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A Few Reasons Why Ralph Lauren Looks Like a Good Long-Term Pick

August 21, 2014 | About:

Ralph Lauren (NYSE:RL) released its fiscal results recently that ended up being above consensus estimates owing to solid North American request. Besides, Ralph Lauren is far cheaper than peers PVH (PVH) and Kate Spade (KATE), which makes it an interesting investment. Ralph Lauren is, as of now, performing exceptionally well with its new and interesting distinctive strategies.

Strong expansion plans

The expansion in sales was headed by the Polo and Club Monaco brands. These two brands reported strong wholesale sales, coupled with vigorous development in worldwide sales.

Ralph Lauren acknowledged twofold digit development in Asia with robust demand from China. Ralph Lauren expects China to become a strong business opportunity for its development and expansion. It plans to open a double flagship store at Lee Garden in Hong Kong. This will be built across 20,000 square feet. Ralph Lauren is committed to spreading its brand picture in China by way of different PODs (points of distribution) and expects its flagship store to be a significant driver in the Chinese market.

Ralph Lauren also witnessed strong development in the e-business direct in Q3, attaining solid development in the youngster segment comprehensively. To date, its universal e-business revenue development has crossed the half stamp, with Japan and Europe being the significant contributors. Ralph Lauren is consolidating its e-business further and is arranging an investment of $75 million in ralphlauren.com, consequently growing its operations. Ralph Lauren is devoted to making browsing and purchasing merchandise through portable and other electronic devices easier to improve the customer experience.

Products are selling great

Ralph Lauren also reveled in tremendous development success in its accessories line, especially Ricky handbags. The organization spread awareness with respect to Ricky handbags with investments in generation, merchandising and visual presentation. This drive resulted in exceptional sales development for Ricky in Q3. Ralph Lauren's long-term development prospects were further bolstered by holding hands with specialty store partners comprehensively.

Ralph Lauren's position is obviously better than its peers due to a number of positive characteristics that include regular revenue development, a strong budgetary position, a sensible obligation level and modest valuation against peers.

Despite the fact that Ralph Lauren may not be the fastest-developing organization of the three, its shoddy valuation and superior profitability make it a firm pick. Ralph Lauren offers stable development at average earnings that makes it an esteemed decision for an investor. What's more, Ralph Lauren also offers superior profit margin alongside a solid dividend yield in comparison to peers.

More aggressive investors should most likely consider an investment in either PVH or Kate Spade. On the other hand, Morgan Stanley as of late minimized PVH on fears that the organization could struggle in a profoundly limited nature. The consistent and aggressive business development of Ralph Lauren is doubtlessly a risk to PVH's prospects.

Kate Spade, then again, is exceptionally expensive and it may take more time to convey consistent gains to investors. Kate Spade aims to fourfold its sales to $4 billion later on. On the other hand, it faces intense rivalry from officially established peers such as Ralph Lauren, Michael Kors, Coach and so forth. It may not be a decent investment choice provided for its sky high valuation and not all that impressive profit margin.


Ralph Lauren's significant investments in e-trade coupled with a robust universal development and its development in a right bearing alongside a cheaper valuation when contrasted with peers makes it a decent purchase at a reasonable cost.

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