Ralph Lauren Stock Gains More Than 44% in a Year: Time to Buy or Hold?

Ralph Lauren Corporation RL has retained its solid market foothold by focusing on brand elevation, a diversified growth strategy and its Next Great Chapter: Accelerate plan. 

RL stock has been trending up the charts in the past year, recording growth of 44.5%. This growth comfortably outpaces the broader Consumer Discretionary sector’s return of 12.5% and the Zacks Textile - Apparel industry‘s loss of 12.5% in the same period. RL’s shares have also surpassed the S&P 500 index’s appreciation of 10.5% in a year.

Currently priced at $237.19, Ralph Lauren stock is trading at an 18% discount to its 52-week high of $289.33, reached on Feb. 6. However, it is trading at a 52.1% premium to its 52-week low mark.

RL’s Strategies Aid the Rally

Ralph Lauren’s performance is supported by its progress on the ‘Next Great Chapter: Accelerate Plan’ and digital efforts. As part of the plan, the company is focused on elevating its lifestyle brand, expanding its core and other businesses, and strengthening its presence in key cities. 

The company is enhancing its global lifestyle brands by offering premium products that align with the evolving consumer preferences. Its strategy, which includes product elevation, personalized promotions, disciplined inventory management and a favorable channel and geographic mix, is proving effective.

RL continues to invest in key priorities like marketing, digital growth and expansion of its ecosystem in major cities. The company’s direct-to-consumer (DTC) channels, including stores and digital commerce, are performing well, with significant progress in mobile, omnichannel and fulfillment investments. In the latest quarter, RL added 1.9 million new consumers to its DTC business, with digital sales increasing 14% in Europe and 29% in Asia.

Additionally, Ralph Lauren is experiencing strong gains across its retail and wholesale channels, buoyed by solid reorder trends, brand momentum, strong AUR growth and full-price sell-through. Overall, such channels are performing well on the back of the company’s strategic brand elevation, disciplined inventory management and digital investments.

RL Price Performance

Challenges RL Might Face Ahead

Ralph Lauren, like other lifestyle brands, faces macroeconomic challenges such as inflation, supply-chain issues and shifting consumer behavior. Adverse foreign currency impacts are other deterrents for RL.

The company has been facing high-cost concerns for a while. Adjusted operating expenses increased 10% year over year during the third quarter of fiscal 2025. Management expects marketing expenses to be about 7% of sales in fiscal 2025, implying lower spending in the second half, particularly in the fourth quarter.

RL Stock’s Premium Valuation

Ralph Lauren’s stock is trading at a premium valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 17.25 on a forward 12-month basis, higher than 10.98 for the industry. Also, RL is trading higher than its median of 16.39.

How to Play RL Stock?

Ralph Lauren’s robust strategies, including the Next Chapter Plan and digital endeavors, position it well for long-term growth.  However, macroeconomic uncertainties and high operating costs may continue to be headwinds in the near term. The stock's pricey valuation signals a cautious approach for investors willing to enter at these levels. 

For existing investors, holding onto the stock seems to be a prudent choice, considering the company’s growth potential. Analysts also seem optimistic about the stock. The Zacks Consensus Estimate for Ralph Lauren’s sales and earnings per share (EPS) indicates growth of 5.8% and 16.6%, respectively, year over year for fiscal 2025. The consensus mark for fiscal 2026’s sales and EPS reflects a year-over-year increase of 4.1% and 13%, respectively. The company’s Zacks Rank #3 (Hold) supports our thesis.

Key Consumer Discretionary Picks

We have highlighted three better-ranked stocks, namely, Duluth Holdings DLTH, Gildan Activewear GIL and Royal Caribbean RCL.

Duluth Holdings, a marketer of casual wear, workwear and accessories, currently carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Duluth Holdings has a negative trailing four-quarter earnings surprise of 37.2%, on average. The Zacks Consensus Estimate for DLTH’s current financial-year EPS indicates growth of 5.6% from the year-ago figure.

Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank of 2 at present. GIL has a trailing four-quarter earnings surprise of 5.3%, on average. 

The consensus estimate for Gildan Activewear’s current financial-year sales indicates growth of 4.4% from the year-ago figure.

Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 15.7%, on average.

The Zacks Consensus Estimate for RCL’s 2025 sales and EPS indicates an increase of 9% and 26.7%, respectively, from the year-ago levels.

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This article originally published on Zacks Investment Research (zacks.com).

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