Aritzia (TSX:ATZ) has proven to be a powerful force in the retail sector and continues to showcase its ability to expand and grow sales.
A look at the company’s first quarter of fiscal 2020 shows its commitment to that trend, and a strong indicator of why the Canadian stock climbed 7% during the final trading day of the week.
Strong year over year sales
Aritzia gained an exceptional amount of ground year over year, taking its income from operations from $16,731 to $28,758 increasing 71.9%. The end result was a net income increase of 31.5% from $12,290 to $16,156.
Other year over year key points
- Gross profits increased 26.7% from $67,543 to $85,561.
- EBITDA increase of 24.8% from $28.4 million in Q1 2019 to $35.4 million in Q1 2020.
- EPS rose 30.8% compared to the company’s first quarter last year.
Store network expansion
Aritzia has managed to add to its brick and mortar network adding 7 new stores over fiscal 2019.
The company has grown its brand awareness between both consumers and landlords alike. This provides some fuel for expanding its boutique network, with a particular interest in spreading in the United States. They continued their expansion in Q1 2020 adding one new location in Manhattan.
Taking E-commerce bull by the horns
Any retail outfit should know well the benefits of a focus on e-commerce and online marketing.
Aritzia already has a strong sales model within their establishments, that some blast for being too competitive. But at the end of the day and possibly a few hurt feelings, it does work. Employees are well compensated for their efforts to help the business, and customers are happy being specially catered to.
The company is showing the same attention to strategy with their work in e-commerce to capture a larger market share, drive more sales, and also create a higher quality experience for their customers.
A focus on digital marketing will help the company in engaging with existing clients, acquiring new clients, and spreading the brand awareness as far as it can.
The company speaks volumes about its commitment to expansion and improvement of its online approach through:
- Search engine optimization enhancements.
- Refining email marketing.
- Further leveraging social media.
Sweetening The Deal for Loyal Clients
The company speaks to its work with creating a first-class shopping experience and loyalty program for its clientele.
We have recently entered into an expanded strategic partnership with SAP to develop a comprehensive client program, which we believe will be transformative for our business.” – excerpt from Aritzia’s “Managements Discussion and Analysis” in its most recent filing
These efforts harmonize with improvements to Aritzia’s international website and the ability to ship world wide, giving the company an opportunity to continue to grow and access more markets.
Aritzia has been a model of retail growth and I’m sure we haven’t seen a plateau with this fashion-forward organization. If you’re looking for another strong Canadian retailer, look no further than Dollarama, who also posted excellent second quarter results.