NEW YORK (TheStreet) -- Amid the Fashion Week buzz this month, popular apparel companies such as Ralph Lauren (RL) and Michael Kors (KORS) have been pushed to the forefront of investors' minds. However, a closer look at Ralph Lauren reveals some possible inventory problems that investors need to consider.
Ralph Lauren stock closed Tuesday at $172.60, up 3.75% over the past 52 weeks, but down 2.25% for the year to date. Kors closed at $76.38, up 3.17% over the past 52 weeks.
Based on Ralph Lauren's finanical statements, Morningstar found that the time RL takes to convert its products into cash through sales -- the cash conversion cycle -- has increased over 20% during the past decade. And, taking apart the components of this measure, Morningstar's calculations show that the number of days' worth of inventory that Ralph Lauren holds on its books has increased 25% over that time. Meanwhile, the average time the company takes to pay its bills has decreased over 50%.
Essentially, Ralph Lauren has paid its bills faster while increasing the amount of inventory it has on hand. Considering that this is a multi-year trend, there may be a larger issue at play in the company's inventory management.