Feb 4, 2016
Ralph Lauren's sales miss due to mild weather, fewer tourists
Feb 4, 2016
Ralph Lauren Corp reported a bigger-than-expected decline in sales in the holiday-shopping quarter, hurt by unusually mild weather and fewer tourists visiting its stores in North America.
The luxury fashion retailer's shares fell more than 18 percent on Thursday after the company also cut its sales forecast for the year ending March and said sales would decline further in the following 12 months.
Unusually warm weather during November and December has hurt sales of winter apparel such as sweaters, coats and gloves, especially at department stores.
Macy's Inc, which accounted for about 12 percent of Ralph Lauren's total sales in 2015, reported in January a decline in comparable sales for the holiday-shopping period and cut its earnings outlook for the second time in two months.
Kohl's Corp on Thursday also cut its profit estimate for the year ended January 2016, citing weak demand for winter products.
Ralph Lauren, whose brands include Polo Ralph Lauren, Club Monaco, American Living and Chaps, said "challenges with the product assortment under the Lauren brand" contributed to the sales decline in the quarter.
A stronger dollar also hit revenue, accounting for 3 percentage points of the 4.3 percent decline in quarterly net revenue, the company said.
Total sales at established stores fell 7 percent in the quarter ended Dec. 26. Analysts on average had expected a decline of 2.7 percent, according to Consensus Metrix.
Ralph Lauren said it now expects revenue to fall by about 3 percent for the year ending April 2017, with the strong dollar pulling down revenue by 4 percentage points. The company had previously forecast sales to remain flat for the period.
The company also forecast current-quarter revenue to be flat to down 2 percent.
Ralph Lauren's net income fell nearly 40 percent to $131 million, or $1.54 per share, in the third quarter. Excluding items, it earned $2.27 per share, beating the average analyst estimate of $2.13, according to Thomson Reuters I/B/E/S.
Net revenue fell to $1.95 billion, below the $2.03 billion expected by analysts.
The company's shares fell as much as 18.7 percent to $94.02, their lowest since October 2010.
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