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Ralph Lauren Kicks Off Fiscal 2016 With Solid Earnings Beat

Ralph Lauren Corp. (NYSE: RL) reported its fiscal first-quarter financial results on Wednesday before the markets opened. The company had $1.09 in earnings per share (EPS) on $1.6 billion in revenue, versus consensus estimates from Thomson Reuters that called for $0.99 in EPS on $1.61 billion in revenue. In the same period of the previous year the company posted EPS of $1.80 and $1.71 billion in revenue.

The company also gave guidance for the second quarter. Ralph Lauren expects consolidated net revenues to be up 3% to 5% on constant currency basis, and operating margin to be roughly 275 to 325 basis points below the same period of the previous year. The consensus estimates are $1.87 in EPS on $1.98 billion in revenue.

In terms of its segments, Ralph Lauren reported revenues as follows:

  • Wholesale sales declined 9% to $642 million.
  • Retail sales declined 3% to $935 million.
  • Licensing increased slightly to $41 million.

At the end of the first quarter, the company had 467 directly operated stores, comprised of 140 Ralph Lauren stores, 65 Club Monaco stores and 262 Polo factory stores. Ralph Lauren also operated 558 concession shop locations worldwide at the end of the first quarter.

Ralph Lauren, chairman and CEO, said:

We are making the right strategic decisions and investments to support the future growth of the Company. I am confident that our new organizational structure will allow us to make our already powerful brands even stronger, and the investments we are making today will create significant value for shareholders over the long term.

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Jacki Nemerov, president and COO, said:

Our better-than-expected first quarter profitability reflects the strong progress we have made on our key strategic initiatives. The decisive actions we are taking around our global brand reorganization, infrastructure investments, e-commerce re-platform, and product pricing will position the Company for future growth and generate substantial operating efficiencies.

The company ended the first quarter of fiscal 2016 with $1.2 billion in cash and investments, compared to $1.4 billion in cash and investments at the end of the first quarter of fiscal 2015.

Shares of Ralph Lauren closed Tuesday at $123.31, in its 52-week trading range of $119.16 to $187.49. After the earnings were released Wednesday, shares were up about 3% after the opening bell but later down fractionally to $123.14. The stock has a consensus analyst price target of $143.47.

By Chris Lange