Shares of Ralph Lauren Corporation (NYSE: RL) were climbing last month after the preppy clothier delivered surprise earnings growth in its first-quarter report. According to data from S&P Global Market Intelligence, the stock finished the month up 16%.
Continue Reading Below
As the chart below shows, shares spiked 13% on Aug. 8 as the company beat estimates in its earnings report and showed progress in its turnaround efforts.
The luxury retailer said revenue declined 13% to $1.35 billion, but that was largely due to planned exits from distribution channels and brands and a reduction in promotional activity. It is cutting back on sales to department stores to take more control of its brand and limit availability, to help regain its luxury status. Inventory levels also fell by 31%, a result of planned reductions to boost efficiency. That result edged out estimates of $1.34, but the company easily beat bottom-line expectations.
As a result, adjusted earnings per share increased from $1.06 to $1.11, ahead of the $0.95 consensus.
New CEO Patrice Louvet said, "While we are addressing challenges in our business, we have significant opportunity ahead and we're moving forward with urgency. Ralph and I are focused on actively evolving the brand expression and consumer experience so we can ultimately renew growth and get back to leading."
Management maintained its full-year guidance, calling for a drop in revenue of 8%-9%. It did not provide EPS guidance, but said it expected an operating margin of 9%-10.5%.
The overall landscape still remains challenging for luxury brands like Ralph Lauren as more consumers do their shopping on the internet. Despite the strong report, shares are still down 10% over the last year, but it's clear the company is still taking steps in the right direction to improve the business.
10 stocks we like better than Ralph Lauren CorpWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Ralph Lauren Corp wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of September 5, 2017