Ralph Lauren Gears Up for Q2 Earnings: Here's What You Should Know

Core Viewpoint - Ralph Lauren Corporation (RL) is expected to report second-quarter fiscal 2025 results on November 7, with revenue estimates at $1.49 billion, reflecting a 0.6% decrease year-over-year, while earnings per share are projected to grow by 14.8% to $2.41 [1][2] Group 1: Performance Expectations - The company's last reported quarter saw earnings surpassing the Zacks Consensus Estimate by 10.2%, with an average trailing four-quarter earnings surprise of 10.3% [2] - Key factors contributing to RL's anticipated performance include strong brand recognition, robust demand, and strategic initiatives aimed at enhancing core business and market opportunities [3] - The "Drive the Core and Expand for More" initiative is expected to bolster the company's performance across all channels and regions [3] Group 2: Digital and Omnichannel Growth - RL has experienced significant growth in its digital and omnichannel business, adding 1.3 million consumers to its direct-to-consumer segment in the previous quarter, which is expected to positively impact fiscal second-quarter results [4] - Management anticipates constant-currency revenue growth in the low-to-mid single digits for the fiscal second quarter, with operating margins projected to expand by 80-120 basis points [5] Group 3: Challenges and Risks - The North America segment, particularly the wholesale channel, has been underperforming, with a projected revenue drop of 0.4% year-over-year due to higher promotions and inflationary pressures [6] - Foreign currency fluctuations are expected to negatively impact gross and operating margins by 40 basis points and 50 basis points, respectively, with a 160 basis points negative impact on revenue [7] Group 4: Valuation and Market Performance - Ralph Lauren's stock is currently trading at a forward price/earnings ratio of 16.38, which is higher than the Textile-Apparel industry's 13.48 and its own median of 14.74 [9] - Over the past three months, RL shares have risen by 24.2%, outperforming the industry's growth of 22.4% [10]