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Ralph Lauren’s Drive to Deepen Its Premium Image Is Paying Off

Ralph Lauren is reaping the benefits of tightening up distribution in its pursuit of a more premium image.

The firm today posted first-quarter results that were better than expected as profits soared 83 percent year-over-year to $109 million, or $1.31 per diluted share. On an adjusted basis, profits were $128 million, or $1.54 per diluted share — a gain of 41 percent over the comparable period and 18 cents higher than analysts’ bets.

“We are off to an encouraging start to the new fiscal year on both the top and the bottom line,” said President and CEO Patrice Louvet in a statement. “Guided by our three core principles of putting the consumer at the center of all we do, elevating and energizing our brand, and balancing productivity and growth, we are on track to return the company to long-term, sustainable growth and value creation.”

Overall, company sales increased 3 percent to $1.39 billion — a modest beat against analysts’ estimates that foresaw sales of $1.36 billion.

During a call today, Louvet told investors that digital and better-quality distribution are among the areas where the firm’s turnaround efforts are taking hold.

“[A] key element of our distribution strategy is to provide a consistent, elevated experience across all channels,” Louvet said. “To achieve this, we continue to improve the quality of our distribution through our store and shop refresh programs globally. We are elevating our distribution and our brands through improvements in fixtures, lighting, layout and visual merchandising. We continue to see a good return on our investments with these projects.”

Overall digital business, including directly operated sites, Departmentstore.com, pure players and social commerce, was up 7 percent globally in the first quarter, Louvet noted.

“This was driven by 24 percent growth in international, with North America up slightly,” he said. “We expect to drive an acceleration of our overall digital growth as our directly operated North America digital flagship returns to growth.”

In the first quarter, the North American business showed a “significant sequential improvement,” Ralph Lauren’s chief said, reporting a 2 percent decline versus the high teen declines it saw last year.

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