Ralph Lauren Corp. came into the summer with some momentum, with fiscal first-quarter sales that topped estimates on a constant currency basis.
But the exchange rate and higher operating expenses, in part to fuel “both near- and long-term strategic growth,” bit into the bottom line.
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Net income declined 25 percent to $123.4 million, or $1.73 a diluted share, from $164.7 million, or $2.18, a year earlier. Adjusted earnings per share slipped to $1.88.
However, revenues for the three months ended July 2 rose 8.3 percent to $1.5 billion from $1.4 billion. And on a constant currency basis, revenues increased a stronger 13 percent, ahead of the 8 percent rise the company had penciled in.
Investors liked the start of the year and traded shares of Ralph Lauren up 2.8 percent to $104 in premarket trading.
“Our strong first quarter performance underscores the power of our brand and momentum of our strategy around the world, following our significant multi-year reset,” said Patrice Louvet, president and chief executive officer. “While the global operating environment remains as volatile as ever, our talented, passionate teams are delivering on the multiple growth opportunities to scale our business with creativity and discipline — from driving high-quality new consumer recruitment to expanding digital and elevating our touch points in every region and channel.”
While sales are up, the company has been pushing inventories up even higher, looking to skirt supply chain delays that have complicated life in fashion while also meeting consumer demand.
Inventories in the first quarter rose 47 percent to $1.2 billion, primarily with an increase of goods-in-transit.
Fashion companies have sought to make sure they have enough of their classic and staple goods on hand so they can tell their stories to consumers.
And Ralph Lauren always has a story.
Ralph Lauren, executive chairman and chief creative officer, said: “Our vision of timelessness and an authentic life well-lived continues to resonate around the world. From the elegant spirit of Wimbledon to the anniversary celebration of our iconic Polo Shirt, our brand is inspiring people to step into their dreams.”