Ahead Of Ralph Lauren's Q2 Results

(RTTNews) - On November 5, Ralph Lauren Corp. (RL) will publish its second-quarter results before the bell, with analysts polled by Thomson Reuters estimating earnings of $1.74 per share on revenue of $1.95 billion. The company expects consolidated net revenues for the second quarter to increase 3% - 5% in constant currency.

In the just bygone quarter, the apparel maker reported a steep decline in profit, reflecting decreased revenues and lower operating margins amid charges. However, adjusted earnings per share and revenues surpassed analysts' expectations.

Looking Ahead...

The company said the first half was negatively impacted by the Easter calendar, significant foreign exchange pressure and its infrastructure investments. In the second half, the company expects to see both sales and profit improvement, due to the launch of Polo Sport and the opening of its new stores, the impact of product cost savings and pricing actions, and the benefit of restructuring activities. In addition, the foreign exchange pressure will lessen as the year progresses.

The company said it is on track to achieve $100 million in annual expense savings associated with the restructure. It expects to incur restructuring and related non-cash charges of about $70 million to $100 million as a result of this reorganization, of which $45 million was taken in the first quarter.

For fiscal 2016, the company continues to project revenue growth in the mid-single digits in constant currency, supported by significant contributions from the strategic initiatives in which it has invested over the last several years. Street is currently looking for fiscal 2016 revenues to edge down 0.30% to $7.60 billion.

"The decisive actions we are taking around our global brand reorganization, infrastructure investments, e-commerce re-platform, and product pricing will position the Company for future growth and generate substantial operating efficiencies," said Ralph Lauren's President and Chief Operating Officer Jacki Nemerov.

Q1 Results The company reported first-quarter net income of $64 million or $0.73 per share, sharply lower than the $162 million or $1.80 per share earned in the prior-year quarter.

Excluding restructuring and non-cash charges associated with its global brand reorganization, net income for the latest quarter was $95 million or $1.09 per share. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.99 per share. Analysts' estimates typically exclude certain special items.

Net revenues declined 5.3%, or 0.4% in constant currency, to $1.62 billion from $1.71 billion last year, but topped fourteen Wall Street analysts' consensus estimate of $1.61 billion by a whisker.

Net sales declined 5.5%, or 0.5% in constant currency, to $1.58 billion from last year. Consolidated comparable-store sales decreased 8%, or 2% on a constant currency basis.

Operating margin for the quarter contracted 830 basis points to 6.0%, primarily due to a higher operating expenses and a 120 basis points decline in gross profit margin from last year.

"Our better-than-expected first quarter profitability reflects the strong progress we have made on our key strategic initiatives," said Nemerov.

Company Profile

Ralph Lauren designs, markets and distributes premium lifestyle products in four categories: apparel, home, accessories and fragrances. The company's brand names, which include Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Lauren by Ralph Lauren, RRL, RLX, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, American Living, Chaps and Club Monaco, constitute one of the world's most widely recognized families of consumer brands.