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Ralph Lauren (RL) Stock Gains on Q4 Earnings & Revenue Beat

Shares of Ralph Lauren Corporation RL jumped more than 5% before the trading session on May 25, following the impressive fourth-quarter fiscal 2023 results, wherein the top and bottom lines improved year over year. Results have gained from robust demand and brand strength. It has been on track with its Next Great Chapter: Accelerate plan.

The company reported adjusted earnings per share of 90 cents for the fiscal fourth quarter, surpassing the Zacks Consensus Estimate of 65 cents. Also, the bottom line surged 83.7% year over year from 49 cents in the year-ago quarter.

Net revenues grew 1% year over year to $1,541 million and beat the Zacks Consensus Estimate of $1,470 million. On a constant-currency (cc) basis, revenues were up 9% from the prior-year quarter. The top line witnessed impacts of 370 basis points (bps) from adverse currency rates.

The company’s global digital ecosystem witnessed year-over-year mid-single-digit revenue growth.


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Zacks Investment Research

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Shares of this Zacks Rank #3 (Hold) company have gained 11.5% year to date against the industry’s 6.1% decline.

Segmental Details

North America: In the fiscal fourth quarter, the segment’s revenues declined 3% from the year-ago quarter to $656 million and came below our estimate of $690 million. Comparable store sales (comps) for North America’s retail channel fell 4% year over year, wherein the same for brick-and-mortar stores moved down 4%, while digital commerce decreased 3%. Revenues from the North American wholesale business advanced 11% year over year.

Europe: The segment’s revenues inched down 1% year over year to $461 million, with a 7% improvement in currency-neutral revenues. The metric exceeded our estimate of $422.6 million. Comps for the retail channel in Europe were up 8%, whereas brick-and-mortar stores grew 9% year over year and digital sales witnessed a 6% rise. Revenues for the segment’s wholesale business fell 3% on a reported basis, while it grew 3% at cc.

Asia: The segment’s revenues increased 13% year over year to $390 million on a reported basis and 29% on a currency-neutral basis. The metric came ahead of our estimate of $315.8 million. Comps in Asia were up 20%, backed by 20% growth in brick-and-mortar stores and a 19% increase in the digital business.


Ralph Lauren's adjusted gross profit margin contracted 150 bps year over year on a reported basis but the metric remained almost flat on a cc basis to 63%. However, the metric expanded 170 bps from fourth-quarter fiscal 2019 on solid AUR growth, improved pricing, favorable product mix and reduced air freight costs.

Adjusted operating expenses increased 3% from the year-ago period to $908 million in the fiscal fourth quarter, driven by higher compensation and variable selling expenses, partly offset by lower marketing expenses. Adjusted operating expenses, as a percentage of sales, contracted 280 bps to 57% in the reported quarter.

The company’s adjusted operating income was $74.9 million, up 38.2% from $289.2 million in the year-ago quarter. The adjusted operating margin expanded 130 bps year over year to 4.9%.

Ralph Lauren Corporation Price, Consensus and EPS Surprise


Ralph Lauren Corporation price-consensus-eps-surprise-chart | Ralph Lauren Corporation Quote


Ralph Lauren ended the quarter with cash and short-term investments of $1,529.3 million, total debt of $1,138.5 million and total shareholders’ equity of $2,430.5 million. Inventory grew 9.6% year over year to $1,071.3 million.

The company repurchased Class A shares for about $42 million in the fiscal fourth quarter. As of Apr 1, the company had $1.2 billion remaining under its total share repurchase authorization.

In fiscal 2023, capital expenditure was $217 million. Management expects capital expenditure of $275-$300 million for fiscal 2024.

Store Update

As of Apr 1, 2023, Ralph Lauren had 553 directly operated stores and 722 concession shops globally. The directly operated stores included 209 Ralph Lauren and 344 Polo factory stores. The company operated 182 licensed stores globally as of the same date.


Management has issued the guidance for fiscal 2024 based on the ongoing macroeconomic environment, muted consumer spending, inflationary pressures, foreign currency movement, the war in Ukraine, and COVID variants and other COVID-related disruptions.

For fiscal 2024, RL anticipates year-over-year revenue growth (cc) in the low-single digits. This includes 20 bps of positive impacts of currency. The operating margin is forecast to expand 30-50 bps on a constant-currency basis, which includes a favorable impact of currency of 10 bps. Notably, it reported an operating margin is envisioned to expand 50-100 bps on a constant-currency basis, driven by solid AUR and lower freight costs, which more than offset continued product cost inflation. The metric includes 20 bps of adverse impacts of foreign currency. The fiscal 2024 tax rate is likely to be 24-25%.

For the fiscal first quarter, the company anticipated revenues to be flat to up slightly on a constant-currency basis. On a reported basis, revenues are expected to be down slightly year over year. This includes approximately 150 basis points of negative foreign currency impact.

The operating margin is predicted to expand 30-50 basis points in constant currency, driven by stronger gross margins. Gross margin expansion is expected to be driven by lower freight costs and continued AUR growth, partly offset by increased product costs. Both metrics are likely to witness 50 bps of adverse currency impacts each. Also, the tax rate is estimated to be 23-24%.

Stocks to Consider

Some better-ranked companies are Crocs CROX, Royal Caribbean PVH and MGM Resorts MGM.

MGM Resorts currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 81%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MGM’s 2024 sales and EPS indicates increases of 2.2% and 31%, respectively, from those estimated for 2023.  

Royal Caribbean sports a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of 26.4%, on average.

The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 47.9% and 158.3%, respectively, from the year-ago period’s reported levels.

Crocs, which offers casual lifestyle footwear and accessories, carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 15%.

The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings suggests growth of 13.1% and 2.8% from the year-ago period’s reported figure. CROX has a trailing four-quarter earnings surprise of 21.8%, on average.

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