Aritzia Raises 2027 Outlook After Revenue Jumps 44 Percent

Canadian fashion retailer Aritzia Inc. raised its fiscal 2027 revenue forecast on Thursday, October 8, after reporting a 44.1 percent increase in second-quarter revenue to $1.17 billion. The Vancouver-based company attributed the performance to strong demand across its product lines, expanding US operations, and accelerating digital sales, with net income more than tripling from a year earlier.

According to the company's fiscal 2027 second-quarter results, net income for the period reached $201.7 million, up 204.2 percent year over year, while diluted earnings per share climbed to $1.70 from $0.56. Adjusted net income increased 122.1 percent to $156 million, and adjusted earnings per diluted share rose to $1.31 from $0.59.

Aritzia's adjusted EBITDA nearly doubled to $246.2 million, an increase of 99.7 percent. Its adjusted EBITDA margin expanded by 590 basis points to a quarterly record of 21 percent, according to the company's earnings release.

Chief Executive Officer Jennifer Wong attributed the results to demand for seasonal collections and investments in the company's retail locations, digital operations, and marketing.

"We sustained exceptional momentum in the second quarter, delivering 44% net revenue growth and a 35% increase in comparable sales, as broad-based strength across geographies, channels and product categories continued to demonstrate the wide appeal of our brand," said Jennifer Wong, Chief Executive Officer.

The company's US business remained its largest growth engine, generating $779.4 million in revenue, up 60.3 percent year over year and representing 66.6 percent of total sales. Canadian revenue rose 19.8 percent to $390.4 million, accounting for the remaining 33.4 percent.

Retail revenue increased 34.1 percent to $766.9 million, while digital revenue surged 67.7 percent to $402.9 million. Comparable sales grew 34.5 percent, indicating that the company's growth extended beyond new store openings.

Aritzia also benefited from approximately $97.4 million in refunds associated with US tariffs imposed under the International Emergency Economic Powers Act. The refunds helped lift its reported gross margin to 57.1 percent, an increase of 1,330 basis points from the prior year.

Excluding the tariff refunds, adjusted gross margin rose 490 basis points to 48.7 percent, according to figures cited in analyst commentary published by The Globe and Mail. Canaccord Genuity analyst Luke Hannan said the improvement exceeded management's expectations and reflected the benefits of stronger sales.

"Gross margin expanded by ~13 percentage points YoY to 57.1%, aided by the receipt of $97 million of IEEPA tariff refunds. Excluding this, adjusted gross margin expanded by 490 bps YoY to 48.7%, well above management’s guidance of +250-300 bps, which we suspect was attributable to incremental fixed-cost leverage due to higher sales," said Luke Hannan, Canaccord Genuity analyst.

The company plans to continue expanding its physical presence in the United States, with six additional boutiques planned across Florida, Georgia, Massachusetts, Nevada, and Texas. Aritzia has opened 14 boutiques over the past 12 months, while some new locations are substantially larger than its traditional stores.

In addition to its physical expansion, the company has benefited from a mobile app launched nearly a year ago. Management identified the app and its broad merchandise appeal as contributors to digital growth, alongside investments in marketing and inventory management.

Based on its second-quarter performance and continued demand, Aritzia now expects fiscal 2027 revenue of $4.78 billion to $4.88 billion, representing annual growth of approximately 29 percent to 32 percent. The company also projected third-quarter revenue of $1.275 billion to $1.325 billion, according to analyst commentary published by The Globe and Mail.

Analysts responded to the results with revised financial estimates and share-price targets. Canaccord Genuity raised its target to C$194 from C$189 and maintained a buy rating, while Raymond James retained an outperform rating with a C$175 target. Ventum Capital Markets raised its target to C$160 from C$146 while maintaining a neutral rating.

TD Cowen maintained a buy rating but reduced its price target to C$175 from C$200, citing concerns about rising bond yields and their potential effect on consumer spending. Analysts also noted that Aritzia's growth comparisons could become more challenging as the company approaches the anniversary of its mobile app launch.

Wong said the company intends to outline its longer-term growth strategy at its investor day scheduled for October 27, 2026, as the retailer continues to expand its reach across North America.