Ralph Lauren Drops 7% On Wider-Than-Expected 1Q Loss

Shares of Ralph Lauren slid around 7% in U.S. morning trading after the luxury lifestyle brand posted a wider-than-expected loss in the first quarter and missed analysts’ expectations for revenues. Coronavirus-led store closures and a slowdown in demand took a toll on its financial results.

Ralph Lauren (RL) reported an adjusted loss of $1.82 per share, missing analysts’ estimates of a loss of $1.75 per share. Revenues of $487.5 million were also lower than Wall Street expectations of $600 million.

During the first quarter, the company witnessed a majority of store closures in its key markets for an average of 8-10 weeks, which severely dented its traffic and revenues. However, digital comparative sales grew 13% year-over-year, as consumers increasingly shifted to e-commerce shopping.

Following the earnings, Needham analyst Rick Patel assigned a Buy rating on the stock, with a price target of $90 (40.1% upside potential). Patel said that the first quarter was the “performance trough,” and results should improve from here.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys, 7 Holds, and 1 Sell. The average price target of $82.75 implies an upside potential of about 29%. (See RL stock analysis on TipRanks).

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