Ralph Lauren Corp. (RL) Wednesday said profit in the first quarter improved 5 percent from last year, helped by growth in North America, but the apparel retailer forecast a drop in second-quarter sales. The stock is falling close to 6 percent in pre-market activity.
Net income attributable to the company climbed to $193.4 million or $2.03 per share from $184.1 million or $1.90 per share in the prior-year period. On average, 16 analysts polled by Thomson Reuters expected earnings of $1.78 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues advanced to $1.593 billion from $1.526 billion. Analysts expected revenues of $1.58 billion.
Net sales grew to $1.551 billion from $1.487 billion. According to the company, consolidated sales growth was suppressed by around 5 percent due to termination of some North American and Asian operations, as well as adverse currency impact.
Wholesale segment sales rose 3 percent to $694 million with double-digit growth in North America. European wholesale revenues declined at a double-digit rate, due mainly to lower shipments to specialty stores, a shift in the timing of certain seasonal merchandise shipments and adverse currency impact.
Retail segment sales increased 5 percent to $857 million, supported by the contribution from new stores, incremental e-commerce operations and comparable store sales growth.
Consolidated comparable store sales rose 1 percent on a reported basis and increased 3 percent in constant currency.
The company ended the first quarter with 379 directly operated stores comprising of 103 Ralph Lauren stores, 59 Club Monaco stores, 202 Polo factory stores and 15 Rugby stores.
Looking ahead to the second quarter, the company expects consolidated net revenues to decline by a mid-single-digit percentage, as a low-double-digit decline in wholesale revenues is partially offset by a mid-single-digit increase in retail revenues. Analysts expect revenues of $1.98 billion for the quarter.
The growth may be mitigated by 700 to 800 basis points due to decisions regarding certain operations, including reduced distribution in Greater China and for American Living, along with unfavorable foreign currency effects.
The company continues to expect consolidated net revenues to increase by a mid-single-digit percentage for the year. Wall Street sees revenues of $7.24 billion for the year.
RL, which closed at $153.03 on Tuesday, is falling 5.9 percent in pre-market activity.
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