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Digital Efforts, Strong Demand to Keep Aiding Ralph Lauren (RL)
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Ralph Lauren Corporation (RL - Free Report) is a promising bet on its brand strength, solid growth across all channels and regions, favorable product mix and robust full-priced selling trends, which have been aiding AURs. The company’s efforts to expand digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment bode well. It is well-poised to attain its targets under the “Next Great Chapter” plan. These initiatives are likely to go a long way in continuing to bolster the company’s performance.
An uptrend in the company’s Zacks Consensus Estimate echoes a positive sentiment. The Zacks Consensus Estimate for Ralph Lauren’s fiscal 2023 sales and earnings per share (EPS) is pegged at $6.37 billion and $8.11, respectively. Sales estimates suggest growth of 2.5% from the year-ago quarter’s reported figure, while the EPS estimate indicates a 3.2% decline. The consensus estimate for the next fiscal year’s sales and EPS of $6.72 billion and $9.25 implies year-over-year increases of 5.5% and 14%, respectively.
Buoyed by the aforesaid tailwinds, the Zacks Rank #2 (Buy) company’s shares have appreciated 9% against the industry’s 17.6% decline. The stock also compared favorably against the Consumer Discretionary sector’s decline of 14.8% and the S&P 500’s fall of 7.1%. An impressive long-term projected EPS growth rate of 9.3% further highlights the strength of this lifestyle goods retailer.
Let’s take a look at the factors that make the stock an attractive pick.
Image Source: Zacks Investment Research
Factors to Aid Growth
Ralph Lauren has been making significant progress in expanding digital and omni-channel capabilities, which are aiding the top line. In third-quarter fiscal 2023, the digital business continued to be a key growth driver, with accelerated digital sales across all regions. The company’s global digital ecosystem witnessed year-over-year high-single-digit revenue growth and more than 40% on a two-year stack basis. This includes 10% growth within the owned Ralph Lauren and digital sites on top of more than 30% growth last year.
RL has been focused on further digital investments to continue content creation for all platforms, enhancing digital capabilities to improve the user experience, and continuing to leverage AI and data to serve its consumers more efficiently. Ralph Lauren continues to scale and expand its connected retail capabilities, including virtual selling appointments, “buy online, pick up in store,” and endless aisle product availability.
The company launched its first-ever full-catalog Ralph Lauren mobile app during the holiday season, efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform. It introduced additional digital sites in key markets, including Korea and Australia, in the fiscal third quarter. A positive mix of products, investments in AI-powered targeting and consumer acquisition bode well. Also, its online search grew year over year and exceeded 51 million social media followers on a global basis.
Ralph Lauren has also been on track to exceed its top and bottom-line targets under the “Next Great Chapter” plan 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, RL 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.
For fiscal 2023, RL anticipates year-over-year revenue growth (cc) in the high-single digits on a 52-week comparable basis. For the fourth quarter of fiscal 2023, the company expects year-over-year revenue growth of mid to high-single digits at constant currency.
The company earlier revealed plans of returning 100% free cash flow to shareholders in the next five years, amounting to $2.5 billion on a cumulative basis through fiscal 2023 in the forms of dividends and share repurchases.
Other Stocks to Consider
Some other top-ranked stocks from the Zacks Consumer Discretionary sector are Crocs (CROX - Free Report) , Kontoor Brands (KTB - Free Report) and PVH Corp (PVH - Free Report) .
Crocs currently sports a Zacks Rank #1 (Strong Buy). CROX delivered a four-quarter average earnings surprise of 21.8%. The company’s shares have appreciated 74.5% in the past year. It has an expected long-term earnings growth rate of 15%.
The Zacks Consensus Estimate for Crocs’ 2023 sales and EPS indicates increases of 12.5% and 2.5%, respectively, from the year-ago period’s reported levels.
Kontoor Brands currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 12.4%, on average. It has an expected long-term earnings growth rate of 8%.
The Zacks Consensus Estimate for Kontoor Brands’ 2023 sales and earnings suggests increases of 2.5% and 5.8% from the year-ago period’s reported numbers, respectively. The company’s shares have rallied 15.4% in the past year.
PVH Corp currently carries a Zacks Rank #2. PVH has a trailing four-quarter earnings surprise of 23.4%, on average. PVH has a long-term earnings growth rate of 16.1%.
The Zacks Consensus Estimate for PVH Corp’s current financial-year sales and EPS indicates growth of 3.8% and 9.8%, respectively, from the year-ago period’s reported levels. PVH’s shares have risen 10.7% in the past year.
