Aritzia Demand Remains Strong Ahead of Earnings, TD Cowen Says

Consumer demand for Aritzia's apparel remains robust despite investor concerns about the impact of higher interest rates on spending, according to a research note from TD Cowen. The brokerage maintained its Buy rating and C$200 price target on the Canadian fashion retailer, citing continued strength in both its retail stores and e-commerce channels.

Upbeat Quarterly Forecasts

Ahead of Aritzia's second-quarter results expected on Oct. 8, TD Cowen projects significant year-over-year growth that trends toward the upper end of management's guidance. The firm's channel checks indicated no deterioration in demand.

Key Q2 fiscal 2027 forecasts from TD Cowen include:

• Net Revenue: C$1.125 billion, a 39% increase from C$812 million a year earlier.
• Same-Store Sales Growth: 30.4%, ahead of the 28.8% consensus estimate.
• Adjusted Earnings Per Share: C$1.05, up from C$0.59 in the prior-year period and slightly above the C$1.03 consensus.

U.S. Growth and Margin Expansion

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The report highlights the U.S. market as a key growth driver, with observed sales data showing an approximate 58% year-over-year revenue increase for the 13 weeks ended Aug. 30. TD Cowen suggested Aritzia's more affluent customer base and its focus on premium workwear and everyday apparel may provide greater demand resilience compared to its peers.

Analysts also expect margin improvement in the second quarter. Gross margin is forecast to expand by 285 basis points to 46.6%, while selling, general and administrative (SG&A) expenses are projected to improve by about 50 basis points, reflecting benefits from operating leverage and cost-saving measures.

Market Jitters vs. Long-Term Outlook

Despite the positive operational outlook, Aritzia's shares have declined about 20% since its first-quarter report, a move TD Cowen attributes to broader market anxiety over interest rates, consumer affordability, and an eventual slowdown from the company's rapid growth.

However, the brokerage's long-term view remains positive. It sees Aritzia as positioned for 15%-20% annual earnings-per-share growth, supported by U.S. expansion, digital initiatives, and strong free cash flow generation, which is forecast to exceed C$1.1 billion through fiscal 2028.