Aritzia, an everyday luxury brand in the fashion industry. Founded in Vancouver, Canada and has expanded to over 100 stores across North America and a global eCommerce platform. Aritzia was a founder-lead company until 2022, when Jennifer Wong, who started as a salesperson, was handed the keys to the company.
In 2019, Jennifer Wong made a statement that targeting influencers is a part of the company’s future. There is no doubt that Aritzia has a strong online presence, with thousands of influencers advertising their outfits from Aritzia on various social media platforms giving advice to customers on how to keep up with the latest trends.
With its current share price, the company has an attractive entry point. According to Simply Wall St, Aritzia is estimated to be 39% undervalued based on the current share price (St, 2023). The goals of this project are to investigate customer sentiments of the brand and if Aritzia is a worthy investment.
Data Collection
I collected Aritzia data from two sources:
- Youtube: “i tried on the LARGEST size at Aritzia… (inside the fitting room!)” by Carrie Dayton.
- Yahoo Finance: This source contains the historical data for Aritzia (ATZ.TO), Lululemon (LULU), Abercromie & Fitch (ANF), and Vanguard S&P 500 Index ETF (VFV.TO ).
Data Description
For the Youtube Data, the comments from the video were used for sentimental analysis.
The variables used from the historical data of Aritzia, Lululemon, Abercromie & Fitch, and Vanguard included:
- Ticker Symbol
- Date (YYYY-MM-DD)
- Open (USD)
- High (USD)
- Close (USD)
- Adj Close (USD)
- Volume (Physical number of shares traded of that stock for given period)
Tools Used:
The tools that were used to analyze the collected data:
- Jupyter Notebook: To create visualizations
- Tableau: Visualization software used to create visuals
- Excel: Used to do some basic merging
In this data story, we will explore the currently available data to answer the following questions:
- What controversies surround Aritzia, according to the customer experience?
- Since Aritizia has gone public, how has their stock price fluctuated?
- Is Aritzia’s stock price affected by the Vanguard stock price?
- How does Aritzia’s stock compete with other brands with similar messaging such as Lululemon and Abercromie and Fitch for 2023–2024.
- What are the daily stock returns for Aritzia based on percentages?
Analysis Question 1: What controversies surround Aritzia according to the customer experience?
Understanding customer sentiment is vital for product and service enhancement, optimizing customer experiences, monitoring brand health, and garnering predictive insights for sales and retention. The above becomes particularly significant in the context of Aritzia, a brand that has sparked controversy due to its unique policy of not having mirrors in changing rooms — a strategy aimed at engaging sales associates to enhance the selling process. Moreover, Aritzia has faced criticism for its lack of size inclusivity, which only saw an expansion in its range as recently as the spring/summer of 2020, according to Elle Canada (2020). By analyzing the sentiments expressed in the comments section of the YouTube video, ‘I tried on the LARGEST size at Aritzia… (inside the fitting room!)’, we can interpret public opinion on these matters. Our generated plot, which aligns to specific emotions with related keywords, serves as a visual representation of customer attitudes and can guide strategic decisions to address the concerns highlighted by the community.
Let’s analyze each topic based on the provided key words:
- Topic 1: Happy — Positive sentiments, with words such as “amazing”, “cute”, and “good”.
- Topic 2: Sad — Negative sentiments, possibly related to the communal space or fittings rooms with words such as “communal”, “room”, “fitting”, and “mirrors”. Another observation is that there seems to be customer dissatisfaction with the quality that Aritzia offers.
- Topic 3: Angry—Frustrations are expressed with words such as “size”, “rooms”, and “mirrors”. “People” are also mentioned which could be relating to customer service dissatisfaction.
- Topic 4: Surprised — Unexpected outcomes from words such as “sales”, “size”, and “store”.
- Topic 5: Fearful — Concerns over “black” and “white” could be reflection on the styles being offered in Aritzia. Additionally, “prices” were mentioned as a customer fear.
