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  5. ATZ: Interested in Aritzia, can you provide a good thesis as to why this investment is worthy of a buy or hold? [Aritzia Inc. Subordinate Voting Shares]
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Investment Q&A

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Q: Interested in Aritzia, can you provide a good thesis as to why this investment is worthy of a buy or hold? Capital IQ estimates revenue growth for 2024 to be only 4.6%, how come this is so low? Is the increase SG&A expenses a result of the recent inventory surplus and do you think it will resolve itself within the next couple of months? Lastly, how many shares were issued after initial IPO offering compared to now and with low ownership from management, why do you like the company?

-Thanks
Asked by Don on January 09, 2024
5i Research Answer:

ATZ's growth has slowed, and inventory has been one of the main issues. But it has also specifically tempered store openings as well. We do expect inventory to decline and would consider it the biggest concern. The bigger question is what sort of discounts might be needed to clear inventory. Discounts are never good: they hurt profits and the brand. But, we do think management knows what they are doing, and the past year is 'probably' a hiccup in its growth story (time will tell of course). Historically it has shown very good growth, and investor sentiment is so low right now any good news could move the stock with more impact. It has multi-voting shares so insiders control the company and have a very substantial stake through the multi-voting shares which are often not reported on financial sites. The share count has gone from 108M at IPO to 90M today.