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Here's Why You Should Hold Ralph Lauren (RL) Stock Right Now
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Ralph Lauren Corporation (RL - Free Report) is in good shape, thanks to its digital endeavors and other robust strategies. The company is 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 gained 38.4% against the industry’s 4.8% decline in a year.
Let’s Delve Deeper
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 added more than 5 million new consumers to its direct-to-consumer (DTC) businesses in the fiscal year. Its followers on social media grew low double digits year over year to more than 58 million, driven by TikTok, Instagram, Line and Douyin. Region-wise, digital sales were up 11% in Europe and 19% in Asia in fourth-quarter fiscal 2024.
Image Source: Zacks Investment Research
The company has been experiencing solid DTC growth apart from its connected ecosystems expansion across significant markets. DTC comps were up mid-single digits across both its brick-and-mortar stores and digital channels. The company remains focused on digital investments to continue the creation of content for all platforms, enhancing digital capabilities to improve the user experience and leveraging AI and data to serve its consumers more efficiently.
As part of the “Next Great Chapter” plan, it completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment. This will 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.
As a result, management is optimistic about fiscal 2025 and anticipates year-over-year revenue growth (at cc) in the low-single digits, revolving around the band of 2-3%. This includes 90 bps of positive impacts of currency. Management expects the operating margin to grow in the range of 100-120 bps at cc on higher gross margin and operating expense leverage. The gross margin is likely to increase in the band of 50-100 bps in cc, with AUR growth, lower cotton costs, and favorable geographic and channel mix shifts more than offsetting higher product costs. Foreign currency is anticipated to hurt gross and operating margins by about 30 bps. The fiscal tax rate is likely to be in the range of 23-24%.
The Zacks Consensus Estimate for fiscal 2025 sales and earnings per share (EPS) is currently pegged at $6.76 billion and $11.07, respectively. These estimates indicate corresponding growth of 2.4% and 7.4% year over year. The consensus estimate for fiscal 2026 sales and EPS is presently $7 billion and $12.54, respectively, indicating increases of 4.1% and 13.3%. This highlights the analysts’ confidence in the stock.
However, Ralph Lauren is reeling under macro challenges, as well as inflationary headwinds, including higher compensation, rent and occupancy costs, and elevated marketing investments. These factors resulted in an adjusted operating expenses increase of 3% year over year in the fourth quarter of fiscal 2024. The company has also been witnessing a dismal performance across its North America segment’s wholesale channel for a while now. Nonetheless, this Zacks Rank #3 (Hold) company is making constant efforts to maneuver such challenges and boost the overall growth.
G-III Apparel Group has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 sales indicates an increase of 3.3% from the year-ago period’s reported level.
Royal Caribbean sports a Zacks Rank of 1, at present. RCL has a trailing four-quarter earnings surprise of 18.3%, on average.
The consensus estimate for RCL’s 2024 sales and EPS indicates increases of 16.9% and 64%, respectively, from the year-ago period’s reported levels.
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 implies growth of 11.4% and 11.9%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 7.4%, on average.
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Here's Why You Should Hold Ralph Lauren (RL) Stock Right Now
Ralph Lauren Corporation (RL - Free Report) is in good shape, thanks to its digital endeavors and other robust strategies. The company is 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 gained 38.4% against the industry’s 4.8% decline in a year.
Let’s Delve Deeper
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 added more than 5 million new consumers to its direct-to-consumer (DTC) businesses in the fiscal year. Its followers on social media grew low double digits year over year to more than 58 million, driven by TikTok, Instagram, Line and Douyin. Region-wise, digital sales were up 11% in Europe and 19% in Asia in fourth-quarter fiscal 2024.
Image Source: Zacks Investment Research
The company has been experiencing solid DTC growth apart from its connected ecosystems expansion across significant markets. DTC comps were up mid-single digits across both its brick-and-mortar stores and digital channels. The company remains focused on digital investments to continue the creation of content for all platforms, enhancing digital capabilities to improve the user experience and leveraging AI and data to serve its consumers more efficiently.
As part of the “Next Great Chapter” plan, it completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment. This will 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.
As a result, management is optimistic about fiscal 2025 and anticipates year-over-year revenue growth (at cc) in the low-single digits, revolving around the band of 2-3%. This includes 90 bps of positive impacts of currency. Management expects the operating margin to grow in the range of 100-120 bps at cc on higher gross margin and operating expense leverage. The gross margin is likely to increase in the band of 50-100 bps in cc, with AUR growth, lower cotton costs, and favorable geographic and channel mix shifts more than offsetting higher product costs. Foreign currency is anticipated to hurt gross and operating margins by about 30 bps. The fiscal tax rate is likely to be in the range of 23-24%.
The Zacks Consensus Estimate for fiscal 2025 sales and earnings per share (EPS) is currently pegged at $6.76 billion and $11.07, respectively. These estimates indicate corresponding growth of 2.4% and 7.4% year over year. The consensus estimate for fiscal 2026 sales and EPS is presently $7 billion and $12.54, respectively, indicating increases of 4.1% and 13.3%. This highlights the analysts’ confidence in the stock.
However, Ralph Lauren is reeling under macro challenges, as well as inflationary headwinds, including higher compensation, rent and occupancy costs, and elevated marketing investments. These factors resulted in an adjusted operating expenses increase of 3% year over year in the fourth quarter of fiscal 2024. The company has also been witnessing a dismal performance across its North America segment’s wholesale channel for a while now. Nonetheless, this Zacks Rank #3 (Hold) company is making constant efforts to maneuver such challenges and boost the overall growth.
Key Picks
Some better-ranked companies are G-III Apparel Group (GIII - Free Report) , Royal Caribbean (RCL - Free Report) and lululemon athletica (LULU - Free Report) .
G-III Apparel Group sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
G-III Apparel Group has a trailing four-quarter earnings surprise of 571.8%, on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 sales indicates an increase of 3.3% from the year-ago period’s reported level.
Royal Caribbean sports a Zacks Rank of 1, at present. RCL has a trailing four-quarter earnings surprise of 18.3%, on average.
The consensus estimate for RCL’s 2024 sales and EPS indicates increases of 16.9% and 64%, respectively, from the year-ago period’s reported levels.
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 implies growth of 11.4% and 11.9%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 7.4%, on average.