Tighter controls on discounting and reducing its department store inventory has allowed Ralph Lauren to record better-than-expected quarterly results under new chief executive Patrice Louvet.
Shares at the luxury fashion retailer rose by as much as 11 per cent to $87 (£67) today, which allowed the company to claw back a large chunk of its losses for the year.
Net income for Ralph Lauren’s first fiscal quarter ending July 1 totaled $59.5 million (£45.8 million), compared to a loss of $22.3 million (£17.1 million) during the same period last year.
However, revenue totaled $1.35 billion (£1.04 billion), down from $1.55 billion (£1.19 billion) but still better than predictions from stock market experts.
Same-store sales also fell seven per cent for the quarter, but this was also better than predictions of an 8.6 per cent decline.
Ralph Lauren said the revenue decline was driven by fewer price cuts and promotions, brand eliminations, less consumer demand, and pulling back 31 per cent of inventory from department stores.
The company plans to pull back more inventory from 20 to 25 per cent of US department stores during the second half of the year, meaning its upcoming trading updates will also have further declines in revenue.
Louvet, who took over the helm May, is looking to build on the initiatives put in place by his predecessor Stefan Larsson.
“We are looking at these three buckets: our own sites, our wholesale.com and pure plays,” Reuters reported as Louvet saying in a post-earnings call.
Louvet added that Ralph Lauren was also actively looking to partner with the right online-only retailers.
“While we are addressing challenges in our business, we have significant opportunity ahead and we’re moving forward with urgency,” he said in press statement.
“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.”