Ralph Lauren (RL) Beats On Q2 Earnings, Stock Climbs 2.8%

Ralph Lauren Corporation (NYSE:RL) , a designer, marketer and distributor of lifestyle products, released second-quarter fiscal 2017 results, wherein adjusted earnings of $1.90 came substantially ahead of the Zacks Consensus Estimate of $1.70, while it declined 10.8% from $2.13 earned in the year-ago quarter.

Earnings Estimate Revision: The Zacks Consensus Estimate for 2017 has been trending downwards in the last 30 days. However, Ralph Lauren’s performance over the trailing four quarters, including the quarter under review, remains encouraging with an average beat of 11.1%.

Revenues: Ralph Lauren’s net revenues dropped approximately 8% (on a currency neutral basis as well) to $1,821 million, which also fell short of the Zacks Consensus Estimate of $1,829 million. On a reported basis, the increase in international revenues was more than offset by soft North American revenues.

Outlook & Other Developments: Management continues to anticipate consolidated net revenues to fall at a low-double digit rate in fiscal 2017, in line with the company’s Way Forward Plan. For the third quarter, the company expects consolidated net revenues to dip in low-double digits to low-teens range. Currency headwinds are expected to have minimum impact on the net revenues for both the periods, given the current spot rates.

Further, Ralph Lauren remains focused on its Way Forward plan, which was announced in Jun 2016. In this regard, management expects to generate annualized cost savings worth $180-$220 million, on the back of its fiscal 2017 restructuring activities. Such restructuring activities include rightsizing the portfolio and cost-structure, alongside streamlining the structure of the organization. The company also expects to incur $400 million and $150 million by the end of fiscal 2017, on account of these restructuring charges and inventory charge associated with the company’s Way Forward Plan, respectively.

Zacks Rank: Currently, Ralph Lauren carries a Zacks Rank #3 (Hold) which is subject to change following the earnings announcement. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stock Movement: Ralph Lauren’s shares jumped nearly 2.8% during pre-market trading hours following the earnings release. Investors developed a positive sentiment based on the better-than-expected results.

Check back later for our full write up on Ralph Lauren’s earnings report!

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