Ralph Lauren is closing its flagship Polo store on Fifth Avenue
Ralph Lauren is closing its flagship Polo store on Fifth Avenue © Reuters

Ralph Lauren shares see-sawed as the fashion group posted upbeat fourth-quarter earnings showing that while its turnround plans and efforts to curb discounting are progressing, sales were still down for the 10th consecutive quarter.

Shares in the New York-based company, known for its Polo line and trendy Americana, rose as much as 3.8 per cent to $75.49 before giving up those gains to fall as much as 2.9 per cent. By markets close, the stock was down 1.9 per cent at $71.38.

Ralph Lauren has worked to curb promotions by lowering shipments to department stores and tightening inventory in the hopes of driving more full-price sales.

It reported adjusted earnings at 89 cents per share, eclipsing Wall Street estimates of 78 cents. Moreover, gross margin was 90 basis points higher than the year-ago period to 50.4 per cent.

“We continue to view gross margin improvements as the most exciting opportunity Ralph Lauren has,” said Brian Tunick, analyst at RBC Capital Markets. “As we look out, we remain confident that Ralph Lauren has a number of tangible initiatives to undo some of its self-inflicted merchandise margin erosion and improve the supply chain.”

However, the efforts to moderate discounts and tightening inventories did hurt traffic and weighed on sales.

Comparable sales fell 11 per cent in its fiscal fourth quarter, steeper than analysts’ expectations of a 5.6 per cent drop.

Stripping out the impact of the calendar shifts of the Christmas and Easter holidays, its sales fell 8 per cent. Revenues fell 16 per cent to $1.6bn but were just ahead of Wall Street estimates.

The retailer, which named Procter & Gamble executive Patrice Louvet its new chief executive on Wednesday, also reported a net loss of $204m or $2.48 a share, compared with a profit of $41.3m, or 49 cents a share, in the year-ago period.

While investors appeared ambivalent on Ralph Lauren’s results, they took a more optimistic view on L Brands after the company behind Victoria’s Secret and Bath and Body Works lifted its full-year earnings outlook.

Shares in L Brands rose 2.7 per cent to $49.69 and were among the biggest gainers on the S&P 500 for the day after the retailer said it now expected to earn between $3.10 to $3.40 a share, up from its previous outlook of $3.05 to $3.35 a share. The news accompanied upbeat adjusted earnings in the first quarter.

By contrast, investors soured on Ascena Retail, sending its shares 27 per cent lower to $2.06 after the company behind Ann Taylor lowered its full-year outlook.

Meanwhile, Cisco Systems was the biggest decliner on the S&P 500 falling 7.2 per cent to $31.38 after the communications equipment maker projected a steeper-than-expected drop in sales in the current quarter and said it would shed an additional 1,100 jobs.

By the close of trading in New York, US stocks had rebounded from the previous day’s sell-off. The S&P 500 was up 0.4 per cent to 2,365.72 while the Dow Jones Industrial Average added 0.3 per cent to 20,663.02. The Nasdaq Composite advanced 0.7 per cent to 6,055.13.

mamta.badkar@ft.com

Twitter: @mamtabadkar

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article

Comments