Canadian retailer Aritzia is continuing its strong momentum across North America, with Stifel Nicolaus Canada Inc. raising its target price for the company to $96.00 per share. The investment bank’s latest research note, authored by Martin Landry, Managing Director and equity research analyst, highlights better-than-expected earnings trends and solid market share gains as reasons for the higher valuation.
The new forecast comes as Aritzia prepares to report its second quarter fiscal 2026 earnings on October 9. Analysts now expect adjusted earnings per share for the quarter to come in at $0.41, nearly double the $0.21 reported in the same quarter last year. That represents a 96 percent year-over-year increase, slightly ahead of consensus estimates of $0.39.
Aritzia has exceeded analyst expectations in each of the last eight quarters, and Landry believes this streak is poised to continue. Credit card data show robust sales growth in both Canada and the United States, and the company’s ongoing store expansion is contributing to higher square footage.
Canadian Momentum Supports Upgraded Forecast
Within the Canadian market, Aritzia continues to post healthy comparable sales. Stifel increased its Canadian comparable sales forecast by 300 basis points to a 10 percent year-over-year gain. The revised estimate follows strong first-quarter results, when the retailer posted 17 percent growth in Canada.
“Given the Canadian economy is performing better than expected and Aritzia’s significant growth in Q1, we are comfortable with our revised 10 percent revenue growth forecast,” Landry noted in the report. He added that Aritzia’s investments in digital marketing are expected to continue supporting growth throughout the remainder of the year.
U.S. Growth Drives Revenue Expansion
The United States has become an increasingly important driver for Aritzia, and Stifel projects comparable sales growth of 15 percent year-over-year for the quarter. That translates into total revenue growth of 37 percent in local currency, only a slight moderation from the 40 percent growth reported in the previous quarter.
Data from analytics firm Second Measure, which tracks credit and debit card spending, indicates U.S. sales rose at a pace closer to 40 percent during the period, suggesting the possibility of upside to Stifel’s forecast. “We are comfortable with our U.S. revenue assumption and see potential for a small upside,” said Landry.
Aritzia’s expansion south of the border has been one of the most closely watched growth stories in Canadian retail. With stores in major American cities and a growing digital footprint, the company is carving out a larger share of the premium women’s fashion market.
De Minimis Exemption Removal Creates New Headwinds
While the outlook remains strong, Aritzia faces new challenges stemming from changes to U.S. trade policy. Effective August 29, 2025, the U.S. government removed the De Minimis exemption, which previously allowed goods valued under $800 to enter duty-free.
Aritzia had used the exemption to fulfill some U.S. e-commerce orders from its Canadian distribution centres. The change is expected to impact gross margins by roughly 100 basis points, or approximately $0.10 in annual earnings per share, if no mitigation measures are adopted.
The company had already accounted for the exemption’s removal for goods from China but had not anticipated its removal globally. Stifel expects Aritzia to update its annual guidance to reflect the change when it reports its second-quarter results.
Key Metrics for the Second Quarter
Stifel’s preview of Aritzia’s second-quarter fiscal 2026 results anticipates net revenue of $774.3 million, representing a 25.8 percent increase over the prior year. Gross profit is projected at $323.7 million, a 30.8 percent rise, with gross margin expanding 160 basis points to 41.8 percent.
E-commerce revenue is forecast to increase 14.9 percent to $218.4 million, while retail store revenue is expected to climb 30.6 percent to $556.0 million. Adjusted EBITDA is projected at $90.7 million, up 64.3 percent year-over-year, with an 11.7 percent margin. Adjusted net income is forecast at $48.9 million, nearly double the $24.5 million reported in the same period last year.
These results would mark another period of outperformance, solidifying Aritzia’s reputation as one of Canada’s fastest-growing apparel retailers.
Stifel Raises FY26 and FY27 Estimates
In addition to its quarterly outlook, Stifel modestly increased its full-year fiscal 2026 revenue estimate to $3.28 billion from $3.26 billion. Adjusted earnings per share were also lifted to $2.58 from $2.52.
Looking ahead to fiscal 2027, Stifel projects revenue of $3.69 billion and adjusted earnings per share of $3.50. The brokerage sees adjusted EBITDA reaching $687.3 million, with a margin of 18.6 percent.
These projections align with Aritzia’s longer-term targets. At its 2022 investor day, management outlined a goal of reaching $3.5 to $3.9 billion in revenue and a 19 percent EBITDA margin by fiscal 2027. After setbacks in fiscal 2024, those targets now appear within reach.
Strategic Initiatives to Drive Growth
Aritzia’s growth is being supported by a series of strategic initiatives designed to improve both top-line and margin performance. The retailer continues to invest in digital marketing, helping to attract new customers and build loyalty with its existing base.
The company has also launched a “Smart Spending Initiative” aimed at reducing costs. Stifel expects this program, alongside improvements in initial markups, to contribute to margin expansion in the years ahead.
In the second half of fiscal 2026, Aritzia plans to introduce a dedicated mobile app, which should enhance customer engagement and support e-commerce growth.
The brand is also maintaining its cultural relevance through campaigns featuring well-known figures. Its Fall 2025 campaign, for example, spotlights American fashion designer and businesswoman Jenna Lyons in a series of advertisements for cashmere sweaters.
Financial Strength Supports Expansion
Another factor supporting Aritzia’s growth outlook is its balance sheet. The company currently has no bank debt and a growing cash position, giving it flexibility to pursue strategic investments.
With its market capitalization now exceeding $10 billion, Aritzia’s shares are becoming increasingly attractive to a broader base of institutional and international investors. Liquidity and scale are expected to aid in further expanding its shareholder base.
Investor Focus and Risks Ahead
Stifel notes that investors are likely to focus on three key areas when Aritzia reports its results: the strength of sales momentum heading into the fall season, management’s updated guidance in light of the De Minimis exemption removal, and progress toward margin expansion and the 2027 EBITDA targets.
Despite optimism, several risks remain. Aritzia could face challenges if the United States introduces tariffs on Canadian imports, which would raise selling prices and potentially reduce demand. The brand also risks losing momentum if consumer tastes shift, while inflationary pressures and higher interest rates could constrain discretionary spending. In addition, with a large portion of its costs in U.S. dollars, Aritzia remains exposed to currency fluctuations.
Valuation and Target Price Methodology
Stifel’s increased target price of $96.00, up from $82.00, is based on higher valuation multiples. The firm derived its target by averaging three methods: applying a 27.5 times multiple on fiscal 2027 earnings per share, a 17.5 times multiple on fiscal 2027 EBITDA, and a discounted cash flow analysis.
The firm points out that Aritzia shares currently trade at 25 times forward earnings, leaving room for multiple expansion. Historically, the company has traded above 30 times forward earnings, even during periods of slower growth.
Aritzia’s Growth Runway Remains Intact
Overall, Stifel’s analysis underscores that Aritzia remains on a strong growth trajectory. The company is gaining market share in both Canada and the United States, supported by a loyal customer base, successful product lines, and investments in marketing and digital infrastructure.
“Momentum appears to be continuing into this fall, supporting a higher valuation than historically,” wrote Landry.
With initiatives underway to improve margins, expand digitally, and strengthen brand engagement, Aritzia appears well positioned for sustained growth in the years ahead.
