Here's Why Ralph Lauren (RL) Looks Poised for Q2 Earnings Beat
Ralph Lauren Corporation RL is expected to register top-line growth when it reports second-quarter fiscal 2024 numbers on Nov 8, before the opening bell. The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $1.61 billion, which indicates an increase of 1.9% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at $1.92 per share, which suggests a decline of 13.9% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved up by a penny in the past 30 days.
The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 8.8% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 17.3%, on average, in the trailing four quarters.
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation price-eps-surprise | Ralph Lauren Corporation Quote
Factors to Note
Ralph Lauren has been gaining from brand strength, solid demand, and expansion across all channels and regions. Its strategy of product elevation, acquisition of full-priced consumers, favorable channel and geographic mix, as well as ramping up of its targeting and personalization efforts, is likely to have supported AUR growth in the fiscal second quarter.
RL’s premium pricing strategy has been a key contributor to the company’s growth story. The renowned lifestyle apparel company has always managed to maintain higher prices for its clothing. Gains from the improved pricing are likely to get reflected in Ralph Lauren’s top-line results in the to-be-reported quarter.
The company’s focus on expanding digital and omni-channel capabilities via investments in mobile, omni-channel and fulfillment bodes well. Strength across owned and wholesale digital channels globally is likely to have been a key growth driver in the to-be-reported quarter.
Some other notable efforts on the online front are virtual selling appointments, “buy online, pick up in store,” endless aisle product availability, the introduction of additional digital sites in key markets, investments in AI-powered targeting and consumer acquisitions. These factors are likely to have aided the top line in the quarter under review.
On its last reported quarter’s earnings call, management expected second-quarter fiscal 2024 revenues to be flat to up slightly on a constant-currency basis. The operating margin is predicted to be 9.5-10% on a reported basis and 9-9.5% in constant currency.
The gross margin is expected to expand 40-60 bps, which will more than offset higher operating expenses. The gross margin expansion is anticipated to have been driven by lower freight costs and continued AUR growth, partly offset by increased product costs.
We expect the second-quarter fiscal 2024 adjusted operating margin to be 9.7%, indicating a 370-bps decline from the year-ago quarter’s reported number. The operating margin is likely to be impacted by elevated SG&A expenses, which should more than offset growth in the gross margin.
Our model predicts the adjusted gross margin to expand 30 bps year over year, while the GAAP gross margin is expected to expand 10 bps year over year in the to-be-reported quarter. SG&A expenses, as a percentage of revenue, are estimated at 55.3%, indicating an increase of 410 bps in the to-be-reported quarter.
Notably, Ralph Lauren has been witnessing the negative impacts of higher compensation and variable selling expenses, which are anticipated to have partly dented the margins in the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts 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 chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ralph Lauren has a Zacks Rank #3 and an Earnings ESP of +1.80%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Spectrum Brands SPB currently has an Earnings ESP of +5.93% and sports a Zacks Rank #1. SPB is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $759.9 million, suggesting 1.4% growth from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Spectrum Brands’ fiscal fourth-quarter earnings is pegged at $1.14 per share, suggesting 137.5% growth from the 48 cents reported in the year-ago quarter. The consensus mark has moved up 4.6% in the past 30 days.
NIKE NKE currently has an Earnings ESP of +1.63% and a Zacks Rank #3. NKE is likely to register top-line growth when it reports second-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $13.4 billion, suggesting 0.7% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for NKE’s fiscal second-quarter earnings is pegged at 0.85 per share, in line with the year-ago reported quarter. The consensus mark for earnings has been unchanged in the past 30 days.
Wynn Resorts WYNN currently has an Earnings ESP of +17.89% and a Zacks Rank #3. WYNN is likely to register top and bottom-line improvement when it reports third-quarter 2023 numbers. The Zacks Consensus Estimate for Wynn Resorts’ quarterly revenues is pegged at $1.6 billion, suggesting growth of 74.2% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for quarterly EPS of 74 cents suggests a 161.7% increase from the year-ago quarter’s actual. The consensus mark for WYNN’s earnings has moved down by a penny in the past 30 days.
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NIKE, Inc. (NKE) : Free Stock Analysis Report
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Ralph Lauren Corporation (RL) : Free Stock Analysis Report
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