01—Abstract
Summary
Summary of the 10-Q filed August 10, 2023. Cited figures are marked; the original filing is the authoritative source.
Ralph Lauren Corporation's first-quarter Fiscal 2024 Form 10-Q, covering the three months ended July 1, 2023, reported net revenues of $1.496 billiona, up 0.4% on a reported basis and 1.2% on a constant currency basis, compared with $1.491 billion in the prior-year quarter.
Net income rose to $132.1 millionb from $123.4 million, and diluted EPS was $1.96 versus $1.73. Growth was driven by international businesses, which more than offset a 9.8% decline in North America net revenues. Operating income fell 5.0% to $166.4 million, with the operating margin at 11.1%, versus 11.8% a year earlier.
Restructuring and other charges, net, totaled $35.6 millionc, and the filing states that net restructuring-related and other charges reduced diluted EPS by $0.38. Gross margin improved 180 basis points to 69.0%, reflecting lower non-routine inventory charges, lower freight costs, and favorable channel and geographic mix. SG&A rose to 55.5% of net revenues from 55.0%.
Operating cash flow was $270.7 milliond, compared with $45.3 million in the prior-year quarter, and the net cash and short-term investments position increased to $541.3 million from $427.2 million at fiscal year-end. Capital returns continued during the quarter.
The company repurchased $50.0 million of Class A stock, paid $49.2 million in dividends, and reported approximately $1.125 billion of remaining repurchase authorization. Management stated there were no material changes to previously disclosed risk factors, and the filing notes that the Russia-Ukraine war, inflation, and foreign currency volatility continue to affect the business.
02—Key points
Key Highlights
- Net revenues of $1.496 billion, up 0.4% reported and 1.2% in constant currency; international growth more than offset a 9.8% decline in North America.
- Gross profit margin rose 180 basis points to 69.0%, driven mainly by lower non-routine inventory charges and lower freight costs.
- Operating income declined 5.0% to $166.4 million; operating margin was 11.1% versus 11.8%, due to higher restructuring charges of $35.6 million.
- Net income increased 7.0% to $132.1 million, and diluted EPS rose to $1.96 from $1.73, helped by a $17.2 million increase in non-operating income and lower diluted share count.
- Net cash provided by operating activities was $270.7 million, versus $45.3 million a year earlier, supported by favorable working capital changes.
- Net cash and short-term investments rose to $541.3 million; the company repurchased $50.0 million of stock and paid $49.2 million in dividends.
- The $750 million Global Credit Facility is undrawn, and no Event of Default has occurred under it.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Ralph Lauren kept $0.09.
- Revenue$1.63B100.0%
- Cost of revenue−$562.9M34.5%
- Gross profit$1.07B65.5%
- Operating costs−$905.6M55.5%
- Operating income$164.5M10.1%
- Interest, other & tax−$17.6M1.1%
- Net income$146.9M9.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 10, 2023Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.63B$1.49B | +9.6% |
| Cost of Revenue | $562.90M$489.20M | +15.1% |
| Gross Profit | $1.07B$1.00B | +6.9% |
| SG&A Expenses | $896.30M$820.60M | +9.2% |
| Operating Expenses | $905.60M$826.20M | +9.6% |
| Operating Income | $164.50M$175.20M | −6.1% |
| Interest Expense | $10.00M$11.80M | −15.3% |
| Net Income | $146.90M$123.40M | +19.0% |
| EPS (Basic) | $2.24$1.76 | +27.3% |
| EPS (Diluted) | $2.19$1.73 | +26.6% |
| Shares Outstanding (Basic) | 65.60M70.10M | −6.4% |
| Shares Outstanding (Diluted) | 67.20M71.50M | −6.0% |
05—Questions
Frequently Asked Questions
How did Ralph Lauren perform in the first quarter of Fiscal 2024?
Net revenues were $1.496 billion, up 0.4% reported and 1.2% in constant currency. Net income was $132.1 million, and diluted EPS was $1.96, up from $1.73. Operating income declined 5.0% to $166.4 million because of higher restructuring charges.
Why did North America revenue decline?
North America net revenues fell $69.0 million, or 9.8%. The filing attributes $42.2 million of the decline to wholesale, driven by a return to more normalized shipment timing after last year's supply chain disruption, and $26.8 million to retail, where comparable store sales decreased.
What drove the improvement in gross margin?
Gross profit as a percentage of net revenues rose 180 basis points to 69.0%. The filing cites lower non-routine inventory charges, lower freight costs, favorable geographic and channel mix, and higher pricing, partly offset by higher product costs and unfavorable foreign currency effects.
How is the company's balance sheet and liquidity position?
Cash and cash equivalents were $1,607.2 million and short-term investments were $73.1 million, against long-term debt of $1,139.0 million. Net cash and short-term investments were $541.3 million. The $750 million Global Credit Facility had no borrowings outstanding as of July 1, 2023.
What are the capital return plans?
The company repurchased $50.0 million of Class A common stock in the quarter and has approximately $1.125 billion remaining under its repurchase program. It paid $49.2 million in dividends, and the quarterly dividend is $0.75 per share. Future dividends remain at the discretion of the Board.
06—Continue