Ralph Lauren (NYSE: RL) reported Q2 EPS of $1.90, $0.19 better than the analyst estimate of $1.71. Revenue for the quarter came in at $1.8 billion versus the consensus estimate of $1.82 billion.

• Wholesale Revenue. In the second quarter of Fiscal 2017, wholesale segment revenue decreased 10% on both a reported and constant currency basis to $831 million, driven by a decline in North America, as shipments were strategically reduced as part of the Way Forward plan. This was partially offset by an increase in Europe.
• Retail Revenue. Retail segment revenue decreased 5% on a reported basis to $942 million in the second quarter, and was down 6% on a constant currency basis, both driven by a comparable store sales decline. Consolidated comparable store sales decreased 8% on a reported basis and 9% in constant currency in the second quarter with traffic declines only partially offset by moderated markdown levels.
• Licensing Revenue. Licensing segment revenue of $48 million in the second quarter increased 2% on a reported basis and was approximately flat with the prior year period on a constant currency basis.

Full Year Fiscal 2017 and Third Quarter Outlook

For Fiscal 2017, the Company is maintaining its guidance. Consolidated net revenue is expected to decrease at a low-double digit rate consistent with the Way Forward plan. Key elements include a proactive pullback in inventory receipts, store closures, pricing harmonization and quality of sales initiatives. Based on current exchange rates, foreign currency is expected to 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 in gross margin, infrastructure investments and fixed expense deleverage. The Fiscal 2017 tax rate is estimated to be approximately 29%.

In the third quarter of Fiscal 2017, the Company expects consolidated net revenues to be down low-double digits to down low-teens on a reported basis, with continued execution of quality of sales initiatives, inventory receipt reductions, and fleet optimization consistent with the Way Forward plan. Based on current exchange rates, foreign currency is expected to have minimal impact on revenue growth in the third quarter, but will pressure gross margin by at least 120 basis points.

Operating margin for the third quarter of Fiscal 2017 is expected to be down approximately 200 to 225 basis points compared to the prior year period, as a shift in timing of planned operating expenses negatively impacts the third quarter and savings initiatives from the Way Forward plan are more fully realized in the fourth quarter. The third quarter tax rate is estimated at 29%.

The full year Fiscal 2017 and third quarter guidance excludes restructuring and other related charges expected to be recorded in connection with the Company’s Way Forward plan.

The Company is not able to provide a full reconciliation of the non-GAAP financial measures to GAAP because certain material items that impact these measures, such as the timing and exact amount of charges related to our Way Forward plan, have not yet occurred or are out of the Company’s control. Accordingly, a reconciliation of our non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort. The Company has identified the estimated impact of the items excluded from its Fiscal 2017 guidance.

This Fiscal 2017 non-GAAP guidance excludes estimated pretax charges related to our Way Forward plan, comprised of restructuring-related charges of about $400 million and an additional charge of about $150 million associated with the reduction of inventory out of current liquidation channels.

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