I think it is safe to say that prior to and after the November election, investors got massively turned around two to three times in retail and apparel stocks. Take shares of Ralph Lauren (RL) for example, the stock rallied nearly 20% from the morning after election lows to its 52-week highs made on November 23rd. Since then, it has been lights out, with the stock losing nearly one-third of its value:
There are no shortage of reasons for the stock’s decline, but yesterday’s news that the company will close its Flagship New York City Store Fifth Avenue in the shadow of Trump tower is symbolic of how buyers must feel about buying the highs in November. RL is expected to print $8.60 a share in earnings this fiscal year ending in March, down from its peak of $8.43 in 2014, with sales declining 10% year over year to $6.64 billion, down from its peak of $7.5 billion in 2014.
Both the fundamentals and the technicals, looking at a 10-year chart appear to be at a possibly dire inflection point for RL. The company’s cost-cutting measures are their latest attempt to quell earnings declines. But it may be too little too late for the stock as it’s broken down below the uptrend from the 2009 lows (last month post earnings), while yesterday’s massive break on heavy volume below $80 make lower lows very likely (despite cheap valuation, solid balance sheet and healthy dividend yield).
I suspect that eventually RL is rolled up with another apparel brand, possibly by a company like VF Corp (VFC) in an attempt to become more nimble in an increasingly competitive apparel and retail selling environment.