Ralph Lauren Corp. reported better-than-expected quarterly profit and revenue on Tuesday, as the luxury apparel maker sold more products at full price and kept a tight grip on costs.
The New York-based company, like Coach and Calvin Klein-owner PVH Corp., has pulled products off department store shelves, where they were discounted heavily, to regain its status as a premium brand.
Ralph Lauren also has focused on its core brands, cut jobs, reduced excess inventory and shut underperforming stores, while also pushing its supply chain to bring the latest fashion to stores faster.
In the first quarter of Fiscal 2019, revenue increased by 3 percent to $1.4 billion on a reported basis and was up 1 percent in constant currency, driven by Asia and Europe.
North America revenue in the first quarter decreased 2 percent on both a reported and constant currency basis to $698 million. North America wholesale revenue declined primarily due to deliberate actions to improve quality of sales and exits from lower quality distribution. In retail, comparable store sales in North America were down 3 percent in constant currency, driven by a 3 percent decline in brick-and-mortar stores and a 2 percent decline at ralphlauren.com.
Europe revenue in the first quarter increased 8 percent to $351 million on a reported basis and 2 percent in constant currency. Europe wholesale revenue grew, partially due to a shift in timing of shipments. In retail, comparable store sales in Europe were down 8 percent on a constant currency basis, as a 9 percent decline in brick-and-mortar stores, related to assortment and inventory challenges, was partly offset by a 2 percent increase in digital commerce.
Asia revenue in the first quarter increased 19 percent to $248 million on a reported basis and increased 16 percent in constant currency, driven by strength in both retail and wholesale channels. Comparable store sales in Asia increased 6 percent in constant currency, reflecting growth in both brick-and-mortar and digital commerce operations.
“I continue to be inspired and energized by the passion our teams have for our brand and our company,” said Ralph Lauren, executive chairman and chief creative officer. “This passion along with Patrice’s partnership over the last year, the clear plan he and the team laid out in June, and the initial progress in this quarter, give me confidence in our future as we celebrate 50 years in business.”
“We are off to an encouraging start to the new fiscal year on both the top and the bottom line. Our teams around the world are fully engaged and focused on executing the Next Great Chapter plan we shared at our recent Investor Day,” added Patrice Louvet, president and chief executive officer. “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.”