If you have never heard of Aritzia, it’s one of the fastest-growing fashion apparel brands growing globally. Like Lululemon, it was born out of Canada and has mapped an aggressive growth plan in the United States. With 48 stores in the United States, they project to have over 100 retail stores state-side by 2030.

Artizia has taken a long time to grow its brand. Founded in 1984, the company has gained a cult-like following over the past five years. The brand has been a favorite worn by celebrities like Meghan Markle, Taylor Swift, Ariana Grande, Malia Obama, etc.

Why I like Aritiza over the next seven years:

• Each store is individualized, with a boutique-like feel.
• High-touch personal customer service and shopping experience. To the bags and even how associates fold clothes. Some stores serve coffee and alcohol.
• Explosive growth through social media. Support for Aritizia is cult-like. A Reddit subgroup, r/Aritzia, has over 35k members.
• The brand is fresh and new for many in the United States. The growth so far has mainly been organic via worth of mouth and on social media.

I see no specific competitive edge or moat for Aritiza, but I don’t consider it high-risk. The company is highly profitable and executes better than most of its competitors. The company is in an envious position for long-term profitability and scalability, which doesn’t devalue operational efficiency over future growth. Many newer companies focus on top-line growth: revenue, and sales while letting expenses balloon. This growth-at-all-costs strategy has worked for companies but requires revenue to grow exponentially, making it highly risky. With Aritzia, I don’t see that.

Based on my non-professional opinion, this may be a good window of opportunity to start accumulating shares. The stock trades at an attractive level, to where it was before the pandemic rebound in 2021 and the re-opening in 2022. The weak hands have left the stock, and investors willing to be patient and not looking to speculate will be rewarded. Revenue growth numbers can return and potentially exceed levels from last year.

Gen Z will open their purses on discretionary categories as long as they care about it, even if they do not have the money. If maxed-out “Swifties” are spending thousands on merchandise and nose-bleed seats, that proves spending on non-essentials is not dead. Discretionary companies like Aritiza will get crushed in a recession or worsening economy. However, the growth story is mainly intact; nothing has changed in the past few months.

Retail is still alive, but it is becoming more fragmented and digital. The winners of this space will have to provide a more curated in-store experience and utilize social media to thrive. Aritiza is an early adapter in the changing retail landscape and will continue to win over a younger audience. They have a runway for 5-7 years; if they can continue to execute, I see them growing steadily. As we have seen with the rise of Lululemon, having a dedicated niche following can easily grow to a much larger audience quickly.

I have talked about the term”curated shopping experience.” Let me put more color to that. Gen X and Boomers didn’t need a customized shopping experience because the circle of people they interacted with was much smaller. With the rise of social media and technology, the average person’s friend group is much larger. Gen Z needs to have a more revolving and unique wardrobe. Previously, going to Bloomingdale’s or Macy’s was acceptable, but these companies have seen their brands degrade. Women today have way more options, and Aritzia fills a space where consumers demand a more personable experience.

Most importantly, we have seen a steady rise in women’s earnings. Given that America is a nation of spenders and not savers, women will not spend more on discounted or cheap clothing but on the everyday luxury/luxury category. Aritizia’s target audience will continue to buy more quality apparel, and their spending in this category will increase.

My thesis is relatively simple. The more women earn and spend their time on social media, the better a company like Aritzia does financially. It’s a perfect compliment to my investment in Revolve Group. If either of these two companies can see expanding growth in their men’s segment or products outside of apparel, it can become a real home-run investment.