'Better than expected Q2 operating margin' - Ralph Lauren

04 Nov '14
3 min read

Luxury fashion good marketer and NYSE-listed – Ralph Lauren said it has reported better-than-expected operating margin for the second fiscal quarter ending September 27, 2014.

Although, operating margin which stood at 14.4% in the second fiscal quarter of 2014, 100 basis points below the second quarter of 2013, Ralph Lauren said it is better, than the outlook provided in August.

According to the luxury fashion marketer, operating margin performed better than expected, due to strong and proactive operational management, in addition to a shift in the timing of certain expenses into the back half of the fiscal year.

It also added that the lower operating margin in the second quarter of 2014 is a result of higher operating expenses associated with incremental investments in the Company’s long-term growth strategies.

Ralph Lauren posted net income of $201 million, or $2.25 per diluted share, for the second quarter of 2014, down from $205 million, or $2.23 per diluted share, for the second quarter of 2013.

Net revenues for the reporting quarter rose 4% from a year ago quarter, to $2.0 billion led by retail segment expansion, including double-digit international growth.

Of which, wholesale segment sales were up 2% to $943 million and retail sales increased 7% to $1.0 billion in the second quarter of 2014, led by double-digit growth globally and e-commerce operations.

It said consolidated comparable store sales increased 1% year-on-year on both a reported and constant currency basis during the second quarter.

Licensing revenues of $45 million in the second quarter of 2014 were 2% above the prior year period, reflecting higher royalties from increased sales of Ralph Lauren products.

Gross profit for the second quarter of 2014 went up by 4% to $1.1 billion and gross profit margin of 56.8% was 20 basis points above the prior year period, primarily due to favourable channel and geographic mix.

In the quarter under review, operating expenses touched $846 million, up 7% higher than the prior year period. According to Ralph Lauren, higher operating expenses are attributable to incremental investments in global retail development, advertising, marketing and infrastructure.

Operating income for the second quarter of 2014 touched $286 million, 3% below the second quarter of 2013, while operating margin was 14.4%, 100 basis points below the second quarter of 2013.

In the third quarter of 2014, Ralph Lauren expects revenues to hike by 3%-5%, including a 200 basis point net negative impact from foreign currency translation and operating margin is expected to be around 100-150 basis points below the comparable prior year period.

“I am confident we are well-positioned for the upcoming Holiday season, supported by the distinctiveness of our luxury lifestyle positioning and the desirability of our products,” President, Jacki Nemerov said. (AR)

Fibre2fashion News Desk - India

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