Skip to Content

Ralph Lauren Corp Class A RL

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

Ralph Lauren’s Q2 Sales Smashed by COVID-19 Shutdowns, but Liquidity Is Strong; Shares Undervalued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Narrow-moat Ralph Lauren suffered a stunning decline in sales in its (June-ending) first quarter of fiscal 2021, as the temporary closures of its stores and those of its wholesale partners in all regions took a huge toll. The firm’s sales decline of 66% was even worse than our forecast of 57%. Most notably, North America wholesale sales dwindled to practically nothing, falling a whopping 93%. Yet, Ralph’s Lauren’s net loss was not much worse than our forecast, as its gross margin outperformed and expense control was good. While the firm provided no specific guidance, we anticipate that the first quarter was the bottom for sales as nearly all stores worldwide have opened. Store traffic, though, is slow in most regions. Shares dropped about 8% on the report, and Ralph Lauren trades well below our fair value estimate of $93, which we do not expect to materially change. We view it as a firm that will emerge from the crisis in better shape than many of its peers because of its brand strength and liquidity.

Read Full Analysis

Company Profile

Business Description

Founded in 1967 by Ralph Lauren, Ralph Lauren Corp. designs, markets, and distributes lifestyle products in North America, Europe, and Asia. Its products include apparel, footwear, eyewear, jewelry, leather goods, home products, and fragrances. The company's brands include Polo Ralph Lauren, Lauren Ralph Lauren, Chaps, Double RL, and Club Monaco. Distribution channels for Ralph Lauren include wholesale (including department stores and specialty stores), retail (including company-owned retail stores and e-commerce), and licensing.

Contact
650 Madison Avenue
New York, NY, 10022
T +1 212 318-7000
Sector Consumer Cyclical
Industry Apparel Manufacturing
Most Recent Earnings Jun 30, 2020
Fiscal Year End Mar 30, 2021
Stock Type Cyclical
Employees 24,900

Related