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Ralph Lauren (RL) to Post Q2 Earnings: Is a Beat on the Cards?
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Ralph Lauren Corporation (RL - Free Report) is expected to register top and bottom-line growth when it reports second-quarter fiscal 2022 numbers on Nov 2, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $1.46 billion, which indicates growth of 22.5% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for earnings is pegged at $1.99 per share, which suggests growth of 38.2% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved up 2% in the past seven days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 157.3% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 91.4%, on average, in the trailing four quarters.
Ralph Lauren’s fiscal second quarter is expected to have benefited from continued strong performances across Europe and North America regions, and brand strength. Fast recovery across North America and Europe due to the easing of restrictions is likely to have aided its performance. Accelerating digital capabilities, enhanced marketing efforts, cost-saving plans and a reduction in structural woes are also expected to have contributed to quarterly growth.
The company has been expanding digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment. The investments have been accretive to the company’s top line and margins in the past few quarters. Margins at its owned digital business have been robust, and are likely to have been accretive within every region and to the total company margin rate. Positive impacts of continued digital growth are expected to get reflected in the company’s fiscal second-quarter sales.
The to-be-reported quarter’s bottom line is expected to reflect benefits of improved operating margin and reduced costs. Positive regional and channel mix shifts along with enhanced AUR in all regions are expected to have boosted the margin rate. Growth in AUR is likely to have resulted from the combination of reduced promotional activity, improved full-price selling and price increases.
On the last reported quarter’s earnings call, management predicted second-quarter fiscal 2022 revenue growth of 20-22% on a constant-currency basis, including a favorable currency impact of 50 bps. The operating margin is forecast to be 13-14%, with lower operating expenses. The gross margin is on average anticipated to be flat to up 20 basis points driven by unit retail growth and positive product mix.
Although Ralph Lauren provided a robust margin view for fiscal 2022, it expects margins to be offset by the persistence of certain costs, including global supply-chain pressures, higher freight costs and marketing investments. Gross margin growth for the fiscal second quarter is expected to be largely offset by higher freight costs as it laps last year's COVID mix benefits.
The company expects the operating margin for the remaining three quarters to moderate from first-quarter fiscal 2022 levels, driven by the anticipated rise in marketing expenses, higher freight costs and normalizing of the higher-margin wholesale replenishments witnessed in the fiscal first quarter. It expects the highly volatile and inflationary input cost environment to continue throughout fiscal 2022.
Ralph Lauren anticipates marketing investments to remain elevated throughout fiscal 2022 to support consumer engagement, acquisition and long-term brand-building initiatives. This is likely to get reflected in the company’s margins and bottom-line performance in the fiscal second quarter.
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 #3 and an Earnings ESP of +3.68%.
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.
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Ralph Lauren (RL) to Post Q2 Earnings: Is a Beat on the Cards?
Ralph Lauren Corporation (RL - Free Report) is expected to register top and bottom-line growth when it reports second-quarter fiscal 2022 numbers on Nov 2, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $1.46 billion, which indicates growth of 22.5% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for earnings is pegged at $1.99 per share, which suggests growth of 38.2% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved up 2% in the past seven days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 157.3% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 91.4%, on average, in the trailing four quarters.
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation price-eps-surprise | Ralph Lauren Corporation Quote
Factors to Note
Ralph Lauren’s fiscal second quarter is expected to have benefited from continued strong performances across Europe and North America regions, and brand strength. Fast recovery across North America and Europe due to the easing of restrictions is likely to have aided its performance. Accelerating digital capabilities, enhanced marketing efforts, cost-saving plans and a reduction in structural woes are also expected to have contributed to quarterly growth.
The company has been expanding digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment. The investments have been accretive to the company’s top line and margins in the past few quarters. Margins at its owned digital business have been robust, and are likely to have been accretive within every region and to the total company margin rate. Positive impacts of continued digital growth are expected to get reflected in the company’s fiscal second-quarter sales.
The to-be-reported quarter’s bottom line is expected to reflect benefits of improved operating margin and reduced costs. Positive regional and channel mix shifts along with enhanced AUR in all regions are expected to have boosted the margin rate. Growth in AUR is likely to have resulted from the combination of reduced promotional activity, improved full-price selling and price increases.
On the last reported quarter’s earnings call, management predicted second-quarter fiscal 2022 revenue growth of 20-22% on a constant-currency basis, including a favorable currency impact of 50 bps. The operating margin is forecast to be 13-14%, with lower operating expenses. The gross margin is on average anticipated to be flat to up 20 basis points driven by unit retail growth and positive product mix.
Although Ralph Lauren provided a robust margin view for fiscal 2022, it expects margins to be offset by the persistence of certain costs, including global supply-chain pressures, higher freight costs and marketing investments. Gross margin growth for the fiscal second quarter is expected to be largely offset by higher freight costs as it laps last year's COVID mix benefits.
The company expects the operating margin for the remaining three quarters to moderate from first-quarter fiscal 2022 levels, driven by the anticipated rise in marketing expenses, higher freight costs and normalizing of the higher-margin wholesale replenishments witnessed in the fiscal first quarter. It expects the highly volatile and inflationary input cost environment to continue throughout fiscal 2022.
Ralph Lauren anticipates marketing investments to remain elevated throughout fiscal 2022 to support consumer engagement, acquisition and long-term brand-building initiatives. This is likely to get reflected in the company’s margins and bottom-line performance in the fiscal second quarter.
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 #3 and an Earnings ESP of +3.68%.
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.
PVH Corp. (PVH - Free Report) has an Earnings ESP of +4.84% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hanesbrands Inc. (HBI - Free Report) currently has an Earnings ESP of +1.06% and a Zacks Rank #2.
Central Garden & Pet Company (CENT - Free Report) presently has an Earnings ESP of +22.22% and a Zacks Rank #3.