Ralph Lauren Shares Slide Despite Strong Global Sales

The shares have moved below the potentially important $116 area

by Emma Duncan

Published on May 14, 2019 at 9:54 AM

Shares of retail giant Ralph Lauren Corp (NYSE:RL) are down 5.1% at $112.20 in early trading, despite the company reporting impressive fiscal fourth-quarter earnings and international sales. The pullback is in part due to a decline in North American revenue, on top of general fears around the effects of the U.S.-China tariff battle -- though the company in its conference call said tariffs currently in place would have just a limited impact on the business.

RL stock has struggled in recent weeks, and yesterday breached its 320-day moving average for the first time since an early February bull gap. Today's slide has the equity below the $116 level, site of the aforementioned bull gap, as well as another from a year ago.

Digging into options, the stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 1.98, and ranks in the 84th percentile of its annual range. In other words, puts have been purchased over calls at a faster-than-usual clip the past two weeks.

Lastly, short interest on RL has dropped 10% during the past two reporting periods, and now accounts for just over 6% of the stock's total available float. At the security's average pace of daily trading, it would take four days for shorts to buy back their bearish bets.

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