Luxury lifestyle company Ralph Lauren is set to report its fiscal first-quarter results with expectations of mixed results. While revenues are projected to fall below consensus estimates, earnings are anticipated to marginally surpass expectations. Looking ahead to fiscal 2025, Ralph Lauren forecasts revenue growth at a low single-digit pace, centered around 2% to 3%. Foreign currency is expected to have a negative impact of approximately 90 basis points on revenue growth for the year. The company has introduced a strategic growth plan titled “Next Great Chapter: Accelerate” and anticipates mid-to-high single-digit revenue compounded annual growth over the next three years.
Despite strong gains of 50% in the past three years, Ralph Lauren’s stock performance has been inconsistent, with returns of 15% in 2021, -11% in 2022, and 36% in 2023. This performance contrasts with that of the S&P 500, underperforming in 2021. The uncertain macroeconomic environment, characterized by high oil prices and elevated interest rates, raises questions about whether Ralph Lauren will continue to struggle against the S&P 500 over the next 12 months or experience a significant increase in performance. The Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over recent years, showcasing better returns with less risk.
In the upcoming earnings report, Ralph Lauren’s revenues are expected to come in slightly below consensus estimates, with Trefis forecasting Q1 2025 revenues to be around $1.5 billion. The company’s revenue growth in the fourth quarter of fiscal 2024 reached 2% year-over-year, driven by increases in sales across Asia, Europe, and North America. Ralph Lauren’s direct-to-consumer business and sequential improvement in the wholesale sector contributed to the revenue growth. With reduced inventory levels and a healthy balance sheet, the company is poised for continued growth in fiscal 2025, with projected revenues of $6.8 billion, up 3% year-over-year.
Earnings per share are projected to marginally exceed consensus estimates, with a forecast of $2.49 for Q1 2025 according to Trefis analysis. In the previous quarter, Ralph Lauren reported earnings of $1.71 per share, a significant increase from the previous year. The company’s adjusted gross margin also saw improvement, rising 480 basis points to 66.6% of sales in Q4 2024. Strong average unit retail growth, lower freight costs, and favorable geographic and channel mix shifts drove the increase in margins, offsetting continued pressure from raw material costs. Ralph Lauren’s stock price estimate aligns closely with the current market price, with a valuation analysis suggesting a price of $167 per share for fiscal 2024.
As the luxury retailer prepares to announce its first-quarter results, investors will closely monitor the performance metrics for any signs of growth and stability. With a focus on long-term sales and margin growth, Ralph Lauren aims to accelerate its strategic growth plan and achieve sustained revenue expansion over the next three years. In a volatile market environment, Ralph Lauren’s ability to navigate challenges and capitalize on opportunities will determine its future performance relative to industry peers and benchmarks.
