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Ralph Lauren 8-K Report, Financial Results (Feb 8, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 8, 2024
Period End
February 8, 2024
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 8-K filed February 8, 2024. Cited figures are marked; the original filing is the authoritative source.

Ralph Lauren Corporation reported results for its fiscal third quarter ended December 30, 2023, via a press release furnished as Exhibit 99.1 under Item 2.02.

Revenue rose 6% to $1.9 billiona on a reported basis and 5% in constant currency, with all regions exceeding expectations, led by Asia. Reported diluted EPS was $4.19, up 31%, and adjusted diluted EPS was $4.17, up 24%, compared with $3.20 reported and $3.35 adjusted a year earlier. Global direct-to-consumer comparable store sales accelerated to 9% growth in the quarter.

Adjusted operating margin was 16.4%b, and the operating expense rate rose to 50.0% from 49.2%, reflecting strategic investments in marketing, digital and key city ecosystems. Regional performance was mixed. Asia revenue grew 16% reported and 17% in constant currency, with China up more than 30%.

Europe revenue rose 11% reported and 6% in constant currency. North America was approximately flat, with North America wholesale revenue down 15%, and adjusted North America operating margin fell 150 basis points to 21.8%. Inventory was $1.1 billionc, down 15% year over year, and the company held $1.9 billion in cash and short-term investments against $1.1 billion of total debt.

For fiscal 2024, management reiterated its outlook for low-single-digit revenue growth in constant currency, now centering on 2%d, and expects gross margin expansion of 140 to 180 basis points in constant currency. Full-year operating margin is expected to be 12.3% to 12.5%, and the fiscal 2024 tax rate is now expected at 19% to 20%. Fourth-quarter revenue growth is guided to be centered around 2% in constant currency, with foreign currency expected to reduce reported growth by about 160 basis points.

02—Key points

Key Highlights

  1. Q3 revenue rose 6% to $1.9 billion reported (5% constant currency); all regions exceeded expectations, led by Asia at 16% reported growth.
  2. Reported diluted EPS was $4.19 (up 31%); adjusted diluted EPS was $4.17 (up 24%), helped by discrete tax benefits.
  3. Global direct-to-consumer comparable store sales grew 9% in the quarter, with positive retail comps across all regions and channels.
  4. Adjusted operating margin was 16.4%, 40 basis points above the prior year, despite higher operating expenses from marketing and key city investments.
  5. North America revenue was approximately flat, with wholesale down 15%, while the company is exiting roughly 20 department store doors in the region this fiscal year.
  6. Inventory fell 15% year over year to $1.1 billion, and the company ended the quarter with $1.9 billion in cash and short-term investments and $1.1 billion in total debt.
  7. Fiscal 2024 revenue growth outlook was narrowed to centering on 2% in constant currency, with gross margin expansion of 140 to 180 basis points and capex of $200 million to $225 million.

03—Questions

Frequently Asked Questions

  1. How did Ralph Lauren perform in the fiscal third quarter of 2024?

    Revenue increased 6% to $1.9 billion on a reported basis and 5% in constant currency. Reported diluted EPS was $4.19, up 31%, and adjusted diluted EPS was $4.17, up 24%, both ahead of the company's expectations.

  2. Which regions drove growth, and which lagged?

    Asia led with revenue up 16% reported and 17% in constant currency, with China up more than 30%. Europe rose 11% reported and 6% in constant currency. North America was approximately flat, as wholesale revenue fell 15% while direct-to-consumer performance improved.

  3. What is the company's outlook for fiscal 2024?

    Management reiterated low-single-digit constant-currency revenue growth, now centering on 2%, and expects operating margin of 12.3% to 12.5%, driven by gross margin expansion of 140 to 180 basis points in constant currency. The fiscal 2024 tax rate is now expected to be 19% to 20%.

  4. How is the company's balance sheet and capital return position?

    Ralph Lauren ended the quarter with $1.9 billion in cash and short-term investments against $1.1 billion of total debt. Inventory was $1.1 billion, down 15% from the prior year. About $425 million was returned to shareholders year to date through dividends and Class A share repurchases.

  5. What pressures did the company face in the quarter?

    Operating expenses rose to 50.0% of revenue from 49.2% in the prior year period, driven by mix shifts toward international and direct-to-consumer businesses and by higher compensation, rent, marketing and key city ecosystem investments. North America adjusted operating margin declined 150 basis points to 21.8%, and raw material costs remained a headwind, though cotton costs are expected to ease starting in Spring 2024.

04—Continue

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