Ralph Lauren Corp.’s second-quarter results bested Wall Street’s estimates.
For the second quarter, the company posted net income of $143.8 million, or $1.75 a diluted share, compared with net income of just $45.7 million a year ago, or 55 cents. On an adjusted basis, excluding restructuring-related and other charges, EPS was $1.99. Net revenues fell 8.6 percent to $1.66 billion from $1.82 billion a year ago.
By region, revenues fell 16.1 percent in North America to $878.7 million, with comparable-store sales down 9 percent; rose 3.9 percent in Europe to $463 million, although comps were down 6 percent, and was essentially flat in Asia at $216.8 million, even though comps rose 3 percent. The balance of revenues was in other non-reportable segments, which fell 5.1 percent to $107.7 million.
Wall Street was expecting adjusted earnings per share at $1.88 on net revenues of $1.65 billion.
Ralph Lauren, executive chairman and chief creative officer, said, “I am pleased with the progress we are making as we continue to strengthen the foundations of our business and elevate the expression of our iconic brand.” He also added that Patrice Louvet, president and chief executive officer, who joined the company earlier this year, has “already proven to be an invaluable partner who is embracing our core values, bringing unique expertise and uniting and empowering our capable teams.”
Louvet said, “While there is a lot of work to be done, I am encouraged by the early progress we are making across multiple fronts to strengthen our brand and better connect with consumers.” He emphasized that the company continues to be focused on “creating value for all of our shareholders by continuing to drive productivity and re-igniting quality of growth.”
The company said key initiatives in the quarter included: Discount rates down across all regions in retail; closure of unproductive distribution in retail and wholesale, which reduced off-price shipments; evolution of product assortment; release of limited edition products, and launched on T-mall, JD.com and WeChat in China. The company also said it reduced operating expenses by 5 percent on an adjusted basis and lowered inventory levels by 26 percent, when compared with year-ago levels.
The company also provided guidance for the third quarter and fiscal year 2018. The guidance, which excludes restructuring-related charges connected with its Way Forward plan, includes a net revenue decrease of 8 percent to 9 percent for fiscal 2018 and a decrease of 6 percent to 8 percent for the third quarter.
Ralph Lauren shares rose 6.3 percent in pre-market trading and were at $94.99 at 8:53 a.m.