Ralph Lauren Earnings: Another Solid Report in a Difficult Environment; Shares Fairly Valued

Ralph Lauren's sales and profitability results in fiscal 2025's first quarter surpassed our estimates despite tough economic conditions, unfavorable currency movement, and a 13% drop in North America wholesale sales. Some of this wholesale weakness was planned, as the firm is exiting more low-performing department stores (about 45 this year). While this move reduces sales in the short run, we think it generally bolsters brand value, the source of our narrow moat rating. We expect to lift our $147 fair value on Ralph Lauren's shares by a low-single-digit percentage but rate them as fully valued.