The recent record-breaking TSX rally has pushed the shares of Aritzia (TSX:ATZ) up by a solid 57% over the last four weeks. With this, ATZ stock now trades at $66.25 per share with a market cap of $7.6 billion.
While easing inflation and rate cut hopes have driven much of the market’s rise, Aritzia’s surge is being driven by more than just macro momentum, as its financial growth trends and fundamental outlook continue to show strength despite the volatile economic environment.
In this article, I’ll talk about the key factors behind ATZ stock’s sudden surge and discuss whether there’s more upside to come.
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What’s fueling Aritzia stock’s rally?
So, what’s really behind Aritzia’s recent jump in share price, apart from the general excitement in the markets? For starters, the company crushed expectations in its latest earnings report for the fourth quarter of its fiscal year 2025 (three months ended in February).
During the quarter, the company’s sales surged over 31% YoY (year over year), and even more impressively, comparable sales jumped 26% from a year ago. That’s not something you see a lot in retail, especially in an uncertain economic environment. Interestingly, most of this growth came from its U.S. operations, where sales soared 48.5% YoY. Clearly, Aritzia’s expansion efforts south of the border are paying off well.
It wasn’t just the top line that impressed investors either, as Aritzia’s profit margins got a nice boost last quarter due mainly to a mix of fewer markdowns, lower warehousing costs, and some sharp spending discipline. All of this led to a 122% YoY spike in its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) and an increase of more than 300% in net profit.
A solid year of growth
And that strong quarter wrapped up a year of impressive gains. Aritzia’s full-year fiscal 2025 revenue rose 17.4% YoY, and adjusted net profit more than doubled. But even more impressive was the strength in both its retail and e-commerce segments. Notably, during the year, the company expanded its boutique footprint, with 12 new locations opened and several repositioned in high-traffic areas like Manhattan and Chicago. Meanwhile, its online sales grew over 21% YoY and now make up more than a third of total sales.
It’s also worth noting the company’s gross margin expanded from 38.5% to over 43% in fiscal 2025.
Why ATZ stock still looks like a strong buy
When ATZ stock has already jumped nearly 95% in the past year, you’d think the best days might be behind it. But with Aritzia stock, there are good reasons to believe the runway is far from over.
The company is still in the early years of its U.S. expansion, which now makes up the majority of its sales. And with a healthy balance sheet and plans to open at least 12 more boutiques this year, we can expect more growth. These factors, coupled with its investment in a new distribution centre and enhanced digital tools, could help Aritzia stock see more upside in the coming years.
