Ralph Lauren’s Strategic Efforts Allow It to Navigate External Challenges; Shares Undervalued

Overcoming virus-related store closures in China and inflation’s impact on consumer spending, Ralph Lauren reported results for its fiscal 2023 first quarter (June-ended) that largely surpassed our expectations. We think these results provide further evidence that its efforts to elevate its product and pricing have bolstered its brand intangible asset, the source of our narrow-moat rating. The company marginally lowered sales and margin guidance for the rest of the fiscal year (perhaps explaining the mid-single-digit drop in its share price), but the cut was due solely to the stronger U.S. dollar. We plan no material change to our per-share $122 fair value estimate on Ralph Lauren and view it as very attractive at current levels.