of this equation, such concerns were put to rest in a substantial way with the company providing a very strong sales outlook for F4Q. We expect the focal point for investors today will be the $830-850 million revenue guidance for F4Q, with management referencing that they exited F3Q with comp growth in the high teens as trends accelerated through each month in F3Q, meaningfully in November, with further acceleration in F4Q. The items underlying the performance have been a positive response to fall and winter product, optimized inventory position, favourable weather, investments in marketing spend that drove e-commerce traffic, as well as strength in the U.S. retail channel from new store / reposition contributions. From that perspective, while we had viewed the F3Q guidance as a low hurdle, we would regard the F4Q revenue guidance as a much more aggressive hurdle and one that is more in-line with the rate of growth we would expect to see from the company given new store openings and square footage growth. Moving forward out of the F4Q report, we would expect investors to pay extremely close attention to alternative data reports (including those provided from Bloomberg). We will definitely acknowledge that our decision to downgrade was premature in hindsight, as we expect the stock will respond quite favourably to the F3Q update. That said, beyond what we see from the shares on Friday, our messaging for investors is to remain opportunistic in looking for an entry point in the stock.”
* Canaccord Genuity’s Luke Hannan to $70 from $62 with a “buy” rating.
“In our view, given its healthy track record of comparable sales growth, robust pipeline of new selling square footage coming online, and healthy balance sheet to support growth and margin enhancement initiatives, we believe Aritzia is deserving of a premium valuation,” he said.