Ralph Lauren lifts sales outlook after strong holiday quarter

Designer clothing company Ralph Lauren forecast a strong finish to its financial year after posting a better-than-expected 10 percent rise in third-quarter profit, sending its shares up 9 percent in premarket trading.

The clothier, known for its Polo and Lauren by Ralph Lauren brands, said it expects full-year 2014 revenue to rise 7 percent – the high end of its previously projected range of 5-7 percent.

Ralph Lauren Denim Supply | Source: Ralph Lauren

Ralph Lauren has been opening more of its own stores, mostly in malls, to rely less on its wholesale business, which sells clothes to upscale retailers such as Macy’s.

Sales at its retail stores, excluding certain items, rose 10 percent to $1.1 billion, accounting for 55 percent of total revenue in the quarter. Comparable store sales rose 2 percent.

Ralph Lauren, whose portfolio also includes brands such as Club Monaco and Chaps, said wholesale revenue rose 14 percent to $840 million.

Brian Sozzi, chief executive of research firm Belus Capital Advisors, said Ralph Lauren’s quarterly performance was surprisingly strong given that apparel margins at other retailers were decimated during the holiday season.

Sozzi said the company’s strong core product margins stood out, indicating it was winning market share from rivals.

Ralph Lauren said it expects fourth-quarter sales to rise 10-12 percent, which translates to $1.81-$1.84 billion. Analysts on average expect current-quarter sales of $1.81 billion, according to Thomson Reuters I/B/E/S.

The company’s net income rose to $237 million, or $2.57 per share, from $216 million, or $2.31 per share, a year earlier.

Revenue, including licensing revenue, rose 9 percent to $2.01 billion in the quarter ended December 28.

Analysts on average had expected a profit of $2.51 per share on revenue of $2.03 billion.

Ralph Lauren’s shares were up 8.3 percent at $167 in premarket trading on Wednesday.

© Thomson Reuters 2017 All rights reserved.

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