Ralph Lauren Q4 Profit Climbs, But Outlook Disappoints

In What's New by Jeff PrineLeave a Comment

RLNew York—Ralph Lauren Corp. today reported its fourth quarter profit climbed 20.5%, but its lukewarm outlook disappointed Wall Street, sending shares lower in early trading.

For the quarter ended March 29, the luxury fashion brand posted a net profit of $153 million, or $1.68 a share, compared with $127 million, or $1.37 a share, a year earlier. Analysts’ average estimate expected earnings of $1.63 a share.

Accessories Strong

Net revenue increased 14% to $1.87 billion, ahead of the company’s own forecast for 10% to 12% growth and beating analysts’ consensus for $1.83 billion in sales.

For its full fiscal year, the company posted a 7% increase in sales to $7.4 billion.

“Fiscal 2014 was another year of record sales and profits for us,” said Ralph Lauren, chairman/ceo. “It was also a year of important achievements, including the establishment of a new global leadership structure, creating greater clarity around our global store development efforts and innovating with new products, particularly in accessories and with Polo for women. The creativity, passion and diligence that defines all that we do is incredibly invigorating. I am confident we are focused on the right

initiatives and that we have the right team in place to realize our goals.”

By division, the wholesale segment reported a 24% increase to $983 billion, “fueled by broad-based growth in the Americas, including strong demand for accessories; the contribution from the newly transitioned Chaps men’s sportswear operations; and double-digit growth in Europe.”

Retail sales increased 5% to $845 million with a boost from international operations and global store expansion, the company said. Comparable store sales were down 2%.

Licensing revenues of $39 million in the fourth quarter were 10% below the prior year period, as higher licensing revenues for Ralph Lauren products were more than offset by lower Chaps and Australia/New Zealand licensing revenues due to recent license take-backs.

Roger Farah to Retire

Gross profit increased 8% to $1 billion. Gross profit margin of 56.2% was 310 basis points lower than the prior year, primarily due to the mix impacts from the integration of the Chaps men’s sportswear operations and stronger wholesale revenue growth as well as net negative foreign currency effects.

In its outlook, Ralph Lauren forecast sales increases in its current quarter at 3% to 5%, below the 10% increase that analysts had predicted. For the full year, Ralph Lauren said sales should increase 6% to 8%. Analysts’ consensus expects an 8% increase.

In other news, Ralph Lauren announced executive vice chairman Roger Farah will retire in May. Farah, who stepped down as president and COO last year, will remain on the board until the expiration of his term in August.


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