Research Desk Line-up: Lululemon Athletica Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 8, 2017 / Pro-Trader Daily publishes post-earnings coverage on Ralph Lauren Corp. (NYSE: RL) following the Company's posting of its fourth quarter and fiscal 2017 financial results on May 18, 2017. The clothing retailer provided its outlook for fiscal year and upcoming quarter. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
Get more of our free earnings reports coverage from other constituents of the Textile - Apparel Clothing industry. Pro-TD has currently selected Lululemon Athletica Inc. (NASDAQ: LULU) for due-diligence and potential coverage as the Company announced on June 01, 2017, its financial results for Q1 FY17 which ended on April 30, 2017 and also a plan to restructure its ivivva operations. Register for a free membership today, and be among the early birds that get access to our report on Lululemon Athletica when we publish it.
At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on RL; also brushing on LULU. With the links below you can directly download the report of your stock of interest free of charge at:
For the three months ended April 01, 2017, Ralph Lauren's reported revenue decreased 16% to $1.58 billion, driven by the Company's initiatives to improve quality of sales and reduce excess inventory, as well as challenging traffic trends. Excluding the impact of foreign currency and on a 13-week to 13-week basis, the Company's revenue declined 12% on a y-o-y basis. Ralph Lauren's revenue numbers were in-line with its guidance of a mid-teens decline. For fiscal 2017, Ralph Lauren's revenue decreased 10% to $6.7 billion.
For Q4 FY17, Ralph Lauren's gross profit was $819 million on a reported basis, including $48 million in non-cash inventory-related charges. On an adjusted basis, gross profit was $868 million and gross margin was 55.4%, 90 basis points above last year. This increase was primarily driven by improved quality of sales, reduced promotional activity, lower product costs, and favorable geographic and channel mix shifts.
During Q4 FY17, Ralph Lauren's operating loss was $268 million, including restructuring and other charges of $370 million. On an adjusted basis, the Company's operating income was $102 million and operating margin was 6.5%, 10 basis points above the prior year's same period. Excluding the impact from the 53rd week, adjusted operating margin expanded 60 basis points compared to the year ago corresponding period.
On a reported basis, Ralph Lauren's net loss in Q4 FY17 was $204 million, or $2.48 per share, compared to net income of $41 million, or $0.49 per diluted share, for Q4 FY16. On an adjusted basis, the Company's net income for the reported quarter totaled $74 million, or $0.89 per diluted share, compared to net income of $74 million, or $0.88 per diluted share, for the year ago comparable quarter. Ralph Lauren's earnings surpassed Wall Street's expectations of $0.78 per share.
In fiscal 2017, on a reported basis, Ralph Lauren's net loss was $99 million, or $1.20 per share, compared to net income of $396 million, or $4.62 per diluted share, for FY16. On an adjusted basis, the Company's net income was $477 million, or $5.71 per diluted share, compared with $546 million, or $6.36 per diluted share, for fiscal 2016.
During Q4 FY17, Ralph Lauren's wholesale revenue dropped 17% to $777 million. On a 13-week to 13-week basis in constant currency, the Company's wholesale revenue declined 15% on a y-o-y basis. The decline was primarily driven by North America as shipments were strategically reduced to increase quality of sales, better align with demand, and reduce excess inventory. The Company's wholesale operating income in Q4 FY17 was $201 million and wholesale operating margin was 25.8% on a reported basis. On an adjusted basis, wholesale operating income in Q4 FY17 was $211 million and wholesale operating margin was 27.2%.
Ralph Lauren's retail revenue for the reported quarter fell 16% on a y-o-y basis to $745 million; on a 13-week to 13-week basis in constant currency, retail revenue was down 9% from the year ago period. Lower retail sales were driven by a decline in comparable store sales. Ralph Lauren's retail operating loss in Q4 FY17 was $103 million and retail operating margin was (13.8%) on a reported basis. On an adjusted basis, retail operating income was $17 million and retail operating margin was 2.2%, 20 basis points lower than last year.
Ralph Lauren's licensing revenue in the reported quarter increased 7% on a reported basis to $43 million. The Company's licensing operating income of $41 million in the reported quarter increased 16% compared with the prior year's same period.
Balance Sheet and Cash Flow
Ralph Lauren ended fiscal 2017 with $1.4 billion in cash and short-term investments and $588 million in total debt, compared to $1.1 billion and $713 million, respectively, at the end of fiscal 2016. The Company's inventory at the end of FY17 was $792 million, down 30% compared to the prior year, driven by both restructuring actions and improvement in operating processes, including a proactive pullback in receipts and moving towards a demand driven supply chain.
Ralph Lauren spend $284 million towards capital expenditures in FY17, compared to $418 million in the prior year same period, primarily driven by lower IT and infrastructure investments as well as an increased focus on return on investment.
During Q4 FY17, the Company repurchased $100 million of its common stock, bringing year-to-date purchases to $200 million.
On May 17, 2017, Ralph Lauren announced that Patrice Louvet has been named President and Chief Executive Officer. His appointment will become effective July 17, 2017, at which time he will also be appointed to the Ralph Lauren Corp.'s Board of Directors. Mr. Louvet will dual report to Ralph Lauren in his capacity as Executive Chairman of the Board and to the Company's Board of Directors. Mr. Louvet most recently served as Group President, Global Beauty at Procter & Gamble (P&G), which is a division of 12 brands with approximately $11.5 billion in revenues for 2016.
For Fiscal 2018, Ralph Lauren is expecting net revenue to decrease 8%-9%, excluding the impact of foreign currency. The Company expects operating margin for FY18 to be 9.0%-10.5%, excluding the impact of foreign currency.
In Q1 FY18, Ralph Lauren expects net revenue to be down low double-digits, excluding the impact of foreign currency. The Company's operating margin for the upcoming quarter is expected to be about 9.5%-10.0%, excluding foreign currency impacts.
On Wednesday, June 07, 2017, Ralph Lauren's stock closed the trading session at $69.13, marginally up 0.16% from its previous closing price of $69.02. A total volume of 2.26 million shares were exchanged during the session, which was above the 3-month average volume of 1.52 million shares. Shares of the Company have a dividend yield of 2.89% and currently have a market cap of $5.63 billion.
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