Shares of Ralph Lauren Inc. shot up more than 9.1 percent to $125 in early trading Tuesday after the company’s fiscal third-quarter sales and profits came in stronger than expected.
The company’s net profits tallied $120 million, or $1.48 a diluted share, reversing year-ago losses of $81.8 million, or $1. Adjusted earnings hit $2.32 a share, well ahead of the $2.14 Wall Street projected.
Revenues for the quarter ended Dec. 29 increased 5.1 percent to $1.73 billion, topping the $1.66 billion analysts had penciled in.
Patrice Louvet, president and chief executive officer, told WWD in an interview Tuesday morning that the “Next Chapter Plan,” while not yet fully instituted, was bearing results.
“Average unit retail prices were better than expected across all the regions and all the channels we operate in,” Louvet said. “This is really the result of the work we’re doing to elevate the brand, to improve marketing, better engage with consumers, improve product and pull back on promotions.”
The increase in prices also stands out in what the ceo described as “a more promotional environment.”
Ralph Lauren has been cutting back on its off-price sales, seeking to return the channel to its traditional role, which is to manage excess inventory. Despite this, North American sales rose 3 percent with a 4 percent comparable sales increase at the company’s retail sales more than offsetting the off-price draw down.
And while the company’s business at home strengthened it also gained ground in the vital growth market of China, which has been on investors’ radar since Apple warned last month of a sales slowdown in the region. The company’s Greater China business saw revenues gain 19 percent in constant currencies.
Ralph Lauren, executive chairman and chief creative officer, added in a statement: “Our passionate teams are focused on staying true to the authentic expression of the Ralph Lauren lifestyle while evolving with the changing consumer and global retail landscape around us. As we continue to strengthen the foundations of our business and elevate our iconic brand, I am pleased with the progress we are making.”