Aritzia's Digital Momentum: Can Strong Web Traffic Growth Sustain the Outperform Narrative?

Aritzia, the Canadian-based casual luxury retailer, has emerged as a compelling investment story in 2025, fueled by surging web traffic and strategic expansion into the U.S. market. Recent analyses from BMO Capital Markets highlight a narrative of resilience and growth, though not without challenges. Let’s dissect the data to determine whether Aritzia’s digital and financial momentum can justify its current valuation and analyst optimism.

Key Trends in Web Traffic Growth

BMO’s December 2024 report revealed a 32% year-over-year jump in web traffic, marking a pivotal shift for Aritzia. This surge was driven primarily by the U.S. market, where traffic skyrocketed by 78%—a testament to successful marketing campaigns and the opening of three flagship stores in late 2024. By March 2025, traffic growth moderated slightly to 13% year-over-year, with the U.S. still leading at 28%, while Canada stagnated.

The deceleration in March was attributed to seasonal factors, but analysts emphasize that the brand’s Spring product launches and Summer Sale promotions have maintained engagement. BMO noted a strong correlation between these initiatives and paid search traffic increases in both markets, underscoring the effectiveness of digital marketing investments.

Regional Breakdown: U.S. Dominance Over Canada

Aritzia’s U.S. strategy has been its crown jewel. The region’s 24% surge in sales during Q2 2025 (to $616 million in total revenue) reflects the impact of store openings and e-commerce growth. Meanwhile, Canada’s 6% sales growth pales in comparison, though it marked the first positive quarter in six months.

The U.S. market’s 40% web traffic growth in select periods, as highlighted by BMO analyst Stephen Macleod, suggests untapped potential. This is critical because the U.S. now accounts for nearly half of Aritzia’s revenue, up from 30% in 2020.

Financial Performance and Revenue Guidance

Aritzia’s Q2 2025 results were a win for bulls. Net revenue rose 15% year-over-year, with the U.S. contributing significantly. The company raised its full-year revenue guidance to $2.54–2.6 billion, a 6–7% increase over 2024. For Q3, management aims for $675–700 million, relying on back-to-school and holiday sales.

The 10.36% year-over-year revenue growth over the past 12 months aligns with web traffic trends, reinforcing the link between digital engagement and sales.

Risks and Valuation Concerns

Despite the optimism, risks linger. BMO lowered its price target to C$74 (from C$80) due to sector-wide tariff risks and multiple compression in retail stocks. Meanwhile, Aritzia’s P/E ratio of 63.5x raises valuation concerns, as it trades at a premium to peers like Lululemon (P/E 28x) and Urban Outfitters (P/E 17x).

Analysts also caution that U.S. competition is intensifying, with fast-fashion brands and digital-native retailers vying for market share. Aritzia’s reliance on e-commerce—accounting for over 40% of sales—also exposes it to cybersecurity and logistics risks.

Analyst Sentiment and Conclusion

BMO’s Outperform rating and Stephen Macleod’s Buy rating (C$52 target) reflect confidence in Aritzia’s "Everyday Luxury" positioning, which blends affordability with style. Other analysts, like Desjardins and Jefferies, share this optimism, citing U.S. real estate expansion and margin improvement as tailwinds.

The data paints a compelling picture: Aritzia’s 40% U.S. traffic growth, 24% sales surge in the region, and $2.6 billion revenue target suggest sustainable momentum. However, investors must weigh this against its elevated valuation and macroeconomic headwinds.

In conclusion, Aritzia’s Q1 2025 trajectory—bolstered by digital innovation, U.S. expansion, and strong brand equity—supports BMO’s bullish stance. While risks like tariffs and competition loom, the company’s ability to execute its growth strategy in a high-margin sector positions it as a long-term winner. For investors, the question remains: Can the stock sustain its 103% one-year return despite its frothy valuation? The answer may hinge on whether Aritzia can continue converting web traffic into profit.