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Ralph Lauren (RL) Q1 Earnings & Revenues Beat Estimates
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Ralph Lauren Corporation (RL - Free Report) has posted impressive first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and grew year over year. Results have gained from robust demand and brand strength. The company has been on track with its Next Great Chapter: Accelerate plan.
RL has reported adjusted earnings per share of $2.34 for the fiscal first quarter, surpassing the Zacks Consensus Estimate of $2.15. Also, the bottom line rose 24.5% year over year from $1.88 in the year-ago quarter.
Net revenues grew 0.4% year over year to $1,496.5 million and beat the Zacks Consensus Estimate of $1,482 million. On a constant-currency (cc) basis, revenues were up 1% from the prior-year quarter. The top line witnessed impacts of 80 basis points (bps) from adverse currency rates.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company have gained 15.8% in the past three months against the industry’s 1.4% decline.
However, shares of RL declined more than 4% before the trading session on Aug 10. This is expected to have resulted from high interest rates, leading to muted U.S. luxury spending.
Segmental Details
North America: In the fiscal first quarter, the segment’s revenues declined 10% from the year-ago quarter to $632 million and came below our estimate of $635 million. Comparable store sales (comps) for North America’s retail channel fell 6% year over year, wherein the same for brick-and-mortar stores moved down 8%, while digital commerce decreased 5%. Revenues from the North America wholesale business advanced 16% year over year.
Europe: The segment’s revenues rose 8% year over year to $450 million, with a 7% improvement in currency-neutral revenues. The metric exceeded our estimate of $421 million. Comps for the retail channel in Europe were up 2%, whereas brick-and-mortar stores grew 1% year over year and digital sales witnessed an 8% rise. Revenues for the segment’s wholesale business fell 12% on a reported basis, while it grew 11% at cc.
Asia: The segment’s revenues increased 13% year over year to $378 million on a reported basis and 18% on a currency-neutral basis. The metric came ahead of our estimate of $376 million. Comps in Asia were up 13%, backed by 14% growth in brick-and-mortar stores and an 11% increase in the digital business.
Margins
Ralph Lauren's adjusted gross profit margin expanded 80 bps year over year on a reported basis but the metric expanded 130 bps on a cc basis to 69%. This was mainly driven by solid AUR growth across all regions, favorable channel and geographic mix, and reduced freight, which more than offset continued pressure from raw material costs and adverse currency.
Adjusted operating expenses inched up 1% from the year-ago period to $830 million in the fiscal first quarter, driven by higher compensation, and rent & occupancy costs, partly offset by lower marketing expenses. Adjusted operating expenses, as a percentage of sales, expanded 30 bps to 56% in the reported quarter.
The company’s adjusted operating income was $200 million, up 5.3% year over year. The adjusted operating margin expanded 70 bps year over year to 13%.
Ralph Lauren Corporation Price, Consensus and EPS Surprise
Ralph Lauren ended the quarter with cash and short-term investments of $1,680 million, a total debt of $1,139 million and total shareholders’ equity of $2,441 million. Inventory grew 0.8% year over year to $1,187.8 million.
The company repurchased Class A shares for about $50 million in the fiscal first quarter.
In the quarter under review, capital expenditure was $39.6 million. Management expects a capital expenditure of $250-$275 million for fiscal 2024.
Store Update
As of Jul 1, 2023, Ralph Lauren had 560 directly operated stores and 721 concession shops globally. The directly operated stores included 215 Ralph Lauren and 345 Polo factory stores. The company operated 183 licensed stores globally as of the same date.
Outlook
Management has issued its fiscal 2024 guidance based on the ongoing macroeconomic environment, muted consumer spending, inflationary pressures, foreign currency movement and the war in Ukraine.
For fiscal 2024, RL anticipates year-over-year revenue growth (cc) in the low-single digits. This includes 20 bps of negative impacts of currency. The gross margin is forecast to expand 100 bps on a constant-currency basis, driven by solid AUR, favorable geographic mix and lower freight costs, which more than offset continued product cost inflation. The metric includes 30 bps of adverse impacts of foreign currency. The fiscal 2024 tax rate is likely to be 23-24%.
For the fiscal second quarter, the company anticipated revenues to be flat to up slightly on a constant-currency basis. This includes approximately 100 basis points of positive foreign currency impact.
The operating margin is predicted to be 9.5-10% on a reported basis and 9-9.5% in constant currency. The gross margin is expected to expand 40-60 bps, which will more than offset higher operating expenses. The metric is likely to witness 10 bps of adverse currency impacts. Also, the tax rate is estimated to be 21-22%.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 47.9% and 158.3%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 16.7% and 18%, respectively, from the year-ago reported figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
G-III Apparel is a leading designer and distributor of women's and men's apparel in the United States, which carries a Zacks Rank of 2.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year sales suggests growth of 1.9%. Its earnings per share are expected to rise 0.4% from the year-ago reported figure. GIII has a trailing four-quarter earnings surprise of 47.4%, on average.
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Ralph Lauren (RL) Q1 Earnings & Revenues Beat Estimates
Ralph Lauren Corporation (RL - Free Report) has posted impressive first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and grew year over year. Results have gained from robust demand and brand strength. The company has been on track with its Next Great Chapter: Accelerate plan.
