Ralph Lauren Q1 Profit Falls - Quick Facts

(RTTNews) - Ralph Lauren Corp. (RL) reported that net income for the first quarter of fiscal 2016 fell to $64 million or $0.73 per share from $162 million, or $1.80 per share, for the first quarter of Fiscal 2015.

Excluding restructuring and non-cash charges associated with its global brand reorganization, net income was $95 million, or $1.09 per share, for the first quarter of Fiscal 2016. Analysts polled by Thomson Reuters expected the company to report earnings of $0.99 per share for the quarter. Analysts' estimates typically exclude special items.

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

Net revenues for the first quarter of Fiscal 2016 were in line with the prior year period on a constant currency basis, driven by double-digit growth internationally, contribution from new stores and global e-commerce expansion. Reported net revenues declined 5% to $1.6 billion in the first quarter. Wall Street expected revenues of $1.61 billion. The decline in reported net revenues included approximately 500 basis points of negative impact from foreign currency effects.

In the 90 days since the announcement of a new global brand management organizational structure, the Company established six global brand groups and filled the global brand president roles, as well as the key regional and channel positions. The Company said it is on track to achieve $100 million in annual expense savings associated with the restructure.

The Company expects to incur restructuring and related non-cash charges of about $70 million - $100 million as a result of this reorganization, $45 million of which was taken in the first quarter. This charge encompasses the cost of separation associated with the workforce reduction as well as the cost of store and shop adjustments to provide greater clarity of brand presentation.

In the second quarter of Fiscal 2016, the Company expects consolidated net revenues to be up 3-5% in constant currency, and based on current exchange rates, foreign currency will have an approximate 550 basis point negative impact on revenue growth. Operating margin for the second quarter of Fiscal 2016 is expected to be approximately 275-325 basis points below the comparable prior year period, primarily due to negative foreign currency effects, the quarterly revenue growth profile and timing of expense savings initiatives.

The Company continues to expect consolidated net revenues for Fiscal 2016 to increase by mid-single digits in constant currency. Based on current exchange rates, foreign currency will have an approximate 450 basis point negative impact on Fiscal 2016 revenue growth. Operating margin for Fiscal 2016 is still expected to be 180-230 basis points below the prior year's level due to negative foreign currency effects.

This guidance excludes restructuring and non-cash charges associated with its global brand reorganization.