Aritzia (TSX:ATZ) Stock is rising Friday morning after very strong results strong quarterly results. Year to date, shares are up 9.5% after the company reported earnings that significantly beat analyst expectations.
A huge quarter for Aritzia
For the second quarter, net sales increased 31.9% to $812 million. Comparable turnover (organic growth) increased by 21.6%. Much of the strength was due to rising sales in the United States, which now account for almost 60% of sales. However, strategies to invest in digital advertising have also paid off with strong e-commerce net sales growth of 26.5%.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose a whopping 122.5% to $122 million, while adjusted EBITDA margins rose from 9% to 15%. Adjusted net earnings per share also rose 181% to $0.59.
Overall, it was an exceptional quarter with great results and strong execution. It is clear that Aritzia is gaining ground in the new US markets and new flagship stores are quickly paying off.
Is this stock still a buy after a 100% increase?
Amazingly, the stock is now up 100% since hitting a low in April on tariff concerns. Consumers have proven to be more resilient than the market expected and Aritzia appears to have done well with its summer and autumn clothing collections.
Certainly, Aritzia shares are no longer cheap as they were in April. However, with $350 million in cash before lease obligations, it has the dry powder to continue aggressive investments to expand its U.S. footprint.
Aritzia is targeting 20% revenue growth by 2025. If the company can continue to perform and exceed expectations, there could certainly be more upside potential for the stock. The clothing retailer still has growth opportunities in the US and hasn’t even started internationally yet. These retail stocks could have a long runway in the coming years.
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