3Q EPS of 47c beat estimates of 41c. Sales of $653.5M beat estimates by 5%. EBITDA of $91.7M beat estimates by 12%. Revenue growth was around 5%, (retail growth was 6%, e-commerce was 5%), which was not high, but this was on top of 38% last year, so the 3-year CAGR was still around 33%. The inventory level is getting under control now, decreasing 21.9% compared to last year. Guidance was decent, growth next quarter is expected to be around 5%-8%, a reacceleration here. A share buyback is in place, but they did not do it on a big scale. Overall, a good quarter, which seems like the worst is behind ATZ. Shares may experience a decent recovery over the next few quarters if growth reaccelerates into double-digit from here as the market may rerate the company. Margin guidance was tempered a bit, however, due to 'inflation pressures, normalized markdowns, warehousing costs and pre-opening lease amortization'. Investors should breathe a sigh of relief on the resumption of sales growth, but may stay a bit cautious on the margin guidance. Going forward, Aritzia's comparable sales may gain in fiscal 4Q, which along with two new store openings and digital ad spending (vs. none in 4Q22), could help the apparel retailer beat consensus and achieve top-line growth near the high end of its guidance (including an extra week). Outerwear sales, led by its Super Puff franchise and wool coats, were up year over year. The stock is always tough to call, but we would consider it a better-than-expected quarter overall.
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