Ralph Lauren Cuts FY16 Revenues Outlook; Stock Plunges

(RTTNews) - Ralph Lauren Corp. (RL) cut its net revenues outlook for fiscal 2016. The company expects consolidated net revenues to be flat to down 2% on a reported basis in the fourth quarter of fiscal 2016.

In pre-market, RL is currently trading at $102.00, down $13.56 or 11.73%.

Looking ahead for fiscal 2016, the company expects consolidated net revenues for Fiscal 2016 to be down approximately 3% on a reported basis and up approximately 1% in constant currency. This compared to previous guidance of flat on a reported basis and up 3-5% in constant currency.

Analysts polled by Thomson Reuters expect the company to report revenues of $7.57 billion for fiscal year 2016. Analysts' estimates typically exclude special items.

Based on current exchange rates, the Company continues to expect that foreign currency will have an approximate 400 basis point negative impact on Fiscal 2016 revenue growth.

Operating margin for Fiscal 2016 is now expected to be 290-320 basis points below the prior year's level due primarily to negative foreign currency effects. This guidance excludes restructuring and other charges that are primarily associated with our global brand reorganization and a pending customs audit charge. This compares to previous guidance of a 180-230 basis point decline. The full year Fiscal 2016 tax rate is now estimated at 28% versus previous guidance of 30%.

In the fourth quarter of Fiscal 2016, the company expects consolidated net revenues to be flat to down 2% on a reported basis, and based on current exchange rates, foreign currency will have an approximate 150 basis point negative impact on revenue growth.

Operating margin for the fourth quarter of Fiscal 2016 is expected to be approximately 400-450 basis points below the comparable prior year period, primarily due to proactive action the Company is taking to clear end-of-season inventories related to the sales challenges the Company faced in the third quarter, as well as infrastructure investments and negative foreign exchange impacts. The fourth quarter tax rate is estimated at 32%.