Ralph Lauren tops Street even amid sales decline
Ralph Lauren Corp. posted better-than-expected results for its first quarter as it kept tight control on its inventory and promotions. But despite the company's efforts at reinvention, sales dropped 13.2%.
Ralph Lauren earned $59.5 million, or 72 cents per share, for the quarter ended July 1, compared to a loss of $22.3 million, or 27 cents per share in the year-ago period, which included a restructuring-related inventory charges of $54 million. Restructuring charges for the current period were $700,000. Excluding items, the company earned $1.11 per share, topping analysts estimates.
Revenue dropped 13.2% to $1.35 billion, which came in just above estimates. Same-store sales fell 7%. The sales drop was partially impacted by the company's decision to reduce shipments, reduce promotions and eliminate brands. Ralph Lauren said it lowered its inventory levels by 31% from a year earlier.
"While we are addressing challenges in our business, we have significant opportunity ahead and we’re moving forward with urgency,” said Patrice Louvet, who took the reins as CEO in July. “Ralph and I are focused on actively evolving the brand expression and consumer experience so we can ultimately renew growth and get back to leading."
Analyst Neil Saunders, managing director of GlobalData, said that with its new CEO in place, this is a "fresh start" for Ralph Lauren. To succeed, he said, the company needs to both win back old customers and secure new ones — especially younger consumers who do not feel connected with the brand.
"We are under no illusions that this process will be hard and painful," Saunders said. "We also believe that because of its many false starts, while Ralph Lauren has been running the race of reinvention for quite some time, it is now effectively back at the starting line as it embarks on its latest quest to win back its lost glory." (For more of Saunders' comments, click here.)
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