What happened
Shares of Ralph Lauren (RL +0.03%), a global leader in the design, marketing, and distribution of premium products spanning apparel, home, accessories, and fragrances, were down 7% as of 11:20 a.m. EST on Tuesday after the company released second-quarter results.
So what
Sales totaled $1.69 billion, up from the prior year's $1.66 billion and ahead of analysts' estimates calling for $1.65 billion. Adjusted earnings per share checked in at $2.26, also higher than analysts' estimates of $2.16. North America comparable-store sales were up 1% in constant currency, with a 1% decline in brick-and-mortar stores offset by a 9% increase at ralphlauren.com. Asia revenue was another bright spot, with second-quarter revenue increasing 14% and comps rising 6%, both in constant currency.
Image source: Getty Images.
CEO Patrice Louvet said in a press release: "As we execute our Next Great Chapter strategic plan, we are encouraged by the early progress we have made in the first half of this year on both the top and bottom line. We remain focused on strengthening our connection with consumers around the world, and executing on our strategic priorities as we manage through the evolving trade and inflationary environment with agility."
Now what
Despite topping analysts' estimates and returning to growth in North America, shares are trending lower today. One possible reason is that investors didn't see enough progress in North America, considering it spent about 30% more on marketing in the quarter, versus the prior year. That included its 50th anniversary fashion show as well as targeting New York Fashion Week.
Management will certainly continue focusing on social media to lure in a new generation of high-spending millennials to help boost its North America segment. Ralph Lauren's share price is down today but still up 22% year to date. And if management continues to lure in millennials, accelerate underdeveloped products and categories, and drive overseas expansion and growth, it's poised to have better financial performances going forward.
