3 Canadian Retail Stocks with Low Cost Operations

The Canadian retail stocks on our list have an average EBITDA margin of 16.4%

SmallCapPower | July 11, 2018: As the Canada-U.S. trade dispute progresses, many Canadians plan to buy domestically if possible. The Canadian retail stocks we have identified today operate with an average EBITDA margin of 16.4%, outperforming their peers, which average 9.5%. EBITDA margin is a measure of operating profitability, derived as a percentage of revenue.

Aritzia Inc. (TSX:ATZ) – $16.20
Apparel & Accessories Retailers

Aritzia is a women’s fashion retailer that designs apparel and accessories for a collection of exclusive brands that sell under the Aritzia banner. The Company operates over 80 retail stores along with an e-commerce platform. Aritzia is one of the fastest growing women’s retail brands in the world, with revenues having grown at a 21% CAGR since 2005.

  • Market Cap: $923.3M
  • EBITDA Margin: 15.4%
  • Enterprise Value to EBITDA FY2018: 15.6x
  • Enterprise Value to EBITDA FY2019: 11.9x
  • YTD Total Return: 27.7%

Sleep Country Canada Holdings Inc. (TSX:ZZZ) – $32.00
Home Furnishings Retailers

Sleep Country is a Canadian mattress retailer. The Company sold 2,720 units at an average price of $280. Sleep Country operates 247 stores and 16 distribution centres across Canada. Management estimates it holds a 25% market share. The Company aims to increase its accessories sales, which have doubled since 2012.

  • Market Cap: $1,184.3M
  • EBITDA Margin: 16.1%
  • Enterprise Value to EBITDA FY2018: 13.3x
  • Enterprise Value to EBITDA FY2019: 11.6x
  • YTD Total Return: -3.2%

New Look Vision Group Inc. (TSX:BCI) – $33.75
Miscellaneous Specialty Retailers

New Look Vision operates 376 eyewear stores across Canada, 205 of which are located in Quebec. The Company sells fashion-focused eyewear, as well as access to optometry services through partnerships with optometrists and opticians. In May, the Company reported a 36.7% increase in revenue over the prior-year quarter.

  • Market Cap: $523.6M
  • EBITDA Margin: 17.7%
  • Enterprise Value to EBITDA FY2018: 17.4x
  • Enterprise Value to EBITDA FY2019: 13.1x
  • YTD Total Return: -3.3%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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