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True Religion Apparel, AŞ Message Board

  • gwconcord gwconcord Feb 25, 2011 8:10 PM Flag

    LULU vs. TRLG

    As a Canadian, I have an advantage of seeing the popularity of Lululemon on its home turf, where it's very popular... be interested to see what fellow Canuck fatbroker has to say...

    Lulu: (TTM: 95.5 million, quarter ended Oct 31, analysts est on yahoo $106.5 mil for year ended Jan/11)
    TRLG (TTM: 43.5 million, year ended Dec 31)

    Lulu: Zero
    TRLG: Zero

    Market Cap:
    Lulu: $5.45 Billion
    TRLG: $0.64 Billion

    Which brand has better global potential? I know Lulu currently has a higher earnings growth rate, but TRLG's growth rate is being impacted by switching to less wholesale and more retail. So below, I've posted the growth rates comparing direct to consumer sales of TRLG and Revenue of Lulu:

    TRLG: Direct to consumer growth rate Q4: 38.4%
    LULU: Company guidance of revenue growth rate Q4: 47.2%-48.4%

    Sources: - Jan 11, 2011 release

    The rates above are both great, and I would expect there's room for improvement at TRLG given their current plans. However, with LULU at 8.5 times the market cap of TRLG, I don't think TRLG is getting the higher multiple it deserves.

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    • This is a comparison of extremes. LULU's EV/EBITDA is 29.60 and TRLG's is 5.04, at least according to Yahoo Finance. TRLG's book value per share is over twice LULU's with no goodwill or intangible assets. LULU has had the advantage of not having to transition from a wholesale operation to a direct retailer. While TRLG does deserve a higher multiple, LULU's might be on the high side.