Aritzia (TSX: ATZ) stock has been quite a wild ride over the past two-and-a-half years. The stock enjoyed a massive parabolic melt-up in 2021, only to peak and come crashing down to Earth in the years that followed. Undoubtedly, the Canadian women’s clothing retail play has not been for the faint of heart, with shares shedding around 64% of their value from its early 2022 peak to its eventual late 2023 trough.
With the “bull trap” rally that got dip-buyers excited in the back half of 2022, questions linger as to whether the recent spike in shares of ATZ is the start of a sustained move back to its prior highs or if more contrarian hearts stand to be broken as continued macro headwinds continue to weigh across the retail scene at large.
Source: Getty Images
Aritzia stock: It’s in comeback mode, but there are headwinds hitting the industry
It’s been quite the dreadful past few months for retail, with fellow Vancouer-based clothing company Lululemon (NASDAQ: LULU) taking a plunge following its latest round of quarterly earnings results. Undoubtedly, discretionary income may not be in a great spot right now. However, after Aritzia’s robust quarter to kick off 2024, I think that it’s more the athleisure trend that’s fading rather than a broad weakening of clothing retailers. Indeed, Aritzia may have what it takes to keep on delivering upward surprises as Bay Street analysts look to hike their recommendations after the fact.
So, what do Aritizia investors really have to look forward to over the next year or two? And why is the mid-cap growth stock ($3.9 billion market cap at the time of writing) a potentially great fit for Millennial Tax-Free Savings Account portfolios?
Aritzia’s U.S. expansion could be big, perhaps a lot bigger than many of us may think. Undoubtedly, the company is proceeding with cautious optimism in this uncertain market environment. Looking ahead, the firm plans to add tens of boutiques across more of the more promising markets in the United States. Think of places like Manhattan and Chicago as the company looks to benefit from greater demand for “everyday luxury.”
Could the U.S. market be a source of huge positive surprises?
Personally, I’m not sure if U.S. customers will view the Canadian brand as a high-end luxury. However, I think that the incredibly impressive brick-and-mortar stores will gain attention, especially in the more affluent areas in which it intends to open new stores.
Indeed, the firm’s ongoing U.S. expansion plans have generated some investor enthusiasm, helping ATZ stock get a bit of a jolt in recent quarters. However, I think the best has yet to come, especially if American customers flock to newly opened boutiques. There’s no denying that Aritzia’s fashions are intriguing. But only time will tell if the U.S. can be that major growth driver that helps give a lift to Aritzia stock again.
Personally, I think it can. But I’d look for management to play things by ear regarding any acceleration in its expansion plans beyond 2027. If the U.S. stores end up a profound success, I think Artizia could really put its foot on the gas as it looks to become more of a household name among American consumers.
The bottom line on Aritzia stock
Despite macro headwinds, new stores have fared quite well. As we head into the back half of 2024, I think Aritzia stock could continue to surprise investors as it looks to nudge top-line growth toward (or even above) the high teens.
