Aritzia Inc. (TSX:ATZ) is a Canadian retailer with an obvious bearish thesis right now given the significant impact of COVID-related government mandated store closures have had on the company's top and bottom line. That said, some are now seeing value with the company’s stock price amid some signs things may not be as bad as initially thought.
Sandwiched between earnings results that were expectedly terrible, was news that the fashion retailer posted an online revenue increase of 150% since store closures were put in place.
This implies demand for Aritzia's brands remain strong, and investment in the company's online platform have begun to pay off. This pandemic has shone a spotlight on how well bricks and mortar retailers have been able to integrate e-commerce into their business models, and appears Aritzia gets a passing grade.
Aritzia fundamentals do look good when compared to its peers, furthering the value thesis for owning this stock. That said, questions around the sustainability and stability of Aritzia's cash flows in a post-Covid world remain unanswered.
Fashion retail in general is notorious for earnings volatility as seasonal preferences change and shift as quick as the company's target consumer. For now, Aritzia remains on my watch list as a potential value play should the company stock price drop further.
Invest wisely, my friends.
