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Ralph Lauren posts decline in Q3 earnings

By Prachi Singh

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Business

Ralph Lauren Corporation has reported earnings per diluted share of 0.55 dollar on a reported basis and 1.90 dollars on an adjusted basis, excluding restructuring and other related charges recorded in connection with the company’s Way Forward plan, for the second quarter of fiscal 2017. This compared to earnings per diluted share of 1.86 dollars on a reported basis and 2.13 dollars on an adjusted basis, for the second quarter of fiscal 2016.

“We are changing with the consumer, as we demonstrated in September with our first-ever ‘see-now-buy-now’ runway show at our flagship store on Madison Avenue,” said Ralph Lauren, Executive Chairman and Chief Creative Officer in the company’s statement, adding “I am confident that this industry leading endeavour in combination with our other elements of the Way Forward plan are strengthening our brand to support future profitable growth.”

Second quarter revenues declined 8 percent

Net revenues for the second quarter of 1.8 billion dollars declined 8 percent compared to the prior year period on both a reported and constant currency basis. On a reported basis, international net revenue rose 2 percent, offset by a 12 percent decline in North America. Wholesale segment revenue decreased 10 percent on both a reported and constant currency basis to 831 million dollars, driven by a decline in North America, partially offset by an increase in Europe.

Retail segment revenue decreased 5 percent on a reported basis to 942 million dollars and was down 6 percent on a constant currency basis, both driven by a comparable store sales decline. Consolidated comparable store sales decreased 8 percent on a reported basis and 9 percent in constant currency. Licensing segment revenue of 48 million dollars increased 2 percent on a reported basis and was approximately flat with the prior year period on a constant currency basis.

Gross profit was 954 million dollars on a reported basis, including 81 million dollars in non-cash inventory-related charges. On an adjusted basis, gross profit was 1 billion dollars and gross profit margin was 56.9 percent, 40 basis points above last year.

On a reported basis, net income was 45 million dollars or 0.55 dollar per diluted share. On an adjusted basis, net income was 158 million dollars or 1.90 dollars per diluted share. This compared to net income of 160 million dollars or 1.86 dollars per diluted share on a reported basis and 184 million dollars or 2.13 dollars per diluted share on an adjusted basis, for the second quarter of fiscal 2016.

Maintains full year outlook

For fiscal 2017, the company is maintaining its guidance. Consolidated net revenue is expected to decrease at a low-double digit rate consistent with the Way Forward plan. The company said key elements include a proactive pullback in inventory receipts, store closures, pricing harmonisation and quality of sales initiatives. Based on current exchange rates, Ralph Lauren said, foreign currency is expected to have minimal impact on revenue growth in fiscal 2017.

In the third quarter, the company expects consolidated net revenues to be down low-double digits to down low-teens on a reported basis. Operating margin is expected to be down approximately 200 to 225 basis points compared to the prior year period.

Picture:Ralph Lauren

Ralph Lauren