Which Retailer Offers a Better Investment: Lululemon Stock or Canada Goose?

April 04, 2024 07:22 AM EDT | By Team Kalkine Media
 Which Retailer Offers a Better Investment: Lululemon Stock or Canada Goose?
Image source: shutterstock

Investors in Lululemon Athletica (NASDAQ:LULU) and Canada Goose (TSX:GOOS) have witnessed divergent trajectories in the stock market. Lululemon, which made its public debut in July 2007, has delivered impressive returns of 2,600% to shareholders. In contrast, Canada Goose stock has faced a decline of over 30% since its initial public offering (IPO) in March 2017. These divergent performances highlight the variability in stock market outcomes, emphasizing the importance of careful investment decisions. Additionally, investors seeking stable returns may look towards TSX value stocks, which offer the potential for steady growth and income generation amidst market fluctuations. 

Concerning Lululemon's valuation, despite its impressive returns, the stock currently trades 26% below its all-time highs, with a market capitalization of US$48 billion. Following its fourth-quarter results for fiscal 2023, Lululemon witnessed a significant pullback of almost 16% in share prices. Although the company exceeded revenue and earnings estimates for Q4, its guidance for the upcoming quarter fell short of expectations. Lululemon attributed this tepid outlook to lower consumer spending on apparel and a challenging macro environment. Nonetheless, the company achieved a 16% year-over-year growth in sales to US$3.2 billion in fiscal Q4, with adjusted earnings rising by 20% to US$5.29 per share. 

Moreover, Lululemon's expansion efforts, including new store openings and growth in international markets, have contributed to its top-line growth. The company's operating cash flows more than doubled to US$2.3 billion, with a significant increase in its cash balance. With a robust brand presence and a growing community of 17 million members, Lululemon benefits from pricing power and strong customer engagement. 

On the other hand, Canada Goose reported a 6% year-over-year increase in sales to US$609.9 million in fiscal Q3 of 2024. While direct-to-customer revenue rose by 14%, wholesale revenue experienced a decline of 28%. Despite growth in Asia Pacific, revenue declined in Europe and North America. Currently, Canada Goose stock is priced at 14.8 times forward earnings, offering a discount of 9% to consensus target estimates. 

In summary, Lululemon appears to be a more attractive investment option compared to Canada Goose due to its consistent profits, robust growth trajectory, and widening cash flows. 


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Incorporated (Kalkine Media), Business Number: 720744275BC0001 and is available for personal and non-commercial use only. The advice given by Kalkine Media through its Content is general information only and it does not take into account the user’s personal investment objectives, financial situation and specific needs. Users should make their own enquiries about any investment and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media is not registered as an investment adviser in Canada under either the provincial or territorial Securities Acts. Some of the Content on this website may be sponsored/non-sponsored, as applicable, however, on the date of publication of any such Content, none of the employees and/or associates of Kalkine Media hold positions in any of the stocks covered by Kalkine Media through its Content. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used in the Content are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used in the Content unless stated otherwise. The images/music that may be used in the Content are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.


Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.