Ralph Lauren's fourth-quarter earnings beat offsets soft revenue guidance

By Ciara Linnane

Company is expecting first-quarter revenue to fall slightly

Ralph Lauren Corp.'s stock reversed early losses to trade up 2% Thursday after the apparel and accessories maker posted better-than-expected fiscal fourth-quarter earnings that weighed against soft guidance for fiscal 2025.

The company (RL) raised its quarterly dividend by 10% to 82.50 cents a share. The new dividend is payable July 12 to shareholders of record as of June 28.

The New York-based company had net income of $90.7 million, or $1.38 a share, for the quarter to March 30, up from $32.3 million, or 48 cents a share, in the year-earlier period. Adjusted per-share earnings came to $1.71, ahead of the $1.67 FactSet consensus.

Revenue rose to $1.568 billion from $1.541 billion a year ago, just ahead of the $1.566 billion FactSet consensus.

Same-store sales rose 6%, while FactSet was expecting a rise of 5.1%.

Chief Executive Patrice Louvet said the company is now in the second year of its "Next Great Chapter: Accelerate" plan as it navigates a "highly dynamic global operating environment."

"Looking ahead to fiscal 2025, we are staying on offense by continuing to invest in our brand, our portfolio of iconic core products and our consumer-centric ecosystems in top cities globally," he said in prepared remarks.

The company is also working to expand its direct-to-consumer channels and away from wholesale with DTC now accounting for two-thirds of the business, compared with 55% when Louvet joined the company in July of 2017, he told analysts on the company's earnings call.

Performance for the core brand was led by cable knits, crew neck and Polo Bear sweaters, transitional outerwear, iconic mesh polos, linen shirts and shirt jackets and casual sports coats, he said, according to a FactSet transcript.

Women's, outerwear, and home departments also performed well, rising by mid-single digits in the quarter. The company's women's division now accounts for about 29% of total company sales and is viewed as a key long-term growth opportunity.

The company continued to open stores in top target cities, including Amsterdam; Singapore; Prague and Charlotte, N.C. Regionally, growth was led by Asia, followed by a better-than-expected performance in Europe and North America.

The company is on track with its three-year targets and a 15% operating margin goal on a constant currency basis, he said.

"Our strategy is working, and we're going to continue to execute on the key tenets of it," he said.

The company is now expecting fiscal 2025 revenue to increase by low-single digits on a constant currency and reported basis, or by about 2% to 3%. Based on current exchange rates, it expects foreign currency to shave about 90 basis points off revenue growth for the year. The current FactSet consensus implies growth of 4%.

The company expects first-quarter revenue to rise slightly on a constant currency basis, but to be down slightly on a reported basis. The FactSet consensus implies growth of 3%.

The company named Justin Picicci as chief financial officer effective May 23, promoting him from his former role as enterprise CFO.

The stock has gained 14% in the year to date, while the S&P 500 has gained 11%.

-Ciara Linnane

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05-23-24 1122ET

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