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Why Shares of Ralph Lauren Are Jumping Tuesday

By Daniel Miller – Updated Apr 17, 2019 at 12:09PM

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Despite a rocky retail environment, Ralph Lauren posted a strong third quarter.

What happened

Shares of Ralph Lauren Corporation (RL -1.21%) were up 7% as of 12:18 p.m. EST after the company released strong results for the third quarter of fiscal 2019. The company is a global designer, marketer, and distributor of premium products in apparel, home, accessories, and fragrances.

So what

Ralph Lauren shares jumped Tuesday morning after third-quarter earnings and revenue topped analysts' estimates. Starting from the top line, revenue checked in at $1.73 billion, better than the prior year's $1.64 billion and also ahead of the $1.66 billion analysts had expected. Adjusted earnings per share totaled $2.32, higher than analysts' estimates of $2.15 per share.

Men's jackets on racks in an upscale clothing store

Image source: Getty Images.

"Solid execution on our key initiatives, especially during the important holiday period, delivered better-than-expected results for the third quarter as we drove higher average unit retail and continued to improve quality of sales overall," said Patrice Louvet, president and CEO, in a press release.

Check out the latest Ralph Lauren earnings call transcript.

Now what

There are reasons investors should feel optimistic after the third quarter. Ralph Lauren's 18% increase in marketing spending helped drive brand awareness during the critical holiday season in the U.S.; it also helped fuel international success, with Asia posting 11% revenue growth and a 4% gain in comparable-store sales based on constant currency. A strong third quarter gives investors confidence that management is on the right track in a difficult retail environment.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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