Ralph Lauren Results Beat Estimates

Ralph Lauren Corp. said its profit fell 77% in the latest quarter as the apparel company's sales and margins were hurt by moves to clear inventories in its U.S. business.

However, shares rose 3.6% to $87.50 in recent premarket trading as per-share earnings, excluding certain items, beat Wall Street views and revenue edged past expectations.

The Ralph Lauren board also authorized the repurchase of an additional $200 million of the company's stock.

Chief Executive Stefan Larsson, who has been conducting a review of the business, said in prepared remarks the company would disclose details of its strategic plan to strengthen the brand and drive profits at its investor day set for June 7.

Mr. Larsson unveiled the review in February after the apparel company reported a 39% drop in quarterly profit and cut its sales outlook for the current year. At the time, he said he wanted to bring more focus to the company. He also was taking a hard look at pricing and distribution—including its business with department stores such as Macy's Inc. and Nordstrom Inc.

On Wednesday, Macy's set off fresh fears about the health of the U.S. retail sector, after the country's largest department-store chain reported its worst quarterly sales since the recession. Nordstrom is set to release its first-quarter results Thursday after the bell.

Mr. Larsson, who joined Ralph Lauren from Gap Inc.'s Old Navy business last year, has made some management shifts including February's elimination of the position of global brands president. In February, Ralph Lauren said it was bringing part of its supply-chain operations in-house. The shift, part of what Ralph Lauren says is a long-planned action, will move warehousing and inventory management service from a North Carolina distribution center into a new, far larger distribution center that the fashion retailer will operate.

Over all for the period ended April 2, Ralph Lauren reported a profit of $41 million, or 49 cents a share, down from $124 million, or $1.41 a share, a year earlier. Excluding restructuring-related charges and other items, adjusted per-share adjusted earnings fell to 88 cents from $1.41.

Revenue edged down 0.7% to $1.87 billion. Excluding currency effects, revenue was flat. The latest period also included an additional week of sales, which contributed sales of roughly $70 million, mostly in its retail business.

Analysts polled by Thomson Reuters expected per-share profit of 83 cents and revenue of $1.86 billion.

Operating margin fell 3.7 percentage points to 6.4%. The decline wasn't as bad as the 4 to 4.5 percentage point drop projected in February, a development the company attributed to disciplined cost management. Gross profit margin declined 0.9 percentage point to 54.5%, partly owing to U.S. inventory reduction efforts.

Excluding currency effects, Ralph Lauren said international revenue increased 3% and was offset by an decline of 1% in Americas revenue as the result of moves to clear inventories in the U.S.

Retail sales rose 6% to $889 million. However, excluding currency effects, sales at established stores declined 5%.

The company plans to issue its guidance for its recently started fiscal year during its Investor Day.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

May 12, 2016 09:35 ET (13:35 GMT)

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