Ralph Lauren Drops on Concerns About Tourist Sales Slowdown
Ralph Lauren Jumps on Asia Sales Beat and Robust Profit
(Bloomberg) -- Ralph Lauren Corp. shares fell as much as 4.7% in New York trading after the preppy apparel maker warned about a challenging outlook for its North America business amid declines in tourist sales, hurt in part by the stronger dollar.
- The 2% gain in quarterly global same-store sales, a key retail metric, was less than the average estimate compiled by Consensus Metrix, although the measure was better than expected in the important Asian market. Profit was $1.77 a share when excluding some items last quarter, beating even the highest analyst estimate.
Key Insights
“We have taken a slightly more cautious view of the retail environment for the year ahead,” Chief Executive Officer Patrice Louvet said on an earnings call with analysts. He cited foreign tourist volatility among the challenges.
In an interview before the call, Louvet said that much progress had been made in reviving business in North America, though the company invested too much in seasonal fashion items instead of core products like its mesh polo shirts and chinos in the region. “Stabilization is the operative word in North America,” he said. Comparable sales there were up 1%.
Ralph Lauren has been on the comeback with re-invigorated products that speak to younger shoppers. It has been pulling away from off-price retail, reducing inventory, cutting costs and refocusing on its own e-commerce business. But it still has more work to do, especially in its home market, where it said it saw softer digital performance in the quarter.
- The company spent more than 19% more on marketing last quarter. Louvet said he will continue to increase marketing investment until it reaches a target of 5% of sales. Recent projects include sponsoring sporting events like Wimbledon, special capsule collections and celebrity partnerships.
Market Reaction
- The shares fell 3.3% to $108.58 at 9:56 a.m. in New York.
- Get more on the numbers here.
To contact the reporter on this story: Kim Bhasin in New York at kbhasin4@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Cécile Daurat, John J. Edwards III
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