Why Ralph Lauren Shares Are Gaining Today

Ralph Lauren Corporation RL shares are trading higher on Thursday.

The company reported third-quarter adjusted earnings per share of $4.17, beating the street view of $3.54.

The quarterly revenue was $1.93 billion, beating the consensus of $1.87 billion.

Third-quarter revenue increased by 6% on a reported basis and 5% in constant currency, with all regions exceeding expectations, led by Asia.

Adjusted gross margin was 66.4%, 120 basis points above the prior year. Lower freight costs, favorable channel and geographic mix shifts, and AUR growth across all regions drove gross margins.

On an adjusted basis, the operating income was $318 million, and the operating margin was 16.4%, 40 basis points above the prior year. 

On an adjusted basis, operating expenses were $968 million, up 7% from last year. The increase was driven by channel and geographic mix shift resulting from stronger growth in the company’s international and direct-to-consumer businesses.

The company ended the third quarter of fiscal 2024 with $1.9 billion in cash and short-term investments and $1.1 billion in total debt.

Ralph Lauren repurchased approximately $103 million of Class A Common Stock in the third quarter.

Outlook: For fiscal 2024, the company continues to expect revenues to increase approximately low-single digits to last year on a constant currency basis, now centering around 2% compared to 1% to 2% previously.

Ralph Lauren continues to expect the operating margin for fiscal 2024 to expand approximately 30 to 50 basis points in constant currency to 12.3% to 12.5%, driven by gross margin expansion. 

For the fourth quarter, the company expects revenue growth to be in a range centered around 2% in constant currency to last year. 

Operating margin for the fourth quarter is expected to expand approximately 350 to 400 basis points in constant currency, driven largely by gross margin expansion.

Price Action: RL shares are trading higher by 13.8% to $167.53 on the last check Thursday.