Aritzia Posts Better-Than-Expected Q2; Shares Pop

Aritzia (ATZ) reported better-than-expected results in its second quarter. The fashion retailer sales topped pre-pandemic sales thanks to strong U.S. e-commerce growth.

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Net revenue for Q2 2022 came in at C$350.1 million, an increase of 74.9% from Q2 2021, and 45.1% from Q2 2020. Comparable store sales increased 60% year-over-year, and 14% from pre-pandemic levels in 2019.

Retail revenue came in at C$219.6 million, 95.3% higher than a year ago and 13.8% from two years earlier. E-commerce revenue grew 48.7% in the quarter ended August 29 to C$130.4 million. This is up 171.1% from Q2 2020.

Meanwhile, adjusted net income amounted to C$0.39 per diluted share, compared to C$0.01 per diluted share in Q2 2021, and C$0.18 per diluted share in Q2 2020.

Analysts expected Aritzia to earn C$0.21 per share in adjusted earnings on C$296.2 million in revenue, according to financial data firm Refinitiv.

Aritzia CEO Brian Hill said, “The strength of our business across all geographies and all channels continues through the start of the third quarter. Looking ahead, expansion in the United States will be a leading driver of our growth.”

Aritzia has raised its fiscal outlook for the full year to a range of C$1.25 billion and C$1.3 billion, compared to a previous outlook of C$1.15 billion to C$1.2 billion. (See Analysts’ Top Stocks on TipRanks)

Following the results, Baird analyst Mark Altschwager reiterated a Buy rating on ATZ, while raising its price target to C$48 (from C$44). This implies 1.7% upside potential.

Altschwager noted that Aritzia reported a significant beat and said the company is firing on all cylinders as it shows healthy growth across the board. He increased his estimates by 15%, with room for improvement,

The rest of the Street is bullish on ATZ with a Strong Buy consensus rating, based on five Buys and one Hold. The average Aritzia price target of C$48.58 implies 3% upside potential.