Ralph Lauren is fighting to turn around its sagging U.S. business, but there was more bad news Thursday when the company reported its second-quarter earnings.
The New York-based company posted earnings per share of $1.90, lower than last year’s second quarter EPS of $2.13. Despite this, it was enough to top Wall Street’s expected EPS of $1.70.
Revenue fell 7.6% to $1.82 billion, in line with the company’s expectations. International revenue was up 2 percent but was offset by a deep 12 percent drop in North America.
Ralph Lauren saw same-store sales decrease 5 percent during the quarter, and wholesale revenue decrease 10 percent, largely due to the decline in North American sales. The brand blamed the decline on reduced shipments as a part of their Way Forward plan.
The negative second quarter findings come after a successful ‘See-now-buy-now’campaign during New York Fashion Week, which brought more than twice the global media impression compared to last season’s show.
“We are changing with the consumer, as we demonstrated in September with our first-ever ‘see-now-buy-now’ runway show at our flagship store on Madison Avenue,” said Ralph Lauren. “I am confident that this industry leading endeavor in combination with our other elements of the Way Forward plan are strengthening our brand to support future profitable growth.”
The company managed to decrease expenses by 4 percent during the quarter, though this was mostly due to lower employee headcount and the closure of seven stores. The company also went ahead with discontinuing its Denim & Supply line, announced earlier this year. Lauren said it would allow the company to better focus on its core business.
“While it is still the early stages of our plan, we made meaningful progress and we are on track to deliver against fiscal 2017 guidance,” said Lauren.
For fiscal 2017, the company is maintaining its guidance of a net revenue decrease at a low-double-digit rate, consistent with the company’s Way Forward plan. Operating margins are expected to remain stable at around 10 percent. The company also indicated there would be more store closures as part of its 2017 strategy, although the exact number of stores wasn’t revealed.