- Topic 6: Disgusted — Negative sentiments mentioned are “sales”, “clothes”, and “quality”. This suggests that customers may be experiencing dissatisfaction with products or sales experience.
- Topic 7: Neutral — Comments that were neither positive nor negative sentiments with words such as “feel” and “sales”.
- Topic 8: Excited — Positive sentiments with words such as “loved” and “shopping”.
- Topic 9: Grateful — Words that expressed gratitude were “communal” and “shopping”.
- Topic 10: Hopeful — Optimistic sentiments with words such as “mirrors”, “fitting”, and “room”. Shows a hopeful outlook on the brand, with hopes that they will notice change with the mirrors and fitting rooms.
Recommendation: From this sentiment analysis, it is recommended that Aritzia prioritizes creating a more comfortable fitting room experience. Introducing individual mirrors in the fitting rooms could mitigate the discomfort associated with the communal mirrors and enhance customer satisfaction.
Analysis Question 2: Since Aritzia has gone public, how has their stock price fluctuated and what was their volume?
To assess the fluctuations in Aritzia’s stock price, we will examine the overall average adjusted closing price, moving average, and average volume.
The overall average adjusted closing price, accounting for corporate actions, offers an accurate depiction of the stock’s value over time. This analysis will allow us to gauge the long-term performance of Aritzia’s stock since its initial public offering. From our observations, there was a consistent uptrend from 2017 to 2022, indicating bullish behavior. However, a notable decline was observed in 2023, followed by a stabilization in 2024. Despite this recent volatility, the trend line’s overall positive slope suggests that the stock’s adjusted closing price has experienced a net increase since Aritzia went public.
Observing the moving average trend we can look at the general trend, crossovers, price and moving average interaction, and volatility. The general trend shows that there is an overall uptrend, as the moving average generally slope upwards. There are periods where the price dips below the MAs, suggesting short-term pullbacks. Looking at the crossovers, we can see that the 10-day MA crosses above the 50 day MA the market looks bullish in 2024. Additionally, the adjusted close price was below the 50-day MA in 2023 but it has risen in 2024 which could indicate the market may be bullish. The MA for 10 days follows the adjusted close price more closely and has more volatility, while the 50-day MA is smoother and less volatile.
From the overall average volume of Aritzia, we can see that although the average adjusted closing price had dropped, the volume has gone up exponentially from 2021 to 2024. Factors that could contribute to higher trading volumes could be a result of speculative trading with the anticipation of short-term price movements or significant news or events related to Aritzia such as new business model developments.
Conclusion:
While there has been some recent volatility, the positive slope trend over the long term suggests that Aritzia’s stock value may have potential growth.
Analysis Question 3: Is Aritzia’s stock price affected by the Vanguard stock price?
According to the correlation matrix, there is a high negative correlation between Aritzia (ATZ) and Vanguard S&P 500 Index ETF (VFV) metrics that suggests an inverse relationship between stocks or perhaps the two react differently to market conditions. The metrics of Aritzia shows a negative correlation with the volume of VFV which suggests when VFV experiences more trading volume, ATZ’s prices tend to decrease or vice versa.
Conclusions:
Although, correlation matrixes can be useful, it is important to note that correlation does not imply causation and these relationships can change over time. The associations observed are merely indications of how these metrics have moved in tandem over a specific period and should be interpreted cautiously. Market dynamics are complex and fluid, with correlations evolving over time due to multiple factors. Therefore, while correlation matrices can guide us towards patterns in data, they should not be relied upon as predictors of future movements or relationships
Analysis Question 4: How does Aritzia’s stock compete with other similar brands such as Lululemon and Abercrombie and Fitch in 2023.
Aritzia, Lululemon, and Abercrombie & Fitch offer styles that cater to fashion-conscious consumers with their own unique brand positioning. Lululemon has shown a strong growth trajectory similar to Aritzia, while Abercrombie & Fitch have been reinventing its image that closely aligns with Aritzia.
