Ralph Lauren (RL) Issues Q2 Beat, Raised FY12 Guidance; Q3 Outlook Weighs on Shares
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Price: $372.59 +0.02%
Financial Fact:
(a) Includes total depreciation expense of:: -70M
Today's EPS Names:
BTTX, VAXX, ELYS, More
Financial Fact:
(a) Includes total depreciation expense of:: -70M
Today's EPS Names:
BTTX, VAXX, ELYS, More
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Shares of Ralph Lauren Corporation (NYSE: RL) are trading down about 6 percent Wednesday morning following second-quarter results before the market opened.
Total sales increased 24 percent year over year to $1.9 billion, topping the analyst consensus of $1.84 billion. Management noted the increase reflects strong, double-digit gains in both wholesale and retail segment sales and favorable foreign currency effects.
“The better-than-expected, double-digit sales and profit growth we achieved during the first half of the year was well-balanced across channels and geographies and comes on top of double-digit gains in the prior year period,” said Roger Farah, President and COO.
Gross profit rose 21 percent to $1.1 billion, but the gross profit rate declined 140 basis points from 58 percent in the year-ago quarter to 56.6 percent.
Operating expenses rose 25 percent in the quarter to $728 million, resulting in only a 14 percent increase in operating income. Operating income was $351 million and the operating margin was 18.4 percent, down 170 bps year over year.
Net income of $233 million grew 14 percent from $205 million last year. Net income per diluted share rose 18 percent to $2.46 per share and topped the consensus of $2.24. Management highlighted the upside relates to the higher operating income.
The company ended the quarter with $407.7 million in cash and cash equivalents.
In the third quarter of fiscal 2012, Ralph Lauren expects consolidated revenue to increase at a low-teens rate. Wholesale revenue is expected to grow at a mid-single digit rate in the third quarter and retail sales are projected to increase by a high-teens rate. The company expects the operating margin from continuing operations for the third quarter of Fiscal 2012 to be approximately 300 basis points below that in the comparable prior year period, primarily due to cost of goods inflation, channel mix and continued investment in business expansion.
Due to the stronger-than-expected second quarter performance, Ralph Lauren now expects consolidated revenues for fiscal 2012 to increase at a high-teens-to-low 20% rate, which compares to a prior expectation of mid-to-high teens growth. The full year operating margin from continuing operations is now estimated to be down 50 basis points from the prior year period, which compares to a prior expectation of a 50-100 basis point decline and reflects the anticipated impact of cost of goods inflation and continued investment in strategic growth initiatives.
“Our momentum in the first half of the year demonstrates the incredible vitality of our brand and the growing desirability of our products around the world,” said Ralph Lauren, Chairman and CEO. “The progress we are making with our international development and the acceptance of our vibrant accessories merchandise confirms that we are paving important new avenues of growth. At the same time, demand for our products in more developed markets has been very strong. Customers around the world understand that Ralph Lauren stands for the highest quality products that withstand the test of time, and this is reflected in our strong performance over the last six months.”
Total sales increased 24 percent year over year to $1.9 billion, topping the analyst consensus of $1.84 billion. Management noted the increase reflects strong, double-digit gains in both wholesale and retail segment sales and favorable foreign currency effects.
“The better-than-expected, double-digit sales and profit growth we achieved during the first half of the year was well-balanced across channels and geographies and comes on top of double-digit gains in the prior year period,” said Roger Farah, President and COO.
Gross profit rose 21 percent to $1.1 billion, but the gross profit rate declined 140 basis points from 58 percent in the year-ago quarter to 56.6 percent.
Operating expenses rose 25 percent in the quarter to $728 million, resulting in only a 14 percent increase in operating income. Operating income was $351 million and the operating margin was 18.4 percent, down 170 bps year over year.
Net income of $233 million grew 14 percent from $205 million last year. Net income per diluted share rose 18 percent to $2.46 per share and topped the consensus of $2.24. Management highlighted the upside relates to the higher operating income.
The company ended the quarter with $407.7 million in cash and cash equivalents.
In the third quarter of fiscal 2012, Ralph Lauren expects consolidated revenue to increase at a low-teens rate. Wholesale revenue is expected to grow at a mid-single digit rate in the third quarter and retail sales are projected to increase by a high-teens rate. The company expects the operating margin from continuing operations for the third quarter of Fiscal 2012 to be approximately 300 basis points below that in the comparable prior year period, primarily due to cost of goods inflation, channel mix and continued investment in business expansion.
Due to the stronger-than-expected second quarter performance, Ralph Lauren now expects consolidated revenues for fiscal 2012 to increase at a high-teens-to-low 20% rate, which compares to a prior expectation of mid-to-high teens growth. The full year operating margin from continuing operations is now estimated to be down 50 basis points from the prior year period, which compares to a prior expectation of a 50-100 basis point decline and reflects the anticipated impact of cost of goods inflation and continued investment in strategic growth initiatives.
“Our momentum in the first half of the year demonstrates the incredible vitality of our brand and the growing desirability of our products around the world,” said Ralph Lauren, Chairman and CEO. “The progress we are making with our international development and the acceptance of our vibrant accessories merchandise confirms that we are paving important new avenues of growth. At the same time, demand for our products in more developed markets has been very strong. Customers around the world understand that Ralph Lauren stands for the highest quality products that withstand the test of time, and this is reflected in our strong performance over the last six months.”
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