Shares of Ralph Lauren on Friday saw heavy trading on the Big Board as talk of a takeover titillated the Twittersphere.
After opening at $106.91, shares reached a high of $112.89 in intraday trading, with nearly 1.25 million shares changing hands, outpacing the average three-month volume of 1.5 million.
The action seems to stem from a British deal blog, which sent an alert Friday advising subscribers that French luxury giant Kering was mulling an offer for the American fashion brand that both President Biden and Second Gentleman Doug Emhoff sported on Inauguration Day.
A Ralph Lauren spokeswoman declined to “comment on rumor or speculation.” A spokeswoman for Kering did not immediately respond to a request for comment.
Although the speculation remains unconfirmed, the post began circulating on Twitter, with one usrs pointing to Ralph Lauren CEO Patrice Louvet’s decision to sell 29,023 shares on Jan. 12. Another hoped the speculation would push the stock to as much as $140 a share.
RBC Capital analyst Kate Fitzsimmon on Jan. 15 upgraded the Ralph Lauren shares to “outperform,” setting a target price of $138. On Thursday, Deutsche Bank analyst Paul Trussel maintained his “Hold” rating on the shares, but raised his target price to $127 from $75.
Years ago, Betaville blogged that Coach Inc., before it became Tapestry, was working with Evercore for a possible $20 billion Burberry merger. That rumbling has since gone through several repeats, and to this day both Tapestry and Burberry remains separate firms, which would seem to discredit the current speculation around Ralph.
Like its peers, Ralph Lauren has faced numerous trials throughout coronavirus pandemic, shedding 3,600 jobs in a September reorg, while refocusing on future-proof digital investments.
“The changes happening in the world around us have accelerated the shifts we saw pre-Covid, and we are fast-tracking some of our plans to match them—including advancing our digital transformation and simplifying our team structures,” Louvet said at the time. “These steps will enable us to progress our brand elevation journey and deliver Ralph’s vision in today’s dynamic environment—inspiring our consumers around the world and creating value for all of our stakeholders.”
One month later, the fashion titan reported lower second-quarter sales, though adjusted diluted earnings per share—$1.44 a share versus Wall Street’s estimates of 90 cents—bested analysts estimates. The company’s restructuring drove improvement in speed to market, even with global supply chain challenges. Twenty-five percent of orders are now completed in three months or less, and sales in Mainland China are also recovering.
So far, it seems that the company’s strategic initiative to “Lead With Digital” under the oversight of Louvet is working. But one question lurking in the background centers on succession and the future of the company should Ralph Lauren, who is chief creative officer, decide to retire.