Bank of America Merrill Lynch slashed its price target for Ralph Lauren Corp.
to $76 from $98 because of the headwinds the luxury clothing and lifestyle brand faces, including challenges at department stores and the trade war. News that Macy’s Inc.
will “tighten its inventory” will weigh on Ralph Lauren at a time when the company is revitalizing its brand, analysts said. “In the U.S., price has benefited from lean inventory and better consumer spending, but traffic remains a challenge, signaling weak brand demand, in our view,” Bank of America added, saying that the international business has successfully offset any weakness in U.S. sales. But that will wind down as the comparisons become tougher. “In the U.S., price has benefited from lean inventory and better consumer spending, but traffic remains a challenge, signaling weak brand demand, in our view. International has enabled Ralph Lauren to offset sluggish U.S. sales, but we expect the benefit to wane as Ralph Lauren laps tougher comparisons, especially in Europe. “Macy’s asserted that U.S. consumers have no appetite for higher prices,” the note said. “In our view, the risks for Ralph Lauren are near-term disruption with only a month notice on tariffs, any slowing in consumer spending, and further escalation in the trade war.” Bank of America reiterated its underperform stock rating. Ralph Lauren stock has fallen almost 39% over the last year while the S&P 500 index
is down 0.2% for the period.
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