Ralph Lauren Corporation RL has demonstrated impressive performance in the stock market this year. With a year-to-date (YTD) gain of 54.4%, RL has significantly outperformed the Zacks Textile – Apparel industry's decline of 12.8%. It has also surpassed the broader Consumer Discretionary sector, which increased 14.1%, and the S&P 500, which grew 26% in the same period.

RL Stock’s Year-to-Date Performance

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Technical indicators are supportive of Ralph Lauren’s strong performance. The stock is trading above both its 50 and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength implies positive market perception and confidence in Ralph Lauren's financial health and prospects.

RL Trades Above 50 and 200-Day Moving Average

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The question that arises here is whether it is prudent to buy RL’s shares after the recent rally. Let’s take a look at the company’s underlying opportunities for growth and challenges that could impact its future trajectory.

Uncovering RL’s Opportunities

Ralph Lauren is advancing its long-term strategy under the “Next Great Chapter: Accelerate Plan.” This plan includes creating a simplified global organizational structure and rolling out improved technological capabilities. As part of the plan, the company is focused on three strategic pillars, which are elevating and energizing the lifestyle brand; driving the core and expanding for more; and winning key cities with its consumer ecosystem.

To focus on core brands, the company completed the transition of Chaps to a licensed business, thus concluding its portfolio realignment last year. In addition, its strategy of product elevation, personalized and targeted promotion, disciplined inventory management and favorable channel and geographic mix bodes well. 

Driven by strong brand equity, a diversified growth strategy and robust performance in the direct-to-consumer (DTC) channel, Ralph Lauren is advancing its digital and omnichannel capabilities through strategic investments in mobile, omnichannel platforms and fulfillment. The company's digital business, encompassing directly operated sites, departmentstore.com, pure players and social commerce, has shown strong performance.

In the second quarter, Ralph Lauren achieved strong digital sales growth in Europe and Asia, reflecting continued momentum in its online channels. The company also witnessed solid growth in DTC comparable store sales and expanded its connected ecosystems in key markets. Global DTC comps improved, driven by ongoing brand elevation, higher average unit retail (AUR) and positive retail comps across all regions.

RL Outlines an Optimistic View

Looking ahead to the holiday season, management is optimistic about business momentum and executing the long-term game plan, continuing to elevate the brand and strengthening its positioning in the marketplace. For the third quarter of fiscal 2025, the company anticipates revenues to increase 3-4% on a constant-currency basis led by DTC channels. This includes nearly 10-50 bps of positive foreign currency impacts.

For fiscal 2025, Ralph Lauren anticipates year-over-year revenue growth of 3-4%. This outlook reflects stronger growth in DTC channels and international markets, driven by solid consumer demand and strategic investments.

How are Estimates Faring for RL?

Indicating the positive sentiment, the Zacks Consensus Estimate for RL’s earnings per share (EPS) has seen upward revisions. In the past 30 days, analysts have increased their estimates for the current and the next fiscal year by 3.5% to $11.71 and 4% to $13.08 per share, respectively. These estimates indicate year-over-year growth rates of 13.4% and 11.7%, respectively.

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How Should You Play RL?

Ralph Lauren’s recent rally with its focus on diversified growth strategy, product elevation, personalized and targeted promotion, disciplined inventory management and favorable channel and geographic mix demonstrates its resilience and growth potential. An optimistic forward outlook and upward revisions in earnings estimates show promise. Ralph Lauren is well-positioned for sustained long-term growth, making it a stock worth considering for investors seeking opportunities in the sector. The company currently carries a Zacks Rank #2 (Buy).

Other Key Picks

Some other top-ranked stocks are Wolverine World Wide WWW, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.

Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago figure. The consensus mark for EPS indicates significant growth to 89 cents from 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 17.03%, on average.

Gildan Activewear manufactures and sells various apparel products in the United States, North America, Europe, the Asia Pacific and Latin America. It carries a Zacks Rank of 2  at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.

The consensus estimate for Gildan Activewear’s current financial-year sales and earnings indicates advancements of 1.5% and 15.6%, respectively, from the prior-year figures.

Steven Madden designs, sources, markets and sells fashion-forward, name-brand and private-label footwear. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.2% and 13.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.6%.

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Ralph Lauren Corporation (RL) : Free Stock Analysis Report

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