Ralph Lauren slips in volatile trade after sales set­back

Financial Times USA - - MARKETS & I NVESTING - Mamta Bad­kar

Ralph Lauren shares see-sawed as the fash­ion group posted up­beat fourthquar­ter earn­ings show­ing that its ef­forts to curb dis­count­ing and turn round the com­pany are pro­gress­ing.

But the moves were also weigh­ing on sales, which de­clined for the 10th con­sec­u­tive quar­ter.

Shares in the com­pany known for its Polo line and trendy Amer­i­cana rose 3.8 per cent to $75.49 then fell 2.9 per cent be­fore it trimmed its losses by mid­day to trade 0.5 per cent lower at $72.39.

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 of 89 cents a 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.

But ef­forts to mod­er­ate dis­counts and tight­en­ing in­ven­to­ries 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 ful­lyear earn­ings out­look.

Shares in L Brands rose 3.4 per cent to $50.06 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 30 per cent lower to $1.96 after the com­pany be­hind ap­parel re­tailer Ann Tay­lor low­ered its full-year out­look.

Mean­while, Cisco Sys­tems was the big­gest de­cliner on the S&P 500 fall­ing nearly 8 per cent to $31.18 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.

But US stocks had re­bounded from the pre­vi­ous day’s sell-off. By mid­day, the S&P 500 was up 0.2 per cent to 2,362.65 and the Dow Jones In­dus­trial Av­er­age also climbed by the same mar­gin to 20,637.39. The Nas­daq Com­pos­ite rose 0.5 per cent to 6,040.61.

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