• Q3 profit jumped 27.8% to $216m
  • Revenues rose 2% to $1.85bn
  • Gross margin up 220 basis points to 59.3%

Luxury apparel and accessories business Ralph Lauren Corp has today (6 February) reported better-than-expected third-quarter profit growth thanks to continued momentum in the Americas and improved trends in Europe.

Net income increased 27.8% to US$216m for the three months to 29 December, compared with $169m in the same period last year.

During the quarter, the company revealed plans to axe its Rugby diffusion line to focus on growing its core labels. Excluding Rugby-related charges, net income jumped 33% to $224m.

Revenues climbed 2% to $1.85bn from $1.81bn the previous year, driven by retail segment growth. Retail sales rose 6% to $1.1bn and licensing sales edged up 1% to $50m, while wholesale revenue dropped 2% to $734m. Comparable store sales rose 4%.

Gross profit margin improved 220 basis points to 59.3%, helped by lower input costs, a favourable product mix and operational discipline.

"The robust profit growth we achieved in the third quarter demonstrates the strength of our operating model," said president and chief operating officer Roger Farah.

"The relevance of our brand, product and merchandising strategies resulted in a strong holiday season for us, one that was characterised by continued momentum in the Americas and improved trends in Europe. The consistent investment in our long-term growth initiatives has created a steadily improving, highly resilient profit margin structure for our organisation."

Looking forward, the company said it expects fourth-quarter revenues to increase by a mid-single-digit percentage.