Burb Beauty | Ralph Lauren posts surprisingly strong results as it reins in discounts
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Ralph Lauren posts surprisingly strong results as it reins in discounts

Ralph Lauren’s quarterly profit and sales topped estimates as the luxury apparel maker reined in discounts and cut inventories in a bid to boost margins.

The company’s shares were down around 2 percent at $71.30 in late morning trading.

Ralph Lauren, like other apparel chains, has been struggling to turnaround sales due to sluggish spending on apparel and accessories. The company’s margins have taken a hit as competition in the industry has stiffened.

In a bid to turnaround the business, the company appointed a new chief executive on Wednesday and has been reducing promotional activity and trying to sell more higher priced items as well as cut product costs.

Ralph Lauren’s gross margins on an adjusted basis rose 90 basis points to 55.4 percent in the fourth quarter ended April 1.

The company reported a net loss of $204 million, or $2.48 per share, in the fourth quarter ended April 1, reflecting a more than $300 million charge related to restructuring and severance pay.

Ralph Lauren posted a net income of $41.3 million, or 49 cents per share, a year earlier.

Excluding items, Ralph Lauren reported a profit of 89 cents per share, beating analysts’ average expectation by 11 cents, according to Thomson Reuters I/B/E/S.

Ralph Lauren also said that it expects its current-quarter net revenue to fall in the low double digit percentage range.

In the fourth-quarter, the company posted a 12 percent fall in comparable store-sales, compared with analysts’ average estimate of a 6.5 percent drop, according to research firm Consensus Metrix.

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