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.
“As we reflect on the year, I am incredibly proud of what the team is doing to elevate and energize our brand around the world,” said Ralph Lauren, executive chairman and CEO.
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.