Ralph Lauren's Profit Shrinks as North American Sales Decline--Update
May 14 2019 - 12:05PM
Dow Jones News
By Suzanne Kapner and Kimberly Chin
Ralph Lauren Corp.'s profit and sales fell in the most recent
quarter, dragged down by declines in North America and a higher tax
expense.
The company's stock fell more than 7% in morning trading to
$109.36 even though Ralph Lauren increased its quarterly dividend
by 10%.
"We believe our strategy is working and our plan is on track,"
Ralph Lauren Chief Executive Patrice Louvet told analysts on a
conference call.
Mr. Louvet pointed to progress in winning over younger consumers
and focusing on more full-priced sales as signs the company was on
track. But he added it needed to do a better job attracting
shoppers to its retail stores.
Net revenue for the period that ended March 30 fell 1.5% to
$1.51 billion from the year prior, reversing three previous
quarters of growth.
Profit for the period was down 23% to $31.6 million, or 39 cents
a share, compared with $41.3 million, or 50 cents a share, a year
earlier.
In North America, revenue fell 7% to $708 million. Wholesale
revenue to third parties such as department stores fell 10%, in
part due to a planned reduction to off-price sellers such as T.J.
Maxx.
Sales excluding newly opened or closed locations at the
company's North American retail stores fell 4%, including a 7%
decline at bricks-and-mortar locations. Digital sales grew 6%.
Asia and Europe performed better, with revenue up 6% and 4%,
respectively, in the period.
The company has been trying to invigorate core products such as
its Polo shirt, which it said performed strongly in the period.
But other areas still need work, such as its moderately priced
Lauren line sold in department stores. Mr. Louvet said the brand
needs to focus more on core categories such as denim and dresses
and have a better balance of fashion and basics. In recent seasons,
the line had too much fashion, he said. There is a new design team
in place for the line and the company is also renovating its Lauren
shops in department stores.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Kimberly
Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
May 14, 2019 11:50 ET (15:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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