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Ralph Lauren, +47% inventory: risk or opportunity?

Ralph Lauren Corporation is an American fashion company that was founded in 1967 by American fashion designer Ralph Lauren.

It's listed on the NYSE and currently trading at around $98.8 (-20.58% compared to same time last year).

In 2021 it has recorded revenues for 4.4 billion $ (28.56% decline from 2020).


Ralph Lauren is an interesting actual case because its increase in inventory of the last 12 months: this could worry investors about the demand trend, but executives say this is a precaution to face the upcoming season demand peak around next Christmas time.


In July 2022, the inventory value stands at $1.2 billion, which means a +47% compared to the prior year.


CEO Patrice Louvet admits it's a risky approach, but they know what they're doing considering Ralph Lauren's projections on its customers' taste and dynamics through the year.


Let's get to the profitability performances: in second quarter of 2022 the company has made $1.49B revenues and $1.0 B of gross profit, while in the second quarter of 2021 it made $1.37B of revenues and $0.96B of gross profit, therefore there is an alignment in the 12-months period economic results.


Financial management generated a free cash flow of $273 mln in March 2021, while in the first quarter of 2022 it amounted to $549 mln, thanks to an operating cash flow activity of $715 mln compared to $380 mln of same time last year.



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