RALPH LAUREN REPORTS THIRD QUARTER FISCAL 2022 RESULTS AND RAISES FISCAL 2022 OUTLOOK.

ENPNewswire-February 7, 2022--RALPH LAUREN REPORTS THIRD QUARTER FISCAL 2022 RESULTS AND RAISES FISCAL 2022 OUTLOOK

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Release date- 03022022 - RALPH LAUREN REPORTS THIRD QUARTER FISCAL 2022 RESULTS AND RAISES FISCAL 2022 OUTLOOK.

Highlights:

* All Regions Reported Double-Digit Revenue Growth in the Third Quarter, Ahead of Expectations, and Positive Growth Compared to Third Quarter Fiscal 2020 Pre-Pandemic Levels Notably in North America

* Ralph Lauren Digital Ecosystem Revenue Increased More Than 40% Including Owned Digital Commerce Growth of More than 30%

* Operating Margin of 15.9%, Up 400 Basis Points on a Reported Basis and Up 260 Basis Points on an Adjusted Basis, with Better Than Expected Gross Margins and Operating Expense Leverage Including Substantial Strategic Investments for Long-Term Growth

* Outlook for Fiscal 2022 Net Revenues Raised to 39% to 41% Growth in Constant Currency with Adjusted Operating Margin of Approximately 13%

* The Company Repurchased 2.5 Million Shares of Class A Common Stock During the Third Quarter and Board of Directors Authorizes Additional New $1.5 Billion Stock Repurchase Program

NEW YORK- Ralph Lauren Corporation (NYSE:RL), a global leader in the design, marketing, and distribution of premium lifestyle products, today reported earnings per diluted share of $2.93 on a reported basis and $2.94 on an adjusted basis, excluding restructuring-related and other net charges for the third quarter of Fiscal 2022. This compared to earnings per diluted share of $1.61 on a reported basis and $1.67 on an adjusted basis, excluding restructuring-related and other net charges and one-time tax events for the third quarter of Fiscal 2021.

The Company repurchased approximately $300 million of Class A Common Stock in the third quarter. In addition, the Company's Board of Directors authorized a new $1.5 billion stock repurchase program permitting it to purchase shares of Class A Common Stock, subject to overall business and market conditions. This is in addition to the $280 million available at the end of third quarter Fiscal 2022 as part of a previously authorized stock repurchase program, bringing the Company's total current authorization to $1.78 billion.

'What we do has always been about living - enjoying every moment from what you wear, to the way you live, to the way you love,' said Ralph Lauren, Executive Chairman and Chief Creative Officer. 'And as we enter a new year, filled with hope of more connection and healing as humans and for our planet, I am inspired by how our teams and people around the world are connecting to what we are about - timelessness and an authentic life well-lived.'

'We were pleased to report strong third quarter performance during the important holiday season,' said Patrice Louvet, President and Chief Executive Officer. 'Our better-than-expected results across all three regions are a testament to the outstanding work our teams have done to fundamentally reposition our business, elevate our brand and pivot to offense - including in North America, where our turnaround is well underway. With our significant reset work behind us, we are encouraged that our long-term growth is supported by multiple engines - from geographic and channel expansion to recruiting new high-value consumers and developing high-potential product categories.'

Key Achievements in Third Quarter Fiscal 2022

We delivered the following highlights across our strategic priorities in the third quarter of Fiscal 2022:

Win Over a New Generation of Consumers

Continued to fuel strong consumer engagement through diverse content and accelerated marketing investments, driving growth in global brand consideration and purchase intent

Third quarter investments supported our Holiday 2021 campaigns including first-of-its kind collaboration - The Ralph Lauren Winter Escape - on Roblox, continuing our expanding leadership into the metaverse; and the launch of our full-catalog Ralph Lauren mobile shopping app and continued focus on new full-price consumer acquisition

Energize Core Products and Accelerate Under-Developed Categories

Delivered a compelling Fall assortment, successfully capturing the consumer's interest in post-pandemic dressing, blending casual comfort with elevated looks - both core to the Ralph Lauren brand. Continued momentum in both core and high-potential categories, led by our outerwear, fleece and sweater programs this Holiday

Special releases included Create-Your-Own customizable jackets, '7 Days, 7 Decks' skateboard collection on our Polo app and our latest exclusive Major League Baseball collection featuring the Red Sox

Brand elevation continues with average unit retail up 18% across our direct-to-consumer network in the third quarter, on top of a 19% increase last year, driven by a strong Fall product offering and promotional discipline

Drive Targeted Expansion in Our Regions and Channels

Delivered strong growth across every region in the quarter, exceeding expectations with North America up 30%, Europe up 50% and Asia up 20% to last year in constant currency

All three regions returned to positive growth compared to third quarter Fiscal 2020 pre-pandemic levels

Lead With Digital

Total Ralph Lauren digital ecosystem revenues grew more than 40% in the third quarter, with strong momentum across both owned and wholesale digital channels globally

Third quarter operating margin in our owned digital business contracted modestly from last year's levels but increased 700 basis points to third quarter Fiscal 2020, significantly benefiting the total company margin rate

Operate With Discipline to Fuel Growth

Third quarter adjusted operating margin expanded 260 basis points to last year to 15.9%, with continued gross margin expansion and operating expense leverage on stronger revenues including increased marketing investments. Adjusted operating profit dollars increased 52% to last year and 18% to Fiscal 2020

Adjusted gross margin expansion of 60 basis points exceeded our expectations, with strong double-digit AUR growth and elevated product mix more than offsetting planned higher freight costs as we continue to successfully mitigate a dynamic inflationary environment

Continued progress on our citizenship and sustainability journey including the groundbreaking launch of our first product using Clarus, a first-to-market patented technology using high-performance recycled cotton developed by our partner, Natural Fiber Welding

Third Quarter Fiscal 2022 Income Statement Review

Net Revenue. In the third quarter of Fiscal 2022, revenue increased by 27% to $1.8 billion on a reported basis and was up 28% in constant currency. Foreign currency negatively impacted revenue growth by approximately 150 basis points in the third quarter.

Revenue performance for the Company's reportable segments in the third quarter compared to the prior year period was as follows:

North America Revenue. North America revenue in the third quarter increased 30% to $929 million. In retail, comparable store sales in North America were up 38%, with a 40% increase in brick and mortar stores and a 32% increase in digital commerce. North America wholesale revenue increased 11%.

Europe Revenue. Europe revenue in the third quarter increased 47% to $463 million on a reported basis and increased 50% in constant currency. In retail, comparable store sales in Europe were up 55%, with a 68% increase in brick and mortar stores and a 27% increase in digital commerce. Europe wholesale revenue increased 45% on a reported basis and increased 48% in constant currency.

Asia Revenue. Asia revenue in the third quarter increased 16% to $383 million on a reported basis and 20% in constant currency. Comparable store sales in Asia increased 14%, with a 12% increase in our brick and mortar stores and a 64% increase in digital commerce.

Gross Profit. Gross profit for the third quarter of Fiscal 2022 was $1.2 billion and...

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