Insider Buying

Insider Buying Report: Ralph Lauren Corp (RL:US)

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Ralph Lauren Corp
12 months:
Large purchase from board member
Poor Q2 results

There are two main reasons why insiders invest in their own companies. They either believe that business performance is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the business expect the stock price to go up.

In this article, we are going to highlight a large insider purchase at Ralph Lauren Corp (RL:US). Ralph Lauren is a US company that is engaged in the design, marketing, and distribution of lifestyle products, including apparel, accessories, and home furnishings. It’s listed on the New York Stock Exchange and currently has a market capitalization of $5.75 billion.

Ralph Lauren: insider buying

Form 4 filings show that on 30 October, Ralph Lauren board member Michael George purchased 3,770 shares in the company at a price of $66.51 per share. The total cost of the transaction was $250,743. This purchase boosted George’s holding from 6,323 shares to 10,093 shares.

RL-US(chart)     Source: 2iQ Research

Industry expert

This insider purchase is significant for a few reasons. Firstly, George has significant experience in the retail industry. Currently, he is President and CEO of Qurate Retail Inc, the number one player in video commerce globally. Previously, George was a senior partner at McKinsey & Company where he led the firm’s North American Retail Industry Group.

Secondly, his purchase is substantial. Our records show that it is the largest insider purchase at Ralph Lauren for several years. This purchase has boosted George’s holding by 60%.

Covid-19 pressure

Ralph Lauren has been hit hard by the coronavirus pandemic. Its recent second-quarter results showed a 30% decrease in revenue to $1.19 billion, missing analysts' average estimate of $1.21, and a net loss of $39 million. Looking ahead, the company warned that a new wave of Covid-19 cases could hurt its sales recovery in North America and Europe, with consumer demand likely to be pressured for the rest of the year. Year to date, the stock is down about 35%.

This purchase from board member Michael George suggests that he expects the stock to bounce back. Given his retail experience, we see his purchase as a bullish signal.