Ticker Reports for May 29th
Ralph Lauren Slingshots Higher as Sentiment Improves for Retailer
Premium apparel maker Ralph Lauren Co. (NYSE: RL) reported its fiscal Q4 2024 earnings report with lowered guidance, causing a predictability gap in shares the following morning. However, the initial drop to $159.10 reversed as the market reassessed the results, turning sentiment bullish and causing shares to surge back up to $173.45 in the following days. Investors are wondering what caused the sentiment reversal and if the gains will stick.
Ralph Lauren competes in the consumer discretionary sector with premium brand apparel makers like Guess? Inc. (NYSE: GES) and PVH Co. (NYSE: PVH), maker of Tommy Hilfiger and Calvin Klein.
Premium All-American Fashion: Ralph Lauren's Legacy
As a brand, Ralph Lauren embodies the spirit of the American Dream premium lifestyle through its line of Polo, RLX, RL, Lauren, Chaps, Polo Sport, Black Label, and the most expensive Purple Label fragrances, clothing, and accessories for men, women, and children. Some of its Polo products can be found on rare occasions at discount retailers like Ross Stores Inc. (NASDAQ: ROST).
They've expanded their products to include home goods, accessories, and expensive high-end furniture. Their Ralph Lauren Writer's Chair sells for $14,180, or you might consider plunking down $36,470 for a Ralph Lauren Clivedon Tufted Bed. Their brand company even considers opening a premium hotel after inspiring many boutique hotels to adopt its designer logos.
Daily Cup Pattern and Strong Q4 Performance for Ralph Lauren
Ralph Lauren completed a daily cup pattern, beginning at the cup lip line of $177.45 on April 2, 2024. Ralph Lauren's stock fell to a low of $156.91 on April 19, 2024. Shares rallied back to $167.31 and were chopped sideways until its fiscal Q4 2024 earnings release, which caused a gap down and squeezed back up. Ralph Lauren completed the cup pattern upon surging through $177.85 and entering the gap-fill zone. The $183.75 would complete the gap filled on the April 2, 2024, gap down. The daily relative strength index (RSI) is rising to the 70-band. Pullback support levels are at $174.82, $170.92, $167.31, and $161.81.
In fiscal Q4 2024, Ralph Lauren reported an earnings per share (EPS) of $1.71, beating analyst estimates by 4 cents. Revenues rose 1.8% YoY to $1.57 billion, matching consensus estimates. Global direct-to-consumer (DTC) sales rose 6% YoY, driven by continued brand elevation with double-digit growth rates in average unit retail (AUR) and full-price retail performance.
North American revenues rose 2% to $668 million. Comparable store sales rose 3%, and brick-and-mortar locations saw a 6% increase offset by a 4% decrease in digital sales. North American wholesale revenues fell 2% but were still ahead of expectations as the company managed to sell in alignment with consumer demand.
Mixed Guidance from Petco and Ralph Lauren
Petco's In-Line Guidance
Petco provided in-line guidance for Q2 2024, forecasting an EPS loss of 2 cents, matching consensus analyst estimates. Revenues are expected to be around $1.525 billion, slightly beating the consensus estimate of $1.52 billion. The company projects full-year 2024 net interest expense to be around $145 million and capital expenditures (CAPEX) to be $140 million. Additionally, Petco announced a 10% increase in its quarterly dividend.
Ralph Lauren's Lowered Guidance
Ralph Lauren offered a less optimistic outlook, guiding fiscal Q1 2025 revenues below prior-year estimates, against the consensus estimate of 3.3% growth or $1.55 billion. Despite this, the company expects revenue growth on a constant currency (CC) basis, though the outlook includes a 50 basis points negative impact from the timing of an earlier Easter, which benefited fiscal Q4 2024.
For the fiscal full year 2025, Ralph Lauren anticipates revenue growth of 2% to 3% on a CC basis compared to the previous year.
Ralph Lauren CEO's Insights
CEO Patrice Louvet commented that fiscal 2024 marked the second year of its Accelerate Plan strategy. The company made progress in increasing the desirability of its timeless brand, which resonated with consumers of all ages. They leveraged the breadth and authenticity of their lifestyle product portfolios and made progress in their long-term strategic pivot toward the higher-margin DTC channels, which have grown to two-thirds of its total business, up from 50%.
Chief Creative Office Ralph Lauren summed it up, saying, "Our brand has always been about inspiring people to live the life of their dreams. We marry elegance and style in aspirational worlds — from our recent fashion show featuring elevated classics to the vibrant home line we showcased last month in Milan — our teams around the world are delivering our vision with passion and care."
Ralph Lauren analyst ratings and price targets are on MarketBeat.
