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Factors to Decide the Fate of Ralph Lauren (RL) in Q4 Earnings

Ralph Lauren Corporation RL is expected to register a bottom-line decline when it reports fourth-quarter fiscal 2023 numbers on May 25, before the opening bell. The Zacks Consensus Estimate for fourth-quarter fiscal 2023 revenues is pegged at $1.5 billion, which indicates a decline of 3.5% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 65 cents per share, which suggests growth of 32.7% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days.

The apparel and lifestyle products company’s earnings beat the Zacks Consensus Estimate by 15.1% in the last reported quarter. Its earnings outpaced the Zacks Consensus Estimate by 23.6%, on average, in the trailing four quarters.

Ralph Lauren Corporation Price and EPS Surprise

 

Ralph Lauren Corporation Price and EPS Surprise
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 quarter under review.

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. 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 acquisition.

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 year-over-year revenue growth of mid to high-single digits at constant currency for the fourth quarter of fiscal 2023. The company anticipates an operating margin of 5.5%.

However, Ralph Lauren has been reeling under the negative impacts of higher freight and product cost inflation, which are anticipated to have dented margins in the fiscal fourth quarter. These are expected to have more than offset solid AUR growth and a positive product mix in the to-be-reported quarter.

Also, unfavorable currency fluctuations are likely to have been concerning. The company expected the unfavorable currency to negatively impact revenues by 500 bps, the gross margin by 140 bps and the operating margin by 160 bps in the to-be-reported quarter. These are likely to have impacted the bottom-line performance in the said quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict 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. But that’s not the case here. 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 #4 and an Earnings ESP of -6.92%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

lululemon athletica LULU currently has an Earnings ESP of +0.24% and a Zacks Rank #3. LULU is likely to register bottom and top-line growth when it reports first-quarter fiscal 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.92 billion, suggesting 19.3% 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 lululemon’s fiscal first-quarter earnings is pegged at $1.97 per share, suggesting 33.1% growth from $1.48 reported in the year-ago quarter. The consensus mark has moved up 2.1% in the past seven days.

Carnival Corp. CCL currently has an Earnings ESP of +0.42% and a Zacks Rank #3. CCL is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023. The Zacks Consensus Estimate for its quarterly revenues is pegged at $4.8 billion, suggesting 100% growth from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Carnival’s fiscal second-quarter loss is pegged at 34 cents per share, suggesting a significant improvement from a loss of $1.64 reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days.

Deckers Outdoor DECK currently has an Earnings ESP of +10.63% and a Zacks Rank #3. DECK is likely to register a bottom-line improvement when it reports fourth-quarter fiscal 2023 numbers.

The Zacks Consensus Estimate for Deckers’ quarterly revenues is pegged at $703.6 million, suggesting a decline of 4.4% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for quarterly EPS of $2.60 suggests a 3.6% increase from the year-ago quarter. The consensus mark for DECK’s earnings has moved up 1.2% in the past 30 days.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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