Ann Inc (ANN), Ralph Lauren Corp (RL): Retail, Women, and Labor Force Participation

With a three year revenue growth rate of 12.05% the post-recession boom has aided the firm even more than Ann Taylor. Earnings per share have also seen a strong three year growth rate of 18.39%. Further Asian expansion is one of the main techniques executives plan to use to try and sustain this growth. All of this growth makes Ralph Lauren Corp (NYSE:RL) very attractive, but its general focus and relatively large size calls into question the sustainability of its growth.

Recent expansion and a dividend yield of 0.90% have helped to drive up valuations. Currently the firm trades at a price to earnings ratio around 23, a substantial premium to Ann Taylor. Ann Taylor’s smaller size, greater room for growth, and lower valuation make it a more attractive investment.

Fifth & Pacific Companies Inc (NYSE:FNP) has gone through a major restructuring recently. Juicy Couture, Kate Spade, Jack Spade, Lucky Brand, and the Adelington Design Group are the firm’s remaining brands and divisions. Juicy Couture and Kate Spade focus on women while Lucky Brand sells to both sexes.

The company has lost money for the past three years, but the sale of a number of brands should help to bring it back to profitability. In fiscal year 2012 Kate Spade and Lucky Brand both saw substantial increases in comparable sales of 30% and 8% respectively. Juicy Couture consistently dragged down the firm and over all had decreased comparable sales of 4%. These numbers show the firm is improving, though it is not out of the woods yet.

Until sales stabilize and the firm returns to profitability it is best to ignore Fifth & Pacific. Its gross margin of 61.00% is comparable to Ralph Lauren Corp (NYSE:RL)’s, but Fifth’s EBIT margin of -0.30% is substantially less and shows that the healing process will not be instantaneous.

Conclusion

Ann Inc (NYSE:ANN) offers a simple and easy way to invest in women’s important role in the economy. The firm is small and yet continues to grow. Unlike Ralph Lauren Corp (NYSE:RL) it does not need to expand out of apparel to find growth. Thankfully, Ann Taylor is not plagued by Fifth & Pacific’s consistent unprofitably.

The article Retail, Women, and Labor Force Participation originally appeared on Fool.com.

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