Ralph Lauren (RL) Tops Q4 EPS by 9c; Adds $500M to Buyback Plan

(Updated - May 13, 2015 8:26 AM EDT)

Ralph Lauren (NYSE: RL) reported Q4 EPS of $1.41, $0.09 better than the analyst estimate of $1.32. Revenue for the quarter came in at $1.89 billion versus the consensus estimate of $1.88 billion.

In addition, the Company's Board of Directors authorized an additional $500 million stock repurchase program permitting the Company to purchase shares of Class A Common Stock, subject to market conditions. This amount is in addition to the $80 million available at the end of the fourth quarter of Fiscal 2015 as part of a previously authorized stock repurchase program, bringing the Company's total current authorization to $580 million.

“We made excellent progress on our strategic initiatives in Fiscal 2015,” said Ralph Lauren, Chairman and Chief Executive Officer. “We opened several stores in key markets around the world, fueled the momentum of our luxury accessories business with the launch of the Drawstring Ricky bag, and continued to innovate with the introduction of Polo for women as well as the development of Polo Sport which will be launching this Fall. We also announced a new global brand management organizational structure that will more fully leverage the power of our brands to drive future growth for the Company.”

“Our better-than-expected fourth quarter results were achieved in a challenging global macroeconomic environment, showcasing the operational discipline of our teams,” said Jacki Nemerov, President and Chief Operating Officer. “While foreign exchange and global consumer spending remain unpredictable, we are taking decisive actions to offset some of these ongoing external pressures. We also believe the new global brand management structure will enhance the consistency of our brand presentation around the world and generate substantial operating efficiencies.”

Fiscal 2016 Outlook

The Company currently expects consolidated net revenues for Fiscal 2016 to increase by mid-single digits in constant currency. Based on current exchange rates, foreign currency will have an approximate 450 basis point negative impact on Fiscal 2016 revenue growth. Operating margin for Fiscal 2016 is currently expected to be 180-230 basis points below the prior year’s level due to negative foreign currency effects. The full year Fiscal 2016 tax rate is estimated at 30%. Capital expenditures are planned at approximately $400-$500 million in Fiscal 2016.

This guidance excludes restructuring and other one-time related charges associated with our global brand reorganization. We expect these charges to be approximately $70-100 million over the course of Fiscal 2016.

In the first quarter of Fiscal 2016, the Company expects consolidated net revenues to be flat in constant currency, as retail segment growth is offset by a decline in wholesale revenue which is impacted by our customers’ receipt plans due to an earlier Easter this year. Based on current exchange rates, foreign currency will have an approximate 600 basis point negative impact on revenue growth in the first quarter of Fiscal 2016. Operating margin for the first quarter of Fiscal 2016 is expected to be approximately 600-650 basis points below the comparable prior year period, primarily due to negative foreign currency effects, the quarterly revenue growth profile and timing of expense savings initiatives. The first quarter tax rate is estimated at 30%.

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