Ralph Lauren (RL) Stock Forecast & Price Target

Ralph Lauren Corp. has demonstrated strong growth in its wholesale segment, with an 18% increase attributed to both shipment timing and healthy underlying demand in various regions. The direct-to-consumer channel is thriving, having added 1.5 million new shoppers year-over-year, and digital sales now comprise approximately 26% of total revenue, reflecting a significant increase from prior years. Additionally, the company's operating margin expectations have improved, with a projected expansion of 60 to 80 basis points, driven by effective expense management and robust performance in core products that account for over 70% of sales.

Ralph Lauren Corp. faces a challenging outlook as gross margins are projected to be significantly pressured in the fourth fiscal quarter, primarily due to tariffs and unfavorable comparisons to the previous year, which may impact profitability despite expected growth in Average Unit Retail (AUR) and reduced promotions. The company anticipates that this quarter will remain the weakest in terms of sales, particularly within North America, which contributed notably to prior year sales and is expected to experience softer demand amidst macroeconomic pressures and a more cautious consumer sentiment. Additionally, while management cites positive sell-out trends, their cautious stance on the second half of the fiscal year underscores concerns over potential consumer headwinds that could adversely affect revenue growth and margin stability.