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Ralph Lauren (RL) to Report Q4 Earnings: Is a Beat in Store?

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Ralph Lauren Corporation (RL - Free Report) is likely to register a decline in the top and bottom lines when it reports fourth-quarter fiscal 2021 numbers on May 20, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $1.2 billion, which indicates a decline of 5.5% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the bottom line is pegged at a loss of 75 cents per share, which suggests a decline of 10.3% from the year-ago quarter’s reported figure. However, the consensus mark for earnings has narrowed by 2 cents in the past 30 days.

The apparel and lifestyle products company’s bottom line beat the Zacks Consensus Estimate by 3.1% in the last reported quarter.

Factors to Note

Ralph Lauren has been gaining from expanded digital and omnichannel capabilities as well as investments in mobile, omnichannel and fulfillment. The company remains focused on creating innovative digital experiences to connect with customers across the globe. Keeping in these lines, customers across the world can now check out its brands and assortments via its virtual flagship store experiences in Beverly Hills, New York and Paris. This has been contributing to digital traffic nearly eight times greater than the foot traffic in these physical stores. Also, strength in social commerce presence and strategic partnerships with influential digital retailers around the world bode well. Driven by these initiatives, the company is likely to have registered robust digital sales growth in the to-be-reported quarter.

Moreover, the company has been accelerating its Next Great Chapter plan, which aims at creating a simplified global organizational structure and rolling out improved technological capabilities. The company is expected to have restructured its global workforce in the quarter under review, as per its Fiscal 2021 Strategic Realignment Plan. As part of this plan, management has been progressing well with the transition of the Chaps brand to a fully licensed model, which will help Ralph Lauren focus better on its core brands and reduce dependence on North American stores. Gains from such endeavors are likely to get reflected in the fourth-quarter results.

However, it is still reeling under COVID-related disruptions, which have been hurting its top line, particularly in North America and Europe. Management, in its last earnings call, forecasted that COVID-related impacts and uncertainties are expected to persist in the fourth quarter of fiscal 2021. Also, significant operating and travel restrictions stemming from the resurgence in cases across many regions are likely to have dented the fourth-quarter results to some extent. Apart from these, rising operating expenses remain a concern.

Ralph Lauren Corporation Price and EPS Surprise

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Ralph Lauren this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ralph Lauren has a Zacks Rank #1 and an Earnings ESP of +6.25%.

Other Stocks Poised to Beat Earnings Estimates

Here are some more companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this reporting cycle.

Smith & Wesson Brands, Inc. (SWBI - Free Report) has an Earnings ESP of +22.05% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

V.F. Corp (VFC - Free Report) presently has an Earnings ESP of +0.43% and a Zacks Rank #3.

Nike (NKE - Free Report) presently has an Earnings ESP of +15.26% and a Zacks Rank #3.

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