Ralph Lauren (RL) Reports Fiscal Q4 and FY 2024 Result, Beats Forecasts
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Ralph Lauren (RL) Reports Fiscal Q4 and FY 2024 Result, Beats Forecasts

Ralph Lauren Corporation reported strong fourth-quarter results for Fiscal 2024, with net revenues reaching $1.57 billion and a gross margin of 66.6%.
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Ralph Lauren Corporation (NYSE: RL) reported a robust performance for the fourth quarter of Fiscal 2024, exceeding market expectations.

The company posted net revenues of $1.57 billion, marking a 2% increase on a reported basis and a 3% rise in constant currency. This growth was driven by a 6% increase in global direct-to-consumer comparable store sales. Notably, the gross profit for the quarter was $1.04 billion, translating to a gross margin of 66.6%, a significant improvement from the previous year.

Operating income for the quarter stood at $108 million, with an operating margin of 6.9% on a reported basis. On an adjusted basis, operating income was $137 million, reflecting an 8.7% margin. The quarter also saw net income rise to $91 million, or $1.38 per diluted share on a reported basis. Adjusted net income was $112 million, or $1.71 per diluted share, showcasing the company’s strong profitability.

Geographically, Asia led the performance with a 1% increase in reported revenue and a 7% rise in constant currency. North America and Europe both saw a 2% increase in reported revenues. This diverse geographical growth underscores Ralph Lauren’s strong global presence and effective market strategies.

Ralph Lauren Corporation Beats EPS and Revenue Expectations in Q4

Ralph Lauren’s fourth-quarter performance surpassed the market’s expectations. Analysts had projected an earnings per share (EPS) of $1.67 and revenue of $1.56 billion. The company, however, reported an adjusted EPS of $1.71 and revenue of $1.57 billion.

The company’s gross margin expansion of 480 basis points above the prior year was a key highlight. This was attributed to lower freight costs, favorable channel and geographic mix shifts, and a 13% increase in average unit retail (AUR) across the direct-to-consumer network.

Operating expenses were $936 million on a reported basis and $907 million on an adjusted basis, reflecting a 3% increase from the previous year. Despite the rise in expenses, the company’s operating margin improved significantly, indicating efficient cost management.

Regarding regional performance, North America saw a 3% increase in retail comparable store sales, driven by a 6% increase in brick-and-mortar stores. Europe and Asia also reported strong retail performance, with Europe showing a 12% increase in comparable store sales and Asia reporting a 6% increase. These results highlight the company’s successful efforts to drive growth across all key markets.

RL Cautiously Optimistic for FY 2025

Looking ahead to Fiscal 2025, Ralph Lauren provided a cautiously optimistic outlook. The company expects net revenue growth in the low-single digits on both a reported and constant currency basis, centering around 2% to 3%. This guidance reflects the company’s confidence in its strategic initiatives despite the challenging macroeconomic environment.

Ralph Lauren also anticipates operating margin expansion of approximately 100 to 120 basis points in constant currency for Fiscal 2025. This growth is expected to be driven by gross margin expansion and operating expense leverage.

The gross margin is projected to increase by about 50 to 100 basis points in constant currency, supported by AUR growth, reduced cotton costs, and favorable geographic and channel mix shifts. However, foreign currency is expected to negatively impact gross and operating margins by approximately 30 basis points.

For the first quarter of Fiscal 2025, the company expects revenues to be slightly up on a constant currency basis. However, on a reported basis, including a 160 basis points negative impact from foreign currency, revenues are expected to be slightly down compared to the prior year. The company also projects operating margin expansion of 60 to 80 basis points in constant currency for the first quarter, driven by stronger gross margins.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.