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Kors, Ralph surge

Luxury retailers, beaten up in recent years, may have started to rebound, analysts said Tuesday.

Both Ralph Lauren and Michael Kors, their stocks deep in the red this year, turned things around by posting second-quarter results that beat Wall Street expectations.

Both designers reported sales declines — but they were smaller than the dropoffs recently experienced as each cut back on discounts, managed inventory better and continued a retreat from department stores.

Ralph Lauren reported a 13 percent revenue drop and Michael Kors said sales were down 3.6 percent. Investors cheered. Ralph Lauren’s shares popped 13 percent, to $88.53, while Michael Kors ballooned by 22 percent, to $45.25.

“These companies were left for dead and people were not viewing Ralph and Kors as the ones who could thrive in this environment, but what they told us is that there is stabilization” said NomuraInstinet analyst Simeon Siegel.

The effort at Ralph Lauren is being led by newly installed Chief Executive Patrice Louvet, who joined the company a month ago.

“While we are addressing challenges in our business, we have significant opportunity ahead and we’re moving forward with urgency,” Louvet said in a statement.

The company said it will exit up to 25 percent of its underperforming US department stores by 2018.

Michael Kors pointed to improvements in the designs of its handbags.

“If it’s the right product, you don’t have to have these aggressive markdowns at retail,” said CEO John Idol during an earnings call.

Michael Kors is also expanding beyond its ubiquitous bags, agreeing last month to buy luxury shoemaker Jimmy Choo for $1.2 billion.

It also signaled its interest in buying more companies in order to become a diversified fashion house.

The companies’ results “reflect the fact that luxury and near luxury demand is quite soft, including handbag growth that has flatlined and luxe apparel growth that may be actually negative,” said Customer Growth Partners retail consultant Craig Johnson.

Same-store sales at Michael Kors fell 5.9 percent, while same-store sales at Ralph Lauren stores dropped 7 percent.