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Ralph Lauren Quarterly Report for Q2 Ended Sep 30, 2023

Filing Date
Filed November 8, 2023
Period End
September 30, 2023
Security
RL
In the record · 2016–202610-K1110-Q328-K93

RL filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 93 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Aug ’18Aug ’18
  2. Restructuring8-K · Sep ’20Sep ’20
  3. Leadership change8-K · Nov ’22Nov ’22
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 10-Q filed November 8, 2023. Cited figures are marked; the original filing is the authoritative source.

Ralph Lauren Corporation's Form 10-Q for the second quarter of Fiscal 2024 (ended September 30, 2023) reports net revenues of $1.633 billiona for the three months, up from $1.579 billion a year earlier, and net income of $146.9 million, versus $150.5 million.

Diluted EPS was $2.19b compared with $2.18. Operating income fell to $164.5 million from $206.7 million, with SG&A expenses rising to $896.3 million from $809.5 million. Management attributes the margin pressure mainly to higher compensation-related and marketing costs, while gross profit improved on lower freight costs and favorable mix.

Net income was supported by a one-time $11.8 millionc tax benefit tied to Swiss tax reform and the EU anti-tax avoidance directive, and by higher interest income of $15.8 million. For the six months, net revenues were $3.130 billion and net income was $279.0 million, with diluted EPS of $4.15 versus $3.90 a year earlier. Asia led revenue growth, with Asia net revenues up $75.4 million for the six months, offsetting a $77.8 million decline in North America.

Operating cash flow improved sharply to $343.6 milliond from $1.9 million, largely due to working capital changes. The company repurchased $225.7 million of stock, including tax withholdings, and paid $98.2 million in dividends. Cash and cash equivalents were $1.382 billion at quarter end, and long-term debt was $1.140 billion.

The balance sheet shows total equity of $2.369 billion, and net cash and short-term investments of $327.4 million, down from $427.2 million at fiscal year-end. Remaining repurchase authorization was approximately $1.000 billion, and the company expects capital expenditures of approximately $250 million for Fiscal 2024.

02—Key points

Key Highlights

  1. Net revenues rose 3.4% to $1.633 billion in the quarter, with constant-currency growth of 1.7%, led by Asia (up 10.1% reported).
  2. Operating income declined 20.4% to $164.5 million, and operating margin fell 300 basis points to 10.1%, driven by SG&A expenses rising to 54.9% of net revenues.
  3. Gross margin improved 70 basis points to 65.5% in the quarter, reflecting lower freight costs, favorable mix, and higher pricing.
  4. Net income was $146.9 million, with diluted EPS of $2.19, supported by an $11.8 million one-time tax benefit from Swiss tax reform and the EU anti-tax avoidance directive.
  5. Operating cash flow was $343.6 million for the six months, compared with $1.9 million a year earlier, mainly from favorable working capital changes.
  6. The company returned capital through $225.7 million of share repurchases and tax withholdings and $98.2 million of dividends in the six months.
  7. Net cash and short-term investments declined to $327.4 million from $427.2 million at fiscal year-end, and approximately $1.000 billion remained under the repurchase program.

03—Questions

Frequently Asked Questions

  1. Why did operating income decline despite higher revenue?

    Operating income fell $42.2 million in the quarter to $164.5 million, as SG&A expenses rose $86.8 million to $896.3 million. The filing attributes the increase mainly to compensation-related expenses ($33.7 million) and marketing and advertising ($25.1 million), creating operating deleverage as SG&A growth outpaced revenue growth.

  2. How much of the net income was boosted by one-time items?

    The filing reports a one-time income tax benefit of $11.8 million in the second quarter of Fiscal 2024, tied to Swiss tax reform and the EU anti-tax avoidance directive, equal to $0.18 per diluted share for the quarter. Restructuring and other charges reduced net income by $5.8 million, or $0.09 per diluted share, in the quarter.

  3. Which regions drove revenue performance?

    In the quarter, Asia net revenues increased $32.0 million to $348.4 million, and Europe increased $33.3 million to $526.8 million. North America declined $8.8 million to $717.8 million, reflecting lower wholesale revenue partly offset by retail growth. For the six months, North America declined $77.8 million while Asia rose $75.4 million.

  4. How is the company's liquidity and capital allocation position?

    Cash and cash equivalents were $1.382 billion at September 30, 2023, and the company had $750 million of revolving credit availability under its Global Credit Facility with no borrowings outstanding. The company expects approximately $250 million of capital expenditures in Fiscal 2024 and has about $1.000 billion remaining under its share repurchase authorization.

04—Continue

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