Ralph Lauren trades 6% higher following better than expected profit in the quarterly report

Ralph Lauren announced its quarterly performance results on Tuesday. Having beaten the experts’ forecast for profit in the holiday quarter, shares were seen trading 6% higher in premarket trading. The fashion house cited increased demand for winterwear at higher prices to have helped fuel margins in the recent quarter.

The company also highlighted that it has recently improved investments in marketing. Hiring actors and supermodels to market products via social media, Ralph Lauren added, contributed to lifting its reputation and consequently the quarterly sales.

Marketing Expenses Rose By 16% For Ralph Lauren In The Third Quarter

In the third quarter, marketing expenses surged by 16% for Ralph Lauren while a 6% increase in average prices at the website and stores was reported. In terms of adjusted gross margin, Ralph Lauren highlighted an increase of 60 basis points.

The recent quarter posted Ralph Lauren’s net revenue at $1.75 billion that marked a 1.4% increase. Analysts, on the other hand, were expecting the company to print $1.72 billion in net revenue, as per Refinitiv’s data.

Excluding foreign exchange and relevant fluctuations, the American fashion house anticipated a 2% to 3% increase in its revenue in fiscal 2020. The forecast, however, didn’t account for the potential impact that the recent Coronavirus outbreak in China can cast on its performance at large.

On the net income’s front, the company recorded $334.1 million that translates to an almost three-fold increase in the recent quarter. Thanks to the one-time tax benefit, the company made $4.41 of earnings per share. Excluding such one-time items, however, the fashion house boasted $2.86 of earnings per share in the recent quarter. According to Refinitiv, analysts were expecting its EPS at a much lower $2.45.

Ralph Lauren’s Performance In The Stock Market

Ralph Lauren’s performance in the stock market in 2020 has remained modestly upbeat so far. The company opened the year at around $118 per share. Following a low of $112.66 last Tuesday, the company climbed back to near $125 level following the earnings report.

Last year wasn’t too kind to the American fashion house either. While share prices were reported just above $100 in January 2019, as of April, the stock had surged to over $130. Following the yearly high, however, it dropped continuously to note at around $83 in August. Towards the end of the year, Ralph had gained back to above $115 in the stock market where it closed the last year.