After market close today, Aritzia (TSE:ATZ) (OTC:ATZAF) reported its Fiscal Q4 and Fiscal 2023 financial results for the year ended February 26, 2023. Both revenue and earnings beat analysts’ estimates.
Aritzia’s revenue reached C$637.6 million compared to the consensus estimate of about C$588.5 million, growing by 43.5% year-over-year. Also, its adjusted earnings per share (EPS) were C$0.40 compared to C$0.34 last year, while analysts were expecting a figure of C$0.35. unadjusted diluted EPS came in lower, at C$0.32.
Additionally, adjusted EBITDA reached C$79.4 million, growing by 19.7%, and the company’s U.S. expansion is still robust, with U.S. revenue growing by 55.7% year-over-year.
Nonetheless, while ATZ beat expectations, the company saw lower profit margins compared to last year, evidenced by earnings growing at a much slower rate than revenue. As well, Aritzia’s gross profit margin fell from 40.4% to 38%.
Aritzia’s Financial Outlook
For Q1, Aritzia projects net revenue between C$450 million and C$460 million, marking a 10% to 13% sales increase year-over-year.
For Fiscal 2024, here’s what Aritzia anticipates:
- Net revenue of $2.42 billion to $2.5 billion, a 10% to 14% year-over-year increase
- A 200 basis point (bps) drop in its gross profit margin
- A 150 bps rise in SG&A as a percentage of net revenue, mainly due to distribution center expenses and increased investments in talent and retail wages.
- Capital cash expenditures (excluding lease incentives) of around $220 million.
By Fiscal 2025, the company expects a return to 16% adjusted EBITDA as a percentage of net revenue, driven by margin improvements, cost efficiencies, and reduced transitory cost pressures.
Is Aritzia Stock a Buy, According to Analysts?
According to analysts, Aritzia earns a Moderate Buy consensus rating based on one Buy, one Hold, and zero Sells assigned in the past three months. The average Aritzia stock price target of C$62.45 implies 44.9% upside potential.
