Ralph Lauren Reports First Quarter Financial Earnings 

August 14, 2024  by Karen Parrish in Business Strategy, Industry   

This compared to earnings per diluted share of $1.96 on a reported basis and $2.34 on an adjusted basis, excluding restructuring-related and other net charges for the first quarter of Fiscal 2024.

• First Quarter Revenue Increased 1% on a Reported Basis and 3% in Constant Currency, Ahead of Expectations Led by Growth in Europe and Asia   

• Global Direct-to-Consumer Comparable Store Sales Grew 5%, Driven by Positive Retail Comps Across All Regions
• Adjusted Gross and Operating Margin Expansion Exceeded Our Outlook, with Brand Elevation and Expense Discipline More than Offsetting Investments in Marketing and Ecosystem Expansion
• Maintained Healthy Balance Sheet Including $1.8 Billion in Cash and Short-Term Investments and Well Positioned Inventories, Down 13% to Last Year
• Returned Approximately $225 Million to Shareholders Through Our Dividend and Repurchase of Class A Common Stock 
• Reaffirmed Full Year Fiscal 2025 Outlook of Low-Single Digit Revenue Growth and Adjusted Operating Margin Expansion of 100 to 120 Basis Points, Both in Constant Currency Compared to Prior Year

"Our brand has always been about inspiring a better life and celebrating the moments that bring us together," said Ralph Lauren, Executive Chairman and Chief Creative Officer. "From our intimate runway show at our New York studio this spring to our elegant Salone del Mobile presentation in Milan and this summer's Olympics, we are inviting people around the world to step into their dreams through authentic, timeless style."

"We delivered a solid start to the year, with first quarter performance exceeding our expectations on the top- and bottom-line led by our direct-to-consumer and international businesses," said Patrice Louvet, president and chief executive officer.

"The powerful combination of our brand strength and diverse growth drivers – together with our culture of agility and operating discipline – gives us confidence that our long-term strategy will continue to deliver even through these dynamic times."

Key Achievements in First Quarter Fiscal 2025

We delivered the following highlights across our Next Great Chapter: Accelerate priorities in the first quarter of Fiscal 2025:

• Elevate and Energize Our Lifestyle Brand

• Drove continued momentum in new customer acquisition and loyalty with 1.3 million new consumers in our direct-to-consumer businesses, growth in net promoter scores, and more than 60 million social media followers, a low-teens increase to last year

• Invested in key brand moments to drive authentic connections with consumers around the world, notably: our Women's Collection fashion show in New York City in April; Only Polo campaign celebrating our summer icons; our annual Salone del Mobile and Men's Purple Label presentation in Milan; another successful 6/18 holiday event in China; and kick-off of our 2024 Paris Olympics campaign as an official outfitter of Team USA

• Drive the Core and Expand for More

• Drove continued momentum in our Core business, up low-single digits, along with our high-potential categories (Women's Apparel, Outerwear, and Handbags), which increased mid-single-digits to last year in constant currency and outpaced total company growth

• Product highlights this quarter included: our Wimbledon capsule, featuring tennis-inspired spectator styles; and our 2024 Paris Summer Olympics collections as an official outfitter of Team USA

• Increased average unit retail ("AUR") by 6% across our direct-to-consumer network in the first quarter, in-line with expectations and on top of a 15% increase last year, reflecting the durability of our multi-pronged elevation approach

• Win in Key Cities with Our Consumer Ecosystem

• By geography, revenue growth was led by Europe, up 6% on a reported basis and 7% in constant currency, exceeding our expectations. Asia sales grew 4% on a reported basis and 9% in constant currency, with China up high-single digits on a reported basis and up low-double digits in constant currency to last year. North America declined 4% as stronger direct-to-consumer performance was more than offset by planned declines in wholesale

• Continued to expand and scale our key city ecosystems with the opening of eight new owned and partnered stores in the first quarter. We also recently unveiled our newly-renovated World of Ralph Lauren store on Chicago's Michigan Avenue, including our iconic RL restaurant and our first Ralph's Coffee shop in the Midwest

Our business is supported by our fortress foundation, which we define through our five key enablers, including: our people and culture, best-in-class digital technology and analytics, superior operational capabilities, a powerful balance sheet, and leadership in citizenship and sustainability.

Full Year Fiscal 2025 and Second Quarter Outlook

The Company's outlook is based on its best assessment of the current geopolitical and macroeconomic environment, including inflationary pressures, other consumer spending-related headwinds and foreign currency volatility, among others. The full year Fiscal 2025 and second quarter guidance excludes any potential restructuring-related and other net charges that may be incurred in future periods, as described in the "Non-U.S. GAAP Financial Measures" section of this press release.

For Fiscal 2025, the Company continues to expect revenues to increase approximately low-single digits to last year on a constant currency basis, centering on around 2% to 3%. Based on current exchange rates, foreign currency is now expected to negatively impact revenue growth by approximately 150 basis points in Fiscal 2025.

The Company continues to expect operating margin for Fiscal 2025 to expand approximately 100 to 120 basis points in constant currency, driven by gross margin expansion and operating expense leverage. Gross margin is expected to increase approximately 50 to 100 basis points in constant currency. Foreign currency is now expected to negatively impact gross and operating margins by approximately 40 basis points.

For the second quarter, the Company expects constant currency revenues to grow approximately low- to mid-single digits to last year, in a range centered around 3% to 4%. Foreign currency is expected to negatively impact revenue growth by approximately 160 basis points.

Operating margin for the second quarter is expected to expand approximately 80 to 120 basis points in constant currency, with roughly 110 to 130 basis points of gross margin expansion more than offsetting higher planned operating expenses to support key marketing campaigns in the quarter. Excluding marketing expense, operating expenses are expected to decline slightly as a percent of sales compared to prior year. Foreign currency is expected to negatively impact gross and operating margins by approximately 40 and 50 basis points, respectively, in the second quarter.

The Company's full year Fiscal 2025 tax rate is now expected to be in the range of approximately 22% to 23%, increasing from 19% in the prior year, following discrete tax benefits recognized in the prior year period. The second quarter tax rate is expected to be in the range of 21% to 22%.

The Company continues to expect capital expenditures for Fiscal 2025 of approximately $300 million to $325 million.

Conference Call

An online archive of the broadcast will be available by accessing the Company's investor relations website at http://investor.ralphlauren.com.