Author Archives: admin

Ralph Lauren Fourth Quarter and Full Year Fiscal 2016

Net revenues for the fourth quarter of Fiscal 2016 were flat with the prior year period on a constant currency basis and declined 1% on a reported basis to $1.9 billion. The decline in reported net revenues was in line with the guidance provided in February of a 0%-2% reported revenue decline and included approximately 110 basis points of negative impact from foreign currency effects. In constant currency, international net revenue rose 3% in the fourth quarter, offset by a 1% decline in the Americas that was due to proactive measures taken in the U.S. to clear end-of-season inventories related to the Fall season.

The Company’s fourth quarter in Fiscal 2016 included a 53rd week that contributed approximately $70 million of sales in the fourth quarter and was primarily generated within the retail segment.

Net revenues for the full year Fiscal 2016 period increased 1% on a constant currency basis, and declined 3% on a reported basis to $7.4 billion.

  • Wholesale Sales. In the fourth quarter of Fiscal 2016, wholesale segment sales decreased 5% on a constant currency basis and 6% on a reported basis to $942 million, primarily due to a decline in sales in North America.For Fiscal 2016, wholesale sales decreased 3% on a constant currency basis and 6% on a reported basis to $3.3 billion, due to a decline in sales in North America.
  • Retail Sales. Retail segment sales increased 7% on a constant currency basis and 6% on a reported basis to $889 million in the fourth quarter, driven by the benefit of a 53rd week of sales, new store expansion and e-commerce growth. On a 13-week to 13-week basis, consolidated comparable store sales decreased 5% in constant currency and 6% as reported during the fourth quarter.Retail sales for Fiscal 2016 increased 4% on a constant currency basis from the prior year period, reflecting new store expansion, e-commerce growth and the benefit of a 53rd week of sales. Reported retail sales decreased 1% to $3.9 billion. On a 52-week to 52-week basis, consolidated comparable store sales decreased 3% in constant currency and 7% as reported in Fiscal 2016.
  • Licensing. Licensing segment revenue of $40 million in the fourth quarter increased 8% on both a constant currency and reported basis, reflecting higher royalties from increased sales of Ralph Lauren, Polo Ralph Lauren and Lauren products worldwide.Licensing revenues of $175 million in Fiscal 2016 were 5% above Fiscal 2015’s level in constant currency and increased 4% as reported.

Gross Profit. Gross profit for the fourth quarter of Fiscal 2016 was $1.0 billion, excluding restructuring charges of $7 million. Gross profit margin was 54.5%, which was 90 basis points lower than the prior year period, reflecting proactive measures taken in the U.S. to clear end-of-season inventories related to the Fall season, in addition to unfavorable foreign currency effects.

Gross profit for Fiscal 2016 decreased 4% to $4.2 billion, excluding restructuring charges of $20 million. Gross profit margin for Fiscal 2016 was 56.8%, 70 basis points lower than the prior year, due to negative foreign currency impacts, which was partially offset by favorable sales mix shift to the retail segment.

Operating Expenses. Operating expenses in the fourth quarter of Fiscal 2016 were $902 million, excluding restructuring and other charges of $45 million. Operating expense rate of 48.2% increased 290 basis points compared with the fourth quarter of Fiscal 2015, due to incremental investments in infrastructure, new stores and marketing, along with unfavorable foreign currency effects. As reported, operating expenses in the fourth quarter of Fiscal 2016 were $947 million.

Operating expenses in Fiscal 2016 were $3.4 billion, excluding restructuring and other charges. Operating expense rate of 46.1% increased 220 basis points compared to Fiscal 2015, due to fixed expense deleverage and incremental investments in infrastructure and new stores. As reported, operating expenses in Fiscal 2016 were $3.6 billion, which included $122 million in restructuring charges, $22 million of additional impairment associated with underperforming stores subject to potential future closure, and $48 million related to a pending customs audit, litigation and other charges.

Operating Income. Operating income in the fourth quarter of Fiscal 2016 was $119 million, excluding restructuring and other charges of $52 million. Operating margin of 6.4% was 370 basis points below the prior year period, better than the guidance provided in February of a 400-450 basis point decline, due to disciplined expense management. The lower operating margin was primarily attributable to gross margin pressure, unfavorable foreign currency effects, and incremental investments in infrastructure and marketing.

Fiscal 2016’s operating income was $794 million, excluding restructuring and other charges. Operating margin of 10.7% was 290 basis points below the prior year period. The lower operating margin was primarily attributable to gross margin pressure, fixed expense deleverage, unfavorable foreign currency effects, and incremental investments in infrastructure and new stores. As reported, operating income in Fiscal 2016 was $582 million, which included $142 million in restructuring charges, $22 million of additional impairment associated with underperforming stores subject to potential future closure, and $48 million related to a pending customs audit, litigation and other charges.

Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2016 Results

Ralph Lauren Corporation (NYSE:RL) today reported net income of $74 million, or $0.88 per diluted share, for the fourth quarter of Fiscal 2016, which excludes restructuring and other charges that are primarily related to activities associated with the Company’s global brand reorganization. This compared to reported net income of $124 million, or $1.41 per diluted share, for the fourth quarter of Fiscal 2015. On a reported basis, net income was $41 million or $0.49 per diluted share in the fourth quarter of Fiscal 2016.

Net income for the full year Fiscal 2016 period was $546 million, or $6.36 per diluted share, excluding restructuring and other charges. This compared to net income of $702 million, or $7.88 per diluted share, for Fiscal 2015. On a reported basis, net income was $396 million, or $4.62 per diluted share.

The Company’s Board of Directors authorized an additional $200 million stock repurchase program permitting the Company to purchase shares of Class A Common Stock, subject to market conditions. This amount is in addition to the $100 million available at the end of the fourth quarter of Fiscal 2016 as part of a previously authorized stock repurchase program, bringing the Company’s total current authorization to $300 million.

“Fiscal 2016 was a year of significant change for our Company as we established a new organizational structure and appointed a new CEO,” said Ralph Lauren, Executive Chairman and Chief Creative Officer. “I am greatly encouraged by the changes that have already taken shape over the past several months under Stefan’s leadership and he has my full support as he and his team build and implement our new strategic growth plan.”

“We have made great progress over the past few months in developing our long-term growth strategy,” said Stefan Larsson, President and Chief Executive Officer. “Immediately following the comprehensive assessment work we undertook after I arrived at the Company, we started developing our new strategic plan and building the foundation to start executing. We are looking forward to sharing the plan at our Investor Day on June 7th. We are confident that our new strategic plan will strengthen the brand, drive sustainable profitable sales growth and deliver shareholder value.”