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Ralph Lauren Q4 revenues increase, reports profit

By Prachi Singh

May 20, 2021

Management

Image: Ralph Lauren newsroom

Ralph Lauren Corporation reported loss per diluted share of 1.01 dollars on a reported basis and earnings of 38 cents on an adjusted basis for the fourth quarter of fiscal 2021. This compared to loss per diluted share of 3.38 dollars on a reported basis and 68 cents on an adjusted basis, for the fourth quarter of fiscal 2020.

For fiscal 2021, loss per diluted share was 1.65 dollars on a reported basis and earnings were 1.70 dollars on an adjusted basis compared to earnings per diluted share of 4.98 dollars on a reported basis and 6.56 dollars on an adjusted basis, for fiscal 2020.

“This fiscal year, we fundamentally repositioned our company for long-term success – accelerating our digital and marketing capabilities, eliminating structural headwinds, focusing our brand portfolio and realigning our cost structure – all while continuing our brand elevation journey around the world,” said Patrice Louvet, president & chief executive officer.

Q4 highlights of Ralph Lauren’s results

In the fourth quarter, revenue increased 1 percent to 1.3 billion dollars on a reported basis and was down 3 percent in constant currency.

North America revenue decreased 10 percent to 569 million dollars, including adverse impacts related to Covid-19 business disruptions across distribution channels. North America wholesale revenue was down 22 percent to last year. In retail, comparable store sales in North America were up 3 percent, including a 25 percent increase in digital commerce partly offset by a 2 percent decline in brick and mortar stores.

Europe revenue increased 5 percent to 370 million dollars on a reported basis and decreased 4 percent in constant currency to last year. In retail, comparable store sales in Europe were down 45 percent, driven by a 65 percent decrease in brick and mortar stores partly offset by a 79 percent increase in digital commerce. Europe wholesale revenue increased 41 percent on a reported basis and 29 percent in constant currency.

Asia revenue in the quarter increased 35 percent to 289 million dollars on a reported basis and 28 percent in constant currency. Comparable store sales in Asia increased 23 percent with a 21 percent increase in brick and mortar stores and a 59 percent increase in digital commerce.

Gross profit was 783 million dollars and gross margin was 60.8 percent. On an adjusted basis, gross margin was 62.9 percent compared to 59.1 percent in the prior year period. Operating loss was 26 million dollars on a reported basis and operating margin was negative 2 percent. Adjusted operating income was 44 million dollars compared to adjusted operating loss of 43 million dollars for the fourth quarter of fiscal 2020.

On a reported basis, net loss was 74 million dollars or 1.01 dollars per diluted share. On an adjusted basis, net income was 28 million dollars or 38 cents per diluted share.

Full year review of Ralph Lauren’s performance

For fiscal 2021, revenue decreased 29 percent to 4.4 billion dollars on a reported basis and 30 percent in constant currency, driven primarily by widespread Covid-related shutdowns and other disruptions throughout the year.

For fiscal 2021, North America revenue decreased 37 percent to 2 billion dollars. Europe revenue decreased 29 percent to 1.2 billion dollars on a reported basis. In constant currency, revenue decreased 32 percent. Asia revenue increased 1 percent to 1 billion dollars on a reported basis. In constant currency, revenue decreased 2 percent.

Gross profit for fiscal 2021 was 2.9 billion dollars on a reported basis and gross margin was 65 percent. On an adjusted basis, gross margin was 65.7 percent, 380 basis points higher than the prior year.

Operating loss was 44 million dollars, while on an adjusted basis, operating income was 211 million dollars compared operating income of 632 million dollars for the prior year period.

In Fiscal 2021, net loss was 121 million dollars or 1.65 dollars per diluted share on a reported basis. On an adjusted basis, net income was 127 million dollars or 1.70 dollars per diluted share.

Ralph Lauren expects FY22 revenue increase between 20 to 25 percent

For Fiscal 2022, the company expects constant currency revenues to increase approximately 20 percent to 25 percent to last year, on a 52-week comparable basis, while the 53rd week is expected to contribute approximately 140 basis points to revenue growth.

The company expects operating margin of about 11 percent, an increase of approximately 620 basis points on a reported basis, while gross margin is expected to be down 40 to 60 basis points as mix normalizes.

For the first quarter, revenues are expected to increase approximately 140 percent to 150 percent in constant currency to last year. Foreign currency is expected to positively impact revenue growth by approximately 250 basis points.

Operating margin is expected in the range of 7 percent to 7.5 percent, while gross margin is expected to contract approximately 575 basis points to last year.

The company also announced that its board of directors has reinstated its regular quarterly cash dividend declared 0.6875 cents per share for a total annual dividend amount of 2.75 dollars per share.