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Why Ralph Lauren Stock Fell on Friday

By John Rosevear – May 30, 2020 at 10:51AM

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Earnings weren't quite what Wall Street had expected.

What happened

Shares of Ralph Lauren (RL -2.68%) closed lower on Friday, after the company reported a quarterly loss that was wider than Wall Street had expected and suspended its guidance for the upcoming fiscal year.

Ralph Lauren's shares ended Friday's session at $75.51, down 5.6% from Thursday's closing price.

So what

Ralph Lauren reported earnings for its fiscal fourth quarter after the market closed on Thursday, and they weren't quite what Wall Street had expected. The company's net loss in the three-month period that ended on March 28 was $50.5 million, or $0.68 per share, on a non-GAAP adjusted basis, on revenue of $1.27 billion. Both were down from a year earlier, when it reported adjusted earnings (a profit) of $1.07 per share on revenue of $1.51 billion. 

A sign outside a Ralph Lauren store in Paris.

Image source: Ralph Lauren.

More to the point, both fell short of consensus Wall Street estimates as reported by Thomson Reuters. Analysts had expected a profit of $0.01 per share on revenue of $1.29 billion, on average.

What happened? Simply put, stores around the world were closed for part of the the quarter amid the COVID-19 pandemic, and online sales didn't make up the difference. In fact, online sales in North America and Europe fell during the period. (They were up 15% in Asia, where physical stores were closed earlier in the quarter.)

Now what

Despite the loss, the company still has plenty of cash. As of March 28, it had $2.1 billion in cash, versus $1.2 billion in debt, and $736 million in inventory. While it understandably declined to give consumer-discretionary investors guidance for the upcoming fiscal year, it did say that it expects to safely return its business to growth when conditions improve. 

John Rosevear 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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Stocks Mentioned

Ralph Lauren Corporation Stock Quote
Ralph Lauren Corporation
RL
$84.93 (-2.68%) $-2.34
Thomson Reuters Corporation Stock Quote
Thomson Reuters Corporation
TRI
$102.62 (-1.07%) $-1.11

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