Ralph Lauren Corporation’s (RL) stock soared over 11% in morning trade on Tuesday after the company surpassed revenue and earnings estimates for the third quarter of 2019.
Net revenues grew 5.1% year-over-year to $1.72 billion, on a reported basis, helped by strong results across all regions. On a constant currency basis, revenue growth was 6.3%. Total comparable stores sales growth was 4%, on a constant currency basis.
During the third quarter, the company reported a net income of $120 million or $1.48 per share compared to a net loss of $82 million or $1.00 per share in the prior-year period. Adjusted net income was $188 million or $2.32 per share.
In North America, revenue grew 3%. Comparable stores sales growth was 4%, reflecting flat comps in brick and mortar stores and a 21% growth in digital commerce. Revenue in Europe increased 10% on a reported basis and 13% in constant currency.
In Asia, revenues grew 10% as reported and 11% in constant currency, helped by a 19% constant currency growth in Greater China. Comp store sales in Europe and Asia were both up 4% in constant currency, reflecting growth in both brick and mortar and digital commerce operations.
Average unit retail across the direct-to-consumer network was up 9% in the quarter. Global digital revenue rose 20% in constant currency, driven by strength across all regions. Inventory at the end of the quarter grew 11% to $914 million, reflecting investments in store expansion and earlier deliveries. The company expects inventory levels to normalize as it moves through the end of the fiscal year.
Also see: Ralph Lauren Q3 2019 Earnings Conference Call Transcript
Ralph Lauren expects net revenue to grow slightly on a constant currency basis in fiscal-year 2019. For the fourth quarter of 2019, the company expects net revenue in constant currency to drop slightly due to a planned reduction in off-price sales. Ralph Lauren lowered its outlook for capital expenditures to around $250 million for fiscal 2019 from the previous figure of $275 million, due to timing shifts into fiscal 2020.