Ralph Lauren stock is surging after earnings beat
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.
Share prices of other apparel retailers are also trending upward:
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.