The plot that visualizes the average adjusted closing prices for 2023 shows that LULU’s stock has the highest average adjust closing price and the highest share price. It also shows an overall uptrend with a significant increase near the end of the year. AZT.TO and ANF have lower share prices and relatively similar average adjusted closing prices with ANF being slightly higher than AZT.TO throughout the year. The plot visualizes the average volume that measures the number of shares traded in a stock during the given period. LULU shows significant volatility in trading volumes, with large spikes and drops. ANF’s volume is relatively stable while AZT.TO’s volume is the most stable and lowest out of the three.
According to the volatility of stocks plot, ANF and ATZ.TO have a similar moderate level of volatility (~50%) in the context of stock returns. Whereas, LULU has a lower level of volatility (~30%) in the context of stock returns. This could suggest that LULU presents a lower risk profile. In comparison, ANF and ATZ.TO come with an increased risk.
Conclusion:
Although ATZ.TO and ANF offer a lower entry point because of lower share prices, they are a risker investment. From the analysis, LULU would be the safest investment. However, Lululemon is a much bigger company, valued at US$48.8 billion by market cap, Aritzia is valued at a market cap of $2.67 billion (Yahoo Is Part of the Yahoo Family of Brands, n.d.-a), and Abercrombie & Fitch’s market cap is 6.01 billion USD dollars (Yahoo Is Part of the Yahoo Family of Brands, n.d.-c). Since Aritzia and Abercombie & Fitch have a lower market cap, it could suggest there is a higher potential for growth in comparison to Lululemon. However, it should be considered among other external factors such as industry position, growth prospects, and financial growth. As market cap alone does not guarantee potential growth.
Analysis Question 5: What are the daily stock returns for Aritzia based on percentages?
From the daily percentile stock returns for Aritzia, we can see the bulk of the data points are centered around zero. This suggest that stock had minimal movement with minimal gains or losses. The period with the most outliers were on days in 2020 to 2021 and 2023 to 2024.
Conclusion:
Since the majority of the daily percentile stock return points are centered around zero, it implies that Aritzia has a stable stock performance. With episodes of higher volatility in 2020–2021 and 2023–2024. This could be due to specific events or market conditions.
In summary, Aritzia has strong presence as a fashion brand that has made its impact globally. Its projected growth offers insights that they may be a worthy investment in the future.
Aritzia reports fourth quarter and fiscal 2023 financial results. (n.d.). Aritzia. https://investors.aritzia.com/investor-news/press-release-details/2023/Aritzia-Reports-Fourth-Quarter-and-Fiscal-2023-Financial-Results/default.aspx
Aritzia will finally offer extended sizing | Elle Canada. (n.d.). Elle Canada. https://www.ellecanada.com/fashion/shopping/aritzia-extended-sizing-2020#:~:text=Come%20spring%2Fsummer%202020%2C%20Aritzia,18%20on%20a%20trial%20basis.
East Rutherford NJ USA August 16 Stock Photo 2197361555 | Shutterstock. (n.d.). Shutterstock. https://www.shutterstock.com/image-photo/east-rutherford-nj-usa-august-16-2197361555
St, S. W. (2023, December 23). Are investors undervaluing Aritzia Inc. (TSE:ATZ) by 39%? Simply Wall St News. https://simplywall.st/stocks/ca/retail/tsx-atz/aritzia-shares/news/are-investors-undervaluing-aritzia-inc-tseatz-by-39
Yahoo is part of the Yahoo family of brands. (n.d.). Yahoo Finance. https://ca.finance.yahoo.com/news/better-buy-aritzia-stock-lululemon-153000231.html#:~:text=While%20Aritzia%20stock%20is%20cheaper,cash%20flows%20across%20market%20cycles.
Yahoo is part of the Yahoo family of brands. (n.d.-c). Yahoo Finance. https://ca.finance.yahoo.com/quote/ANF?.tsrc=fin-srch
