Ralph Lauren (RL) Tops Q2 EPS by 63c

Ralph Lauren (NYSE: RL) reported Q2 EPS of $2.62, $0.63 better than the analyst estimate of $1.99. Revenue for the quarter came in at $1.5 billion versus the consensus estimate of $1.47 billion.

Full Year Fiscal 2022 and Third Quarter Outlook:

The Company continues to note the ongoing uncertainty and evolving situation surrounding COVID-19 impacting the timing and path of recovery in each market, including the potential for further outbreaks or resurgences of the pandemic across various markets as well as potential global supply chain disruptions. The full year Fiscal 2022 and third quarter guidance excludes restructuring-related and other charges, as described in the "Non-U.S. GAAP Financial Measures" section of this press release.

For Fiscal 2022, the Company now expects constant currency revenues to increase approximately 34% to 36% to last year on a 53-week reported basis. Foreign currency is expected to negatively impact revenue growth by approximately 20 basis points. The 53rd week is still expected to represent approximately 140 basis points of this year’s revenue growth.

The Company continues to expect operating margin for Fiscal 2022 of about 12.0% to 12.5%. This compares to operating margin of 4.8% in the prior year period and 10.3% in Fiscal 2020. Gross margin is now expected to increase at the high end of previous guidance of 50 to 70 basis points to last year, with stronger AUR growth and favorable product mix more than offsetting increased freight headwinds. Operating expenses continue to reflect the Company's plans to increase marketing and other strategic investments to support long-term growth, including a higher level of spend in the second half of the fiscal year.

For third quarter Fiscal 2022, revenues are expected to increase approximately 14% to 16% in constant currency to last year. Foreign currency is expected to negatively impact revenue growth by approximately 140 basis points.

Operating margin for the third quarter is expected in the range of 13.0% to 13.5%, roughly in-line with last year, with modest gross margin expansion partly offset by a shift in the timing of investments from the second quarter, increased freight expenses, normalizing channel mix shift compared to the prior year's COVID disruptions and about 30 basis points of negative impact from foreign currency.

The full year Fiscal 2022 tax rate is now expected to be approximately 21% to 22%, assuming a continuation of current tax laws. Third quarter Fiscal 2022 tax rate is expected to be approximately 22% to 23%.

The Company expects to resume its share repurchase program starting in the second half of Fiscal 2022, following the filing of our second quarter Fiscal 2022 Quarterly Report on Form 10-Q, with approximately $580 million remaining under its current authorization.

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

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