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Here's What Makes Ralph Lauren (RL) a Solid Investment Pick

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Not all stocks are losing investors’ confidence in the wake of the COVID-19 pandemic. Some are ramping up their business efforts and digital initiatives to survive the onslaught, Ralph Lauren Corporation (RL - Free Report) being one such stock. This Zacks Rank #1 (Strong Buy) company is an investors’ favorite, thanks to its business strategies and accelerated digital endeavors to support the shift in shopping preference amid the pandemic. Its Strategic Realignment Plan is also impressive.

Incidentally, the key designer and marketer of premium lifestyle products company has seen its shares surge as much as 43% in the past three months compared with the industry’s growth of 15.9%. Further, Ralph Lauren has comfortably outperformed the Zacks Consumer Discretionary sector’s growth of 17.9% and the S&P 500 index’s rise of 11.2% in the same time frame.

Let’s Delve Deep

Talking of Ralph Lauren’s digital initiatives, the company is efficiently capitalizing the shift in consumer shopping patterns to online portals amid the pandemic via expanding its digital and omni-channel capabilities. Further, its omni-channel services, including digital clienteling, Buy Online Ship from Store, curbside pickup, contactless delivery and mobile checkout options bode well. Notably, increased focus on home and loungewear in sync with consumers’ changing preferences as well as expansion in connected retail offerings has been driving digital sales.


Ralph Lauren is investing in technological capabilities to support functions like omni-channel shopping, augmented reality, personalization and social commerce. Advancing the digital initiatives, Ralph Lauren is focusing on cloud-based human resources and planning system worldwide. It also plans to augment capabilities to better serve consumers through the Digitizing the Value Chain project. These initiatives are expected to simplify operations, improve team connect alongside digitalizing product journey. It has launched digital showrooms, expanded buying options, implemented 3D digital product creation and virtual fittings as part of this initiative.

Apparently, the company witnessed a strong online show in second-quarter fiscal 2021, which cushioned the overall top line. Its digital revenues in the same quarter grew year over year in mid-teens and recorded double-digit growth in all regions.

Moving further, management is on track to curtail its global workforce by the end of fiscal 2021 under its “Fiscal 2021 Strategic Realignment Plan.” By reducing workforce it expects to see gross annualized pre-tax expense savings between $180 million and $200 million. These savings are anticipated to be realized mainly starting fiscal 2022. Meanwhile, the company looks to simplify global organizational structure and improve technological capabilities via accelerating its “Next Great Chapter plan.” These efforts are likely to drive Ralph Lauren’s top and bottom lines.

Furthermore, the company is on track with the transition of the Chaps brand, which is in sync with the aforementioned long-term brand elevation strategy. In this context, it has entered into a multi-year licensing deal with an affiliate of 5 Star Apparel LLC, a division of the OVED Group, to be effective from Aug 1, 2021. Per the deal, 5 Star Apparel will manufacture, market and distribute men’s and women’s products under the Chaps brand.

Wrapping Up

With that said, Ralph Lauren’s robust business plans coupled with digital strength will keep supporting the company through the coronavirus blues. An expected long-term earnings growth rate of 8.5% further highlights the stock’s strength.

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Crocs (CROX - Free Report) has a long-term earnings growth rate of 15% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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