Aritzia (TSX:ATZ) is a Vancouver-based company that designs and sells apparel and accessories for women in the United States and Canada. Shares of this Canadian clothing retailer have plunged 27% month-over-month as of close on Wednesday, July 26. That has pushed the stock down 44% so far in 2023. What is behind Aritzia’s sharp dip? Should investors look to buy the retreat? Let’s jump in.
This company released its fourth quarter (Q4) and full-year fiscal 2023 earnings back on May 2. Aritzia posted some promising strategic accomplishments for the year, but markets responded poorly to its results. Despite some of the positives, investors responded poorly to its declining outlook. That reaction worsened after the release of its Q1 fiscal 2024 earnings on July 11.
In Q1, net revenue increased 13% to $462 million. However, net income plunged 47% to $17.5 million and net income per diluted share came in at $0.15, which was nearly halved from the $0.29 it posted in Q1 FY2023. Moreover, adjusted EBITDA plummeted 54% to $31.6 million. Chief executive officer (CEO) Jennifer Wong pointed to a challenging consumer environment. Whatever the case, Aritzia will need to right the ship on the earnings front soon to revitalize investor confidence.
Shares of Aritzia currently possess a favourable price-to-earnings ratio of 17. The company still possesses a fantastic balance sheet, and it remains on track for strong earnings growth with sales in the United States and Canada on the rise. I’m looking to buy the dip and bet on Aritzia’s rebound in the quarters ahead.
