Goldman says elements for successful turnaround 'in place' at Ralph Lauren
Shares of Ralph Lauren (RL) climbed in morning trading after the apparel maker was added to the Conviction Buy list at Goldman Sachs. The firm's analyst noted the one-year anniversary of its chief executive officer's appointment and the implementation of the company's turnaround plan. ELEMENTS FOR SUCCESSFUL TURNAROUND IN PLACE: Investors should buy Ralph Lauren shares on the prospect the company's results will exceed expectations in the coming year, according to Goldman Sachs analyst Lindsay Drucker Mann, who added the stock to the firm's Conviction Buy list. The analyst said that as CEO Stefan Larsson approaches his one-year anniversary in the role, she believes the "foundational elements for a successful turnaround are in place." She continued in a note yesterday to clients that Ralph's sales targets "look reasonable and margin targets look beatable" despite a "soft" retail macro backdrop and Ralph Lauren's "inherent cyclical risks." Additionally, she believes that sentiment will improve as turnaround efforts "gain credibility." WHAT'S NOTABLE: In August, Ralph Lauren reported first quarter earnings and revenue that beat analysts' estimates. The company forecast second quarter revenue down mid-to-high single digits and fiscal year 2017 revenue down at a low-double digit rate. The company noted that restructuring initiatives are expected to have a greater impact on the second half of the year than in Q2. APPOINTMENT OF VICE CHAIRMAN: Separately, Ralph Lauren this morning said in a regulatory filing that it named David Lauren, the son of Ralph Lauren, as Chief Innovation Officer. Lauren has served as executive vice president of global advertising, marketing and corporate communications since February 2000 and oversaw global campaigns, corporate and fashion communications, strategic marketing partnerships, RalphLauren.com and social media platforms. Additionally, Lauren will continue on the board of directors in the new role of vice chairman of the board, the company said. PRICE ACTION: In morning trading, shares of Ralph Lauren are up 2.3% to $103.74.