Ralph Lauren Shares Tumble Despite Strong Earnings

Ralph Lauren Corporation (NYSE: RL) reported its fourth quarter financial results before the market open on Tuesday. The Company surpassed earnings estimates, however, due to weaker North American sales, shares tumbled by 7.8%.

For the quarter, Ralph Lauren reported earnings of USD 1.07 per share on revenue of USD 1.5 Billion. Analysts expected earnings of USD 0.89 per share on revenue of USD 1.48 Billion.

Ralph Lauren reported that it increased marketing investments by 13% for the fiscal year in order to drive unique and impactful brands. The Company’s marketing strategy was much more effective in its Europe and Asia region.

Ralph Lauren witnessed its North American revenue falter year-over-year. Revenue declined by 7% to USD 708 Million. North American wholesale revenue also slipped by 10% in the same period primarily due to softness in select spring fashion concepts and planned reductions in off-price sales.

In the North American retail segment, Ralph Lauren reported that comparable store sales fell by 4%. However, digital e-commerce revenue rose by 6%. Excluding the impact of Easter timing, Ralph Lauren’s North American comparable store sales were down 1% year-over-year.

Despite the lagging North American revenue, Ralph Lauren saw strong growth within its Europe and Asian segments. Europe revenue rose by 4% year-over-year to USD 345 Million, while Asia revenue jumped by 6% to USD 273 Million.

Ralph Lauren continued its global expansion as the Company has 135 international stores operating including over 90 in Asia and partnered with over 20 global digital retailers.

Average unit retail across Ralph Lauren’s direct-to-consumer network was up 8% in the fourth quarter and the fiscal year. The stronger network growth was a result of the Company’s initiative to elevate product assortment and improve the quality of sales.

“This year we marked an incredible milestone for our business and our brands – 50 years of inspiration, passion and innovation,” said Ralph Lauren, Executive Chairman and Chief Creative Officer. “As we celebrate our rich history, we are even more inspired and motivated to continue to build the future for our company, and I am so proud of the work our teams are doing to deliver for consumers around the world every day.”

As a result of the stronger earnings, Ralph Lauren’s board of directors declared a 10% increase in the regular quarterly cash dividend. The new quarterly cash dividend is USD 0.6875 per share. The next payable dividend is on July 12th.

For the first quarter of 2020, Ralph Lauren expects net revenue to increase by 3% to 5% year-over-year due to the timing of Easter. As for fiscal 2020, the Company forecasts net revenue increase to increase by 2% to 3% year-over-year.

3 Comments
  1. Jonathan Alexander 2 weeks ago
    Reply

    Hold your horses? Ralph Lauren beat on earnings but looks like investors not pleased with the drop in sales in North America.

    • Samantha Barrios 2 weeks ago
      Reply

      $rl admits to heavy exposure to tariffs. Will be a tough quarter ahead

  2. Oliver Renick 2 weeks ago
    Reply

    Brutal day for a lot of retail names after $RL turns around now down 7%. Big catch is brick n mortar same store sales down 7% in North America. $M earnings tmrw morning. $GPS down 2.6%.

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