Ralph Lauren Results Beat Estimates
May 12 2016 - 9:50AM
Dow Jones News
Ralph Lauren Corp. said its profit fell 77% in the latest
quarter as the apparel company's sales and margins were hurt by
moves to clear inventories in its U.S. business.
However, shares rose 3.6% to $87.50 in recent premarket trading
as per-share earnings, excluding certain items, beat Wall Street
views and revenue edged past expectations.
The Ralph Lauren board also authorized the repurchase of an
additional $200 million of the company's stock.
Chief Executive Stefan Larsson, who has been conducting a review
of the business, said in prepared remarks the company would
disclose details of its strategic plan to strengthen the brand and
drive profits at its investor day set for June 7.
Mr. Larsson unveiled the review in February after the apparel
company reported a 39% drop in quarterly profit and cut its sales
outlook for the current year. At the time, he said he wanted to
bring more focus to the company. He also was taking a hard look at
pricing and distribution—including its business with department
stores such as Macy's Inc. and Nordstrom Inc.
On Wednesday, Macy's set off fresh fears about the health of the
U.S. retail sector, after the country's largest department-store
chain reported its worst quarterly sales since the recession.
Nordstrom is set to release its first-quarter results Thursday
after the bell.
Mr. Larsson, who joined Ralph Lauren from Gap Inc.'s Old Navy
business last year, has made some management shifts including
February's elimination of the position of global brands president.
In February, Ralph Lauren said it was bringing part of its
supply-chain operations in-house. The shift, part of what Ralph
Lauren says is a long-planned action, will move warehousing and
inventory management service from a North Carolina distribution
center into a new, far larger distribution center that the fashion
retailer will operate.
Over all for the period ended April 2, Ralph Lauren reported a
profit of $41 million, or 49 cents a share, down from $124 million,
or $1.41 a share, a year earlier. Excluding restructuring-related
charges and other items, adjusted per-share adjusted earnings fell
to 88 cents from $1.41.
Revenue edged down 0.7% to $1.87 billion. Excluding currency
effects, revenue was flat. The latest period also included an
additional week of sales, which contributed sales of roughly $70
million, mostly in its retail business.
Analysts polled by Thomson Reuters expected per-share profit of
83 cents and revenue of $1.86 billion.
Operating margin fell 3.7 percentage points to 6.4%. The decline
wasn't as bad as the 4 to 4.5 percentage point drop projected in
February, a development the company attributed to disciplined cost
management. Gross profit margin declined 0.9 percentage point to
54.5%, partly owing to U.S. inventory reduction efforts.
Excluding currency effects, Ralph Lauren said international
revenue increased 3% and was offset by an decline of 1% in Americas
revenue as the result of moves to clear inventories in the U.S.
Retail sales rose 6% to $889 million. However, excluding
currency effects, sales at established stores declined 5%.
The company plans to issue its guidance for its recently started
fiscal year during its Investor Day.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
May 12, 2016 09:35 ET (13:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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