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Ralph Lauren (RL) Rises More Than 41% in a Year: Here's Why
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Ralph Lauren Corporation (RL - Free Report) seems to be doing well on the bourses, thanks to its digital endeavors and other robust strategies. Its strategic efforts, including the Next Great Chapter plan, appear encouraging. Undoubtedly, management is focused on enhancing digital capabilities, deepening relations with customers via marketing, expanding international markets and efficiently controlling expenses.
Buoyed by such strengths, shares of this apparel and accessories designer have surged 41.3% compared with the industry’s 24.3% growth in a year. A Value Score of B adds strength to this current Zacks Rank #3 (Hold) company.
Let’s Delve Deeper
Ralph Lauren is on track to exceed its top and bottom-line targets under the “Next Great Chapter” plan that was announced in June 2018. Later, it announced measures to accelerate its “Next Great Chapter plan,” which includes creating a simplified global organizational structure and rolling out improved technological capabilities.
As part of the plan, it completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment announced last year. The move will likely enable it to focus on core brands, as part of the Next Great Chapter elevation strategy. In addition, the company’s strategy of product elevation, personalized and targeted promotion, disciplined inventory management and favorable channel and geographic mix bodes well.
Image Source: Zacks Investment Research
Ralph Lauren is making significant progress in expanding digital and omnichannel capabilities through investments in mobile, omnichannel and fulfillment. The company remains focused on further digital investments to continue the creation of content for all platforms, thus expanding digital capabilities to improve the user experience, and continuing to leverage AI and data to serve consumers more efficiently.
Ralph Lauren continues to scale and expand its connected retail capabilities, including virtual selling appointments, “buy online, pick up in store,” endless aisle product availability and more. The company launched its first-ever full catalog Ralph Lauren mobile app, thus efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform.
During the second quarter of fiscal 2024, the company’s digital business, including its directly-operated sites, departmentstore.com, pure players and social commerce, was impressive. Strength in its international markets more than offset weakness in North America. Region-wise, digital sales were up 14% in Europe and 19% in Asia.
The company added 1.3 million new consumers to its direct-to-consumer (DTC) businesses in the fiscal third quarter. It reached a milestone of 55.9 million social media followers globally, which reflects a year-over-year low-double-digit increase. This was mainly driven by popularity in Instagram, Line, TikTok and other key platforms. The company continues to witness online search trends outpacing its peers globally, driven by spring icons and accessories.
What’s More?
For fiscal 2024, management projects constant-currency revenues to rise in low single digits, in the range of 1-2%, versus our estimate of 1.4% growth year over year. The company expects top-line growth to be driven by Asia, followed by a low single-digit increase in Europe. It expects a gross margin increase in the band of 120-170 basis points (bps) in constant currency, up from 100 bps expected earlier, gaining from favorable freight costs and mix shifts toward the international and DTC, more than offsetting cotton inflation.
Ralph Lauren anticipates an operating margin expansion of about 30-50 bps in constant currency to 12.3-12.5%. For the fiscal third quarter, the company anticipated revenue growth of 1-2% on a constant-currency basis, on gains from Asia. The gross margin is expected to expand 100-150 bps, which will more than offset higher operating expenses. The operating margin is predicted to be flat on a constant-currency basis, including a 10-bps positive impact of foreign currency.
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $6.5 billion and $9.43, respectively. These estimates show corresponding growth of 1.4% and 13.1% year over year. Hence, this company seems to be a decent investment pick given all the aforementioned positives.
RCL has a trailing four-quarter earnings surprise of 28.3%, on average. The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 57.7% and 187.9%, respectively, from the year-ago period’s reported levels.
GIII Apparel, an accessories dealer, sports a Zacks Rank of 1 at present. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year EPS suggests growth of 33%, respectively, from the year-ago corresponding figure.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.2% and 20.5%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.
