Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Ralph Lauren Are Rising Today

By John Rosevear - Mar 26, 2020 at 11:56AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst's note pointed out that the company has solid cash reserves.

What happened

Shares of Ralph Lauren (RL 1.17%) were rising on Thursday after analysts at UBS said that the company appears to have the financial flexibility to weather a significant sales decline in 2020. 

As of 11:30 a.m. EDT, Ralph Lauren's shares were up about 8.8% from Wednesday's closing price.

So what

In a new note on Thursday morning in which analysts at UBS looked at prospects for several retail stocks, the analysts noted that Ralph Lauren has about $2.4 billion in liquidity. That should be ample to "absorb" a 20% sales decline for the 2020 calendar year, roughly the decline similar companies experienced in the 2008-2009 financial crisis, they wrote. 

The exterior of a Ralph Lauren Store in Paris

Image source: Ralph Lauren.

Ralph Lauren had net sales of $6.31 billion in the fiscal year that ended on March 31, 2019. The $2.4 figure is about 38% of the company's fiscal 2019 sales. 

Separately, Ralph Lauren said on Thursday that its corporate foundation will donate $10 million to organizations providing assistance during the coronavirus pandemic. The company is also beginning U.S. production of 250,000 masks and 25,000 isolation gowns that it will donate to healthcare facilities in need.

Now what

While Ralph Lauren appears to have ample cash to get through the next few months, it has yet to update investors on the state of its balance sheet and any moves it might be making to reduce spending or fortify its cash position. 

The company is expected to report earnings in May, but I expect -- and hope -- that it provides an update on its condition before then.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ralph Lauren Corporation Stock Quote
Ralph Lauren Corporation
RL
$90.70 (1.17%) $1.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.