‘Fluid’ tariff scenario may weigh on Aritzia’s Q2 earnings, analysts warn

Aritzia (ATZ.TO) is expected to post strong second quarter earnings, but analysts warn new U.S. tariff rules could pressure margins and temper its growth outlook. The Canadian apparel retailer is scheduled to report quarterly financial results on October 9.

Martin Landry, managing director at Stifel, estimates the removal of the U.S. de minimis exemption, which had allowed goods under US$800 to enter duty-free, could cut about 100 basis points or 10 cents a share from annual gross margins if mitigation measures aren’t implemented. The change, effective Aug. 29, affects Aritzia’s practice of fulfilling a portion of U.S. online orders from Canada.

In a note, Landry says the company had planned for the policy’s removal from China but not across all countries, and he expects guidance will be updated when second quarter results are released.

Stephen MacLeod, an analyst at BMO Capital Markets, says the tariff backdrop remains fluid, representing a 50 to 75 basis point headwind. He argues that Aritzia’s growing U.S. footprint and brand appeal leave it well-positioned to weather the challenge.

Even with the new headwinds, Landry raised his estimate for second-quarter earnings to 41 cents per share, up 96 per cent from a year ago and slightly ahead of the 39-cent consensus. He notes that the retailer has beaten consensus for eight quarters straight and believes the trend could continue in its next quarter.

Credit card data suggest strong sales momentum in both Canada and the U.S., along with an impactful increase in square footage. “Aritzia’s products are resonating with its loyal customer base, which could translate into a Q2FY26 comparable sales growth of 12.5 per cent year over year, suggesting healthy market share gains,” Landry added.

MacLeod, in a note, adds that web traffic climbed 18 per cent in August, with U.S. growth accelerating 42 per cent while Canada dipped modestly. The momentum reflected customer engagement with a fall launch, back-to-school and the tail end of summer sale.

Landry sees a strong runway for the company in the U.S. and internationally, thanks to investment in digital marketing support, cost-reduction initiatives, multi-year potential to increase initial markups and the launch of a mobile app in the second half of the 2026 fiscal year.

Still, retail analyst Bruce Winder cautions that the U.S. consumer environment is tough right now, with job losses piling up. Even affluent customers may start to watch their spending, he says, though a push for more office returns could offset some of that pressure by boosting demand for workwear.

Winder warns that Aritzia faces the challenge of sustaining momentum. He points to Lululemon as a cautionary tale, noting the brand hit a wall when designs went stale. There’s a lot of pressure on Aritzia to keep designs fresh, he says.

“The stock market is incredibly frothy right now,” he added, noting that when stocks are high, it’s sometimes less about fundamentals and more about the emotional perception of brands. The downside of an emotion pile-on, he adds, is that it can result in wild swings.

Landry increased his valuation by $14 to $96 per share, while MacLeod hiked his target to $100. Last Thursday, Aritzia shares hit a new 52-week high of $89.