Ralph Lauren (RL) Tops Q1 EPS by 17c, Offers Outlook

Ralph Lauren (NYSE: RL) reported Q1 EPS of $1.06, $0.17 better than the analyst estimate of $0.89. Revenue for the quarter came in at $1.55 billion versus the consensus estimate of $1.53 billion.

Consolidated comparable store sales decreased 6% on a reported basis and 7% in constant currency during the first quarter, primarily due to lower traffic trends.

Second Quarter and Full Year Fiscal 2017 Outlook

In the second quarter of Fiscal 2017, the Company expects consolidated net revenues to be down mid-to-high single digits on a reported basis. Based on current exchange rates, foreign currency will have minimal impact on revenue growth in the second quarter. Operating margin for the second quarter of Fiscal 2017 is expected to be 200-250 basis points below the comparable prior year period. Initiatives under the Way Forward Plan are expected to have a greater impact in the second half of Fiscal 2017 than the second quarter. The second quarter tax rate is estimated at 29%.

For Fiscal 2017, the Company continues to expect consolidated net revenues to decrease at a low-double digit rate due to a proactive pullback in inventory receipts, store closures, pricing harmonization and other quality of sale initiatives, combined with the weak retail traffic and a highly promotional environment in the U.S. Based on current exchange rates, foreign currency will have minimal impact on revenue growth in Fiscal 2017.

The Company continues to expect operating margin for Fiscal 2017 to be approximately 10%, as cost savings are expected to be offset by growth in new store expenses, unfavorable foreign currency impacts, infrastructure investments and fixed expense deleverage. The Fiscal 2017 tax rate is estimated to be approximately 29%.

Second quarter and full year Fiscal 2017 guidance excludes restructuring, impairment and inventory-related charges in connection with the Company’s Way Forward Plan.

For earnings history and earnings-related data on Ralph Lauren (RL) click here.

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