Premium lifestyle products manufacturer Ralph Lauren (RL), which was trounced by a year-over-year trend of declining revenue for more than three years, continued the same trend in the recently ended fourth quarter with a 2.3% decline in revenue at $1.52 billion. The New York-based retailer attributed the sales dip to declining consumer demand and lower level of promotional activity along with distribution and brand exits.
The company’s results, however, beat consensus estimates on both the revenue and earnings front. The stock also has been rallying for the past year despite revenue declines, surging more than 72%.
On the other hand, earnings played contrary to its revenue trend and swung to profit for the quarter at $41.3 million compared to a loss in 2017. In the recent past, Ralph Lauren has been concentrating more on providing better digital and e-commerce experience for its customers by moving its retail platform to a cloud-based model.
“We delivered on our commitments for the fourth quarter and full year, and we made strong operational progress. We start the new year with a solid foundation – including a clear strategic plan to deliver long-term growth and value creation, an engaged global organization, and a strong balance sheet,” said CEO Patrice Louvet.
On a geographic basis, North America has been seeing declining sales, with revenue declining more than 13% for the quarter. However, Asia and Europe posted double-digit increases in sales, with Asia reporting the highest growth of 16%.
For fiscal 2019, Ralph Lauren expects its revenue to decline in low single-digits, though foreign currency is expected to have minimal impact on revenue growth during the period. However, for the first quarter of 2019, the company anticipates net revenue to be flat to down slightly in constant currency.
The stock has risen about 11% since the start of the year and the earnings and revenue beat for this quarter brought the stock up in the pre-market trading, increasing more than 3%.
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