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Ralph Lauren tops profit estimates on cost control, Chinese demand

Kitco News

(Reuters) - Ralph Lauren Corp (RL.N) beat quarterly profit estimates on Thursday, driven by tighter control on expenses and strong demand for its Polo shirts and tweed jackets in China and Europe, sending its shares up 9% in premarket trading .

With slowing sales growth in North America, Ralph Lauren has been sending more of its products to international markets, especially China, where recent results from other high-end fashion companies show domestic demand for luxury products is strong despite a slowing economy.

The company has also been cutting costs by shipping more products by sea instead of air freight and by renegotiating vendor contracts for cheaper prices.

Ralph Lauren’s adjusted operating expense rate in the second quarter was 46.6%, 0.3% below the prior year period.

The company’s adjusted net income rose 6.5% to $198 million, or $2.55 per share, in the quarter ended Sept. 28.

Analysts had expected a profit $2.39 per share, according to IBES data from Refinitiv.

Net revenue rose to $1.71 billion from $1.69 billion, beating analysts’ average estimate of $1.69 billion.

Revenue, in constant currency terms, rose 22% on the Chinese mainland. However, revenue from Hong Kong fell 27% due to ongoing protests.

Reporting by Uday Sampath in Bengaluru; Editing by Maju Samuel

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