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Determining Your Risk Tolerance - A Comprehensive Guide
Risk tolerance varies from person to person. Some people have no fear of parachuting out of an airline, while others won’t even ride a rollercoaster at a theme park. Everyone is a combination of their own ideas and experiences, which is why topics like risk tolerance are constantly evolving. Risk can’t be avoided entirely in investments, but the amount of risk we’re exposed to can be modified by concentrating on a few key factors.
Before you invest, it's essential to understand your risk tolerance. While no one-size-fits-all investment plan exists, specific forces consistently influence our decisions. In this article, we’ll guide you through measuring your personal risk tolerance, explain the factors involved and help you identify the right assets for your risk tolerance level.
What Are the Different Types of Risk Tolerance?
All investments carry some risk. Even safe assets, like bonds, index funds or your primary residence, can lose value. Risk tolerance measures how much price volatility you’re willing to withstand on your asset to maximize returns.
Risk-taking can be rewarded, but risky assets can also suffer prolonged drawdowns. Like Goldilocks, you’ll want to adjust the temperature of your portfolio until your asset allocation is just right. Here’s a rudimentary example of 3 different levels of risk tolerance.
Aggressive Risk Tolerance
For those with an aggressive investment risk tolerance, the thrill of high-volatility assets is part of the game. Aggressive portfolios often feature stocks from dynamic sectors like tech or consumer discretionary, and certain market conditions can lead to significant returns. Investors with long time horizons often opt for aggressive portfolios as they can best weather extended drawdowns.
Moderate Risk Tolerance
Moderate investors try to balance their portfolios with risk assets and income-producing instruments. An excellent example is the classic 60/40 portfolio, where an investor puts 60% of the capital into stocks and 40% into bonds.
Conservative Risk Tolerance
Sometimes, preservation is more important than accumulation. Conservative investors often prefer consistency to market-beating returns, so they prefer bank CDs, bonds or dividend-paying stocks. Retirees usually have conservative investment plans to earn steady income-based returns while spending down their nest egg.
How to Determine Your Risk Tolerance
Risk tolerance is a matter of personal preference. Time horizon plays a considerable role but is far from the only important factor. Two investors with similar timeframes may still have drastically different risk tolerance levels depending on their family situation, career or health. You’ll want to consult with an advisor to develop personal risk tolerance guidelines, but here are a few considerations to take into the meeting.
Consider Current Investments and Goals
Why are you investing in the first place? Is it to build a nest egg for retirement or a child’s education, or to save for a house down payment or exotic vacation? Your goals will significantly influence the level of risk you apply to your portfolio. For example, a vacation isn’t necessary, so you might be more comfortable taking risks in that scenario than if you were saving for something more essential like a house or college tuition.
Consider Your Age and Time Horizon
Market timing is tricky, but the time you spend in the market is within your control. If you’re a young investor climbing the career ladder, you have 2 huge advantages: time and physical capital. You have decades to earn income and invest that income aggressively.
According to concepts like time diversification, investing in stocks over long timelines is less risky since the portfolio can be adjusted as the timeframe winds down. Investors in securities like target-date funds have their level of risk automatically toned down as their expected retirement date approaches. Older investors may not be able to afford a risky process since they no longer earn income through their jobs and depend on their investments for living expenses.
Consider Your Personal Comfort Level
Separating emotions from investing is complicated. Can you tolerate an extended drawdown? Are you afraid of pulling money out of risky investments at the worst possible time? Be honest with yourself when considering this factor. Only some investors can tolerate watching their portfolio drop 10-20% quickly, which is often how bear markets materialize. If the idea of losing a big chunk of your capital makes your stomach churn, you might prefer a conservative portfolio, even if you have a long time horizon.
Adjusting Risk Tolerance Over Time
Risk tolerance isn’t fixed; it’s a malleable trait that changes based on personal situations and timelines. This adaptability provides reassurance and flexibility in your investment journey. Age is a good barometer of risk tolerance; younger investors will naturally be able to tolerate more risk than older ones.
However, risk tolerance also changes with income, family dynamics, health and economic environment. An investor with a spouse and 3 children probably won’t have the same comfort with risk as someone the same age with no dependents. Life constantly changes, and keeping up with market headlines can be difficult. Always take time to chat with an advisor if your scenario changes.
Conclusion
Risk tolerance is a tool to determine what assets are ideal for a specific investor’s portfolio. Understanding risk tolerance allows you to construct a portfolio that aligns with your financial goals and comfort levels, making you feel secure and prepared. Aggressive investors with long time horizons can invest in riskier asset classes like individual stocks, while risk-averse investors may prefer bonds or index funds. Several factors go into the risk tolerance equation, such as timeframes, family situations and personal comfort levels. Consider an advisor's services when deciding to change the makeup of your portfolio.
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Decker's Stock Surges Like Nvidia Through $1,000 on Robust Growth
While artificial intelligence (AI) chip maker Nvidia Co. (NASDAQ: NVDA) garnered the spotlight on its stock surge through $1,000, a retailer that gapped through the $1,000 barrier received less fanfare. The price action appears similar, but these companies are in completely different sectors: computer and technology and consumer discretionary.
