Narrow-Moat Ralph Lauren’s Brand Prowess Allows It to Manage Through Market Turmoil

Overcoming unfavorable currency movement and a soft North American apparel market that was characterized by bloated inventories and discounting, narrow-moat Ralph Lauren posted (December-ended) fiscal 2023 third-quarter results that surpassed our expectations. Moreover, the company’s guidance for 1%-2% constant-currency sales growth in the fourth quarter is solid considering that industry challenges have persisted and that it faces a tough comparison with last year. We believe Ralph Lauren’s recent consistency in its results as compared with some peers affirms that its brand elevation plans have been successful. We expect to lift our per-share $124 fair value estimate by a low-single-digit percentage, leaving shares slightly undervalued.