Proactive Investors - Aritzia Inc (TSX:TSX:ATZ) is expected to hand down a “decent” first quarter fiscal 2025 earnings report but will not update its full-year guidance, analysts at UBS believe.
The Canadian fashion retailer will report its Q1 earnings on July 11 after the market close.
The bank’s analysts believe Aritzia’s fundamentals “modestly improved” in Q1 but noted that Street estimates mostly reflect this recovery, and therefore anticipate an in-line Q1 operating result.
Industry data shows Aritzia’s US sales accelerated sequentially in Q1, plus sales had a better exit rate.
Additionally, its promotional activity in Canada declined and central prices were up year-over-year. The data suggests US promotions increased during this period but central prices were still higher, the analysts wrote.
“Importantly, we anticipate conservatism will likely cause Aritzia to maintain its fiscal 2025 operating guidance and this likely keeps consensus' C$1.77 fiscal 2025 earnings per share (EPS) estimate near current levels,” they wrote.
“We believe the market has a similar view around the event and thus don't anticipate sentiment around Aritzia to change much due to its 1Q report.”
They wrote that sentiment towards Aritzia is currently balanced, which is an improvement from a few quarters ago.
“We expect sentiment to gradually get better as the market gains conviction Aritzia's comparitable sales and margins recovery is materializing,” they wrote.
“We believe the 'bar' for the event is Aritzia reaffirms its fiscal 2025 operating guidance and provides a Q2 2025 outlook supportive of the Street's $0.20 EPS forecast.”
The analysts have a ‘Buy’ rating on the stock and a $53 price target, representing upside of about 35% from Aritzia’s current share price.
“Looking over the NTM, we expect ATZ to outperform and thus continue to rate it ‘Buy,’” they wrote.