Tuesday, July 17, 2012

How much is Lulu Worth?

Below is a comp table for a few specialty apparel retailers that I put together.  Similar to CMG, it's pretty amazing to see the value that the market puts on Lululemon relative to the current size of its business.  LULU has phenomenal operating metrics compared to its peers to be certain, but the price that a shareholder has to pay to own a part of the business is pretty exorbitant.

At a $7.5B enterprise value, LULU's 180 stores are valued at ~$42m per store and a whopping $14,875 per square foot.  Obviously you're paying that price for growth not current operations, but think of the number of stores that need to be opened to bring the price per square foot more in line with the company's peers.  That price is nearly 10x more than the closest comp on this table.  LTD has 16x more stores than LULU but only 2.2x the market value.

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