Cramer explains why Ralph Lauren remains one of retail’s best stocks

CNBC’s Jim Cramer said Thursday Ralph Lauren’s years-long stock market outperformance is no accident.

“Retail’s really hard … Louvet makes it look easy,” the “Mad Money” host said of the legacy apparel brand’s CEO Patrice Louvet.

Louvet joined Ralph Lauren in July 2017 after spending nearly three decades at Procter & Gamble. Shares have soared roughly 444% since he took the helm, compared to a roughly 214% gain in the benchmark S&P 500 during the same period.

The stock added another nearly 4% Thursday after Ralph Lauren reported better-than-expected earnings and revenue. Cramer said the results were the latest example of why the retail giant has consistently outperformed both its retail peers and the broader market.

According to Cramer, Ralph Lauren’s success comes down to three priorities: elevating the brand, expanding its core business while introducing new growth opportunities and building deeper relationships with consumers in key cities around the world.

On the branding front, Cramer pointed to Ralph Lauren’s association with prestigious sporting events and luxury destinations, as well as its ability to attract younger consumers through what management calls “cinematic storytelling.” He noted the company added 1.5 million social media followers during the quarter across Instagram, TikTok, LINE and Douyin.

He also credited Ralph Lauren for continuing to refresh its product assortment with new women’s offerings and limited-edition collections, while maintaining the timeless products that define the brand.

The strategy has translated into broad-based growth, Cramer said. Comparable sales rose 9% in North America and 23% in Asia, including 40% growth in China. Importantly, Cramer noted those gains came largely from full-price selling rather than promotions or markdowns.

Just as important, Cramer said, the company has remained disciplined operationally. Inventories declined 3% during the quarter while operating margins expanded, a sign that management continues to balance growth with profitability.

Cramer said this should serve as a blueprint for anyone trying to understand what separates great retailers from average ones.

“For anyone who aspires to own a retail stock, before you take a position in one, I’m begging you to read this Ralph Lauren conference call,” Cramer said. “That’s the highest praise I can offer.”