Shares of Ralph Lauren Corp. rose 3.8 percent to $75.20 in pre-market trading after posting fourth quarter results that bested Wall Street’s estimates.
Even though the company – which named a new chief executive officer, Patrice Louvet, on Wednesday – saw a loss for the quarter and a revenue decline, it managed to beat Wall Street’s adjusted EPS estimate by 11 cents and a revenue estimate by $10 million.
For the three months ended April 1, the company posted a net loss of $204 million, or $2.48 a diluted share, against net income of $41.3 million, or 49 cents, a year ago. But after adjusting for restructuring costs and other charges connected with its Way Forward plan, adjusted EPS was 89 cents for the quarter. Revenues fell 16.3 percent to $1.57 billion from $1.87 billion.
Wall Street was expecting EPS of 78 cents on revenues of $1.56 billion.
For fiscal 2017, the net loss was $99.3 million, or $1.20, on a 10.2 percent decline in net revenues to $6.65 billion. On an adjusted basis, diluted EPS was $5.71 for the year. That compares with net income of $396.4 million a year ago, or $4.65 a diluted share, on revenues of $7.41 billion.
Ralph Lauren, executive chairman and chief creative officer, said, “The retail landscape today is more dynamic than ever but within this environment, our brand continues to be one of the most recognized and beloved all over the world. Our performance for the year reflects our work to strengthen our brand and I am confident that the actions we are taking, combined with our strong heritage, position us well to succeed.”
The chairman said he is “excited to partner” with Louvet, who will join the company in July, “as we continue our evolution.”
Jane Nielsen, chief financial officer, said, “Fiscal 2017 was an important year as we strengthened the foundation of the company. We created operational efficiencies, increased the productivity of our assortment and improved quality of our sales.”
She noted that in the quarter, the company continued to drive quality of sales by moderating discount levels; lowered inventory levels by 30 percent; reduced the number of SKUs by 20 percent for both spring and fall 2017 and produced a more focused, higher margin assortment; shortened lead times and now has 50 percent of the business on a nine-month lead time, and optimized the store fleet by closing 20 doors. The company also added a chief marketing officer and a men’s brand president.
Nielsen also said the the work to strengthen the brand and improve return on investment will continue into fiscal 2018. “The team and I are looking forward to welcoming Patrice as we continue this important work and bring demand back to the business,” the cfo said.
The company said international revenues fell 9 percent, while North American revenue was down 21 percent from a year ago. By business segment, wholesale revenues declined 17 percent to $777 million. At retail, revenues fell 16 percent to $745 million, on a comparable-store sales decrease of 11 percent. Excluding the calendar shifts for both the Christmas and Easter holidays, the company said comps would have been down 8 percent.
For fiscal 2018, the company said it expects net revenue to decrease 8 to 9 percent. For the first quarter, net revenue is expected to be down low double-digits. Both forecasts exclude the impact of foreign currency.
More Ralph Lauren News: