Aritzia (TSX: ATZ) stock is surging Friday morning after delivering very strong quarterly results. So far, its stock is up 9.5% after the company reported earnings that significantly beat analysts’ expectations.
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A huge quarter for Aritzia
For the second quarter, net revenues rose 31.9% to $812 million. Comparable sales (organic growth) increased 21.6%. Much of the strength was driven by rising sales in the United States, which now makes up close to 60% of its revenues. However, strategies to invest in digital advertising have also paid off in strong 26.5% e-commerce net revenue growth.
Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased a whopping 122.5% to $122 million, with adjusted EBITDA margins rising from 9% to 15%. Adjusted net income per share was also up 181% to $0.59.
Overall, it was an exceptional quarter of great results and strong execution. Clearly, Aritzia is gaining traction in the new U.S. markets and new flagship stores are quickly paying off.
Is this stock still a buy after soaring 100%?
It is amazing that the stock is now up 100% since it hit lows in April over tariff worries. Consumers have proven more resilient than the market anticipated and Aritzia appears to have nailed summer and fall apparel lineups.
Certainly, Aritzia stock is no longer cheap like it was in April. However, with $350 million of cash before lease liabilities, it has the dry powder to continue aggressive investments to expand its U.S. footprint.
Aritzia is guiding for 20% revenue growth in 2025. If it can continue to execute and beat expectations, there could certainly be more upside for the stock. The apparel retailer still has legs for growth in the U.S. and it hasn’t even started internationally. This retail stock still could have a long runway for years ahead.
