Ralph Lauren Corporation RL is set to report second-quarter fiscal 2025 results on Nov. 7, before market open. The Zacks Consensus Estimate for revenues is pegged at $1.49 billion, which indicates a decrease of 0.6% from the year-ago quarter’s reported figure.
The consensus estimate for earnings is pegged at $2.41 per share, which indicates growth of 14.8% from the year-earlier actual. The consensus mark for earnings has moved up a penny in the past seven days.
In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by 10.2%. Ralph Lauren has a trailing four-quarter earnings surprise of 10.3%, on average.
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Key Factors Likely to Have Impacted RL’s Q2 Performance
Ralph Lauren’s quarterly performance is likely to have gained from strong brand recognition, robust demand and expansion across all channels and regions. The "Drive the Core and Expand for More" initiative has strategically positioned it for success. This initiative aims to bolster the company’s core business and prepare it to seize market opportunities.
RL has been experiencing growth in its digital and omnichannel business, significantly increasing customer acquisition and loyalty. The company added 1.3 million consumers to its direct-to-consumer business in the preceding quarter, highlighting the effectiveness of its strategies and the strong appeal of its products, which is expected to have aided the fiscal second-quarter performance. Such positives are expected to reflect in its top and bottom-line results.
Management, in its last earnings call, anticipated constant-currency (cc) revenues to grow nearly low-to-mid single digits in the fiscal second quarter. RL had projected operating margin to expand around 80-120 basis points (bps) in cc on higher gross margins. The gross margin is anticipated to grow in the range of 110-130 bps, more than offsetting increased planned operating costs. Excluding marketing expenses, operating costs had been predicted to dip slightly as a percentage of sales year over year.
However, the company has been facing challenges in its North America segment, particularly within the wholesale channel, which has been underperforming for some time now. Higher promotions in the North America market and an unfavorable timing shift in wholesale operations have been significant obstacles. The ongoing inflationary pressures have been concerning. Management expressed caution about the North America wholesale channel. The Zacks Consensus Estimate for the North America’s wholesale unit’s revenues indicates a drop of 0.4% year over year.
Foreign currency is likely to hurt the gross and operating margins by 40 bps and 50 bps, respectively. The revenue view includes nearly 160 bps of negative foreign currency impact for the quarter.
What the Zacks Model Unveils for RL
Our proven model does not conclusively predict an earnings beat for Ralph Lauren this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation price-eps-surprise | Ralph Lauren Corporation Quote
Ralph Lauren currently has an Earnings ESP of -1.19% and a Zacks Rank of 2.
Valuation Picture of RL Stock
Ralph Lauren's stock is trading at a premium valuation relative to the industry. Going by the price/earnings ratio, the RL stock is currently trading at 16.38 on a forward 12-month basis, higher than 13.48 of the Textile - Apparel industry. Also, it is trading higher than its median of 14.74.
The recent market movements show that RL shares have risen 24.2% in the past three months compared with the industry's 22.4% growth.
Stocks With the Favorable Combination
Here are three companies, which according to our model, have the right combination of elements to post an earnings beat this season:
lululemon athletica LULU currently has an Earnings ESP of +15.20% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
LULU is likely to register top-line growth when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.35 billion, indicating 6.8% growth from the figure reported in the year-ago quarter.
The consensus estimate for LULU’s earnings is pegged at $2.73 a share, implying a 7.9% increase from the year-earlier quarter. LULU has a trailing four-quarter earnings surprise of 7.9%, on average.
Disney DIS presently has an Earnings ESP of +2.09% and a Zacks Rank of 3. DIS is likely to register bottom and top-line growth when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $22.6 billion, indicating a 6.4% increase from the figure reported in the year-ago quarter.
The consensus estimate for DIS’ earnings is pegged at $1.09 per share, implying 32.9% growth from the year-ago quarter’s actual. DIS has a trailing four-quarter earnings surprise of 18%, on average.
PVH Corp PVH currently has an Earnings ESP of +0.54% and a Zacks Rank of 3. The Zacks Consensus Estimate for earnings per share is pegged at $2.70, implying a 6.9% dip from the prior-year quarter's reported number.
The consensus mark for revenues is pegged at $2.22 billion, indicating a decrease of 5.9% from the figure reported in the prior-year quarter. PVH has a trailing four-quarter earnings surprise of 14.9%, on average.
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