Shares of Ralph Lauren Corporation (NYSE: RL
) rallied on Wednesday after the apparel retailer surprised the Street by reporting 28% jump in profits for the fiscal third quarter, thanks to lower tax rate and better than expected sales in the holiday-season quarter.
For the fiscal third quarter ended December 29, Ralph Lauren reported non adjusted earnings of $216 million or $2.31 a share compared with $169 million or $1.78 a share, in the year earlier quarter. The company said that latest results included expenses of nearly $13 million linked to restructuring and pre- tax impairment charges (discontinuation of its Rugby brand)
Excluding onetime items, adjusted earnings or non-GAAP earnings stood at $2.40 a share, beating analysts forecast for $2.19 a share.
The New York-based Company, whose upscale brands include Polo and Club Monaco, said that in the latest quarter, the effective tax rate was 27% down from 36% in the same period of last year.
Revenue during the quarter rose by 2.2% to $1.85 billion; however, net revenue climbed 5% after excluding other items and the impact of American Living brand, which was discontinued.
Same-store-sales, a key gauge on retailer’s performance as it excludes the impact of sales arising from those stores that were closed in last 12 months or were opened in last 12 months, rose 4%.
While retail sales climbed 5.6%, wholesale sales fell 2.1%.
Gross margins stood at 59.3% compared to 57.1% as input costs fell 2.8% to $752 million.
Asset impairment charges were $11.4 million compared with $2 million in the year earlier quarter while total operating expenses increased by 3.7%
For the fiscal 2013, Ralph Lauren now expects revenue to grow by 2%, down from its initial guidance of 2% to 3% growth.
For the current quarter, the Company is expecting earnings per share (EPS) to grow by middle-single digit percentage point, while analysts were expecting for 7% growth.