What does Ralph Lauren expect in the coming quarters?
This week, the shares of clothing manufacturer Ralph Lauren Corp. (RL) fell by over 20% because of pessimistic expectations of investors. At the auction on March 11, the RL stock was worth $101.11. One reason for the decline in Ralph Lauren quotes was the change in the recommendation from the analysts of the investment firm Wedbush Securities from “above the market” to neutral.
They lowered the target price from $150 to $127. According to the thesis of experts, the famous clothing manufacturer may face a decline in sales against the background of geopolitical tensions in Europe. In past quarters, it was the European market that provided the company with vigorous growth, because uncertainty there with risks for Ralph Lauren. So, over the past three quarters, European countries have increased sales by $500 million, and operating profit has almost tripled to $350 million.
Thus, analysts suggest that uncertainty in Europe may jeopardize the achievement of forecast sales figures for the 2022 fiscal year, published in early February. According to this assumption, sales should grow by 40% year-on-year, and the operating margin will improve to 13% of sales. Ralph Lauren remains a strong, recognizable brand that can continue to gain market share in premium clothing niches in three key markets in Europe, Asia and North America.
Ralph Lauren continues its digital transformation, which includes a system of planning and personnel management using cloud technologies, as well as optimization of purchases and personalization of goods for customers. Last year, Ralph Lauren announced the launch of a virtual store program. In this program, online shoppers can shop at the largest Ralph Lauren stores around the world using modern digital technologies.