Outdoor lifestyle apparel and footwear maker Deckers Outdoor Co. (NYSE: DECK) shares shot through $1,000 and all-time highs under the radar when it released its fiscal Q4 2024 earnings results. However, the company issued slightly lower guidance than consensus estimates, but shares continued to roar higher.
Deckers competes with outdoor apparel retailers, including Canadian Goose Holdings Inc. (NYSE: GOOS), Visto Outdoor Inc. (NYSE: VSTO), V.F. Corp. (NYSE: VFC), and Columbia Sportswear Co. (NASDAQ: COLM).
Deckers' Brands Soar in Popularity: UGG, HOKA, Teva, AHNU, and Sanuk in High Demand
Deckers has several brands that consumers have an insatiable hunger for. Its UGG brand is known for its super comfortable and plush classic sheepskin boots, slippers, and sandals. HOKA makes athletic performance shoes for running and outdoor activities, focusing on maximum cushioning. Teva makes lifestyle sandals, shoes, and boots for outdoor activities and casual wear. AHNU makes high-performance walking shoes, and Sanuk footwear caters to the surfer lifestyle.
Deckers' Stock Breakout: Daily Ascending Triangle Pattern and Strong Q4 Earnings
Deckers triggered a daily ascending triangle breakout pattern. The ascending trendline formed at $788.37 on April 30, 2024, with higher lows on pullbacks. The flat-top resistance formed at $908.70. The fiscal Q4 2024 earnings release triggered a breakout, with shares surging to $994.50 and reaching new all-time highs. The daily relative strength index (RSI) surged to the oversold 80-band level. Pullback support levels are at $994.50, $956.17, $908.70, and $882.64.
Deckers reported fiscal Q4 2024 EPS of $4.95, crushing analyst estimates by $1.94. Revenues surged 21.2% year-over-year (YoY) to $959.80 million, beating $892 million consensus estimates. Its direct-to-consumer (DTC) sales surged 21% to $415.2 million. Gross margin was 56.2%, compared to 50% in the year-ago period. Operating income rose to $144.3 million, up from $105.9 million. Domestic net sales rose 19.4% YoY to $647.7 million, up from $542.4 million. International net sales rose 25.2% YoY to $312 million, up from $249.1 million.
Deckers' Financial Strength and Dual Channel Growth
The company bought back $104.3 million shares at an average price of $875.01. Deckers closed the quarter with $1.502 billion in cash and cash equivalents, up from $981.8 million in the year-ago period, and no outstanding borrowings. Inventories fell to $474.3 million compared to $532.9 million in the year-ago period.
DTC comparable net sales rose 20.5%. Wholesale net sales rose $21.4% YoY to $544.6 million, up from $448.4 million. Unlike many other retailers with growing DTC channels, Deckers had both DTC and Wholesale channels experience a revenue surge without cannibalizing the other.
Brand Performance Highlights: HOKA Leads, UGG Rises, Teva and Sanuk Decline
The HOKA brand generated the largest revenue, climbing 34% YoY to $544 million, which is up from $397.7 million a year ago. UGG brand net sales rose 14.9% to $361.3 million, up from $314.3 million. Teva sales fell 15.6% YoY to $53 million, pared to $62.8 million. Sanuk saw net sales fall 39.1% YoY to $6.5 million compared to $10.7 million. Other brands like Koolaburra's sales were flat, at around $6 million.
Scorching Hot Year for Deckers
Deckers fiscal full-year 2024 EPS rose 51% YoY to a record $29.16. Full-year revenues rose 19% YoY to a record $4.29 billion. DTC sales rose 26.5% to $1.855 billion, compared to the 25.4% increase last year at $1.467 billion. Wholesale net sales rose 12.6% YoY to $2.432 billion, up from $2.161 billion. Gross margin improved to 55.6% compared to 50.3% in the year-ago period. Deckers bought back $414.9 million of stock at a weighted average price of $580.44 per share in fiscal 2024.
Deckers Adjusts FY 2025 Guidance Following Record 2024 Results
Deckers issued fiscal full-year 2025 EPS guidance of $29.50 to $30.00, compared to $30.47 consensus analyst estimates. Fiscal full-year 2025 revenues are expected to be around $4.70 billion, compared to $4.71 billion consensus estimates.
Deckers CEO Dave Powers commented, "Deckers achieved record results during fiscal year 2024, as we delivered revenue growth of 18% and increased earnings per share by 51%, reflecting a continued dedication to maintain exceptional levels of profitability as our brands scale. HOKA and UGG remain two of the most admired and well-positioned brands in the marketplace, each with a robust innovation product pipeline designed to win with global consumers.”
Decker's analyst ratings and price targets are on MarketBeat.
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