Ralph Lauren Earnings: Brand Strength Shines Despite Challenging Domestic Market; Shares Attractive

Ralph Lauren overcame a 7% sales decline in North America wholesale to post fiscal 2024 second-quarter sales and earnings above our forecast. The firm’s average unit retail in its direct-to-consumer channels rose 10% on top of an 18% increase last year. We believe Ralph Lauren’s ability to lift prices and margins in a difficult demand environment supports our narrow-moat rating based on a brand intangible asset. We expect to lift our $131 fair value estimate by a low-single-digit percentage, leaving shares undervalued.