Meghan Markle Puts the Sparkle Back in Aritzia Inc. (TSX:ATZ) Stock

Aritzia Inc. (TSX:ATZ) clocked in a strong quarter thanks in part to Meghan Markle. Here’s why investors should get greedy with the stock right now!

| More on:

Aritzia Inc. (TSX:ATZ) stock popped over 10% following the release of its impressive Q1 fiscal 2019 results following seasonal weakness.

The late-2016 IPO dud has since begun to pick up a considerable amount of upward momentum since bottoming out at the $10 levels. So, has the company turned a corner? Is it finally time to place a bet in the woman’s fashion brand that’s now under the international spotlight thanks to the Duchess of Sussex, Meghan Markle?

Q1/F19 results were pretty “royal”

For the first quarter, Artizia clocked in an adjusted EPS of $0.13, thereby beating analyst expectations of $0.11. The company experienced 10.9% in same-store sales growth (SSSG), crushing expectations on the Street and beating the 9.3% in SSSG during the same period last year thanks in part to Meghan Markle’s Aritzia wardrobe.

Moreover, recent discounting activities have drawn huge crowds within its brick-and-mortar stores, while Artizia’s e-commerce platform has been generating a significant amount of traction recently thanks to the promising line of spring and summer wear that has found a spot with consumers.

Aritzia’s brand is really sparkling now

Meghan Markle was spotted dawning Aritzia products on several occasions, which was likely a huge reason why Aritzia stock crushed expectations for what was supposed to be a quarter of seasonal weakness. I don’t think Markle’s positive impact on the Aritzia brand will stop at a single quarter, however.

I believe Markle has put the Aritzia brand on the global map ahead of the company’s ambitious U.S. expansion plan and that the stock could pick up a tremendous amount of traction, especially if Markle continues to treat Aritzia as one of her go-to clothiers.

That’s brand attention that money can’t buy!

I suspect that Markel’s affinity for the Canadian brand will inspire a ton of new prospective customers at the international level as she continues to dawn new Aritzia items as a part of her wardrobe.

“Excellent Q1 same-store sales growth highlights just how well consumers (including the newest member of the royal family) are responding to Aritzia’s products,” said Mark Petrie, an analyst at CIBC World Markets. “…the strong growth in the U.S. — in-store and online — proves out a highly differentiated and on-trend concept with a growing following.”

Foolish takeaway

I’ve been quite bearish on Aritzia leading up to and following its IPO, but given the sparkle that Markle has given the latest quarter (and the brand), I think the stock could soar much higher from here as the company ventures into new geographic frontiers with its newly elevated level of brand prestige.

For Q1, gross margins rose 77 basis points year over year, which is remarkable and may be the start of a significant upward trend, especially if Markle continues to be spotted in the public sporting anything made by Aritzia.

Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned.

More on Investing

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

hand stacks coins
Investing

A Top TSX Stock to Buy Now for Real Wealth Later

Intact Financial (TSX:IFC) stock is a fantastic dividend-growth play for the next 15 years and beyond.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, November 14

The U.S. wholesale inflation data and Fed chair Jerome Powell’s remarks about the economy will remain on TSX investors’ radar…

Read more »

Man data analyze
Tech Stocks

3 Reasons Celestica Stock Is a Screaming Buy Now

These three reasons make Celestica stock a screaming buy for long-term investors.

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »