Ralph Lauren Corporation
) - a designer, marketer and distributor of lifestyle products -
is expected to release its financial results for the second
quarter of fiscal 2013 on Thursday, November 1, 2012.
The current Zacks Consensus Estimate for the quarter stands at
$2.14 per share, reflecting a fall of about 13% from $2.46
reported in the comparable prior-year period. Revenue, as per the
Zacks Consensus Estimate, is pegged at $1,834 million.
First Quarter 2013 Recap
Ralph Lauren reported its first quarter 2013 earnings per
share of $2.03, beating the Zacks Consensus Estimate of $1.78 per
share as well as witnessing a 6.8% growth from $1.90 earned in
the year-ago period. The better-than-expected bottom-line
performance was primarily driven by top-line growth, lower tax
rate and reduced number of shares outstanding.
During the quarter, Ralph Lauren's net revenues increased 4.4%
year over year to $1,593.4 million, exceeding the Zacks Consensus
Estimate of $1,579 million, driven by improved performance across
all segments of the company.
During the first quarter conference call, management
anticipated net revenue to decrease by mid-single-digit
percentage in the second quarter of fiscal 2013. Moreover,
operating margin is expected to contract by 175-225 basis points
from the prior-period level.
Management clarified that the contraction in operating margin
will be mainly due to expected deleveraging of operating
expenses, which will be offset in part by increased gross
Agreement of Estimate Revisions
For the to-be-reported quarter, only 2 out of 12 estimates
were revised upwards while no estimates were lowered over the
past 30 days. During the last 7 days, no revision was witnessed
in the estimates.
Moreover, for fiscal 2012, over the last 30 days, 3 estimates
(out of 13) have been revised in the upward direction while none
was adjusted in the opposite direction. In the last 7 days, no
estimate revision was noticed for the stock.
Magnitude of Estimate Revision
For the upcoming quarter, the earnings remained stagnant at
$2.14 per share mainly due to insignificant estimate revisions,
over the last 7 or 30 days. For fiscal 2013, the estimate moved
up by a penny to $7.86 per share over the last 30 days, whereas
in the last 7 days the estimate remained stagnant.
Positive Earnings Surprise History
With respect to earnings surprise, Ralph Lauren has topped the
Zacks Consensus Estimate over the last four quarters, with an
average of 11.7%. We expect the company to surpass the Zacks
Consensus Estimate in the coming quarters as well.
Ralph Lauren's initiatives to capitalize on opportunities in
Asia, spurred by reduced long-term debt, augur well for the
future operating performance. Moreover, Ralph Lauren leverages
its globally renowned brands and their premium positioning to
bolster its well-established business in the specialty retailing
However, macroeconomic headwinds, stiff competition, higher
inventory level and rising input costs still remain the causes of
concern. As a result, we are maintaining a long-term 'Neutral'
recommendation on the stock.
Ralph Lauren, which competes with
The Jones Group Inc.
Phillips-Van Heusen Corporation
), carries a Zacks #2 Rank, implying short term Buy rating on the
stock, based on rising earnings momentum over the past several
JONES GROUP INC (JNY): Free Stock Analysis
PVH CORP (PVH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis
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