NEW YORK (AP) — Ralph Lauren Corp. posted a 27 percent increase in its fiscal third-quarter profit as the designer clothing company enjoyed continued momentum in spending among its affluent shoppers in the U.S. and improving trends in Europe during the crucial winter holidays.
The news sent shares of the company up 6 percent Wednesday.
The results, announced Wednesday, are an improvement from the first half of the year, when cotton costs soared and the company was bearing costs to eliminate some of its businesses to focus on the most profitable ones. But the company managed to navigate through the rough patches and delivered better-than-expected results.
The company's performance also shows that even in challenging times, the affluent will continue to spend on brands that they trust the most. The owner of the Ralph Lauren Collection and Polo by Ralph Lauren brands sells its products at department stores, its own shops and through other retailers.
"Our third-quarter performance is a testament to the enduring appeal of our brand and the dedication of our passionate team," Ralph Lauren, chairman and CEO, said in a statement. "Our orientation as a design-led, marketing and merchandising organization has enabled us to deepen our connection with our customers, particularly as we expand our portfolio of products and lifestyle sensibilities."
The New York-based company said it earned $215.7 million, or $2.31 per share, in the three months ended Dec. 29. That compares with $169 million, or $1.78 per share, a year earlier.
Revenue rose 2.2 percent to $1.79 billion.
Analysts had expected earnings of $2.20 per share on revenue of $1.85 billion, according to FactSet.
The company said that its wholesale segment's sales of $734 million in the third-quarter were 2 percent below the year before. The business has been dragged down by the discontinuation of its American Living brand to J.C. Penney and a planned reduction in shipments to certain European customers.
Ralph Lauren also discontinued its Rugby brand to focus on more profitable brands.
Retail sales rose 6 percent to $1.1 billion. Revenue at stores open at least a year rose 4 percent. The company estimated that the disruption caused by Superstorm Sandy, which hit the East Coast in late October, depressed third-quarter comparable sales by 1 to 2 percentage points.