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Ralph Lauren’s Profit, Sales Beats Aren’t Enough for Wall Street

Ralph Lauren posted profit and revenue that topped analysts’ estimates, though investors weren’t impressed with the flat sales growth and sent the shares lower.

Companywide same-store sales, a key performance measure, were flat last quarter in constant currency terms, the company said Tuesday. Still, that beat the average projection for a drop of 0.6 percent.

Key Insights

Investors have already propped the shares up a hefty 32 percent this year through Monday’s close. They may have been looking for stronger results to keep that momentum going. “The sales numbers are rather anemic and are characteristic of a brand that is still not entirely confident about its place in the fashion world or its future direction,” said Neil Saunders, managing director of GlobalData Retail. Ralph Lauren has been making a comeback by refocusing on classic styles such as polo shirts, sweaters and peacoats, and unveiled its first streetwear collaboration last month, signaling its interest in winning over younger shoppers. North America topped estimates with a 1 percent gain in comparable sales. The label has found success selling its preppy styles to consumers in Asia, where same-store sales jumped 6 percent, almost twice estimates. Europe meanwhile, continues to be a drag on the brand.

Market Reaction

The shares fell as much as 5.2 percent to $129.65 in New York. Their gain so far this year before Tuesday has far outpaced the 2.4 percent increase in the S&P 500 Index.