What happened
Ralph Lauren (RL 3.70%) stock has jumped today, up by 10% as of 12:45 p.m. EDT, after the clothing specialist reported better-than-expected fiscal first-quarter earnings.
So what
The company posted revenue of $1.35 billion, down from $1.55 billion a year ago but slightly ahead of analyst expectations. Adjusted earnings per share came in at $1.11, easily beating the $0.96 per share in adjusted profit that the Street was modeling for.
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The company has been reducing discounts in an effort to bolster profitability, which helped gross margin by 210 basis points. Inventories also fell by 31% as Ralph Lauren improved inventory turnover and efficiency.
Now what
Comparable-store sales in North America fell 8% on a constant currency basis, driven by a 22% decline in e-commerce as well as a 4% decline in brick-and-mortar store revenue. Comps in Europe also fell 8%, while comps in Asia increased by 2%.
"While we are addressing challenges in our business, we have significant opportunity ahead and we're moving forward with urgency," said CEO Patrice Louvet. "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. We are continuing to build a strong foundation for future growth, as evidenced by our progress this quarter on the key elements of the Way Forward plan."
Fiscal second-quarter sales are expected to decline 9% to 10%. Ralph Lauren reaffirmed its full-year guidance, which forecasts net revenue to fall 8% to 9%, with an operating margin of 9% to 10.5%.
