Ralph Lauren (RL) Last Update 3/29/21
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Ralph Lauren
North America
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Ralph Lauren Company


  1. North America constitutes 36% of the Trefis price estimate for Ralph Lauren's stock.
  2. Europe constitutes 27% of the Trefis price estimate for Ralph Lauren's stock.
  3. Asia constitutes 20% of the Trefis price estimate for Ralph Lauren's stock.


  1. Latest Earnings Q3’21
    • The effects of Covid-19 were clearly visible in Ralph Lauren’s performance in the third quarter (three months ended December 2020), with the company falling behind on consensus expectations on revenues and earnings. Overall, revenues for the quarter plunged by 18% y-o-y to $1.4 billion (up 19% sequentially from Q2 2021) while the company reported adjusted earnings per share of $1.67 per share, as compared to a profit of $2.86 in the year-ago quarter. However, RL’s digital segment continued to thrive, delivering double-digit growth across all regions, including more than 70% growth in Europe and Asia and 10% in North America. It should be noted that the Asia segment saw revenues increase 14% y-o-y, while North American revenues declined 21% y-o-y and Europe revenues fell 28% y-o-y in Q3.
  2. Weak Guidance for Q4
    • Ralph Lauren expects a bigger-than-expected drop of mid-to-high single digits in fourth-quarter revenue, as the high-end apparel maker struggles with new lockdowns in its major markets of Europe and Japan. Many European governments put their economies back into lockdown in late 2020 due to a spike in coronavirus cases.
  3. Focus On China
    • During FY2020, the company opened 25 stores globally, with 18 in China, which is its fastest-growing market. Its momentum remained strong in the country before the Covid-19, with 20% revenue growth reported in Greater China in FY’19, including over 30% growth in Mainland China, driven by comps improvement and new stores. Its digital efforts are also powering growth through partnerships with Tmall, Tmall’s Luxury Pavilion, JD.com, and WeChat. We expect these trends to continue through the next fiscal year, resulting in strong growth in the region. China can be considered a key growth market for Ralph Lauren. The brand awareness level in the country is in the 70s currently, which is impressive given the limited store footprint. However, when compared with the U.S., where the metric is at 90%, there is considerable room to grow. The company is also focusing on digital expansion through its partnerships with Tmall, JD.com, and WeChat. Ralph Lauren is aiming to garner $0.5 billion of revenue in five years from Greater China.


Ralph Lauren is a global leader in the design, marketing, and distribution of premium lifestyle products. Its products include apparel, accessories, and fragrance collections for men and women, as well as children’s wear and home furnishings. The company’s brands, such as Ralph Lauren, Club Monaco, and Polo, are some of the world’s most widely recognized consumer brands.

The company offers a broad spectrum of lifestyle products that include:

  1. Apparel: Products include men’s, women’s, and children’s clothing
  2. Accessories: Products encompass a broad range, including footwear, eyewear, watches, jewelry, hats, belts, wallets, sleepwear, and leather goods, including handbags and luggage
  3. Home: Coordinated products for the home that include bedding and bath products, furniture, fabric, rugs, lighting, barware, wallpaper, paint, tabletop, and giftware
  4. Fragrance: Fragrance products are sold under Romance, Polo, Lauren, Safari, Ralph, and Black Label brands, among others.

The company sells its products through company-operated retail stores and its website ralphlauren.com, as well as through upscale and mid-tier department stores and specialty stores.


We believe Ralph Lauren’s North American and European divisions are significant sources of value for Ralph Lauren for the following reasons:

Margin Opportunity

RL has also aimed to reduce its dependence on department stores to generate sales, and in this regard, the company has been in the process of exiting 20% to 25% of such stores that sell its merchandise. While this strategy has had a negative impact on its top-line, it has been a boon to the bottom-line. These efforts should continue to drive margin growth for the company.

Increasing Revenue Share Of Retail business

Over the past few years, Ralph Lauren has focused on increasing its direct-to-consumer reach to gain greater control over its brands and operations. As such, the firm has expanded its store base and increased products and services offered on its online store. This is Ralph Lauren’s response to the ongoing e-commerce boom in the apparel industry.

The result has been a consistent increase in the share of revenues coming from Ralph Lauren’s company-operated stores and the firm’s e-commerce websites.


Ralph Lauren Has a Strong Brand Identity

Ralph Lauren’s greatest competitive advantage has been its ability to maintain the strength of its brand for the past twenty years. While many fashion companies have struggled to retain customers with changing fashion trends, Ralph Lauren’s brand has not only remained strong but has also expanded its brand to other products and geographies. The company’s products are popular through all age groups, and in a study conducted by investment bank Piper Jaffray, Ralph Lauren was ranked in the top five favorite brands among teens, along with Nike, Urban Outfitters, and American Eagle, which target a different set of customers.

Another advantage of Ralph Lauren is its broad consumer appeal. The company offers products across a wide range of price points from discount (Chaps) to luxury (Ralph Lauren Collection), enabling it to appeal to a wide target demographic.

Weak Macroeconomic Conditions in Europe are a Near-Term Threat

Current weak macroeconomic conditions in Europe, particularly in Spain, Greece, and Portugal, pose a threat to Ralph Lauren’s revenues in the near term. Ralph Lauren’s wholesale business is most vulnerable to the situation, as Europe accounts for a significant percentage of the company’s total wholesale revenues.

Expansion in Asia Should Help Sustain Growth

Ralph Lauren has been focusing recently on expanding retail operations in emerging markets, especially in Asia. The Asian market has become a focal point of the global retail industry, with major brands across the globe aggressively expanding their footprint in the region. In FY 2020, Ralph Lauren’s store presence in Asia was stronger than that in Europe. Compared to 94 Ralph Lauren freestanding stores in Europe, there were 132 freestanding stores in Asia. However, the number of wholesale distribution channels in Asia is still minuscule compared to that in North America and Europe (685 vs. 12,623 in North America and 7,229 in Europe). Going forward, there is tremendous scope for the company to expand its presence in wholesale stores in Asia.

Focus On Digital Sales

Ralph Lauren’s digital sales remained robust before the outbreak of Covid-19, with digital sales of more than $1 billion in FY 2019. The company expects the growth in this segment to accelerate as the promotional pullback in the directly operated North America e-commerce business is broadly complete. Ralph Lauren is focusing on improving the site’s functionality and increasing marketing to drive further growth in online sales. Ralph Lauren’s global digital business, including its directly operated sites, department store dot-com, pure players, and social commerce, was up 11% versus last year in fiscal 2019, with strong performance noted across the board. Ralph Lauren has also launched its mid-tier brand – Chaps – on Amazon. We can expect the growth in this segment to accelerate as the promotional pullback in the directly operated North America e-commerce business is broadly complete.