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00:00:01
>> A glimmer of hope shining through retail windows Tuesday, struggling lifestyle brand Michael Kors and Ralph Lauren both beating quarterly expectations, in a sign their turnaround plans are leading to better sales. Reuters' Breakingviews columnist, Kate Duguid.>> Both stores have cut back on discounts and trimmed their sales to big retailers like Macy's.
00:00:26
So Michael Kors has totally saturated the market, and they lost a little bit of their brand cachet because of that. So what they've done has been to rein in inventory and they're closing some of their less profitable stores. So by making their brand sort of prestigious again, they're able to convince people to buy a handbag for the full price.
00:00:50
Ralph Lauren's implementing similar procedures.>> A turnaround made more difficult at Ralph Lauren, due to the second CEO in two years. The results though coming as a breath of fresh air for a retail sector that's had the wind knocked out of it by the dominance of Amazon, and the rise of purveyors of low-cost fashion.
00:01:11
Investors had been bracing for a slew of bad news from retailers this week. So when surprised, they went on a buying spree. Michael Kors shares soaring 22% in their biggest one-day rally in well over a year. And Ralph Lauren surging 13%, a powerful gain not seen since 2015.
00:01:30
>> Even though both companies have regained almost all of the losses that they've paired over the course of the year, they're still trading at a discount to peers like the Calvin Klein parent PVH, as well as to Coach. And it seems that that's because investors are still a little wary about both brands.
00:01:50
>> And with the gloom hanging over the retail business not expected to lift anytime soon, experts say both companies still have improvements to make if they hope to survive in the age of Amazon.