Earnings Roundup: Ralph Lauren, Kate Spade & Puma

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In case you missed it, Footwear News recaps some of the week’s big earnings releases.

Ralph Lauren Corp.

For the second quarter, ending Sept. 26, 2015, Ralph Lauren significantly surpassed estimates in Q2, posting adjusted net income of $184 million, or $2.13 per diluted share. On a reported basis, net income was $160 million, or $1.86 per share. The numbers were a decline from reported net income of $201 million, or $2.25 per diluted share, in the same year-ago quarter.

Earnings per diluted share increased 13 percent from the prior year period, excluding foreign currency impacts and one-time charges.

Second-quarter net revenues were $2 billion, a 4 percent year-over-year increase in constant currency, driven by double-digit growth internationally, the company said. Reported net revenues declined 1 percent year-over-year, which included approximately 500 basis points of negative impact from foreign-currency effects.

We reiterate our buy following Ralph Lauren’s solid Q2 beat; early progress on global brand reorganization and SKU rationalization; and confidence in the upcoming fiscal year,” Citi Research analyst Kate McShane wrote. “While management’s reiterated FY16 outlook acknowledged near-term challenges in the retail environment, Ralph Lauren is managing well through the headwinds.”

McShane added that Q2 highlighted the brand’s strength in international markets; improved e-commerce and new omnichannel capabilities; and showed positive early reads on newer initiatives such as Polo Sport.

UBS Investment Bank analyst Michael Binetti also reiterated his buy rating on the stock, while Normura Securities International Inc. analyst Robert Drbul said he was “encouraged” by the results but remained cautious on FX, weak tourism in the U.S., warmer weather trends, and elevated inventory levels across retail.

Kate Spade & Co.

Kate Spade continues to prove why it is a market watcher top pick in the handbag and accessories space. The company’s third quarter direct-to-consumer comparable sales grew 16 percent, while adjusted net sales increased 26 percent, to $275 million. Reported net sales were $277 million, a year-over-year increase of 11 percent.

Net income was 2.3 million, or 2 cents per diluted share, a significant improvement from the comparable quarter when the company posted a net loss.

Q3 comp impresses and is industry-leading,” wrote Cowen & Co. analyst Oliver Chen. “We remain encouraged for long-term margin expansion opportunities to drive 2016 adjusted EBITDA to 18 percent to 20 percent.”

The company reaffirmed its full-year 2015 guidance.

Puma

The German sportswear company that is backed by Kering saw improved revenues in the third quarter but continued to feel the impact of currency pressures. Reported sales were up 8.4 percent, or 3.1 percent currency-adjusted, to 914 million euros, or $1 billion based on the average exchange rate for the period. Profit declined 31 percent year-over-year to 20 million euros, or $22.2 million.

Puma’s third-quarter growth was boosted by footwear — especially the running and training category — which hit sales of 408.4 million euros, or $453.3 million, representing growth of 3.5 percent currency-adjusted.

The company also highlighted the positive impact of Rihanna’s first appearance in Puma TV ads and the singer’s first footwear launch with the brand.

By region, growth was strongest in the Americas, up 11 percent currency-adjusted, while Asia Pacific gained 5 percent currency-adjusted. But the EMEA region (Europe, Middle East, and Africa) declined by 3.6 percent currency-adjusted.