Ralph Lauren swings to black in Q2, revenues up 26 percent

Ralph Lauren Corporation reported earnings per diluted share of 2.57 dollars on a reported basis and 2.62 dollars on an adjusted basis for the second quarter of fiscal 2022. This, the company said, compared to loss per diluted share of 53 cents on a reported basis and earnings per share of 1.44 dollars on an adjusted basis, for the second quarter of fiscal 2021.

In the second quarter, revenue increased by 26 percent to 1.5 billion dollars on a reported basis and was up 25 percent in constant currency.

“We delivered another quarter of strong progress on our fiscal 2022 plan, with second quarter results exceeding our expectations across all key financial, operating and consumer health metrics,” said Patrice Louvet, president and chief executive officer of the company.

Revenue performance for Ralph Lauren’s reportable segments

North America revenue in the second quarter increased 30 percent to 703 million dollars. In retail, comparable store sales in North America were up 31 percent, with a 31 percent increase in brick and mortar stores and a 32 percent increase in digital commerce. North America wholesale revenue increased 23 percent.

Europe revenue increased 38 percent to 496 million dollars on a reported basis and increased 36 percent in constant currency. In retail, comparable store sales in Europe were up 27 percent, with a 28 percent increase in brick and mortar stores and a 24 percent increase in digital commerce. Europe wholesale revenue increased 44 percent on a reported basis and increased 42 percent in constant currency.

Asia revenue increased 14 percent to 270 million dollars on a reported basis and 13 percent in constant currency. Comparable store sales in Asia increased 7 percent, with a 4 percent increase in brick and mortar stores and a 69 percent increase in digital commerce.

Gross profit for the second quarter was 1.015 billion dollars and gross margin was 67.5 percent, while adjusted gross margin was 67.3 percent, 80 basis points above the prior year on a reported basis and up 50 basis points in constant currency.

Operating income was 252 million dollars and operating margin was 16.7 percent on a reported basis, while adjusted operating income was 257 million dollars and operating margin was 17.1 percent, 450 basis points above the prior year.

Net income in the quarter was 193 million dollars or 2.57 dollars per diluted share on a reported basis. On an adjusted basis, net income was 197 million dollars or 2.62 dollars per diluted share.

Ralph Lauren expects fiscal 2022 revenues to be up 34 to 36 percent

For fiscal 2022, the company now expects constant currency revenues to increase approximately 34 percent to 36 percent to last year on a 53-week reported basis. Foreign currency is expected to negatively impact revenue growth by approximately 20 basis points. The 53rd week is still expected to represent approximately 140 basis points of this year’s revenue growth.

The company continues to expect operating margin of about 12 percent to 12.5 percent, compared to operating margin of 4.8 percent in the prior year period and 10.3 percent in fiscal 2020. Gross margin is now expected to increase at the high end of previous guidance of 50 to 70 basis points to last year.

For the third quarter, revenues are expected to increase approximately 14 percent to 16 percent in constant currency to last year. Foreign currency is expected to negatively impact revenue growth by approximately 140 basis points.

Operating margin for the quarter is expected in the range of 13 percent to 13.5 percent.