Ralph Lauren Q4 And FY 2016 Earnings And Revenue Beat Expectations

-4.53%
Downside
183
Market
175
Trefis
RL: Ralph Lauren logo
RL
Ralph Lauren

Screen Shot 2016-05-13 at 4.26.28 pm

 

Key Trends Highlighted:

1) Decline In Wholesale Revenues

  • Wholesale revenues fell in Q4 and FY 2016 as a result of a decline in North America, where business trends have been challenging.
  • Ralph Lauren is refining its product assortments and deliveries for FY 2017 to improve the declining trends.
  • Operating margins were negatively impacted by measures taken to clear end of season inventories and foreign currency effects.

2) Improvement In The Retail Performance

  • Retail segment sales increased 7% in Q4 in constant currency, aided by a 53rd week of sales, new store expansions, and e-commerce growth.
  • Comparable store sales fell 5% in constant currency and sales to foreign tourists were down ~25% y-o-y in Q4, while international revenues were up.
  • E-commerce revenue was up mid-single digits in Q4.
  • The move to a new e-commerce platform later in the fiscal year will improve functionality of the site, improve customer engagement and satisfaction.
  • Operating margins were impacted by end of season inventory clearance and foreign currency effects.

3) Restructuring Activities To Deliver Substantial Savings

  • ~$125M of annual cost savings to be generated from the FY 2016 Global Reorganization Plan.
  • This is higher than the $110 million expected earlier, driven by additional restructuring activities identified by the company.
  • Activities undertaken include remodeling stores, reducing product count to keep inventory low, and improving the supply chain management.
  • More information regarding the Plan to be provided at their Investor Day on June 7.

Have more questions on Ralph Lauren? See the links below:

Relevant Articles
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  5. Ralph Lauren Stock To Trade Lower After FY Q4 Results?
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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ralph Lauren.
 
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