Corporate insiders tend to have the most up-to-date information on their companies’ operating activities. If these individuals are buying company stock, it’s often a sign that business performance is strong and that the outlook for the stock is positive.
In this report, we are going to highlight some interesting insider buying at Ralph Lauren Corp (RL:US). Ralph Lauren is a fashion company that is engaged in the design, marketing, and distribution of lifestyle products, including apparel, accessories, and home furnishings. The company operates over 500 retail stores worldwide, and also sells products online and through retail concession shops. It’s listed on the New York Stock Exchange and currently has a market capitalization of $8.6 billion.
Ralph Lauren: Insider Buying
Our insider transaction data shows that on 18 August, board member Hubert Joly bought 8,400 RL shares at a price of $117.90 per share. This purchase cost the insider approximately $1 million and increased his holding to 26,232 shares.
Largest Insider Purchase in Years
This trade caught our attention due to its size. Not only is it substantial in nominal terms (it’s the largest insider purchase at Ralph Lauren for several years) but it is also substantial in relative terms as it increased the size of the insider’s holding by 47%.
It’s worth noting that Mr. Joly – who is Lead Independent Director and has served on the board since 2009 – has a wealth of experience in the retail sector. Previously, he was Chairman and CEO of Best Buy from 2012 to 2020. He is also a financial expert and currently lectures at Harvard Business School. Given his background, it’s fair to assume that he knows what he is doing here.
Strong Q1 Results and Raised Guidance
Ralph Lauren recently posted a strong set of first-quarter results.
For the quarter ended 26 June 2021, reported revenues increased 182% to $1.4 billion (exceeding expectations) driven by strong growth in both the US and Europe. Meanwhile, adjusted net income came in at $172 million, or $2.29 per diluted share, compared to a net loss of $133 million, or -$1.82 per diluted share on an adjusted basis for the first quarter of Fiscal 2021. The group’s e-commerce sales were up 45% year on year.
"Against the backdrop of stronger than expected re-openings across North America and Europe, our teams delivered exceptional performance this quarter," commented Patrice Louvet, President and CEO.
"Our timeless brand is resonating strongly with consumers around the world, and the breadth of our lifestyle portfolio is enabling us to deliver products that meet evolving consumer tastes and demand as we progressively emerge from the pandemic. Even as we continued to manage through Covid-related challenges in select markets and in our global supply chain, we are back on offense and excited about our future growth opportunities," he added.
On the back of these results, the group raised its full-year Fiscal 2022 outlook. It now expects revenue to rise 25% to 30% on a constant currency basis and adjusted operating margin to be between 12.0% and 12.5%.
In light of these results and the increase in guidance, we see the insider buying activity here as a bullish indicator.