Where Will Aritzia Stock Be in 3 Years?

Aritzia (TSX:ATZ) stock may have come down from all-time highs, but a new CEO and renewed U.S. focus makes it a solid three-year hold.

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When it comes to growth stocks making headlines, Aritzia (TSX:ATZ) stock makes that list again and again. The company surged in share price only to fall back dramatically. While still down from those heights, Aritzia stock is now up 67% since bottoming out in November.

So, where is Aritzia stock headed next — and not just now but over the next three years as the market recovers?

A bit about Aritzia

Part of the reason that investors like Aritzia stock in the first place is that the company has such a strong brand as well as solid loyalty among customers. The company offers high-quality, design-driven clothing, but on a large scale. And that loyalty should continue in the future.

Plus, Aritzia stock offers an expanding business model. This comes from even more interest in e-commerce and investments in omnichannel strategies. This should help increase profitability through new customer growth.

Furthermore, analysts believe the stock is a strong buy at these levels. The average price target continues to rise based on these previous factors, sure. But also from current and future performance. So, as inflation and interest rates come down, it looks as though there could be a strong future for the stock.

Into earnings

During Aritzia stock’s most recent earnings report, the company saw net revenue rise 4.6% to US$653.35 million in the third quarter. While this was continued growth, it was a bit slower than the high double-digit increases we’d seen in the past.

Plus, net income was down 39.1% to US$43.1 million for the quarter, compared to US$70.1 million the year before. Sales also slowed down by 0.5% compared to a whopping 22.8% increase at the same time last year. Even so, the company still offers a three-year compound annual growth rate (CAGR) of 32.9%. So, that’s worth considering.

Plus, Aritzia stock continues to expand in the United States, where net revenue increased 9.5% to US$857.4 million during the quarter. So, don’t count out the stock yet.

Future outlook

Aritiza stock has come out several times about its future growth outlook. This would include opening eight to 10 new boutiques per year and expanding to five already existing boutiques annually as well. This would create low double-digit square footage growth. What’s more, it’s eyeing a larger market share in the U.S. market. And that clearly is already working.

With more online and offline shopping experiences, the company is seeking out a seamless journey for customers to make purchases. With all that in mind, the company is predicting net revenue between US$3.5 and US$.38 billion by fiscal 2027. That would be 15-17% CAGR! What’s more, profitability should take up 19% of net revenue by then as well.

It seems that new chief executive officer Jennifer Wong is already making good then on her strategic plan. With a focus on everyday luxury, mid-priced fashion, omnichannel growth, and U.S. expansion, the company looks well-positioned to continue climbing. Overall, Aritzia stock doesn’t just look like a good deal for short-term growth. It looks like a solid rebound company as the market recovers, and it could even be a long-term earner.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aritzia. The Motley Fool has a disclosure policy.

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