Naked Brand Group Vs. Gildan Activewear: Which Intimate Apparel Stock Is A Better Buy?

Naked Brand Group Limited (NAKD - Get Rating) and Gildan Activewear Inc. (GIL - Get Rating) are two popular designers and sellers of intimate apparel and activewear products in the United States, Canada and internationally. Based in Double Bay, Australia, NAKD offers its products under the 74-year-old Frederick’s of Hollywood brand. It sells its products through an online channel www.fredericks.com. Headquartered in Montreal, Canada, GIL offers intimate and hosiery products under the Gildan and Gildan Platinum, Secret and Secret Silky, Silver Toe, and other brands.

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The global intimate apparel market is estimated to grow at an 8.1% CAGR from 2018 – 2025. The  increasing popularity of customized, comfortable and luxurious intimate wear, with consumers focusing more on style than pricing, has fueled the growth of the intimate apparel industry. In fact, changes in lifestyle and buying patterns have encouraged consumers to seek products of prominent intimate apparel market players like NAKD and GIL to meet their needs. Since these companies are strengthening their business models and diversifying their product portfolios, we believe they are well-positioned to see sustained demand in the coming months.

GIL has gained 156.6% over the past year, while NAKD has lost 8.8% over the same period. In terms of past month performance, GIL is the clear winner with 3.2% gains versus NAKD’s negative returns. But which of these stocks is a better pick now? Let’s find out.

Recent Financial Results

At the close of its last fiscal quarter, NAKD’s trailing-12-month total revenue was $80.04 million, while its trailing-12-month gross profit was $33.89 million. However, the company reported a negative EBITDA of $51.17 million for the last quarter. Also,  NAKD generated a $9.67 million operating loss and a net loss of $68.35 million.

In the first quarter ended April 4, 2021, GIL’s net sales increased 28.4% year-over-year to $589.6 million, driven by an increase in sales in the hosiery and underwear category. Its gross margin rose 880 basis points from its  year-ago value to 32%. Furthermore,  the company’s operating income was  $113.8 million versus a $92.3 million operating loss in the prior-year quarter. Also, GIL’s net income for the first quarter was $98.5 million, compared to a $99.3 million net loss  for the same quarter of 2020.

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