We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Ralph Lauren's Top-Line Falls Prey to Soft Traffic Trends
Read MoreHide Full Article
The troubles seem to be never-ending for luxury goods retailer, Ralph Lauren Corp. (RL - Free Report) . Like most retailers, the company is also reeling under soft mall and store traffic trends due to sluggish spending on apparel and accessories. Further, persisting forex pressures and intensified competition have been weighing on the company’s sales and margins, respectively.
The cumulative impact of the aforementioned factors is quite visible in Ralph Lauren’s drab stock performance, dismal comparable store sales (comps) trend, disappointing sales outlook and negative estimate revision trend. Let’s find out more about what’s ailing the stock.
Stock Performance
Ralph Lauren has significantly underperformed the broader industry and sector in the last three months. Shares of this New York-based apparel retailer declined 9.4%, while the Zacks categorized Textile – Apparel industry registered a 9% growth. Moreover, it lagged the Zacks categorized Consumer Discretionary sector’s growth of 1.6%.
Dismal Top-line Trend & Outlook
Ralph Lauren reported ninth straight quarter of comps decline in fourth-quarter fiscal 2017 due to challenging traffic trends and fall in average transaction size, alongside calendar shifts of both Christmas and Easter holidays. The soft comps and sluggish traffic contributed to the 16% decline in sales in the quarter. Further, sales were impacted by its initiatives to improve quality of sales and reduce excess inventory.
Going forward, the company expects the challenging industry trends to continue weighing on comps and top-line performance in fiscal 2018. Consequently, management projected revenues to decline in the range of 8–9% in fiscal 2018 and in low double-digits in the first quarter. Further, it expects currency headwinds to continue to impact results in the first quarter and fiscal 2018. For the first quarter, the company estimates currency headwinds to reduce revenues growth by nearly 225 basis points (bps) and operating margin rate by about 75 bps. Further, fiscal 2018 revenues and operating margin growth are expected to be hampered by currency woes to an extent of 150 bps and 50–75 bps, respectively.
Negative Estimate Revisions
These factors have pulled down the company’s estimates in the last 30 days. The Zacks Consensus Estimate for the first quarter and fiscal 2018 has declined to 98 cents per share and $4.73 per share, respectively, from 99 cents and $4.78.
Bottom Line
While Ralph Lauren is trying to turn around its business for a very long time, investors doubt if the company’s plans will yield results. The company has been executing its Way Forward Plan alongside reducing costs through job cuts and closing stores. Apart from this, the company is pulling back inventory from wholesale partners, reducing exposure in off-price sales channel, lowering promotions and exiting brands.
Though these initiatives look promising, we are on the look for more top-line visibility and business stability to change our view on the stock. Aptly, the stock currently carries a Zacks Rank #5 (Strong Sell).
G-III Apparel has a long-term EPS growth rate of 15%. Moreover, the stock has seen positive estimate revisions in the last 30 days.
Guess, with long-term EPS growth rate of 17.5%, has grown 21.4% in the last three months.
PVH Corp., with long-term EPS growth rate of 11.2%, has increased nearly 11.3% in the last three months.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Ralph Lauren's Top-Line Falls Prey to Soft Traffic Trends
The troubles seem to be never-ending for luxury goods retailer, Ralph Lauren Corp. (RL - Free Report) . Like most retailers, the company is also reeling under soft mall and store traffic trends due to sluggish spending on apparel and accessories. Further, persisting forex pressures and intensified competition have been weighing on the company’s sales and margins, respectively.
The cumulative impact of the aforementioned factors is quite visible in Ralph Lauren’s drab stock performance, dismal comparable store sales (comps) trend, disappointing sales outlook and negative estimate revision trend. Let’s find out more about what’s ailing the stock.
Stock Performance
Ralph Lauren has significantly underperformed the broader industry and sector in the last three months. Shares of this New York-based apparel retailer declined 9.4%, while the Zacks categorized Textile – Apparel industry registered a 9% growth. Moreover, it lagged the Zacks categorized Consumer Discretionary sector’s growth of 1.6%.
Dismal Top-line Trend & Outlook
Ralph Lauren reported ninth straight quarter of comps decline in fourth-quarter fiscal 2017 due to challenging traffic trends and fall in average transaction size, alongside calendar shifts of both Christmas and Easter holidays. The soft comps and sluggish traffic contributed to the 16% decline in sales in the quarter. Further, sales were impacted by its initiatives to improve quality of sales and reduce excess inventory.
Going forward, the company expects the challenging industry trends to continue weighing on comps and top-line performance in fiscal 2018. Consequently, management projected revenues to decline in the range of 8–9% in fiscal 2018 and in low double-digits in the first quarter. Further, it expects currency headwinds to continue to impact results in the first quarter and fiscal 2018. For the first quarter, the company estimates currency headwinds to reduce revenues growth by nearly 225 basis points (bps) and operating margin rate by about 75 bps. Further, fiscal 2018 revenues and operating margin growth are expected to be hampered by currency woes to an extent of 150 bps and 50–75 bps, respectively.
Negative Estimate Revisions
These factors have pulled down the company’s estimates in the last 30 days. The Zacks Consensus Estimate for the first quarter and fiscal 2018 has declined to 98 cents per share and $4.73 per share, respectively, from 99 cents and $4.78.
Bottom Line
While Ralph Lauren is trying to turn around its business for a very long time, investors doubt if the company’s plans will yield results. The company has been executing its Way Forward Plan alongside reducing costs through job cuts and closing stores. Apart from this, the company is pulling back inventory from wholesale partners, reducing exposure in off-price sales channel, lowering promotions and exiting brands.
Though these initiatives look promising, we are on the look for more top-line visibility and business stability to change our view on the stock. Aptly, the stock currently carries a Zacks Rank #5 (Strong Sell).
However, investors interested in the space can count on G-III Apparel Group, LTD. (GIII - Free Report) and Guess?, Inc. (GES - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), as well as PVH Corp. (PVH - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
G-III Apparel has a long-term EPS growth rate of 15%. Moreover, the stock has seen positive estimate revisions in the last 30 days.
Guess, with long-term EPS growth rate of 17.5%, has grown 21.4% in the last three months.
PVH Corp., with long-term EPS growth rate of 11.2%, has increased nearly 11.3% in the last three months.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>