Ralph Lauren’s plans to reduce promotions and rein in distribution are yielding progress.
The company today posted better-than-expected second-quarter profits of $144 million, or $1.75 per diluted share. On an adjusted basis, net income rose 4 percent year-over-year to $164 million, or $1.99 per diluted share, significantly topping analysts’ bets for diluted earnings per share of $1.88.
Still, as the company worked to increase quality of sales, reduce promotional activity and elevate distribution, its revenue declined 9 percent to $1.66 billion. Those results modestly beat forecasts for revenues of $1.65 billion. (Brand exits and lower consumer demand were also factors, the company noted.)
On a conference call with investors today, Ralph Lauren’s newly minted president, CEO and director, Patrice Jean Louis Louvet, recounted the brand’s progress on its Way Forward strategy — including key focus areas: improving quality of sales and distribution, evolving product and marketing to appeal to new consumers, productivity and expanding its digital and international presences. (Louvet joined Ralph Lauren in July.)
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Among the quarter’s highlights, Louvet noted, were a reduction in discount rates and a 5 percent increase in average unit retail for direct-to-consumer, more limited-edition product launches, an increase in celebrity partnerships and a 4 percent improvement in revenues in the underrepresented Asian market. (On the retail side, Louvet said the company continues to close unproductive distribution in retail and wholesale, and significantly reduce off-price shipments.)
“We are moving in the right direction, with a clear focus on creating value for all of our stakeholders by continuing to drive productivity and reigniting quality growth,” Louvet said. “Ralph and I have the same vision for the brand, and the same goal, which is to get our great company back to winning. He and I are deeply committed to evolving how our iconic brand is experienced and expressed to win over consumers.”
As of 2:15 p.m. ET, Ralph Lauren shares were up nearly 4 percent to $92.97.