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Despite Soft Revenue Guidance, Ralph Lauren Beats Earnings for the Fourth Quarter

May 23, 2024
minute read

Ralph Lauren Corp.’s stock rebounded from early losses to trade up 2% on Thursday after the apparel and accessories maker reported better-than-expected fiscal fourth-quarter earnings, despite issuing cautious guidance for fiscal 2025.

The company announced a 10% increase in its quarterly dividend, raising it to 82.50 cents per share. This new dividend will be payable on July 12 to shareholders recorded by June 28.

For the quarter ending March 30, the New York-based company reported a net income of $90.7 million, or $1.38 per share, up from $32.3 million, or 48 cents per share, in the same period last year. Adjusted earnings per share were $1.71, surpassing the FactSet consensus of $1.67.

Revenue rose to $1.568 billion from $1.541 billion a year ago, slightly exceeding the FactSet consensus of $1.566 billion.

Same-store sales increased by 6%, higher than the FactSet expectation of a 5.1% rise.

CEO Patrice Louvet stated that the company is now in the second year of its “Next Great Chapter: Accelerate” plan, navigating a “highly dynamic global operating environment.”

Looking forward to fiscal 2025, Louvet emphasized the company's commitment to investing in its brand, core product portfolio, and consumer-centric ecosystems in major global cities.

Ralph Lauren is also shifting focus towards expanding its direct-to-consumer (DTC) channels and reducing dependence on wholesale. Currently, DTC accounts for two-thirds of the business, up from 55% when Louvet joined the company in July 2017.

Core brand performance was driven by popular items such as cable knits, crew neck and Polo Bear sweaters, transitional outerwear, iconic mesh polos, linen shirts, shirt jackets, and casual sports coats. According to a FactSet transcript, women’s, outerwear, and home departments also performed well, with sales rising by mid-single digits in the quarter. The women’s division now represents about 29% of total company sales and is seen as a key growth area.

The company continued to expand by opening stores in strategic cities like Amsterdam, Singapore, Prague, and Charlotte, NC. Regional growth was led by Asia, with Europe and North America also performing better than expected.

Louvet noted that Ralph Lauren is on track with its three-year targets, aiming for a 15% operating margin on a constant currency basis.

“Our strategy is working, and we’re going to continue to execute on the key tenets of it,” he affirmed.

For fiscal 2025, the company anticipates revenue growth in the low-single digits on both a constant currency and reported basis, approximately 2% to 3%. Current exchange rates are expected to reduce revenue growth by about 90 basis points. FactSet's consensus suggests a growth expectation of 4%.

For the first quarter, Ralph Lauren expects a slight revenue increase on a constant currency basis, but a slight decrease on a reported basis. FactSet's consensus implies a 3% growth.

The company promoted Justin Picicci to chief financial officer, effective May 23. Picicci was previously the enterprise CFO.

Year-to-date, Ralph Lauren’s stock has gained 14%, compared to an 11% gain for the S&P 500.

Valentyna Semerenko
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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