Ralph Lauren (RL) Remains A Show Me Story, PT Cut to $123 at Nomura

Nomura/Instinet analyst Simeon Siegel lowered the price target on Ralph Lauren (NYSE: RL) to $123.00 (from $129.00) after broad based fear within retail reemerged after RL posted a global 1% comp store sales increase. N.A. digital led the pack and comps become easier in 1Q, but more difficult in 2Q/3Q leaving investors concerned about the second half of the year.

The company plans to bring marketing rate to ~5% by FY23, adding ~$100mn in costs. The analyst stated "In 4Q, N.A. margins inflected -ve for first time since 4Q17; Europe posted its strongest gain since 1Q17. RL guided 1Q/FY20 op. margin +30-50bps/40-60bps in cc". "The reality is we believe investors would return to RL if they see domestic expansion, but the burden of proof remains on management". No change to the Neutral rating.

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