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Gross profit for the first quarter of fiscal 2019 was $896 million and gross margin was 64.4 percent, 120 basis points above the prior year. 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.
In the first quarter of fiscal 2019, operating income was $130 million on a reported basis, including restructuring-related and other charges of $24 million, and operating margin was 9.4 per cent. Adjusted operating income was $154 million and adjusted operating margin was 11.1 per cent, 90 basis points above the prior year, excluding restructuring-related and other charges from both periods, driven by gross margin expansion. Foreign currency benefited operating margin by 20 basis points in the first quarter.
Operating expenses were $766 million on a reported basis, including $24 million in restructuring-related and other charges. On an adjusted basis, excluding such charges, operating expenses were $742 million, up 4 per cent to prior year driven by 21 per cent growth in planned marketing investment. Excluding marketing and the impact of foreign currency, adjusted operating expenses were up slightly to last year.
The company ended the first quarter of fiscal 2019 with $2.1 billion in cash and short and long term investments and $587 million in total debt, compared to $1.7 billion and $590 million, respectively, at the end of the first quarter of fiscal 2018.
"I continue to be inspired and energized by the passion our teams have for our brand and our Company," said Ralph Lauren, executive chairman and chief creative officer. "This passion along with Patrice’s partnership over the last year, the clear plan he and the team laid out in June, and the initial progress in this quarter, give me confidence in our future as we celebrate 50 years in business."
"We are off to an encouraging start to the new fiscal year on both the top and the bottom line. Our teams around the world are fully engaged and focused on executing the next great chapter plan we shared at our recent Investor Day," said Patrice Louvet, president and chief executive officer. "Guided by our three core principles of putting the consumer at the center of all we do, elevating and energizing our brand and balancing productivity and growth, we are on track to return the Company to long-term, sustainable growth and value creation."
In the second quarter of fiscal 2019, the company expects net revenue to be flat to down slightly in constant currency. Foreign currency is expected to pressure revenue growth by approximately 30 to 50 basis points in the second quarter of fiscal 2019. Operating margin for the second quarter of fiscal 2019 is expected to be up about 30 basis points in constant currency. Foreign currency is estimated to be a slight benefit to operating margin in the second quarter. (RR)
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