Ralph Lauren (NYSE: RL) stock has badly trailed the market in the wake of the COVID-19 pandemic, with shares down over 40% in 2020 through mid-August. The wider market is up by 6%.
Investors have lost enthusiasm for the luxury apparel and accessories specialist in light of major consumer shopping changes that are stressing its finances. Sales dove 66% in the fiscal first quarter, which runs through late June, the company revealed in early August. That decline led to an operating loss of $168 million compared to $143 million of profit in the year-ago period.
Ralph Lauren took a big hit from temporary store closures, but also from shifting consumer spending priorities.
With its store base almost fully operational again, it's a safe bet that Ralph Lauren will announce improving results in the fiscal second quarter as compared to the heavily pandemic-influenced Q1. But some growth pressures might remain well into 2021 as shoppers prioritize categories like home furnishings and consolidate shopping trips to just a few big-box retailers.
That tough outlook has management looking at aggressive cost-cutting and restructuring measures. Ralph Lauren is also entering the holiday shopping season with a light inventory position. Still, these advantages likely won't be enough to return the business to its pre-COVID-19 earnings power for some time -- especially if a prolonged recession hits the industry.
10 stocks we like better than Ralph Lauren Corp
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Ralph Lauren Corp wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 1, 2020