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Ralph Lauren revenue up 1.6% to $1.7 billion in Q2

18 Nov '18
4 min read
Courtesy: Ralph Lauren
Courtesy: Ralph Lauren

The revenue of Ralph Lauren, a leader in the design, marketing, and distribution of premium lifestyle products, in the second quarter of fiscal 2019 grew 1.6 per cent to $1.7 billion on a reported basis and 2.1 per cent in constant currency, driven by Asia. However, foreign currency negatively impacted revenue growth by around 50 basis points in Q2.

North America revenue in the second quarter increased 1 per cent on a reported basis and 2 per cent in constant currency. North America wholesale revenue was flat to last year. In retail, comparable store sales in North America were up 1 per cent in constant currency, including a 1 per cent drop in brick and mortar stores and a 9 per cent increase in the online.

Europe revenue in the second quarter decreased 1 per cent to $459 million on a reported basis and was flat to last year in constant currency. Europe wholesale revenue lowered 1 per cent on a reported basis and was flat in constant currency, as a shift in timing of shipments that benefited the first quarter negatively impacted our second quarter results. In retail, comparable store sales in Europe were down 4 per cent on a constant currency basis, driven by a 4 per cent decline in brick and mortar stores, related to assortment and inventory challenges, and flat revenues in digital commerce.

Asia revenue in the second quarter climbed 13 per cent to $245 million on a reported basis and increased 14 per cent in constant currency, driven by strength in both retail and wholesale channels. Comparable store sales in Asia increased 6 per cent in constant currency, reflecting growth in both brick and mortar and digital commerce operations.

"Our 50th anniversary celebration was an incredible moment for our Company and our teams. It captured how our brand is and the World of Ralph Lauren resonates across generations, cultures and beyond fashion. This is the story, not just of our past, but the one that inspires and builds our future," said Ralph Lauren, executive chairman and chief creative officer.

Gross profit for the quarter was $1.0 billion and gross margin was 60.9 per cent, 100 basis points above the prior year on an adjusted basis. The gross margin increase was driven by initiatives to improve quality of sales through reduced promotional activity and improved pricing as well as favourable product mix. Foreign currency benefited gross margin by 40 basis points in the second quarter.

The company ended the second quarter with $1.9 billion in cash and short and long term investments and $684 million in total debt, compared to $1.7 billion and $590 million, respectively, at the end of the second quarter of fiscal 2018.

For fiscal 2019, the company expects net revenue to be approximately flat to up slightly in constant currency. Foreign currency is expected to have about 75 basis points of negative impact on revenue growth. The Company continues to project operating margin to be up 40 to 60 basis points in constant currency driven by gross margin expansion. Foreign currency is expected to have minimal impact on operating margin in fiscal 2019.

In the third quarter of fiscal 2019, the company expects net revenue to be up low single digits in constant currency and foreign currency is projected to pressure revenue growth by about 100 basis. Operating margin is likely to be up about 20 basis points in constant currency. Foreign currency is expected to be a slight benefit to operating margin in the third quarter.

"As we execute our next great chapter strategic plan, we are encouraged by the early progress we have made in the first half of this year on both the top and bottom-line," said Patrice Louvet, president and chief executive officer. "We remain focused on strengthening our connection with consumers around the world, and executing on our strategic priorities as we manage through the evolving trade and inflationary environment with agility. Looking out to the remainder of the year, we are on track to deliver our full-year goals." (RR)

Fibre2Fashion News Desk – India

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