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Ralph Lauren Corp (RL)
NYSE:RL
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Ralph Lauren
(NYSE:RL)81Outperform
Positive Factors
Customer Acquisition
The largest change being new, younger, less price-sensitive customer acquisition driving both 'trade-up' and 'trade-across' market share capture.
Earnings and Financial Performance
Ralph Lauren's 3Q results showed the strongest growth rate in over a decade and the highest margin this century.
Negative Factors
Market Sentiment and Valuation
Shares pulled back -6% from intra-day highs as sector sentiment has shifted to cautious on macro noise of FX, trade tensions/tariffs and valuation expansion.
Ralph Lauren (RL) vs. S&P 500 (SPY)
Market Cap
$15.61B
Dividend Yield1.23%
Average Volume (3M)833.23K
Price to Earnings (P/E)23.0
Beta (1Y)1.10
Revenue Growth5.23%
EPS Growth24.63%
CountryUS
Employees23,400
SectorConsumer Cyclical
Sector Strength53
IndustryApparel & Luxury
Share Statistics
EPS (TTM)10.97
Shares Outstanding39,882,940
10 Day Avg. Volume847,992
30 Day Avg. Volume833,233
Financial Highlights & Ratios
PEG Ratio0.94
Price to Book (P/B)N/A
Price to Sales (P/S)2.33
Price to Cash Flow (P/CF)5.50
P/FCF Ratio5.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$296.33Price Target Upside18.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
Ralph Lauren Business Overview & Revenue Model
Company DescriptionRalph Lauren Corp. engages in the design, marketing and distribution of premium lifestyle products. The firm offers apparel, accessories, home furnishings, and other licensed product. It operates through the following segments: North America, Europe, and Asia. The North America segment consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. The Europe segment caters to sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. The Asia segment covers the sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Asia, Australia, and New Zealand. The company was founded by Ralph Lauren in 1967 and is headquartered in New York, NY.
How the Company Makes MoneyRalph Lauren Corporation generates revenue through multiple streams, primarily driven by the sale of its wide range of apparel and lifestyle products. The company operates through three main channels: wholesale, retail, and licensing. The wholesale channel involves selling to department stores, specialty stores, and other third-party retailers worldwide. The retail channel includes sales from Ralph Lauren's own stores and e-commerce platforms, providing direct access to consumers. Licensing agreements also contribute significantly to the company's earnings by allowing third parties to produce and sell products under the Ralph Lauren brand, which covers categories such as eyewear, fragrances, and home furnishings. Strategic partnerships and collaborations further enhance brand visibility and market reach, contributing to Ralph Lauren's overall profitability.
Ralph Lauren Financial Statement Overview
Summary
Ralph Lauren demonstrates strong financial health with impressive profitability and cash flow generation. The company shows consistent revenue growth and efficient operations, although its balance sheet could benefit from a higher equity ratio. Overall, Ralph Lauren is positioned well within the Apparel & Luxury industry, with a sound financial foundation to support future growth.Income Statement
Ralph Lauren exhibits strong profitability with a robust gross profit margin of 68.1% and a net profit margin of 10.1% for TTM. Revenue growth is positive, with a 4.8% increase from the previous year indicating solid demand for its products. The EBIT margin is healthy at 12.7%, and the EBITDA margin stands at 15.7%, reflecting efficient operations and good cost management.85
Very Positive
Balance Sheet
The company's balance sheet is stable with a debt-to-equity ratio of 1.05, suggesting moderate leverage. The return on equity is strong at 27.8%, showcasing effective use of equity. However, the equity ratio is relatively low at 35.8%, indicating a higher proportion of liabilities in the capital structure.78
Positive
Cash Flow
Ralph Lauren's cash flow situation is strong, with a notable free cash flow growth rate of 16.9% year-over-year. The operating cash flow to net income ratio is 1.75, indicating robust cash generation relative to net income. The free cash flow to net income ratio is also favorable at 1.50, showing solid free cash flow generation.82
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Jun 2023 | Jun 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.95B | 6.63B | 6.44B | 6.22B | 4.40B | 6.16B | Gross Profit |
| 4.73B | 4.43B | 4.17B | 4.15B | 2.86B | 3.65B | EBIT |
| 884.90M | 756.40M | 704.20M | 798.40M | 240.20M | 442.80M | EBITDA |
| 1.15B | 1.06B | 801.70M | 1.04B | 232.60M | 871.60M | Net Income Common Stockholders |
| 704.60M | 646.30M | 522.70M | 600.10M | -121.10M | 384.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.70B | 1.78B | 1.57B | 2.60B | 2.78B | 2.12B | Total Assets |
| 7.04B | 6.60B | 6.79B | 7.72B | 7.89B | 7.28B | Total Debt |
| 2.80B | 2.68B | 2.86B | 3.37B | 3.23B | 3.03B | Net Debt |
| 1.24B | 1.01B | 1.33B | 1.51B | 651.30M | 1.41B | Total Liabilities |
| 4.57B | 4.15B | 4.36B | 5.19B | 5.28B | 4.59B | Stockholders Equity |
| 2.47B | 2.45B | 2.43B | 2.54B | 2.60B | 2.69B |
| Cash Flow | Free Cash Flow | ||||
| 1.06B | 904.90M | 193.50M | 549.00M | 273.10M | 484.30M | Operating Cash Flow |
| 1.23B | 1.07B | 411.00M | 715.90M | 380.90M | 754.60M | Investing Cash Flow |
| -277.00M | -256.80M | 471.50M | -717.90M | 195.00M | 702.10M | Financing Cash Flow |
| -745.00M | -665.60M | -1.21B | -665.70M | 356.80M | -438.20M |
Ralph Lauren Technical Analysis
Neutral
250.45
Price Trends
253.22
Negative
232.58
Positive
203.62
Positive
Market Momentum
1.81
Positive
39.02
Neutral
10.01
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RL, the sentiment is Neutral. The current price of 250.45 is below the 20-day moving average (MA) of 271.52, below the 50-day MA of 253.22, and above the 200-day MA of 203.62, indicating a neutral trend. The MACD of 1.81 indicates Positive momentum. The RSI at 39.02 is Neutral, neither overbought nor oversold. The STOCH value of 10.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RL.
