Aritzia (TSX:ATZ) proved that luxury fashion can thrive even when economists predict doom. Valued at a market cap of $12.4 billion, the Vancouver-based retailer crushed Q3 expectations with $1 billion in revenue – its first-ever billion-dollar quarter.
The company delivered 43% year-over-year growth, expanded margins, and reported a 55% increase in adjusted earnings per share. CEO Jennifer Wong’s assessment after 39 years with the company? “I’ve never been more excited about the business as I am right now.”
The mobile app launch that changed everything
Aritzia’s mobile app launch in late October shattered expectations. The app became the #1 download in the entire app store on launch day in both markets, staying #1 in shopping for 18 days in Canada. Total downloads hit 1.4 million – exceeding what management expected for the entire first year.
E-commerce revenue jumped 58% in the quarter, with the app driving conversion improvements almost immediately. Apps account for 20% to 40% of e-commerce sales of best-in-class retailers, and Wong believes Aritzia is tracking toward the upper end of that range.
U.S. expansion prints money
Aritzia’s U.S. real estate strategy is delivering exceptional returns.
- The company grew U.S. square footage by roughly 30% over the past year, opening 15 new and repositioned boutiques.
- Revenue in the U.S. market exploded 54% to $621 million, driven by e-commerce traffic growth approaching 60%.
- New U.S. boutiques are tracking to payback in under one year – faster than the company’s 12- to 18-month target.
- With just 72 boutiques currently operating, Wong sees long-term potential for 180 to 200 U.S. locations.
- Management plans to open 12 to 14 stores annually while maintaining disciplined expansion.
Canadian revenue rose 29% to $419 million, the fourth consecutive quarter of accelerating growth. This proves Aritzia isn’t cannibalizing its home market to fuel U.S. expansion.
The company is executing a true omnichannel strategy in which new boutiques, digital initiatives, and marketing investments reinforce one another. Aritzia expanded gross margins by 30 basis points while absorbing 410 basis points of tariff and de minimis pressure.
The retailer offset this through leverage on fixed costs, improved markdowns, and freight tailwinds. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margins expanded 120 basis points to 20%, the seventh consecutive quarter of improvement.
Excluding tariff impacts, Aritzia’s margins would exceed its previous 19% long-term target.
Executing against tough comparisons
Aritzia’s Q3 came against brutal comps.
- Two-year stacked comparable sales accelerated throughout the quarter despite lapping exceptional November 2024 growth.
- Black Friday set records, with nearly 60% of boutiques achieving all-time sales highs, and retail and e-commerce hitting daily peaks in both countries.
- The company achieved this with lower markdowns than last year, suggesting genuine demand rather than promotion-driven sales.
Is ATZ stock still undervalued?
Management raised full-year revenue guidance to $3.615 billion to $3.64 billion, indicating year-over-year growth of over 32%. The company now expects to hit its fiscal 2027 target one year early.
Q4 guidance calls for $1.1 billion to $1.125 billion in revenue, implying high-teens comparable sales despite lapping a 26% comp from last year. Trends are running slightly ahead quarter-to-date.
Aritzia has delivered 123% returns over three years by executing a disciplined playbook. It is systematically building U.S. brand awareness, opening high-productivity stores in premium locations, and creating digital experiences that customers want.
With the mobile app just launching, a vast U.S. expansion runway, and management executing at the highest level in nearly four decades, Aritzia appears well-positioned to continue outpacing the TSX.
The risk is maintaining this growth as comparisons toughen. But after watching this team lap 26% comps and still accelerate, betting against them seems foolish.
Given consensus price targets, ATZ stock still trades at a 41% discount as of February 2026.
