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Ralph Lauren's (RL) Growth Strategies Seem Good: Here's Why
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Ralph Lauren Corporation (RL - Free Report) is poised well for growth, thanks to its digital endeavors and other robust strategies. The company has been making significant progress in expanding its digital and omnichannel capabilities through investments in mobile, omnichannel and fulfillment. Ralph Lauren’s “Next Great Chapter” plan appears encouraging. Buoyed by such strengths, shares of this apparel and accessories designer have surged 52.4% against the industry’s 6.5% decline in a year.
Let’s delve deeper.
What’s More to Know?
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 last holiday season, thus efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform.
The company remains focused on further digital investments to continue the creation of content for all platforms, expand digital capabilities to improve the user experience, and continue to leverage AI and data to serve consumers more efficiently.
Image Source: Zacks Investment Research
Ralph Lauren added 1.7 million new consumers to its DTC businesses in the third quarter of fiscal 2024, which increased up to high single digits year over year. Its followers on social media grew low double digits in the previous year, driven by TikTok, Instagram, WeChat and Douyin. Region-wise, digital sales were up 4% in North America, 12% in Europe and 25% in Asia.
In accordance with the “Next Great Chapter” plan, it completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment. This enables 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, bode well.
For fiscal 2024, management projects constant-currency revenues to rise in the low single digits. The company expects the gross margin increase in the band of 140-180 basis points (bps) in constant currency, gaining from favorable freight costs, a favorable channel and geographic mix, thus more than offsetting continued product cost inflation. Ralph Lauren anticipates an operating margin expansion of about 30-50 bps in constant currency to 12.3-12.5%.
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $6.6 billion and $10.23, respectively. These estimates show corresponding growth of 2.7% and 22.7% year over year. The consensus estimate for fiscal 2025 sales and EPS is presently $6.9 billion and $11.23, respectively, indicating increases of 3.9% and 9.8%.
Given the aforesaid positives, Ralph Lauren stock seems to be a decent investment bet at present. A VGM Score of A further adds strength to this Zacks Rank #3 (Hold) company.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 16.9% and 62.3%, respectively, from the year-ago period’s reported levels.
Gildan Activewear carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.6%, on average.
The Zacks Consensus Estimate for Gildan Activewear’s current financial-year EPS implies growth of 14.4% from the year-ago corresponding figure.
Duluth Holdings carries a Zacks Rank of 2 at present. DLTH has a trailing four-quarter earnings surprise of 9.2%, on average.
The Zacks Consensus Estimate for Duluth Holdings’ current financial-year sales and EPS indicates growth of 0.8% and 75%, respectively, from the year-ago corresponding figures.
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Ralph Lauren's (RL) Growth Strategies Seem Good: Here's Why
Ralph Lauren Corporation (RL - Free Report) is poised well for growth, thanks to its digital endeavors and other robust strategies. The company has been making significant progress in expanding its digital and omnichannel capabilities through investments in mobile, omnichannel and fulfillment. Ralph Lauren’s “Next Great Chapter” plan appears encouraging. Buoyed by such strengths, shares of this apparel and accessories designer have surged 52.4% against the industry’s 6.5% decline in a year.
Let’s delve deeper.
What’s More to Know?
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 last holiday season, thus efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform.
The company remains focused on further digital investments to continue the creation of content for all platforms, expand digital capabilities to improve the user experience, and continue to leverage AI and data to serve consumers more efficiently.
Image Source: Zacks Investment Research
Ralph Lauren added 1.7 million new consumers to its DTC businesses in the third quarter of fiscal 2024, which increased up to high single digits year over year. Its followers on social media grew low double digits in the previous year, driven by TikTok, Instagram, WeChat and Douyin. Region-wise, digital sales were up 4% in North America, 12% in Europe and 25% in Asia.
In accordance with the “Next Great Chapter” plan, it completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment. This enables 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, bode well.
For fiscal 2024, management projects constant-currency revenues to rise in the low single digits. The company expects the gross margin increase in the band of 140-180 basis points (bps) in constant currency, gaining from favorable freight costs, a favorable channel and geographic mix, thus more than offsetting continued product cost inflation. Ralph Lauren anticipates an operating margin expansion of about 30-50 bps in constant currency to 12.3-12.5%.
Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $6.6 billion and $10.23, respectively. These estimates show corresponding growth of 2.7% and 22.7% year over year. The consensus estimate for fiscal 2025 sales and EPS is presently $6.9 billion and $11.23, respectively, indicating increases of 3.9% and 9.8%.
Given the aforesaid positives, Ralph Lauren stock seems to be a decent investment bet at present. A VGM Score of A further adds strength to this Zacks Rank #3 (Hold) company.
Key Picks
Some better-ranked companies are Royal Caribbean (RCL - Free Report) , Gildan Activewear (GIL - Free Report) and Duluth Holdings (DLTH - Free Report) .
Royal Caribbean sports a Zacks Rank #1 (Strong Buy) at present. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 16.9% and 62.3%, respectively, from the year-ago period’s reported levels.
Gildan Activewear carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.6%, on average.
The Zacks Consensus Estimate for Gildan Activewear’s current financial-year EPS implies growth of 14.4% from the year-ago corresponding figure.
Duluth Holdings carries a Zacks Rank of 2 at present. DLTH has a trailing four-quarter earnings surprise of 9.2%, on average.
The Zacks Consensus Estimate for Duluth Holdings’ current financial-year sales and EPS indicates growth of 0.8% and 75%, respectively, from the year-ago corresponding figures.