Ralph Lauren's Profit Shrinks as North American Sales Decline--Update

By Suzanne Kapner and Kimberly Chin 

Ralph Lauren Corp.'s profit and sales fell in the most recent quarter, dragged down by declines in North America and a higher tax expense.

The company's stock fell more than 7% in morning trading to $109.36 even though Ralph Lauren increased its quarterly dividend by 10%.

"We believe our strategy is working and our plan is on track," Ralph Lauren Chief Executive Patrice Louvet told analysts on a conference call.

Mr. Louvet pointed to progress in winning over younger consumers and focusing on more full-priced sales as signs the company was on track. But he added it needed to do a better job attracting shoppers to its retail stores.

Net revenue for the period that ended March 30 fell 1.5% to $1.51 billion from the year prior, reversing three previous quarters of growth.

Profit for the period was down 23% to $31.6 million, or 39 cents a share, compared with $41.3 million, or 50 cents a share, a year earlier.

In North America, revenue fell 7% to $708 million. Wholesale revenue to third parties such as department stores fell 10%, in part due to a planned reduction to off-price sellers such as T.J. Maxx.

Sales excluding newly opened or closed locations at the company's North American retail stores fell 4%, including a 7% decline at bricks-and-mortar locations. Digital sales grew 6%.

Asia and Europe performed better, with revenue up 6% and 4%, respectively, in the period.

The company has been trying to invigorate core products such as its Polo shirt, which it said performed strongly in the period.

But other areas still need work, such as its moderately priced Lauren line sold in department stores. Mr. Louvet said the brand needs to focus more on core categories such as denim and dresses and have a better balance of fashion and basics. In recent seasons, the line had too much fashion, he said. There is a new design team in place for the line and the company is also renovating its Lauren shops in department stores.

Write to Suzanne Kapner at [e-mail] and Kimberly Chin at [e-mail]

(END) Dow Jones Newswires

May 14, 2019 11:50 ET (15:50 GMT)

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