RL - Ralph Lauren rallies after comparable sales shine in FQ4

2023-05-25 08:17:41 ET

Ralph Lauren ( NYSE: RL ) traded higher after comfortably topping estimates with its FQ4 earnings report .

Revenue was up 1% to $1.5B during the quarter. Foreign currency negatively impacted revenue growth by approximately 370 basis points in the quarter. Global direct-to-consumer comparable store sales rose 6% vs. 4.8% consensus. Comparable revenue increased 9% in constant currency.

North America revenue decreased 3% to $656M, but was up 2% on a comparable basis in constant currency. Results included approximately 270 basis points of negative impact from a previously reported shift in the timing of post-holiday sales into FQ3 this year. In retail, comparable store sales in North America were down 4%, with a 3% decrease in digital commerce and a 4% decline in brick and mortar stores driven primarily by the timing shift. North America wholesale revenue was up 11% to last year, benefiting from more normalized timing of spring shipments compared to the prior year's supply chain disruptions.

Europe revenue decreased 1% to $461M on a reported basis. On a comparable basis, revenue increased 7% in constant currency for the region.

Ralph Lauren ( RL ) said adjusted gross margin expanded 170 basis points, supported by strong AUR growth and brand elevation. Operating margin rose 390 basis points to 6.1% of sales during the quarter.

Ralph Lauren ( RL ) ended the first quarter of FY23 with $1.6B in cash and $1.1B in total debt. Inventory was up 10% at the end of the quarter reflecting earlier receipts compared to the prior year's impact from global supply chain delays, increased product costs and continued elevation in product mix.

CEO update: "Our Fiscal 2023 performance puts us on track with our investor day commitments. We continue to be on offense as we balance growth and operating discipline, investing in our brand while delivering strong shareholder returns."

Looking ahead, Ralph Lauren ( RL ) expects FY24 revenue to increase at a low-single digit rate compared to last year on a constant currency basis. Based on current exchange rates, foreign currency is expected to benefit revenue growth by approximately 20 basis points in FY24.

Shares of Ralph Lauren rallied 3.72% in postmarket trading to $112.00 vs. the 52-week trading range of $82.23 to $128.94.

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