Ralph Lauren sells luxury at an exorbitant discount.

On Monday, Ralph Lauren (RL.N) provided investors with a positive financial forecast.

Ralph Lauren

NEW YORK, Sept 19, 9:52 Pm (Reuters Breakingviews) - Ralph Lauren  a promising financial outlook for investors on Monday. It suggests that the $6 billion U.S. retailer, started more than a half-century ago by the man whose name adorns the label, is languishing too deeply in the bargain bin.

Chief Executive Patrice Louvet has been busy the brand. Since 2018, Ralph Lauren has closed more than two-thirds of its wholesale business by halting sales to department stores such as Belk, slashed promotions and lifted its average unit price 60%. The apparel maker expects revenue to grow on average annually as much as in the high single digits over the next three years.

That kind of performance would be broadly in line with some fashionable European peers, but Ralph Lauren’s 15% operating margin target also lags estimates of theirs by at least 5 percentage points. The House of Polo trades at 10 times expected 2025 net profit, per estimates on Refinitiv, compared to Burberry’s 15 times and Prada’s 20 times. There’s scope for that gap to narrow. 


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