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Ralph Lauren Poised for Growth, Buy After a Pull Back

|Includes: Ralph Lauren Corporation (RL), TPR

Out of all the higher-end apparel brands, Ralph Lauren (RL) is the most poised for growth entering 2012.  RL has laid out plans for massive expansion, while at the same time increasing control over their brand image and distribution.  Although future growth is apparent, the market might have over zealously factored in the potential. The main points to discuss are:
·      Expansion plans for Europe and Asia as the standard of living improves for the latter
·      E-commerce expansion through introductions of shopping sites in European countries and throughout Asia
·      Restructuring in Asia to improve brand image and recognition
·      License reacquiring to regain more control over their brands
·      Expanding product line with focus on higher margin products with weak market share
·      Natural price and economic hedge due to their consumer’s socio-economic class
·      Despite short-term pressure due to restructuring costs, RL has strong fundamentals that will carry it through their expansion plans
·      Price is getting a little ahead of growth and therefore I recommend waiting for a sell off before stepping in

Keeping all these factors in mind, I believe that RL is a remarkable long-term play.

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