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Thursday, November 2, 2017

=Ralph Lauren (RL) reported earnings on Thur 2 Nov 2017 (b/o)



Ralph Lauren beats by $0.10, beats on revs; guides Q3 rev above ests; reaffirms FY18 sales ex-FX; raises margin gudiance
  • Reports Q2 (Sep) adj. earnings of $1.99 per share, $0.10 better than the Capital IQ Consensus of $1.89; revenues fell 8.6% year/year to $1.66 bln vs the $1.64 bln Capital IQ Consensus, driven by initiatives to increase quality of sales, reduce promotional activity, and elevate our distribution, as well as brand exits and lower consumer demand. The second quarter revenue decline is in line with the Company's guidance of a 9%-10% revenue decline, excluding ~40 basis points of negative foreign currency impact. FX benefited revenue growth by ~40 basis points in the second quarter, which is better than guidance, as foreign exchange rates moved favorably during the quarter.
    • North America Revenue. North America revenue in the second quarter decreased 16% to $877 million. The decline was due to lower sales in both the retail and wholesale channels, driven by distribution and brand exits, a strategic reduction in shipments and promotional activity to increase quality of sales, as well as due to lower consumer demand. On a constant currency basis, comparable store sales in North America were down 9%, including a 6% decline in brick and mortar stores and an 18% decrease in e-commerce, primarily due to a planned reduction in promotional activity and lower traffic.
  • In the third quarter of Fiscal 2018, the Company expects net revenue to be down 6%-8%, excluding the impact of FX. Foreign currency is expected to have ~160-170 basis points of benefit to revenue growth in the third quarter of Fiscal 2018. Consensus calls for Q3 rev down 6.7% (guide down 6.4-4.3%). Operating margin for the third quarter of Fiscal 2018 is expected to be down 50-70 basis points, excluding the impact of foreign currency. Foreign currency is estimated to benefit operating margin by ~10-20 basis points in the third quarter.
  • For Fiscal 2018, the Company continues to expect net revenue to decrease 8% to 9%, excluding the impact of FX. Foreign currency is now expected to have ~80 basis points of benefit to revenue growth in Fiscal 2018 versus previous guidance of minimal impact, given recent movements in foreign exchange rates. Based on the first half performance, the Company now expects operating margin for Fiscal 2018 to be 9.5%-10.5%, excluding the impact of foreign currency, and versus previous guidance of 9.0%-10.5%. Foreign currency is now expected to have minimal impact on operating margin for Fiscal 2018, versus previous guidance of 40-50 basis points of pressure, due to recent movements in foreign exchange rates. 

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