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Ralph Lauren (RL) Rises More Than 41% in a Year: Here's Why
Ralph Lauren Corporation (RL - Free Report) seems to be doing well on the bourses, thanks to its digital endeavors and other robust strategies. Its strategic efforts, including the Next Great Chapter plan, appear encouraging. Undoubtedly, management is focused on enhancing digital capabilities, deepening relations with customers via marketing, expanding international markets and efficiently controlling expenses.
Buoyed by such strengths, shares of this apparel and accessories designer have surged 41.3% compared with the industry’s 24.3% growth in a year. A Value Score of B adds strength to this current Zacks Rank #3 (Hold) company.
Let’s Delve Deeper
Ralph Lauren is on track to exceed its top and bottom-line targets under the “Next Great Chapter” plan that was announced in June 2018. Later, it announced measures to accelerate its “Next Great Chapter plan,” which includes creating a simplified global organizational structure and rolling out improved technological capabilities.
As part of the plan, it completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment announced last year. The move will likely enable it to focus on core brands, as part of the Next Great Chapter elevation strategy. In addition, the company’s strategy of product elevation, personalized and targeted promotion, disciplined inventory management and favorable channel and geographic mix bodes well.
Image Source: Zacks Investment Research
Ralph Lauren is making significant progress in expanding digital and omnichannel capabilities through investments in mobile, omnichannel and fulfillment. The company remains focused on further digital investments to continue the creation of content for all platforms, thus expanding digital capabilities to improve the user experience, and continuing to leverage AI and data to serve consumers more efficiently.
Ralph Lauren continues to scale and expand its connected retail capabilities, including virtual selling appointments, “buy online, pick up in store,” endless aisle product availability and more. The company launched its first-ever full catalog Ralph Lauren mobile app, thus efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform.
During the second quarter of fiscal 2024, the company’s digital business, including its directly-operated sites, departmentstore.com, pure players and social commerce, was impressive. Strength in its international markets more than offset weakness in North America. Region-wise, digital sales were up 14% in Europe and 19% in Asia.
The company added 1.3 million new consumers to its direct-to-consumer (DTC) businesses in the fiscal third quarter. It reached a milestone of 55.9 million social media followers globally, which reflects a year-over-year low-double-digit increase. This was mainly driven by popularity in Instagram, Line, TikTok and other key platforms. The company continues to witness online search trends outpacing its peers globally, driven by spring icons and accessories.
What’s More?
For fiscal 2024, management projects constant-currency revenues to rise in low single digits, in the range of 1-2%, versus our estimate of 1.4% growth year over year. The company expects top-line growth to be driven by Asia, followed by a low single-digit increase in Europe. It expects a gross margin increase in the band of 120-170 basis points (bps) in constant currency, up from 100 bps expected earlier, gaining from favorable freight costs and mix shifts toward the international and DTC, more than offsetting cotton inflation.
Ralph Lauren anticipates an operating margin expansion of about 30-50 bps in constant currency to 12.3-12.5%. For the fiscal third quarter, the company anticipated revenue growth of 1-2% on a constant-currency basis, on gains from Asia. The gross margin is expected to expand 100-150 bps, which will more than offset higher operating expenses. The operating margin is predicted to be flat on a constant-currency basis, including a 10-bps positive impact of foreign currency.
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $6.5 billion and $9.43, respectively. These estimates show corresponding growth of 1.4% and 13.1% year over year. Hence, this company seems to be a decent investment pick given all the aforementioned positives.
Eye These Solid Picks
Some better-ranked companies are Royal Caribbean (RCL - Free Report) , GIII Apparel (GIII - Free Report) and lululemon athletica (LULU - Free Report) .
Royal Caribbean sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RCL has a trailing four-quarter earnings surprise of 28.3%, on average. The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 57.7% and 187.9%, respectively, from the year-ago period’s reported levels.
GIII Apparel, an accessories dealer, sports a Zacks Rank of 1 at present. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year EPS suggests growth of 33%, respectively, from the year-ago corresponding figure.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.2% and 20.5%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.