Company Reports

In our view, narrow-moat Ralph Lauren's past restructuring has put it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting, the firm closed underperforming stores, reduced exposure to US department stores and off-price channels, and cut product lead times. These and other efforts have led to significant gross margin increases. Although North America sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and high-60s gross margins in the long term. Further, we forecast advertising support as a percentage of sales in the midsingle digits in the long term and anticipate its direct-to-consumer sales will rise to 76% of sales in fiscal 2036 from 68% in fiscal 2026, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential, as customer visitation is declining in many retail stores and malls.

Ralph Lauren's fiscal 2027 first-quarter sales rose 14% on 12% constant-currency same-store sales growth. With a 15% increase in average unit retail prices and 25% sales growth in Asia, gross margin increased to 73.7% from 72.3% and adjusted operating margin expanded to 18.7% from 17%.

In our view, narrow-moat Ralph Lauren's past restructuring has put it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting, the firm closed underperforming stores, reduced exposure to US department stores and off-price channels, and cut product lead times. These and other efforts have led to significant gross margin increases. Although North America sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and high-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 76% of sales in fiscal 2036 from 68% in fiscal 2026, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential, as customer visitation is declining in many retail stores and malls.

With double-digit constant-currency comparable sales growth in Asia (29% of sales) and North America (39%), Ralph Lauren's sales rose 17% in fiscal 2026's fourth quarter. Gross margin and adjusted operating margin increased 110 and 70 basis points, respectively, to 69.7% and 11%.

In our view, narrow-moat Ralph Lauren's past restructuring has put it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting, the firm closed underperforming stores, reduced exposure to US department stores and off-price channels, and cut product lead times. These and other efforts have led to significant gross margin increases. Although North America sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and high-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2035 from 67% in fiscal 2025, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential, as customer visitation is declining in many retail stores and malls.

Ralph Lauren's third-quarter sales increased 12% on 9% same-store sales growth. Despite higher tariffs, its gross margin rose 150 basis points to 69.9% on an 18% jump in average unit retail price and lower cotton costs. Its adjusted operating margin improved 220 basis points to 20.9%.

In our view, narrow-moat Ralph Lauren's completed restructuring puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, the firm has closed underperforming stores, reduced exposure to US department stores and off-price channels, and cut product lead times. These and other efforts have led to significant gross margin increases. Although North America sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2035 from 67% in fiscal 2025, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential, as customer visitation is declining in many retail stores and malls.

Ralph Lauren's sales rose 17% in fiscal 2026 second quarter on an exceptional 13% same-store sales lift. Its ability to drive higher average unit prices drove gross and adjusted operating margins up 100 and 270 basis points, respectively, to 68% and 14.1%, despite higher tariff and marketing cost.

In our view, narrow-moat Ralph Lauren's completed restructuring puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, the firm has closed underperforming stores, reduced exposure to US department stores and off-price channels, and cut product lead times. These and other efforts have led to significant gross margin increases. Although North America sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2035 from 67% in fiscal 2025, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential, as customer visitation is declining in many retail stores and malls.

Ralph Lauren's momentum continued in fiscal 2026's first quarter as it posted 14% sales growth on increases of 8%, 16%, and 21% in North America (38% of total), Europe (32%), and Asia (28%), respectively. Adjusted operating margin rose 270 basis points to 17%.

In our view, narrow-moat Ralph Lauren's completed restructuring puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, the firm has closed underperforming stores, reduced exposure to US department stores and off-price channels, and cut product lead times. These and other efforts have led to significant gross margin increases. Although North America sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2035 from 67% in fiscal 2025, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential, as customer visitation is declining in many retail stores and malls.

Ralph Lauren continued to outperform many in the luxury apparel industry, with 8% sales growth, a 68.6% gross margin (up 200 basis points), and a 10.3% adjusted operating margin (up 160 basis points) in its fiscal 2025 fourth quarter ended March.

In our view, narrow-moat Ralph Lauren's completed restructuring puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, Ralph Lauren has closed underperforming stores, reduced exposure to US department store and off-price channels, and cut product lead times. These and other efforts have resulted in strong gross margin increases. Although North Amercia sales have declined from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2034 from 66% in fiscal 2024, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential as customer visitation is declining in many retail stores and malls.

Continuing its string of strong reports, Ralph Lauren delivered sales and earnings above our expectations for its fiscal third quarter ended December. We attribute this performance in a tough luxury market to the firm’s brand intangible asset, the source of our narrow moat rating. Given its momentum, we expect to lift our $155 fair value estimate by a mid-single-digit percentage. However, we regard the shares, up about 80% over the past year, as expensive.

In our view, narrow-moat Ralph Lauren's completed restructuring puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, Ralph Lauren has closed underperforming stores, reduced exposure to US department store and off-price channels, and cut product lead times. These and other efforts have resulted in strong gross margin increases. Although sales have declined in North America from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2034 from 66% in fiscal 2024, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential as customer visitation is declining in many retail stores and malls.

Ralph Lauren continued to perform well in an uneven demand environment for upscale apparel, posting fiscal 2025 second-quarter results above our expectations. Given its momentum, we expect to raise our $148 fair value estimate by a mid-single-digit percentage but rate its shares, up about 90% over the past year, as overvalued.

In our view, narrow-moat Ralph Lauren's restructuring over the past few years puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, Ralph Lauren has closed underperforming stores, reduced exposure to US department store and off-price channels, and cut product lead times. These and other efforts have resulted in strong gross margin increases. Although sales have declined in North America from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2034 from 66% in fiscal 2024, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential as customer visitation is declining in many retail stores and malls.

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.

In our view, narrow-moat Ralph Lauren's restructuring over the past few years puts it on solid footing as it navigates macroeconomic challenges. In response to poor inventory control and heavy discounting in years past, Ralph Lauren has closed underperforming stores, reduced exposure to US department store and off-price channels, and cut product lead times. These and other efforts have resulted in strong gross margin increases. Although sales have declined in North America from peak levels, we believe the restructuring, including new merchandise and better pricing for core products, has positioned Ralph Lauren for low-single-digit sales growth and mid-60s gross margins. Further, we forecast advertising support as a percentage of sales in the mid-single digits in the long term and anticipate its direct-to-consumer sales will rise to 75% of sales in fiscal 2034 from 66% in fiscal 2024, thereby reducing the brand’s dependence on US physical retail and providing better control over pricing and positioning. We view an increasing direct-to-consumer business as essential as customer visitation is declining in many retail stores and malls.

Ralph Lauren's (March-ended) fiscal 2024 fourth-quarter results were slightly above our forecast. While guidance for fiscal 2025 sales growth of 1%-2% is shy of our prior 5% estimate, margin gains should continue. We expect to lift our $139 fair value estimate by a mid-single-digit percentage, but we view shares, up more than 50% over the past year, as expensive.