Today, Aritzia (TSE: ATZ) (OTC: ATZAF) reported its Fiscal Q2-2023 financial results, and both revenue and earnings beat analysts’ estimates by a wide margin.
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Aritzia’s revenue reached C$525.5 million compared to the consensus estimate of about C$453.9 million, representing a 50.1% growth rate. Also, its earnings per share (EPS) were C$0.44, up almost 13% year-over-year, while analysts were expecting a figure of C$0.34. Diluted EPS came in slightly lower, at C$0.40.
Net income rose a bit more than EPS, registering a 16.1% gain, and adjusted EBITDA reached C$82.6 million, growing by 13.3%. Interestingly, the company’s U.S. expansion is going quite well, as its U.S. revenue grew almost 80% year-over-year. In addition, Jennifer Wong, Aritzia’s CEO, stated, “Our strong performance has continued through the start of the third quarter, with robust client demand across all product categories.”
However, while ATZ’s results came in better than expected, the company saw lower profit margins compared to last year, evidenced by its net income and EBITDA not growing nearly as fast as its revenue. Also, its gross margin fell from 44.6% to 41.9%.
Nonetheless, net income growth of over 16% is still respectable. Also, while Aritzia’s cash position fell from C$131.8 million last year to C$65.4 million at the end of Q2, its inventory levels rose by 150%, meaning that it may not have to spend as much cash on inventory in the near future.
Is Aritzia Stock a Buy, According to Analysts?
Turning to Wall Street, Aritzia earns a Strong Buy consensus rating based on three Buys, one Hold, and zero Sells assigned in the past three months. The average Aritzia price target of C$58.24 implies 19.8% upside potential.
Conclusion: Aritzia’s Fiscal Q2-2023 Results Were Solid
Aritzia posted solid Fiscal Q2-2023 results that beat expectations. While profit margins dropped year-over-year, the company is still creating shareholder value through rising EPS figures. It’s also reassuring for investors that the momentum is continuing into Q3.
