Ralph Lauren posts upbeat revenue and profit results, raises dividend

For its fourth quarter, Ralph Lauren Corporation reported earnings per diluted share of 39 cents on a reported basis and 1.07 dollars on an adjusted basis, compared to 50 cents on a reported and 90 cents on an adjusted basis, for the same quarter of 2018. For Fiscal 2019, the company said, earnings per diluted share were 5.27 dollars on a reported and 7.19 dollars on an adjusted basis compared to 1.97 dollars on a reported and 6.03 dollars on an adjusted basis for 2018.

“Our Next Great Chapter plan is off to a good start – in its first year, we outperformed our commitments across key metrics, including revenue, quality of sales, operating income and EPS,” said Patrice Louvet, the company’s President & Chief Executive Officer in a statement.

Review of Ralph Lauren’s fourth quarter

In the fourth quarter, revenue declined 1.5 percent to 1.5 billion dollars on a reported basis and was up 1.2 percent in constant currency. The company said, foreign currency negatively impacted revenue growth by approximately 270 basis points in the fourth quarter.

North America revenue in the fourth quarter decreased 7 percent to 708 million dollars, while wholesale revenue was down 10 percent to last year. In retail, comparable store sales in North America were down 4 percent, including a 7 percent decline in brick and mortar stores and a 6 percent increase in digital commerce. Excluding the impact of Easter timing, comparable store sales in North America were down approximately 1 percent to last year.

Europe revenue increased 4 percent to 435 million dollars on a reported basis and increased 11 percent to last year in constant currency. In retail, comparable store sales in Europe were up 5 percent on a constant currency basis, driven by a 5 percent increase in brick and mortar stores and a 6 percent in digital commerce. Europe wholesale revenue increased 4 percent on a reported basis and increased 11 percent in constant currency.

Asia revenue, Ralph Lauren added, increased 6 percent to 273 million dollars on a reported basis and increased 10 percent in constant currency, with strong performance across every market, led by approximately 30 percent constant currency growth in Mainland China. Comparable store sales in Asia increased 4 percent in constant currency.

Gross profit for the fourth quarter was 901 million dollars and gross margin was 59.9 percent. On an adjusted basis, gross margin was 60.1 percent, 30 basis points above the prior year. On a reported basis, net income was 32 million dollars or 39 cents per diluted share. On an adjusted basis, net income was 85 million dollars or 1.07 dollars per diluted share compared to 41 million dollars or 50 cents per diluted share on a reported basis, and 75 million dollars or 90 cents per diluted share on an adjusted basis, for the fourth quarter of fiscal 2018.

Highlights of Ralph Lauren’s fiscal 2019

For Fiscal 2019, revenue increased 2 percent to 6.3 billion dollars on a reported basis and 3 percent in constant currency. North America revenue decreased 1 percent on both a reported and constant currency basis to 3.2 billion dollars. Europe revenue increased 5 percent to 1.7 billion dollars on a reported basis. In constant currency, revenue increased 6 percent driven by wholesale and retail growth. For Fiscal 2019, Asia revenue increased 11 percent to 1 billion dollars on a reported basis and 13 percent in constant currency, with double-digit growth in retail and wholesale.

Gross profit for fiscal 2019 was 3.9 billion dollars on a reported basis and gross margin was 61.6 percent. On an adjusted basis, gross margin was 61.7 percent, 90 basis points higher than the prior year. On a reported basis, net income was 431 million dollars or 5.27 dollars per diluted share, while on an adjusted basis, net income was 588 million dollars or 7.19 dollars per diluted share compared to 163 million dollars or 1.97 dollars per diluted share on a reported basis, and 498 million dollars or 6.03 dollars per diluted share for fiscal 2018.

Ralph Lauren reveals outlook for FY20

For fiscal 2020, the company expects net revenue to be up 2 percent to 3 percent on a constant currency basis. Foreign currency is expected to negatively impact revenue growth by 90 to 100 basis points. The company expects operating margin to increase 40 to 60 basis points in constant currency, driven by modest gross margin expansion and SG&A leverage. Foreign currency is expected to negatively impact operating margin by about 10 to 20 basis points.

In the first quarter of fiscal 2020, the company expects net revenue to increase 3 percent to 5 percent in constant currency, benefiting from the timing of Easter. Foreign currency is expected to negatively impact revenue growth by about 190 to 200 basis points. Operating margin for the first quarter is expected to be up 30 to 50 basis points in constant currency. Foreign currency is expected to negatively impact operating margin by about 10 basis points.

The company also announced that its board of directors declared a 10 percent increase in the regular quarterly cash dividend on the company's Common Stock. The new quarterly cash dividend is 0.6875 cents per share for a total annual dividend amount of 2.75 dollars per share.

Picture: Ralph Lauren website

 

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