Driven by all segments, Ralph Lauren revenues rise 4 percent in FY15

Ralph Lauren Corporation reported net income of 124 million dollars, or 1.41 dollars per diluted share, for the fourth quarter of fiscal 2015. Excluding foreign currency impacts, EPS was 1.69 dollars in the fourth quarter. This compared to net income of 153 million, or 1.68 dollars per diluted share, for the fourth quarter of fiscal 2014.

Net revenues for the fourth quarter increased approximately 7 percent on a constant currency basis, driven by wholesale segment growth and double-digit e-commerce expansion across all regions. Reported net revenues increased 1 percent to 1.9 billion dollars in the fourth quarter. Net revenues for the full year fiscal 2015 period increased approximately 4 percent on a constant currency basis. Reported net revenues increased 2 percent to 7.6 billion dollars during fiscal 2015.

Net income for the full year fiscal 2015 period was 702 million dollars, or 7.88 dollars per diluted share. Excluding foreign currency impacts, EPS was 8.19 dollars for fiscal 2015. This compared to net income of 776 million dollars, or 8.43 dollars per diluted share, for fiscal 2014.

“We made excellent progress on our strategic initiatives in fiscal 2015,” said Ralph Lauren, Chairman and Chief Executive Officer, adding, “We opened several stores in key markets around the world, fueled the momentum of our luxury accessories business with the launch of the Drawstring Ricky bag, and continued to innovate with the introduction of Polo for women as well as the development of Polo Sport which will be launching this fall. We also announced a new global brand management organizational structure that will more fully leverage the power of our brands to drive future growth for the company.”

In the fourth quarter, wholesale segment sales increased 8 percent on a constant currency basis, driven by double-digit growth in North America. Reported wholesale segment sales rose 2 percent to 1 billion dollars. For fiscal 2015, wholesale revenues increased 2 percent on a constant currency basis, driven by growth in both Europe and the Americas. Reported wholesale revenues were in line with fiscal 2014 at 3.5 billion dollars.

Retail sales rose 6 percent on a constant currency basis in the fourth quarter over the prior year period, supported by double-digit expansion in global e-commerce and the contribution from new store openings. Reported retail sales were in line with the fourth quarter of fiscal 2014 at 841 million dollars. Consolidated comparable store sales increased 1 percent on a constant currency basis during the quarter and declined 4 percent on a reported basis. Retail sales for fiscal 2015 rose 6 percent on a constant currency basis from the prior year period, reflecting growth in all regions that was driven by double-digit e-commerce expansion globally and the contribution from new stores. Reported retail sales increased 4 percent to approximately 4 billion dollars from 3.8 billion dollars in fiscal 2014. During Fiscal 2015, consolidated comparable store sales were up 1 percent in constant currency and declined 1 percent on a reported basis.

Licensing revenues of 37 million dollars in the fourth quarter were 5 percent below the prior year period, due to negative foreign currency effects and the anniversary of the launch of Polo Red fragrance. Licensing revenues of 169 million dollars in fiscal 2015 were 2 percent above fiscal 2014’s level, reflecting higher royalties from increased sales of Ralph Lauren, Polo and Lauren products worldwide.

Gross profit for the fourth quarter of fiscal 2015 was 1 billion dollars, in line with the prior year period. Gross profit margin of 55.4 percent was 80 basis points lower than the comparable prior year period, reflecting foreign currency effects and mix shift impacts. Gross profit for fiscal 2015 increased 2 percent to 4.4 billion dollars. Gross profit margin for the fiscal was 57.5 percent, 40 basis points lower than the prior year.

The company ended the fourth quarter with 466 directly operated stores, comprised of 143 Ralph Lauren stores, 64 Club Monaco stores and 259 Polo factory stores. The company also operated 536 concession shop locations worldwide at the end of the fourth quarter. In addition to company-operated locations, international licensing partners operated 72 Ralph Lauren stores and 23 dedicated shops, as well as 119 Club Monaco stores and shops at the end of the fourth quarter.

The company currently expects consolidated net revenues for fiscal 2016 to increase by mid-single digits in constant currency. Based on current exchange rates, foreign currency will have an approximate 450 basis point negative impact on fiscal 2016 revenue growth. Operating margin for Fiscal 2016 is currently expected to be 180-230 basis points below the prior year’s level due to negative foreign currency effects. In the first quarter, the company expects consolidated net revenues to be flat in constant currency, as retail segment growth is offset by a decline in wholesale revenue which is impacted by our customers’ receipt plans due to an earlier Easter this year. Based on current exchange rates, foreign currency will have an approximate 600 basis point negative impact on revenue growth in the first quarter.