Performance Comparison: Lululemon Athletica And Competitors In Textiles, Apparel & Luxury Goods Industry

In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Lululemon Athletica LULU alongside its primary competitors in the Textiles, Apparel & Luxury Goods industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.

Lululemon Athletica Background

Lululemon Athletica designs, distributes, and markets athletic apparel, footwear, and accessories for women, men, and girls. Lululemon offers pants, shorts, tops, and jackets for both leisure and athletic activities such as yoga and running. The company also sells fitness accessories, such as bags, yoga mats, and equipment. Lululemon sells its products through more than 700 company-owned stores in about 20 countries, e-commerce, outlets, and wholesale accounts. The company was founded in 1998 and is based in Vancouver, Canada.

By closely examining Lululemon Athletica, we can identify the following trends:

• Notably, the current Price to Earnings ratio for this stock, 24.21, is 1.04x above the industry norm, reflecting a higher valuation relative to the industry.

• The elevated Price to Book ratio of 8.94 relative to the industry average by 3.45x suggests company might be overvalued based on its book value.

• The Price to Sales ratio of 3.89, which is 3.78x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a higher Return on Equity (ROE) of 7.61%, which is 4.74% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $530 Million, which is 6.62x above the industry average, indicating stronger profitability and robust cash flow generation.

• The gross profit of $1.28 Billion is 2.91x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company is experiencing remarkable revenue growth, with a rate of 10.4%, outperforming the industry average of -1.07%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In light of the Debt-to-Equity ratio, a comparison between Lululemon Athletica and its top 4 peers reveals the following information:

• Among its top 4 peers, Lululemon Athletica has a stronger financial position with a lower debt-to-equity ratio of 0.33.

• This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.

Key Takeaways

For Lululemon Athletica in the Textiles, Apparel & Luxury Goods industry, the PE, PB, and PS ratios are all high compared to its peers, indicating a potentially overvalued stock. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest strong financial performance and growth potential relative to industry competitors.

This article was generated by Benzinga's automated content engine and reviewed by an editor.