CA - Aritzia: Why Fashion Risk Doesn't Worry Me

2024-01-31 18:03:48 ET

Summary

• Aritzia has experienced a series of negative events in 2023, leading to poor financial quarters in FY'24.
• Despite a decline in stock price, recent momentum recovery suggests there is potential for upside in Aritzia.
• Aritzia is a high-quality business with multiple levers for results to inflect upwards above the market's estimates.

2023 was a perfect storm of negative events for Aritzia Inc. ( ATZ:CA ) ( OTCPK:ATZAF ): downward guidance, choppy store traffic, inventory buildup, discounting, product cost inflation, and temporary warehousing costs have led to terrible quarters in FY’24:

While all of these issues have contributed to the negative outlook, we argue that each one of these issues is manageable and will either reverse or be offset by other growth factors over FY’24-FY’25.

Overview of a High-Quality Business

Founded in 1984, Aritzia is a premium women’s apparel fashion house with multiple in-house brands which range from athletic wear to “everyday luxury” or more sophisticated and elevated styles....

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