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Ralph Lauren (RL) Prioritizes Digital Investment, Stock to Gain

Ralph Lauren Corporation RL has been making significant progress in expanding digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment. The luxury lifestyle company is focused on diversifying and optimizing marketing across a variety of media and platforms in order to deliver a clear, differentiated experience to its target consumers.

The company’s three strategic pillars to drive long-term growth and value creation bode well. It has been focused on elevating and energizing its lifestyle brand; driving the core and expanding products; and winning in key cities with its consumer ecosystem.

The company’s focus on expanding digital experience has been well-reflected in its share price, with the stock outperforming the industry and the market. Shares of this Zacks Rank #3 (Hold) company have rallied 33.6% in the past year compared with the industry’s growth of 4.6%. The stock has also fared better than the sector’s rise of 12.7% and the S&P 500’s growth of 18.5% in the same period.

Further optimism on the stock is reflected by its forward estimates, which suggest notable growth. The Zacks Consensus Estimate for RL’s fiscal 2024 sales and earnings suggests growth of 2.8% and 13.7%, respectively, from the year-ago period’s reported numbers.


Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research


Digital Business’s Performance

In the fiscal first quarter, the company’s digital business, including its directly-operated sites,, pure players and social commerce, remained flat year over year. Strength in its international markets more than offset weakness in North America.

Starting from June 2023, RL witnessed improvement in its North America digital unit. It reached a milestone of 53.5 million social media followers globally, which reflects a year-over-year high-single-digit increase. This was mainly driven by the company’s popularity on Instagram, Line, TikTok, WeChat and other key platforms. RL continues to witness online search trends outpacing its peers globally, driven by spring icons and accessories. Region-wise, digital sales were up 8% in Europe and 11% in Asia.

For fiscal 2024, management revealed plans for rich digital content and greater customer personalization. It is focused on further digital investments to continue the creation of content 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 last holiday season, efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform.

The company is also on track to exceed its top and bottom-line targets under the “Next Great Chapter” plan announced in June 2018. This plan aims at creating a simplified global organizational structure and rolling out improved technological capabilities. As part of the plan, it 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.

Hurdles on the Way

Ralph Lauren has been reeling under continued product cost inflation and higher compensation. RL expects higher marketing and ecosystem investments for the fiscal second quarter. The company is also witnessing macro inflationary challenges, particularly in North America. This led to a dismal performance in its North America segment in the fiscal first quarter. Higher promotions in the North America market and an unfavorable wholesale timing shift acted as deterrents.

Key Picks

We have highlighted three better-ranked stocks from the Consumer Staple sector, namely GIII Apparel Group GIII, Guess GES and Royal Caribbean Cruises RCL.

GIII Apparel currently sports a Zacks Rank #1 (Strong Buy). Shares of GIII have rallied 59% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GIII Apparel’s current financial year’s sales and earnings per share suggests growth of 8% and 14.7%, respectively, from the year-ago period’s reported figures. GIII has a trailing four-quarter earnings surprise of 526.6%, on average.

Guess has a trailing four-quarter earnings surprise of 43.4%, on average. It flaunts a Zacks Rank #1 at present. Shares of GES have risen 49.2% in the past year.

The Zacks Consensus Estimate for Guess’ current financial-year sales and earnings suggests growth of 3.7% and 9.9%, respectively, from the year-ago period's reported figures.

Royal Caribbean has a trailing four-quarter earnings surprise of 28.5%, on average. It currently sports a Zacks Rank #1. Shares of RCL have rallied 107.2% in the past year.

The Zacks Consensus Estimate for Royal Caribbean’s current financial-year sales and earnings suggests growth of 55.3% and 181.9%, respectively, from the year-ago period's reported figures.

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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

Ralph Lauren Corporation (RL) : Free Stock Analysis Report

Guess?, Inc. (GES) : Free Stock Analysis Report

G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report

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