RL has reported adjusted earnings per share of $2.34 for the fiscal first quarter, surpassing the Zacks Consensus Estimate of $2.15. Also, the bottom line rose 24.5% year over year from $1.88 in the year-ago quarter.
Net revenues grew 0.4% year over year to $1,496.5 million and beat the Zacks Consensus Estimate of $1,482 million. On a constant-currency (cc) basis, revenues were up 1% from the prior-year quarter. The top line witnessed impacts of 80 basis points (bps) from adverse currency rates.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company have gained 15.8% in the past three months against the industry’s 1.4% decline.
However, shares of RL declined more than 4% before the trading session on Aug 10. This is expected to have resulted from high interest rates, leading to muted U.S. luxury spending.
Segmental Details
North America: In the fiscal first quarter, the segment’s revenues declined 10% from the year-ago quarter to $632 million and came below our estimate of $635 million. Comparable store sales (comps) for North America’s retail channel fell 6% year over year, wherein the same for brick-and-mortar stores moved down 8%, while digital commerce decreased 5%. Revenues from the North America wholesale business advanced 16% year over year.
Europe: The segment’s revenues rose 8% year over year to $450 million, with a 7% improvement in currency-neutral revenues. The metric exceeded our estimate of $421 million. Comps for the retail channel in Europe were up 2%, whereas brick-and-mortar stores grew 1% year over year and digital sales witnessed an 8% rise. Revenues for the segment’s wholesale business fell 12% on a reported basis, while it grew 11% at cc.
Asia: The segment’s revenues increased 13% year over year to $378 million on a reported basis and 18% on a currency-neutral basis. The metric came ahead of our estimate of $376 million. Comps in Asia were up 13%, backed by 14% growth in brick-and-mortar stores and an 11% increase in the digital business.
Margins
Ralph Lauren's adjusted gross profit margin expanded 80 bps year over year on a reported basis but the metric expanded 130 bps on a cc basis to 69%. This was mainly driven by solid AUR growth across all regions, favorable channel and geographic mix, and reduced freight, which more than offset continued pressure from raw material costs and adverse currency.
Adjusted operating expenses inched up 1% from the year-ago period to $830 million in the fiscal first quarter, driven by higher compensation, and rent & occupancy costs, partly offset by lower marketing expenses. Adjusted operating expenses, as a percentage of sales, expanded 30 bps to 56% in the reported quarter.
The company’s adjusted operating income was $200 million, up 5.3% year over year. The adjusted operating margin expanded 70 bps year over year to 13%.
Ralph Lauren Corporation Price, Consensus and EPS Surprise
Ralph Lauren Corporation price-consensus-eps-surprise-chart | Ralph Lauren Corporation Quote
Financials
Ralph Lauren ended the quarter with cash and short-term investments of $1,680 million, a total debt of $1,139 million and total shareholders’ equity of $2,441 million. Inventory grew 0.8% year over year to $1,187.8 million.
The company repurchased Class A shares for about $50 million in the fiscal first quarter.
In the quarter under review, capital expenditure was $39.6 million. Management expects a capital expenditure of $250-$275 million for fiscal 2024.
Store Update
As of Jul 1, 2023, Ralph Lauren had 560 directly operated stores and 721 concession shops globally. The directly operated stores included 215 Ralph Lauren and 345 Polo factory stores. The company operated 183 licensed stores globally as of the same date.
Outlook
Management has issued its fiscal 2024 guidance based on the ongoing macroeconomic environment, muted consumer spending, inflationary pressures, foreign currency movement and the war in Ukraine.
For fiscal 2024, RL anticipates year-over-year revenue growth (cc) in the low-single digits. This includes 20 bps of negative impacts of currency. The gross margin is forecast to expand 100 bps on a constant-currency basis, driven by solid AUR, favorable geographic mix and lower freight costs, which more than offset continued product cost inflation. The metric includes 30 bps of adverse impacts of foreign currency. The fiscal 2024 tax rate is likely to be 23-24%.
For the fiscal second quarter, the company anticipated revenues to be flat to up slightly on a constant-currency basis. This includes approximately 100 basis points of positive foreign currency impact.
The operating margin is predicted to be 9.5-10% on a reported basis and 9-9.5% in constant currency. The gross margin is expected to expand 40-60 bps, which will more than offset higher operating expenses. The metric is likely to witness 10 bps of adverse currency impacts. Also, the tax rate is estimated to be 21-22%.
Stocks to Consider
Some better-ranked companies are Royal Caribbean (RCL - Free Report) , lululemon athletica (LULU - Free Report) and G-III Apparel (GIII - Free Report) .
Royal Caribbean sports a Zacks Rank #1 (Strong Buy) at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 47.9% and 158.3%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 16.7% and 18%, respectively, from the year-ago reported figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
G-III Apparel is a leading designer and distributor of women's and men's apparel in the United States, which carries a Zacks Rank of 2.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year sales suggests growth of 1.9%. Its earnings per share are expected to rise 0.4% from the year-ago reported figure. GIII has a trailing four-quarter earnings surprise of 47.4%, on average.