Ralph Lauren Corp. continued to reach higher in the first quarter — and is now projecting a little bit more from its full year financials.
Adjusted earnings in the first quarter rose 19.2 percent to $281 million, or $4.59 a diluted share — easily ahead of the $4.32 analysts forecast, according to Yahoo Finances. Including restructuring and other charges, net income tallied $262 million
The adjusted operating margin expanded by 170 basis points to 18.7 percent.
Revenues for the quarter ended June 26 increased 14 percent to $2 billion, a 13 percent increase in constant currencies.
By region:
- North America revenues increased 13 percent to $740 million with comparable sales jumping 10 percent in stores and 8 percent online. Wholesale revenue rose 22 percent.
- Europe saw its top line increase 7 percent to $594 million, a 5 percent increase in constant currencies as the region struggles with the fall out of the U.S. war with Iran.
- And the top line in Asia increased 24 percent to $589 million, up 25 percent in constant currencies.
The brand elevation strategy led by Patrice Louvet, president and chief executive officer, remained in full view with average unit retail prices up 15 percent in the company’s direct to consumer network, the 37th straight quarter of increased pricing power.
Louvet told WWD that higher AUR was an “outcome of our elevation strategy. Sometimes people view it as an objective. It is not an objective for us. The objective is to elevate the brand, the product, the shopping experience.
“AUR has four factors,” the CEO said. “First, it’s driven by region and channel mix. So when we grow faster in China, where our products are more elevated, then that drives AUR. The second is product category mix. The third is promotional pullback. A lot of our AUR expansion has been driven by our ability to pull back promotions because our full price selling is doing so well. And then the fourth one, which is a much smaller part, is like-for-like pricing. But think of like-for-like pricing as low single digits. That is not the key driver of AUR. The drivers of AUR are more mix and promotional pullbacks.”
The approach — and the business — are working well enough for the company to raise its outlook for the year. Revenues are now expected to increase by 5 percent to 6 percent, better than the 4 percent to 5 percent previously indicated. And the operating margin is slated to expand by 60 to 80 basis points, up from the 40 to 60 basis point range previously forecast.
Investors, who have pushed the stock up over 27 percent over the past year, took a step back in premarket trading, pushing the stock down 0.7 percent to $378.14.
But Ralph Lauren is always looking at the horizon.
“As we celebrate America’s 250th anniversary and look ahead to important milestones for our company over the coming year, I’m reminded of what has inspired us for nearly 60 years — optimism and aspiration, authenticity and the belief that we all can step into our dreams,” said Ralph Lauren, executive chairman and chief creative officer. “These are the values that our teams around the world embrace every day, that will endure as we continue to grow and evolve.”
