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Will Ralph Lauren's (RL) Pricing Actions Aid Q1 Earnings Beat?
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Ralph Lauren Corporation (RL - Free Report) is expected to register bottom-line growth when it reports first-quarter fiscal 2024 numbers on Aug 10, before the opening bell. The Zacks Consensus Estimate for first-quarter fiscal 2024 revenues is pegged at $1.5 billion, which indicates a decline of 0.6% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at $2.15 per share, which suggests growth of 14.4% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 38.5% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 17.4%, on average, in the trailing four quarters.
Ralph Lauren has been gaining from brand strength, solid demand, and expansion across all channels and regions. Its strategy of product elevation, acquisition of full-priced consumers, favorable channel and geographic mix, as well as ramping up of its targeting and personalization efforts, is likely to have supported AUR growth in the fiscal first quarter.
RL’s premium pricing strategy has been a key contributor to the company’s growth story. The renowned lifestyle apparel company has always managed to maintain higher prices for its clothing. Gains from the improved pricing are likely to get reflected in Ralph Lauren’s top-line performance in the to-be-reported quarter.
The company’s focus on expanding digital and omni-channel capabilities via investments in mobile, omni-channel and fulfillment bodes well. Strength across owned and wholesale digital channels globally is likely to have been a key growth driver in the to-be-reported quarter.
Some other notable efforts on the online front are virtual selling appointments, “buy online, pick up in store,” endless aisle product availability, the introduction of additional digital sites in key markets, investments in AI-powered targeting and consumer acquisition. These factors are likely to have aided the top line in the quarter under review.
On its last reported quarter’s earnings call, management expected first-quarter fiscal 2024 revenues to be flat to up slightly on a constant-currency basis. The operating margin is predicted to expand 30-50 basis points in constant currency, driven by stronger gross margins. Gross margin expansion is anticipated to have been driven by lower freight costs and continued AUR growth, partly offset by increased product costs.
We expect the first-quarter fiscal 2024 adjusted operating margin to expand 10 basis points to 12.8%, while on a GAAP basis, the operating margin is likely to increase 90 bps to 12.7% for the quarter. The adjusted gross margin is expected to increase 10 bps year over year, while the GAAP gross margin is expected to expand 60 bps year over year in the to-be-reported quarter.
However, Ralph Lauren has been witnessing the negative impacts of higher compensation and variable selling expenses, which are anticipated to have partly dented margins in the fiscal first quarter. Also, unfavorable currency fluctuations are likely to have been concerning.
On its last reported quarter’s earnings call, the company expected adverse currency rates to hurt revenues by 150 bps in first-quarter fiscal 2024. Additionally, it anticipated the gross and operating margins to witness 50 bps of adverse currency impacts each.
What the Zacks Model Unveils
Our proven model conclusively 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 chances 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 +1.86%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +0.91% and a Zacks Rank #2. LULU is likely to register bottom and top-line growth when it reports second-quarter fiscal 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.2 billion, suggesting 15.9% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for lululemon’s fiscal second-quarter earnings is pegged at $2.52 per share, suggesting 14.6% growth from the $2.20 reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days.
PVH Corp. (PVH - Free Report) currently has an Earnings ESP of +1.02% and a Zacks Rank #3. PVH is likely to register top-line growth when it reports second-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.2 billion, suggesting 2.5% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for PVH’s fiscal second-quarter earnings is pegged at $1.75 per share, suggesting a decline of 15.9% from the year-ago reported quarter. The consensus mark for earnings has moved down 1.7% in the past 30 days.
Wynn Resorts (WYNN - Free Report) currently has an Earnings ESP of +47.78% and a Zacks Rank #3. WYNN is likely to register top and bottom-line improvement when it reports second-quarter 2023 numbers. The Zacks Consensus Estimate for Wynn Resorts’ quarterly revenues is pegged at $1.5 billion, suggesting growth of 64.1% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for quarterly EPS of 51 cents suggests a 162.2% increase from the year-ago quarter. The consensus mark for WYNN’s earnings has moved up 18.6% in the past 30 days.
