Ralph Lauren: Q1 earnings increase to 0.72 dollar per share

Ralph Lauren reported earnings per diluted share of 0.72 dollar on a reported basis and 1.11 dollars on an adjusted basis, excluding restructuring-related and other charges that were primarily related to activities associated with the company’s Way Forward plan, for the first quarter of fiscal 2018. This compares to loss per diluted share of 0.27 dollar on a reported basis and earning of 1.06 dollars on an adjusted basis, excluding restructuring-related and other charges, for the first quarter of fiscal 2017.

“While we are addressing challenges in our business, we have significant opportunity ahead and we’re moving forward with urgency,” said Patrice Louvet, President and CEO in a statement, adding, “We are continuing to build a strong foundation for future growth, as evidenced by our progress this quarter on the key elements of the Way Forward plan.”

First quarter revenues decline 13 percent

In the first quarter, revenue decreased by 13 percent to 1.3 billion dollars on a reported basis and 12 percent in constant currency, driven by distribution and brand exits, a strategic reduction in shipments and promotional activity to increase quality of sales, as well as due to lower consumer demand. The company said, first quarter revenue decline is in line with the company’s guidance of down low double-digits excluding 225 basis points of negative foreign currency impact. Foreign currency pressured the first quarter revenue growth by approximately 130 basis points.

North America revenue in the first quarter decreased 17percent to 710 million dollars due to lower sales in both the retail and wholesale channels, driven by distribution and brand exits, a strategic reduction in shipments and promotional activity to increase quality of sales, as well as due to lower consumer demand. On a constant currency basis, comparable store sales in North America were down 8 percent, including a 4 percent decline in brick and mortar stores and a 22 percent decrease in e-commerce.

Europe revenue decreased 14 percent to 323 million dollars on a reported basis and 10 percent in constant currency driven by shifts in timing of shipments in wholesale, brand exits, and reduced markdowns to improve quality of sales. On a constant currency basis, comparable store sales in Europe were down 8 percent, including an 8 percent decline in brick and mortar stores and a 5 percent decline in e-commerce.

Revenues in Asia decreased 1percent on a reported basis to 209 million dollars and increased 1percent in constant currency. Comparable store sales increased 2percent in constant currency driven by higher traffic.

Ralph Lauren reposts net income growth in Q1

Gross profit was 851 million dollars on a reported basis and 852 million dollars on an adjusted basis, excluding approximately 1 million dollars of inventory charges related to restructuring activities. Gross margin was 63.2 percent on both a reported and adjusted basis, 210 basis points above the prior year on an adjusted basis.

On a reported basis, net income in the first quarter was 60 million dollars or 0.72 dollar per diluted share. On an adjusted basis, net income was 91 million dollars or 1.11 dollars per diluted share, excluding restructuring-related and other charges. This compared to a net loss of 22 million dollars or 0.27 dollar per diluted share on a reported basis, and net income of 90 million dollars or 1.06 dollars per diluted share on an adjusted basis, for the first quarter of fiscal 2017.

“I am thrilled to welcome Patrice Louvet as my partner to continue the exciting evolution of our company,” said Ralph Lauren, Executive Chairman and Chief Creative Officer in a media release, adding, “Patrice has the enthusiasm to discover what has made our brand so iconic and the capability to evolve our business.”

FY18 revenues expected to be down 8-9 percent

For fiscal 2018, the company continues to expect net revenue to decrease 8 percent to 9 percent, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have minimal impact on revenue growth in fiscal 2018; this is more favourable than the previous guidance of 150 basis points of negative impact given recent movements in foreign exchange rates.

In the second quarter, the company expects net revenue to be down 9-10 percent, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have approximately 40 basis points of negative impact on revenue growth in the second quarter of fiscal 2018.

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