Luxury fashion retailer Ralph Lauren Corp. (NYSE:RL) unveiled a 13.2% decline in first quarter sales to US$1.3bn as fewer promotions deterred shoppers and as the company streamlined the business.
Net income totalled US$59.5mln, or 72 cents per share, in the quarter to 1 July, compared to a loss of US$22.3mln, or 27 cents, a year earlier when it incurred a US$86mln restructuring charge.
Adjusted earnings per share was US$1.11, beating analysts’ expectations of 95 cents and sending its share price up 10% to US$86.29 in US morning trading.
Revenue was also ahead of market estimates of US$1.34bn with the company blaming the drop on a pullback in distribution and brands, low consumer demand and an increase in reduction in promotional activity.
The decision to sell more items at full price discouraged consumers in North America and in Europe where sales fell 17% and 14% respectively.
Ralph Lauren expects second quarter revenue to fall 9% to 10% and full year revenue to drop 8% to 9%.
Patrice Louvet, who joined as the company’s new chief executive in July from Procter & Gambler, said: “While we are addressing challenges in our business, we have significant opportunity ahead and we’re moving forward with urgency.”
“Ralph and I are focused on actively evolving the brand expression and consumer experience so we can ultimately renew growth and get back to leading. We are continuing to build a strong foundation for future growth, as evidenced by our progress this quarter on the key elements of the 'Way Forward' plan.”