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Digital Efforts, Strong Demand to Keep Aiding Ralph Lauren (RL)
Ralph Lauren Corporation (RL - Free Report) is a promising bet on its brand strength, solid growth across all channels and regions, favorable product mix and robust full-priced selling trends, which have been aiding AURs. The company’s efforts to expand digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment bode well. It is well-poised to attain its targets under the “Next Great Chapter” plan. These initiatives are likely to go a long way in continuing to bolster the company’s performance.
An uptrend in the company’s Zacks Consensus Estimate echoes a positive sentiment. The Zacks Consensus Estimate for Ralph Lauren’s fiscal 2023 sales and earnings per share (EPS) is pegged at $6.37 billion and $8.11, respectively. Sales estimates suggest growth of 2.5% from the year-ago quarter’s reported figure, while the EPS estimate indicates a 3.2% decline. The consensus estimate for the next fiscal year’s sales and EPS of $6.72 billion and $9.25 implies year-over-year increases of 5.5% and 14%, respectively.
Buoyed by the aforesaid tailwinds, the Zacks Rank #2 (Buy) company’s shares have appreciated 9% against the industry’s 17.6% decline. The stock also compared favorably against the Consumer Discretionary sector’s decline of 14.8% and the S&P 500’s fall of 7.1%. An impressive long-term projected EPS growth rate of 9.3% further highlights the strength of this lifestyle goods retailer.
Let’s take a look at the factors that make the stock an attractive pick.
Image Source: Zacks Investment Research
Factors to Aid Growth
Ralph Lauren has been making significant progress in expanding digital and omni-channel capabilities, which are aiding the top line. In third-quarter fiscal 2023, the digital business continued to be a key growth driver, with accelerated digital sales across all regions. The company’s global digital ecosystem witnessed year-over-year high-single-digit revenue growth and more than 40% on a two-year stack basis. This includes 10% growth within the owned Ralph Lauren and digital sites on top of more than 30% growth last year.
RL has been focused on further digital investments to continue content creation for all platforms, enhancing digital capabilities to improve the user experience, and continuing to leverage AI and data to serve its consumers more efficiently. Ralph Lauren continues to scale and expand its connected retail capabilities, including virtual selling appointments, “buy online, pick up in store,” and endless aisle product availability.
The company launched its first-ever full-catalog Ralph Lauren mobile app during the holiday season, efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform. It introduced additional digital sites in key markets, including Korea and Australia, in the fiscal third quarter. A positive mix of products, investments in AI-powered targeting and consumer acquisition bode well. Also, its online search grew year over year and exceeded 51 million social media followers on a global basis.
Ralph Lauren has also been on track to exceed its top and bottom-line targets under the “Next Great Chapter” plan 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, RL 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.
For fiscal 2023, RL anticipates year-over-year revenue growth (cc) in the high-single digits on a 52-week comparable basis. For the fourth quarter of fiscal 2023, the company expects year-over-year revenue growth of mid to high-single digits at constant currency.
The company earlier revealed plans of returning 100% free cash flow to shareholders in the next five years, amounting to $2.5 billion on a cumulative basis through fiscal 2023 in the forms of dividends and share repurchases.
Other Stocks to Consider
Some other top-ranked stocks from the Zacks Consumer Discretionary sector are Crocs (CROX - Free Report) , Kontoor Brands (KTB - Free Report) and PVH Corp (PVH - Free Report) .
Crocs currently sports a Zacks Rank #1 (Strong Buy). CROX delivered a four-quarter average earnings surprise of 21.8%. The company’s shares have appreciated 74.5% in the past year. It has an expected long-term earnings growth rate of 15%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crocs’ 2023 sales and EPS indicates increases of 12.5% and 2.5%, respectively, from the year-ago period’s reported levels.
Kontoor Brands currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 12.4%, on average. It has an expected long-term earnings growth rate of 8%.
The Zacks Consensus Estimate for Kontoor Brands’ 2023 sales and earnings suggests increases of 2.5% and 5.8% from the year-ago period’s reported numbers, respectively. The company’s shares have rallied 15.4% in the past year.
PVH Corp currently carries a Zacks Rank #2. PVH has a trailing four-quarter earnings surprise of 23.4%, on average. PVH has a long-term earnings growth rate of 16.1%.
The Zacks Consensus Estimate for PVH Corp’s current financial-year sales and EPS indicates growth of 3.8% and 9.8%, respectively, from the year-ago period’s reported levels. PVH’s shares have risen 10.7% in the past year.