Ralph Lauren Q4 Adj. Profit Tops View

(RTTNews) - Ralph Lauren Corp. (RL) reported that its net loss for the fourth quarter of fiscal 2017 was $204 million or $2.48 per share compared to net income of $41.3 million, or $0.49 per share last year.

In the Pre-Market, RL is currently trading at $74.50, up $1.75 or 2.41%.

On an adjusted basis, net income was $74 million, or $0.89 per share, compared to $74 million, or $0.88 per share for the fourth quarter of Fiscal 2016. Analysts polled by Thomson Reuters expected the company to report earnings of $0.78 per share. Analysts' estimates typically exclude special items.

Operating expenses in the fourth quarter of Fiscal 2017 were $1.1 billion on a reported basis, including $322 million in restructuring and other charges. On an adjusted basis, operating expenses were $766 million, down 15% compared to the prior year, primarily as a result of lower headcount, store closures and other expense savings initiatives under the Way Forward plan. Excluding the impact of the 53rd week, adjusted operating expenses were down 12% to the prior year.

In the fourth quarter, reported revenue decreased 16% to $1.6 billion; excluding the impact of foreign currency and on a 13-week to 13-week basis, revenue was down 12% to last year. As a reminder, the Company's fourth quarter last year included an extra week which contributed approximately $72 million of revenue. Foreign currency pressured the fourth quarter revenue growth by approximately 100 basis points. Analysts expected revenue of $1.56 billion for the quarter.

The fourth quarter revenue decline was in line with the guidance of a mid-teens decline. The decline was driven by initiatives to improve quality of sales and reduce excess inventory, as well as challenging traffic trends.

On a 13-week to 13-week constant currency basis, comparable store sales decreased 11% during the fourth quarter. Comps were negatively impacted by calendar shifts related to both Christmas and Easter holidays by about three percentage points; excluding this impact, comparable store sales would have decreased 8%.

The Company announced Wednesday that Patrice Louvet has been named President and Chief Executive Officer.

The full year Fiscal 2018 and first quarter guidance excludes foreign currency impacts, restructuring and other related charges expected to be recorded in connection with the Company's Way Forward plan, and severance-related payments associated with the CEO departure.

For Fiscal 2018, net revenue is expected to decrease 8-9%, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have approximately 150 basis points of negative impact on revenue growth in Fiscal 2018.

The Company expects operating margin for Fiscal 2018 to be 9.0-10.5%, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to pressure operating margin for Fiscal 2018 by 50-75 basis points.

In the first quarter of Fiscal 2018, the Company expects net revenue to be down low double-digits, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have approximately 225 basis points of negative impact on revenue growth in the first quarter of Fiscal 2018.

Operating margin for the first quarter of Fiscal 2018 is expected to be about 9.5-10.0%, excluding foreign currency impacts. Foreign currency is estimated to pressure operating margin by approximately 75 basis points.

In Fiscal 2018, the Company is adopting Accounting Standard Update (ASU) 2016-09 for the accounting of employee share-based payments, which was recently issued by the Financial Accounting Standards Board (FASB). This will affect the Company's effective tax rate and increase its variability, with one of the key variables being the price of stock.

Excluding the impact of ASU 2016-09, the Fiscal 2018 tax rate is estimated at 25%. Based on a stock price of $75 per share, the adoption of ASU 2016-09 is expected to raise the Fiscal 2018 tax rate to 28%.

The adoption of ASU 2016-09 is expected to be most impactful in the first and second quarters of the fiscal year due to the timing of vesting and exercise of certain stock compensation. Including the impact of ASU 2016-09, the first quarter of Fiscal 2018 tax rate is estimated at 33%.

The company is planning capital expenditures of $300-320 million for Fiscal 2018.

This Fiscal 2018 non-GAAP guidance excludes estimated pretax charges related to our Way Forward plan and severance-related payments associated with the CEO departure, which collectively are anticipated to result in estimated charges of approximately $200 million.