Some buyers need fast wins. Others need a inventory they’ll maintain eternally. Personally, I lean arduous towards the second camp. And if there’s one Canadian inventory I’m extra assured in than ever, it’s Aritzia (TSX:ATZ).
Sure, the style retailer — the one your youngsters store at. However that is no passing development; it’s a well-oiled machine with a strategic plan, rising worldwide presence, and the type of earnings that make long-term buyers grin. Let’s break it down.
Into earnings
Aritzia simply posted a blockbuster quarter. Within the first quarter (Q1) of 2026, web income surged 33% yr over yr to $663 million. However that’s only the start. Its U.S. phase, now over 62% of whole gross sales, grew a jaw-dropping 45%, pushed by a potent combine of latest retailer openings and hovering on-line demand. Comparable gross sales grew 19%, and development wasn’t remoted to 1 channel or area. Retail was up 34%, e-commerce rose 30%, and Canada nonetheless pulled its weight with 17% income development.
Gross revenue jumped 42.5% to $312.8 million, and margins expanded by 320 foundation factors to 47.2%. That’s no small feat in a cost-conscious shopper setting. CEO Jennifer Wong summed it up nicely: “The energy of the Aritzia model has by no means been larger, and but we nonetheless have a protracted runway for development in america.”
Much more compelling is that Aritzia is increasing whereas getting leaner. Promoting, common, and administrative (SG&A) bills dropped as a share of income, falling from 35.4% to 33.5%. In the meantime, adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) climbed 76.9% to $95.3 million, and adjusted web revenue almost doubled. Actually, adjusted earnings per share (EPS) got here in at $0.42, up 91% from $0.22 a yr in the past.
Extra to come back
This isn’t a fluke. Aritzia’s strategic plan has been years within the making. The Canadian inventory is targeted on increasing into the U.S., with 11 new boutiques and two re-positionings deliberate in that market this yr alone. And it’s not nearly shops. Aritzia is investing in a brand new distribution centre in British Columbia and doubling down on digital advertising and e-commerce capabilities.
Its stability sheet additionally appears sharp. Aritzia ended Q1 with almost $293 million in money and equivalents, up almost 200% from a yr in the past, and posted $24 million in free money circulation. It additionally repurchased shares throughout the quarter beneath its buyback program. For long-term buyers, that indicators confidence from administration and a concentrate on shareholder worth.
In fact, no firm is invincible. Aritzia does face dangers. Tariffs within the U.S. might inflate prices, foreign money swings can affect margins, and a softening economic system would possibly gradual spending on discretionary items like luxurious style. However to date, Aritzia has confirmed nimble. It’s managed by way of shifting FX charges, optimized stock, and maintained pricing energy at the same time as others within the house low cost closely.
Trying forward
And the longer term appears shiny. Administration is forecasting income between $3.10 and $3.25 billion for fiscal 2026, representing 13% to 19% development. That’s on prime of the 33% leap we simply noticed. Gross margin can also be anticipated to enhance, and EBITDA margins are on monitor to develop by as much as 170 foundation factors.
What makes this Canadian inventory a eternally decide for me isn’t simply the numbers. It’s the model. Aritzia isn’t chasing fads. It’s targeted on “On a regular basis Luxurious,” with curated labels and high quality development that resonate deeply with its core prospects. It’s one of many few Canadian manufacturers that has discovered a loyal following within the U.S., a notoriously arduous market to crack. And it’s doing so with out compromising its type or pricing integrity.
In a market the place many retailers are struggling to remain related, Aritzia is constructing one thing sturdy. The boutiques are stunning, the web site is easy, and the product combine feels timeless fairly than fashionable. The proof is within the outcomes, and the outcomes are spectacular.
Backside line
So, sure, Aritzia doesn’t pay a dividend. However that’s nice by me. I’d fairly it reinvest its money in long-term development, one thing it’s clearly doing with precision. Because it continues to scale, develop margins, and deepen its U.S. presence, I see years of compounding forward.