Ralph Lauren Risk Analysis
Ralph Lauren disclosed 30 risk factors in its most recent earnings report. Ralph Lauren reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ralph Lauren Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $15.61B | 23.04 | 27.75% | 1.23% | 5.23% | 24.63% | |
76 Outperform | $17.41B | 24.41 | 59.54% | 1.72% | 0.74% | -12.69% | |
71 Outperform | $4.61B | 21.81 | 12.01% | 1.44% | -3.35% | -6.09% | |
67 Neutral | $3.46B | 14.33 | 61.44% | 3.23% | 0.07% | 7.19% | |
67 Neutral | $3.90B | 5.71 | 13.48% | 0.21% | -4.83% | 45.23% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
58 Neutral | $8.78B | ― | -27.21% | 1.60% | -8.42% | 57.91% |
* Consumer Cyclical Sector Average
Performance Comparison
RL
Ralph Lauren
250.45
74.17
42.08%
TPR
Tapestry
81.28
35.66
78.17%
COLM
Columbia Sportswear
84.36
5.12
6.46%
PVH
PVH
71.26
-63.94
-47.29%
VFC
VF
23.45
7.97
51.49%
KTB
Kontoor Brands
61.62
2.33
3.93%
Ralph Lauren Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 0.58% | Next Earnings Date: May 22, 2025
Earnings Call Sentiment Positive
Ralph Lauren Corporation showcased a strong financial performance with double-digit revenue growth, significant brand engagement, and increased profitability. However, challenges remain with geopolitical and macroeconomic risks, and efforts to stabilize the North America wholesale market continue. Overall, the positive achievements outweigh the challenges.Highlights
Double-Digit Revenue Growth
Ralph Lauren Corporation reported third quarter revenue growth of 11% on a constant currency basis, surpassing expectations across all geographies and channels.
Retail and Digital Growth
The retail business led performance with double-digit comp growth, and digital sales increased mid-teens, driven by strong consumer demand.
Record New Customer Acquisition
The company added a record 1.9 million new consumers to its DTC businesses, a low double-digit increase from last year.
Strong Brand Engagement
Increased brand consideration, purchase intent, and net promoter scores globally, with social media followers surpassing 64 million.
Asia and Europe Sales Surge
Asia sales increased 15%, with China up more than 20%. Europe sales grew 16%, driven by strong retail and wholesale performance.
Operating Margin Expansion
Adjusted operating margin expanded 230 basis points to 18.7%, with operating profit increasing 27%.
Significant AUR Growth
Average Unit Retail (AUR) increased 12% in the third quarter, supported by strong full-price selling and reduced promotions.
Lowlights
Geopolitical and Macro Risks
Continued challenges from inflationary pressures, tariffs, consumer spending headwinds, supply chain disruptions, and foreign currency volatility.
Decline in Global Discount Rates
The global discount rate was reduced by more than 500 basis points, indicating potential pressure on future promotional activities.
Challenges in North America Wholesale
Despite improvements, the North America wholesale market remains volatile, with ongoing door closures and a focus on stabilizing the business.
Company Guidance
During the Ralph Lauren Corporation's Third Quarter Fiscal Year 2025 earnings call, the company reported strong financial performance, exceeding expectations across all regions and channels. Revenue grew by 11% on a constant currency basis, with retail comps increasing by 12%, driven by significant demand in both direct-to-consumer (DTC) and wholesale channels. The adjusted gross margin expanded by 190 basis points to 68.3%, attributed to a 12% increase in average unit retail (AUR), reduced promotions, and a favorable mix shift towards full-price businesses. Operating margin also improved, expanding 230 basis points to 18.7%, with operating profit up 27%. The company returned $500 million to shareholders year-to-date and generated approximately $980 million in free cash flows. Ralph Lauren raised its full-year outlook, now expecting constant currency revenue growth of 6% to 7%, up from the previous 3% to 4% guidance. The company also anticipates operating margin expansion of 120 to 160 basis points for the fiscal year.Ralph Lauren Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Ralph Lauren Announces Key Leadership Changes for Growth
Positive
Jan 21, 2025
On January 20, 2025, Ralph Lauren Corporation announced the appointment of Robert Ranftl as Chief Operating Officer, effective March 30, 2025, as part of a strategic succession plan. Ranftl, who has been with the company since 2015, has played a critical role in the strategic growth of the North American market and will oversee key functions like IT and logistics. Mercedes Abramo will succeed him as Regional CEO for North America, bringing extensive experience from Cartier S.A. These leadership changes are expected to support Ralph Lauren’s long-term growth strategy and reinforce its market positioning in North America and globally.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.