Ralph Lauren Corporation
CEO : Mr. Patrice Jean Louis Louvet
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | -13.0% YoY | -28.9% | -25.6% | 2023-02-09 |
Jane Nielsen says,
Q3 Revenue and Growth
- Q3 revenues up 1% on a reported basis and 7% in constant currency, above outlook.
- Total company revenues increased 7% in constant currency, led by double-digit growth in Asia and Europe.
Digital Sales and Ecosystem
- Ralph Lauren digital ecosystem sales grew high single digits in constant currency and more than 40% on a two-year stack.
- Sales from owned Ralph Lauren digital sites grew 10% on top of more than 30% growth last year.
- Digital margins strongly accretive to overall profitability.
Gross Margin
- Total company adjusted gross margin was 65.2%, down 80 basis points to last year on a reported basis, but up 80 basis points in constant currency.
- AUR up 10% on top of 19% growth last year and lower air freight reliance following last year’s supply chain disruptions.
- Gross margins were below expectations this holiday due to targeted outlet promotions, post-Christmas sale days, and higher duty costs in Europe.
Operating Margin
- Operating margin was at the high end of guidance range.
- Adjusted operating margin was 16% on a reported basis and 17.8% in constant currency representing a 190 basis point increase to last year.
- Adjusted operating expenses declined 1%, including a marketing expense decline of 8% over last year’s disproportionately back half-weighted spend.
Regional Performance
- North America: Third quarter revenues grew 1%, North America retail comps grew 2%, and wholesale declined 2% to last year.
- Europe: Third quarter revenue increased 1% on a reported basis and 13% in constant currency, and Europe wholesale declined 1% on a reported basis but grew 11% in constant currency.
- Asia: Third quarter revenue increased 1% on a reported basis and 16% in constant currency, with balanced growth across digital commerce and brick-and-mortar stores.
Patrice Louvet says,
Revenue Growth and Strategic Priorities
- Delivered better-than-expected performance with positive revenue growth from all three regions.
- Strong progress on the strategic priorities outlined in the Next Great Chapter plan.
- Maintaining flexibility to respond to consumer demand and market dynamics while elevating and energizing the lifestyle brand.
Brand and Product Elevation
- Investing in the brand’s desirability with consumers with global and localized brand activations and diverse range of campaigns.
- Growing market share and AUR with Polo lovers and attracting young full-price customers to the business.
- Added 1.6 million new consumers with over 51 million social media followers globally.
Core and High-Potential Categories
- Core products represent 70% of sales and continued to drive high single-digit growth in the third quarter.
- High-potential categories including women’s, outerwear, and emerging home business increased low teens.
- Women’s represents single largest long-term opportunity for market share gains and category growth as a company.
Winning in Key Cities with Consumer Ecosystem
- Third quarter sales for total Ralph Lauren digital ecosystem and own digital sites grew high single and low double digits globally.
- Opened 55 new stores in concessions focused on top cities globally, majority in Asia, particularly Mainland China.
- Reported third quarter Mainland sales up high single digits in constant currency despite widespread COVID disruptions.
Enablers
- Proud to be recognized on Fast Company’s 2022 Brands That Matter and Fortune’s World’s Most Admired Companies lists.
- Highlighted first cradle-to-cradle certified product with commitment to enable past and future products to live on responsibly.
Q & A sessions,
Resilient Core Consumer and Diverse Growth Strategy
- Core consumer remains resilient and less price-sensitive
- 1.6 million new consumers added, higher-value and younger
- Diverse growth strategy with significant opportunities across regions, including China, North America, and Europe
- Core products did well, with high single-digit growth, and also growth in high-potential categories like women’s and outerwear
Flexibility and Elevation Journey
- Flexibility in product portfolio enables the company to flex up and down based on consumer needs
- Elevation journey has built-in pricing flexibility to react to competitive environment without walking back brand elevation strategy
- 70% increase in AUR since start of elevation phase, with 10% growth this quarter
China Growth Opportunities
- Significant near and long-term growth opportunities in China
- 7% constant currency growth in Q3 despite store closures, reduced hours, and staffing shortages
- Strong brand building, relevant product offering, and connected ecosystem expansion in key markets
- Brand desirability resonating with Chinese consumers, leaving the brand into local fabric of the culture
Strategic Priorities and Progress
- Strong progress on strategic priorities outlined in Next Great Chapter: Accelerate plan
- Multiple levers of growth and broad lifestyle portfolio puts the company in a position of strength to become the world’s leading luxury lifestyle company
- Commitment to brand and product elevation while maintaining flexibility to respond to consumer demand and market dynamics
- Double-digit AUR growth despite more promotional marketplace
Cost Discipline and Operating Margin Targets
- Culture of operating and cost discipline enabled the company to meet operating margin targets in the period
- Pragmatic approach to merchandising, pricing, and inventory planning in choppy global environment
No bad stock 