Kalkine Media explores Canadian retail stocks ahead of holiday season

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 Kalkine Media explores Canadian retail stocks ahead of holiday season
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  • Aritzia’s Q1 2023 net income increased by 85.8 per cent to C$ 33.3 million.
  • In Q2, 2023, the sales for Dollarama Inc. increased by 18.2 per cent.
  • We look at some retail stocks and see how they have fared.

This holiday season is likely to be different from the last two years in many aspects. There is genuine optimism among shoppers when it comes to festivals. Various retail stores are pinning hopes on this festive season and gearing up to provide the best to customers.

Some retailers had to shut down or enforce restrictions on people entering the stores due to the pandemic. But post-pandemic, they have shifted to the "hybrid retail" system.

The online mode has become a trend and is bridging any gap between the customer and the retailer. Technology has a major role to play in this. Also, many retailers are taking the Artificial Intelligence (AI) route to grow and innovate.

Here, we look at some of the retail stocks and see how they have performed in recent quarters:

Aritzia Inc. (TSX: ATZ)

Aritzia Inc. is an integrated design house. The company deals in exclusive fashion brands under the Aritzia banner. Further, the company's product range includes apparel and accessories, including shorts, sweaters, jackets, coats, blouses, T-shirts, and other accessories.

Aritzia Inc.'s Q1 2023 net income increased by 85.8 per cent to C$ 33.3 million. Further, the net revenue increased by 65.2 per cent to C$ 407.9 million from Q1 2022.

Reportedly, there was an increase in adjusted EBITDA by 70.3 per cent to C$ 69.6 million. The earnings per share (EPS) was  C$ 1.56.

The below graph displays the company's revenue per cent in different sectors.

Dollarama Inc. (TSX: DOL)

Dollarama Inc. operates discount retail stores. It is based in Canada and provides a range of everyday consumer products, seasonal items, and general merchandise at low fixed price points. The total market capitalization for Dollarama Inc. is C$ 23.2 billion.

In Q2, 2023, the sales increased by 18.2 per cent to C$ 1,217.1 million, and comparable store sales increased by 13.2 per cent. The EBITDA too increased by 25.8 per cent to C$ 369.4 million.

Further, the operating income increased by 30.3 per cent to C$ 287.4 million.

The quarterly dividend by Dollarama Inc. was C$ 0.055. The five-year dividend growth for Dollarama Inc. was reported at 8.71.

Canadian Tire Corporation (TSX: CTC)

Canadian Tire Corporation deals in automotive parts, sporting equipment, footwear vehicle fuel through approximately 1,710 stores across locations. The company acts as a dealer and has franchisee-operated stores as well.

The quarterly dividend is C$ 1.625 with a dividend yield of 2.289 per cent. Canadian Tire Corporation offered an EPS of C$ 19.11. 

As of October 11, 2022, the stock price of Canadian Tire Corporation was C$ 284 and increased by 6.2 per cent within three months.

In Q2 2022, the Consolidated Comparable sales increased by 5 per cent, excluding petroleum. On the contrary, there was a decrease in the net income which was reported at C$ 177.6 million compared to C$ 259.1 million in Q2 2021.

Canada Goose Holdings Inc. (TSX: GOOS)

Canada Goose Holdings Inc. is engaged in manufacturing and designing outerwear for children, women, and men. The company operates as a retailer also in the same sector. Presently, the total market capitalization for Canada Goose Holdings Inc. is C$ 1.38 billion.

Reportedly, the Q1 2023 revenue for Canada Goose Holdings Inc. increased by 24.2 per cent and was reported at C$ 69.9 million.

For the quarter that ended July 3, 2022, the gross margin increased by 61.1 per cent from 54.5 per cent in the year-ago quarter that ended on June 27, 2021. The total assets decreased to C$ 1,346.7 million from C$ 1,394.7 million, and the liabilities increased to C$ 994.8 million from C$ 872.5 million in the same comparative period.

Further, the EPS announced by the company is C$ 0.82, with a P/E ratio of 28.30.

Loblaw Companies Limited (TSX: L)

Loblaw Companies Limited is a retailer of general merchandise, pharmacy, and grocery. The company also oversees a financial-services business. This business deals in credit card services and guaranteed investment certificates. The employee strength of the company is 215,000.

In Q2 2022, Loblaw Companies reported revenue of C$ 12,847 million. The adjusted EBITDA was reported at C$ 1,499 million, which witnessed an increase of 9.3 per cent or C$ 128 million.

The company's adjusted net earnings were reported at C$ 566 million, an increase of 22 per cent or C$ 102 million.

On May 10, 2022, Loblaw Companies Limited acquired Lifemark Health Group from Audax Private Equity.

Bottom Line

Investing in the stock market requires a diligent attitude. The market can change anytime. Investors could work on a long-term strategy to avoid losing money in a bearish market.

Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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