Higher prices for Ralph Lauren's winter wear during the crucial holiday season boosted its margin and helped the company easily beat quarterly profit estimates Tuesday, sending the fashion house's shares sharply higher.
Ralph Lauren shares jump on winter wear sales
Having supermodels and actresses promote its clothing on social media paid off for Ralph Lauren.
That marketing drive helped lift its brand image, allowing the fashion house to charge more for its winter wear, pumping up its earnings and shares Tuesday.
Ralph Lauren's profit nearly tripled in the holiday quarter and breezed past analysts' estimates.
A one-time tax benefit also helped lift the bottom line.
Its marketing expenses went up, but that ramp up in marketing enabled the company to boost average prices at its own stores and online by 6%.
That in turn fattened the amount of profit it kept on each sale.
Wall Street cheered the company's results.
Shares shot up 11% in early trading Tuesday.
For fiscal 2020, Ralph Lauren sees its revenue rising by as much as 3%, but that estimate doesn't include any potential impact from the coronavirus outbreak in China.
The company said it is assessing the financial impact of shutting about half of its 110 stores in China due to that outbreak.