Gap vs. Lululemon: Which Apparel Stock Is Worth Owning Right Now?

For investors, 2 apparel names presently are providing 2 precise antithetic pitches. When it comes to Gap (NYSE:GAP) and Lululemon Athletica (NASDAQ:LULU), which 1 belongs successful a retirement-focused portfolio close now?

After moving some done the lenses that substance astir for income-oriented investors — yield, valuation and hazard illustration — the reply is much decisive than the marque prestige spread would suggest.

Dimension 1: When It Comes to Yield and Income, Gap Wins Decisively

This 1 is short. Gap pays a quarterly dividend of 17.5 cents per share, raised this twelvemonth from 16.5 cents, which itself was a measurement up from the 15-cent quarterly complaint paid done 2024. The existent annualized payout works retired to 67 cents per share, and absorption conscionable authorized a caller $1.0 cardinal stock repurchase, with astir $599 cardinal inactive remaining connected the program.

Lululemon? No dividend. Capital returns travel exclusively done buybacks, including $1.2 cardinal repurchased successful FY2025. Buybacks are useful, but they bash not money a retiree's monthly bills. For an income-seeking investor, this magnitude is settled earlier the investigation adjacent begins.

Dimension 2: When It Comes to Valuation, Gap Wins Again

Gap trades astatine a trailing P/E of 8 and a guardant P/E of 9, with a price-to-sales of conscionable 0.49. Lululemon, adjacent aft a brutal repricing, sits astatine a trailing P/E of 10 and guardant P/E of 10, with price-to-sales adjacent 1.4.

Lululemon is undeniably cheaper than it has been successful years. The banal is down 36% twelvemonth to day and 58% implicit the past year, presently trading adjacent $128. But cheaper than its ain past is not the aforesaid arsenic cheap. Gap is the implicit lower-multiple stock, supports the aggregate with a dividend, and has analysts pointing to a people of $27.67 against today's $21.47.