Ralph Lauren starting to hit stride under new boss

Ralph Lauren may be starting to hit its stride. The purveyor of preppy clothes on Wednesday reported an improvement in profitability and sold more Polo wear than expected. It's an encouraging sign for new boss Stefan Larsson's "Way Forward" plan, which includes paring down stores and stocking shelves quicker. Before long, the $8 billion company's altered gait could turn into a gallop. In June, Larsson and the namesake designer whose family controls 82 percent of the Ralph Lauren vote unveiled just how it expected to revive the flagging operation. The shares have tumbled by some 40 percent over the past three years, as the brand suffered from a glut of inventory and an ailing department store industry. It's trading at eight times expected EBITDA, lagging rivals Burberry, Coach and VF, whose labels include North Face and Timberland. Lauren stepped down as chief executive almost a year ago and handed the reins over to Larsson. His experience working at Hennes & Mauritz and helping turn around Gap's struggling Old Navy operation promised to bring more of fast-fashion approach to Ralph Lauren. There are early signs it is working already. Despite swinging to a loss because of restructuring charges, gross operating margin jumped to 57.6 percent from 54.2 percent in the previous quarter. More from Breakingviews : Microsoft's Monster warning for LinkedIn deal What's more, Larsson already has cut how long it takes for a product to be made and distributed by half. The goal is to get it down to 90 percent from where it was. Ralph Lauren also is in the process of testing how to manage inventory at a more H &M-like pace. Other problems may be harder to rein in. Radical changes in how people shop are quickly roiling the industry, as consumers shun the likes of Macy's . Michael Kors , for example, said on Wednesday that quarterly sales from department stores declined 7 percent. Such revenue is falling at Ralph Lauren, too, by some 5 percent in the latest quarter. Even so, there's enough room to run in Larsson's supply-chain management to warrant more horse sense in the company's valuation. For more independent commentary and analysisfrom Reuters Breakingviews, visit breakingviews.com

In this 2015 file photo, Ralph Lauren, right, poses in his office with CEO Stefan Larsson in New York.

Jason DeCrow | AP

Ralph Lauren may be starting to hit its stride. The purveyor of preppy clothes on Wednesday reported an improvement in profitability and sold more Polo wear than expected. It's an encouraging sign for new boss Stefan Larsson's "Way Forward" plan, which includes paring down stores and stocking shelves quicker. Before long, the $8 billion company's altered gait could turn into a gallop.