Ralph Lauren slips in volatile trade after sales setback
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.