Street Calls of the Week
Aritzia Inc. (TSX:ATZ) unveiled its Q2 2026 investor presentation on October 9, 2025, showcasing exceptional financial performance and outlining ambitious growth plans focused on U.S. expansion and digital acceleration. The Canadian fashion retailer reported substantial year-over-year growth across all key metrics, with net income soaring 263% compared to the same period last year.
Q2 2026 Financial Highlights
Aritzia delivered impressive results for the second quarter of fiscal 2026, building on the momentum seen in Q1. Net revenue reached $812.1 million, representing a 31.9% year-over-year increase, while gross profit jumped 43.7% to $355.6 million. The gross profit margin expanded significantly to 43.8%, an improvement of 360 basis points compared to the same period last year.
The company demonstrated strong operational efficiency with SG&A expenses as a percentage of net revenue decreasing by 160 basis points to 30.8%. This contributed to a remarkable 263.4% increase in net income, which reached $66.3 million, translating to $0.56 per diluted share (up 250.0% year-over-year).
As shown in the following detailed financial performance table, Aritzia’s adjusted EBITDA more than doubled to $122.7 million, representing a 122.5% increase, while free cash flow surged by an impressive 1198.2% to $62.6 million:
These results continue the strong performance trend seen in Q1 2026, when the company reported a 33% year-over-year revenue increase to $663 million. The consistent growth across quarters underscores the effectiveness of Aritzia’s strategic initiatives and expanding market presence.
Strategic Growth Initiatives
Aritzia’s presentation emphasized three key growth drivers: geographic expansion, digital growth, and increased brand awareness. The company’s strategic positioning as an "Everyday Luxury" brand between the Sub-Luxury and Mid-Market segments has resonated with consumers, as illustrated in their market positioning diagram:
Geographic Expansion
The company is aggressively expanding its physical presence, particularly in the United States. Aritzia plans to open 13 new boutiques in fiscal 2026, with all but one located in the U.S. market. Looking ahead, management outlined plans to open a minimum of 10 new U.S. boutiques annually through FY2027, while repositioning 3-5 existing locations each year.
The following map highlights Aritzia’s current footprint of 134 boutiques (68 in Canada and 66 in the United States), with significant room for growth in the U.S. market:
The company’s boutique strategy is supported by compelling store economics, with new locations generating approximately $1,000 in sales per square foot and an expected payback period of just 12-18 months on the initial investment.
Digital Growth
Aritzia’s eCommerce business has shown remarkable growth, increasing from $226 million in FY2020 to $951 million in FY2025, representing a 33% CAGR. The company’s online penetration reached 34.7% of total sales in FY2025, highlighting the success of its omni-channel approach.
The following chart illustrates Aritzia’s strong eCommerce trajectory over the past six fiscal years:
To further enhance its digital presence, Aritzia is investing in its eCommerce 2.0 strategy, which focuses on tailored product discovery, creative innovation, and intuitive customer experiences. The company is also developing a mobile app and implementing enhanced digital features to drive continued online growth.
Updated Fiscal 2026 Outlook
Based on the strong performance in the first half of the fiscal year, Aritzia has updated its financial outlook for FY2026. For the upcoming third quarter, the company projects net revenue between $875 million and $900 million, representing approximately 20% to 24% year-over-year growth.
For the full fiscal year 2026, Aritzia now expects:
The updated full-year revenue guidance of $3.30-3.35 billion represents a slight increase from the $3.1-3.25 billion projection provided after Q1 results, reflecting management’s growing confidence in the company’s performance. The projected 21-22% year-over-year growth rate demonstrates Aritzia’s continued momentum in both the U.S. and Canadian markets.
Long-term Vision and Capital Allocation
Aritzia’s presentation outlined ambitious long-term targets through fiscal 2027, including more than doubling U.S. and eCommerce net revenue from FY2022 levels. The company expects to achieve total net revenue of $3.5-3.8 billion by FY2027, representing a 15-17% CAGR from FY2022, with adjusted EBITDA margins reaching the high teens.
The following chart illustrates Aritzia’s historical financial performance and growth trajectory:
To support these growth objectives, Aritzia plans to invest approximately $750 million in cumulative capital expenditures between FY2024 and FY2027, focusing on distribution centers and retail square footage expansion. The company’s strong balance sheet, with $352.3 million in cash and cash equivalents and no debt drawn on its revolving credit facilities, provides ample financial flexibility to fund these initiatives.
Aritzia’s capital allocation priorities are clearly illustrated in the following chart:
Despite the strong quarterly results and positive outlook, Aritzia’s stock closed at $81.81 on October 9, 2025, down 2.77% for the day. However, the share price remains near its 52-week high of $90.12, reflecting investors’ overall confidence in the company’s growth strategy and market positioning.
As Aritzia continues its expansion across North America and enhances its digital capabilities, the company appears well-positioned to capitalize on its "Everyday Luxury" brand positioning and deliver on its ambitious growth targets through FY2027.
Full presentation:
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