Ralph Lauren beats street in successful Q3

Ralph Lauren Corp. exceeded analyst expectations for earnings per share (EPS) and revenue in the third quarter of fiscal 2020.

The luxury clothing and accessories company reported net income of $334 million, or $4.41 per diluted share. On an adjusted basis, net income was $217 million, or $2.86 per diluted share, excluding the impact of tax reform and restructuring-related and other charges. This compared to net income of $120 million, or $1.48 per diluted share on a reported basis, and net income of $188 million, or $2.32 per diluted share on an adjusted basis, for the third quarter of fiscal 2019.

Wall Street analysts had predicted adjusted EPS of $2.45. Revenue totaled $1.75 billion, up 1% on a year-over-year basis and ahead of a forecasted $1.72 billion. North America revenue increased slightly to $911 million, with same-store sales rising 4%. Europe revenue in the third quarter increased 3% to $438 million on a reported basis and 5% in constant currency, with same-store sales growing 2%. Asia revenue in the third quarter increased 5% to $290 million on both a reported and constant currency basis, although same-store sales dropped 1%. However, excluding Hong Kong, same-store sales in Asia rose 2%.
 
"We continue to make strong progress on our Next Great Chapter plan amid a volatile backdrop, with third-quarter results ahead of our overall expectations, including better than expected revenues, operating margin, and double-digit EPS growth," said Patrice Louvet, president and CEO, Ralph Lauren Corp. "Over the important holiday season, our teams consistently executed across each of our strategic priorities, enabling us to elevate our brand and deliver for our consumers across every touchpoint.”

For fiscal 2020, the company expects net revenue growth in the range of 2% to 3% on a constant currency basis. Foreign currency is expected to negatively impact revenue growth by approximately 1.1 to 1.3 percentage points in fiscal 2020. This outlook continues to include the impact of tariffs and business disruptions in Hong Kong but does not include potential impact from the coronavirus outbreak in Asia.

In the fourth quarter of fiscal 2020, the company expects net revenue to be up slightly on both a constant currency and reported basis. Foreign currency is expected to negatively impact revenue growth by approximately 0.5 percentage points in the quarter.