RL +5.24% @ 100.05 vs 95.07
Ralph Lauren beats by $0.17, beats on revs; guides Q2 rev above consensus; reaffirms FY17 outlook
- Reports Q1 (Jun) earnings of $1.06 per share, excluding non-recurring items, $0.17 better than the Capital IQ Consensus of $0.89; revenues fell 4.1% year/year to $1.55 bln vs the $1.53 bln Capital IQ Consensus. The decline in reported net revenues was in line with the guidance provided in June of a mid-single digit revenue decline.
- On a reported basis, international net revenue rose 10% in the first quarter, offset by an 11% decline in North America.
- Wholesale Revenue. In the first quarter of Fiscal 2017, wholesale segment revenue decreased 5% on both a reported and constant currency basis to $607 million, driven by a decline in North America as the U.S. department store channel continued to experience challenging traffic trends, partially offset by an increase in Europe.
- Retail Revenue. Retail segment revenue decreased 3% on both a reported and constant currency basis to $907 million in the first quarter, driven by a comparable store sales decline that was partially offset by non-comparable store sales growth. Consolidated comparable store sales decreased 6% on a reported basis and 7% in constant currency during the first quarter, primarily due to lower traffic trends.
- Co sees Q2 rev down mid to high single digits vs. -10% consensus; Operating margin for the second quarter of Fiscal 2017 is expected to be 200-250 basis points below the comparable prior year period. Initiatives under the Way Forward Plan are expected to have a greater impact in the second half of Fiscal 2017 than the second quarter.
- For Fiscal 2017, the co continues to expect consolidated net revenues to decrease at a low-double digit rate due to a proactive pullback in inventory receipts, store closures, pricing harmonization and other quality of sale initiatives, combined with the weak retail traffic and a highly promotional environment in the U.S. Based on current exchange rates, FX will have minimal impact on revenue growth in Fiscal 2017. The co continues to expect operating margin for Fiscal 2017 to be ~10%, as cost savings are expected to be offset by growth in new store expenses, unfavorable foreign currency impacts, infrastructure investments and fixed expense deleverage.