Higher winterwear prices boost Ralph Lauren holiday margins; shares rise 6%

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© Reuters. FILE PHOTO: A man walks past Ralph Lauren Corp.'s flagship Polo store on Fifth Avenue in New York© Reuters. FILE PHOTO: A man walks past Ralph Lauren Corp.’s flagship Polo store on Fifth Avenue in New York

(Reuters) – Ralph Lauren Corp (N:) beat market expectations for the holiday-quarter profit on Tuesday, as higher prices for its winterwear boosted margins, sending the fashion house’s shares up 6% in premarket trading.

The company has said it could sell products at higher prices due to a ramp up in marketing, especially on social media through supermodels and actors, which has helped lift its brand image.

Its marketing expenses rose 16% in the third quarter, while average prices at its own stores and website gained 6%. Ralph Lauren said its adjusted gross margin rose by 60 basis points.

Net revenue rose 1.4% to $1.75 billion in the quarter ended Dec. 28, inching past average analysts’ estimate of $1.72 billion, according to IBES data from Refinitiv.

Ralph Lauren said it expects fiscal 2020 revenue, excluding fluctuations in foreign exchange, to rise 2% to 3%. This does not include any potential impact from the outbreak of a new coronavirus in China.

The company’s net income rose nearly three-fold to $334.1 million, or $4.41 per share, lifted by a one-time tax benefit.

Excluding one-time items, the New York-based company earned $2.86 per share, beating analysts’ expectation of $2.45 per share.

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