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Can Ralph Lauren (RL) Rise on its Strategic Initiatives?

Ralph Lauren CorporationRL , major designer, marketer and distributor of premium lifestyle products, seems to be gaining ground on the back of its strategic endeavors. The company's solid brand portfolio, healthy financial status and constant initiatives of focusing on profitable areas, bode well. Also, the company's continuous efforts to enhance global performance are likely to drive its performance.

Ralph Lauren is a major specialty retailer of premium lifestyle merchandise in the U.S., commanding a stellar portfolio of globally recognized brands that provide it an edge over its peers. The company has been able to strengthen its position in the market based on these premium brands, while many other retailers have struggled to retain consumers amid the recession and changing fashion trends. Ralph Lauren recently introduced a global reorganization plan aimed at creating a brand-based operating structure to contain costs and improve operational efficiencies. The company expects these cost saving initiatives, along with efficient pricing actions and restructuring initiatives to drive greater profitability and sales in the future.

Moreover, Ralph Lauren flaunts a solid earnings history, having delivered positive earnings surprises in 16 out of the past 18 quarters. The company has delivered an average positive surprise of 4.7% over the trailing four quarters. In second-quarter fiscal 2016, the company posted better-than-expected top- and bottom-line results, backed by store openings, double-digit international growth and global eCommerce expansion, along with stringent cost management which also fuelled stronger-than-anticipated operating margin.

Further, Ralph Lauren, which shares space with other textile apparel majors like Columbia Sportswear Company COLM , Hanesbrands Inc. HBI and Coach, Inc. COH , continues to progress with its mix shift plan toward retail and international, with the vision of greater profitability in these sections than the wholesale and domestic businesses. We believe that with its extensive store network and aim to concentrate on profitable areas, the company's initiatives are likely to boost performance.

However, though Ralph Lauren posted better-than-expected results in the second quarter, results were impacted by adverse foreign currency headwinds. Going forward, the company expects these currency headwinds to persist, as reflected in its outlook for fiscal 2016. The company envisions net sales for the fiscal to bear a negative impact of 400 basis points (bps) from foreign currency translations. Further, third-quarter sales are expected to bear the brunt of these headwinds to an extent of about 250 bps. In addition, high dependence on outside suppliers and competition from other players remain concerns.

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COACH INC (COH): Free Stock Analysis Report

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RALPH LAUREN CP (RL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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