Demand is increasing for Ralph Lauren Corp.’s fashion, which is increasing analysts’ confidence in the growth of sales at the luxury lifestyle company. Ralph Lauren RL, + 2.88% had been experiencing a turnaround strategy prior to COVID-19. During the pandemic, the company, like so many others in the apparel industry, experienced declines as vacations, parties and office work stopped.
“While many have remained skeptical of the company’s top-of-the-line recovery prospects, recent testing now points to a material acceleration in trends at Ralph Lauren,” Wells Fargo wrote in a note. See: This is the most popular footwear brand sold on Amazon “Also, while almost all clothing stocks in our coverage universe continue to show strong momentum over the past few weeks, Ralph Lauren appears to be experiencing outsized demand as much in absolute as well as relative terms. “Wells Fargo rates Ralph Lauren stock as overweight with a price target of $ 150, down from $ 132. Confidence in improving trends and digital controls, as well as a number of Future drivers, prompted a rally in Ralph Lauren shares to outperform the market at Cowen. Analysts at Cowen raised Ralph Lauren’s price target to $ 152 from $ 110. “The backdrop through softlines and department stores until back to school supports higher sales, [average unit retail] and EBIT margin than consensus models as inventory levels are improved, distribution channels are streamlined, and SG&A structures are reduced, ”wrote analysts led by John Kernan. (EBIT refers to earnings before interest and taxes and selling, general and administrative expenses refer to selling, general and administrative expenses). Cowen notes a $ 200 million reduction in SG&A expenses at Ralph Lauren. Additionally: ThredUp will appeal to middle-income consumers who will spend money on clothing after COVID “The construction of clothing in fiscal year 22 is positive for the current environment where discretionary spending may shift to more formal clothing relative to trends in comfort / athleticism that dominated 2020, ”Cowen said. Both sets of analysts also turn to data online, showing more eyes on Ralph Lauren’s offerings in recent weeks. Ralph Lauren shares are up 3.2% in the last few weeks. Wednesday trading. Stocks are up 28.2% year-to-date. The S&P 500 SPX Index, + 0.10% is up 11.5% for 2021 so far.