Image: Bigstock
Will Ralph Lauren's (RL) Pricing Actions Aid Q1 Earnings Beat?
Ralph Lauren Corporation (RL - Free Report) is expected to register bottom-line growth when it reports first-quarter fiscal 2024 numbers on Aug 10, before the opening bell. The Zacks Consensus Estimate for first-quarter fiscal 2024 revenues is pegged at $1.5 billion, which indicates a decline of 0.6% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at $2.15 per share, which suggests growth of 14.4% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 38.5% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 17.4%, 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 has been gaining from brand strength, solid demand, and expansion across all channels and regions. Its strategy of product elevation, acquisition of full-priced consumers, favorable channel and geographic mix, as well as ramping up of its targeting and personalization efforts, is likely to have supported AUR growth in the fiscal first quarter.
RL’s premium pricing strategy has been a key contributor to the company’s growth story. The renowned lifestyle apparel company has always managed to maintain higher prices for its clothing. Gains from the improved pricing are likely to get reflected in Ralph Lauren’s top-line performance in the to-be-reported quarter.
The company’s focus on expanding digital and omni-channel capabilities via investments in mobile, omni-channel and fulfillment bodes well. Strength across owned and wholesale digital channels globally is likely to have been a key growth driver in the to-be-reported quarter.
Some other notable efforts on the online front are virtual selling appointments, “buy online, pick up in store,” endless aisle product availability, the introduction of additional digital sites in key markets, investments in AI-powered targeting and consumer acquisition. These factors are likely to have aided the top line in the quarter under review.
On its last reported quarter’s earnings call, management expected first-quarter fiscal 2024 revenues to be flat to up slightly on a constant-currency basis. The operating margin is predicted to expand 30-50 basis points in constant currency, driven by stronger gross margins. Gross margin expansion is anticipated to have been driven by lower freight costs and continued AUR growth, partly offset by increased product costs.
We expect the first-quarter fiscal 2024 adjusted operating margin to expand 10 basis points to 12.8%, while on a GAAP basis, the operating margin is likely to increase 90 bps to 12.7% for the quarter. The adjusted gross margin is expected to increase 10 bps year over year, while the GAAP gross margin is expected to expand 60 bps year over year in the to-be-reported quarter.
However, Ralph Lauren has been witnessing the negative impacts of higher compensation and variable selling expenses, which are anticipated to have partly dented margins in the fiscal first quarter. Also, unfavorable currency fluctuations are likely to have been concerning.
On its last reported quarter’s earnings call, the company expected adverse currency rates to hurt revenues by 150 bps in first-quarter fiscal 2024. Additionally, it anticipated the gross and operating margins to witness 50 bps of adverse currency impacts each.
What the Zacks Model Unveils
Our proven model conclusively 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 chances 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 +1.86%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +0.91% and a Zacks Rank #2. LULU is likely to register bottom and top-line growth when it reports second-quarter fiscal 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.2 billion, suggesting 15.9% growth from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for lululemon’s fiscal second-quarter earnings is pegged at $2.52 per share, suggesting 14.6% growth from the $2.20 reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days.
PVH Corp. (PVH - Free Report) currently has an Earnings ESP of +1.02% and a Zacks Rank #3. PVH is likely to register top-line growth when it reports second-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.2 billion, suggesting 2.5% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for PVH’s fiscal second-quarter earnings is pegged at $1.75 per share, suggesting a decline of 15.9% from the year-ago reported quarter. The consensus mark for earnings has moved down 1.7% in the past 30 days.
Wynn Resorts (WYNN - Free Report) currently has an Earnings ESP of +47.78% and a Zacks Rank #3. WYNN is likely to register top and bottom-line improvement when it reports second-quarter 2023 numbers. The Zacks Consensus Estimate for Wynn Resorts’ quarterly revenues is pegged at $1.5 billion, suggesting growth of 64.1% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for quarterly EPS of 51 cents suggests a 162.2% increase from the year-ago quarter. The consensus mark for WYNN’s earnings has moved up 18.6% in the past 30 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.