Why Ralph Lauren Is Soaring around 15% Today

Ralph Lauren stock is surging after earnings beat

Fashion giant Ralph Lauren’s (RL) stock had soared 15% as of 1:20 PM EST, thanks to the expectation-beating fourth-quarter results that the company reported earlier today.

The company cruised ahead of both the top and bottom lines. Adjusted earnings per share expanded 1.1% YoY (year-over-year) to $0.90 on total sales of $1.53 billion. In comparison, Wall Street had projected a 6.7% YoY decline to $0.83 on total sales of $1.48 billion. The company recorded a foreign currency benefit of ~440 basis points during the quarter and marked its thirteenth consecutive earnings beat.

Why Ralph Lauren Is Soaring around 15% Today

Share prices of other apparel retailers are also trending upward:

  • Tapestry (TPR)—1.3%
  • PVH Corp. (PVH)—1.6%
  • Guess (GES)—2.6%

What were the bright spots?

RL’s gross margin rate improved by a massive 440 basis points to 59.8% of sales, driven by a higher full-price sales, a favorable shift in geographic and channel mix, and lower product costs. The full-year adjusted gross margin improved by 220 basis points to 60.8%.

The company said it recorded lower discount rates across regions and channels during the fourth quarter and the full fiscal year. Inventories were down 4% on a reported basis and 7% in constant-currency terms.

While the company’s same-store sales continued to fall and declined 1% in constant-currency terms, they were better than the consensus expectations of a 2.3% drop. North American brick and mortar comps increased 6%, compared to a 3% decline in the previous quarter.

ETF investors looking to add exposure to Ralph Lauren can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 2% of its portfolio in the company.