Ralph Lauren is in the black — and out of JCPenney.
The New York fashion giant posted a slight profit increase as sales of its country-club styles surged more than expected. Ralph Lauren also boosted its forecast for the current fiscal year, predicting sales would jump 20 percent.
The upbeat forecast sent the shares up more than 9 percent, rising $14.12 to close yesterday at $171.49.
For the fiscal third quarter ended Dec. 31, revenue rose 17.2 percent to $1.81 billion, with strong growth coming from department stores as well as Ralph Lauren’s own specialty stores. Net income rose 0.4 percent to $169 million.
On a conference call yesterday, Ralph Lauren President Roger Farah confirmed that the plug has been pulled on American Living, an exclusive label for JCPenney that Ralph Lauren has made since spring 2008.
“We decided mutually to move away from that business after the spring, summer shipments,” Farah said.
American Living was a disappointment and plagued by markdowns from the start. Ralph Lauren refused to attach his name to the line, which was set to compete with the Chaps brand that is sold at Kohl’s stores.
As a result, Penney shoppers didn’t recognize its connection to Ralph Lauren, despite its preppy-flavored clothing and home furnishings.
Former Penney CEO Myron Ullman, who had hoped to make American Living a $1 billion brand, later admitted to associates that “it was a mistake,” according to a source close to the retailer.
Penney’s new CEO, Ron Johnson, a former Apple exec who took the helm in November, is now looking to bring in brands such as Martha Stewart and Nanette Lepore.
“I think JCP has a lot of change and transformation going on and in some cases, that’s going to take time to play out,” Farah told analysts yesterday, adding that the effect of American Living on its results was “de minimis.”