Ralph Lauren (RL) Last Update 12/9/21
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Ralph Lauren
North America
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Ralph Lauren Company


  1. North America constitutes 43% of the Trefis price estimate for Ralph Lauren's stock.
  2. Europe constitutes 24% of the Trefis price estimate for Ralph Lauren's stock.
  3. Asia constitutes 22% of the Trefis price estimate for Ralph Lauren's stock.


  1. Ralph Lauren Reports Stellar Q1 Results With Triple-Digit Sales Growth
    • The consumers jumped at the chance to get out and shop, looking for at least some small sense of pre-pandemic normalcy. Consequently, results were clearly visible in Ralph Lauren’s performance in the first quarter (three months ended June 2021), with the company beating consensus expectations on both revenues and earnings. Overall, revenues for the quarter jumped by 182% y-o-y to $1.38 billion while the company reported adjusted earnings per share of $2.29 per share, as compared to a loss of $1.75 in the year-ago quarter.
    • The company's revenues saw a 301% jump in North America itself, as consumers spent more on handbags, shoes, and clothes, fueling a rebound in the luxury goods industry. The company increased the marketing of its brand to capture the renewed demand. It should be noted that the high-end apparel seller's marketing spends in the first quarter were double that of the year-ago period and about 40% higher than 2019 - as it sponsored the U.S. Olympic team and events such as Wimbledon and Major League Baseball.
    • Global digital ecosystem revenue accelerated to more than 80% growth in FQ1, despite traffic starting to return to physical stores, with momentum across both owned and wholesale digital channels globally and led by improvement in North America.
  2. Raised Guidance
    • Looking ahead to FQ2, revenue is expected to increase approximately 20% to 22% in constant currency compared to last year. Foreign currency is expected to positively impact revenue growth by approximately 50 basis points. The operating margin for the quarter is expected in the range of 13.0% to 14.0%, driven primarily by operating expense leverage. Gross margin is expected to be flat to up 20 basis points to last year, with average unit retail growth and favorable product mix partially offset by challenging compares over Covid-19-related mix benefits due to store closures from the prior year.
    • Ralph Lauren also raised its forecast for full-year and now expects revenue to rise 25% to 30% on a 53-week reported basis, having previously estimated a 20% to 25% increase on a 52-week comparable basis.


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 2021, Ralph Lauren’s store presence in Asia was stronger than that in Europe. Compared to 92 Ralph Lauren freestanding stores in Europe, there were 151 freestanding stores in Asia. However, the number of wholesale distribution channels in Asia is still minuscule compared to that in North America and Europe (500 vs. 4,404 in North America and 3,920 in Europe). Going forward, there is tremendous scope for the company to expand its presence in wholesale stores in Asia.