Ralph Lauren (RL) plans to grow rapidly in Europe and Asia, an expansion that should prove very profitable, writes Cowen & Company analyst John Kernan in a note upgrading the shares to Outperform from Neutral. More than 60% of Ralph Lauren’s growth will likely come from those two regions, Kernan writes.
“We expect $500 million in capex alone for international door growth and e-commerce development during the next three years as RL significantly increases its penetration overseas in higher margin and higher returning regions.”
Kernan also thinks the retailer should benefit from a sharp decline in cotton prices, which are down 50% from their peak in March.
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