[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / August 15, 2016 / Active Wall St. announces its post-earnings coverage on Ralph Lauren Corp. (NYSE: RL). The company reported its first quarter fiscal 2017 earnings results on August 10, 2016. The designer, marketer and distributor of lifestyle products swung to losses on softer sales and restructuring expenses; however it topped Wall Street's expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the three months ended on July 2, 2016, Ralph Lauren reported a loss of $22 million, or $0.27 per share, compared to a year earlier profit of $64 million, or $0.73 per share. Excluding one-off items related to the company's on-going restructuring, Ralph Lauren reported adjusted net income of $90 million, or $1.06 per diluted share, down 2.8% from $1.09 in the comparable year ago quarter. Analysts expected earnings of $0.89 per share.
Ralph Lauren's Q1 FY17 net revenues slumped 4.1% to $1.55 billion, slightly above analysts' expectations for revenue of $1.53 billion. Net revenues have now declined for a fifth consecutive quarter.
"I am encouraged by the steps we are taking to refocus on and evolve our core and bring back the entrepreneurial spirit that made this Company great," said Ralph Lauren, Executive Chairman and Chief Creative Officer, "The team has my full support as we start to execute the Way Forward Plan."
For Q1 FY17, the company's comparable same store sales (Comps) declined 6% and excluding currency effects dropped 7%, primarily due to weaker customer traffic. Revenue rose 10% internationally, but was offset by a decline of 11% in North America. Wholesale net sales dropped 5% to $607 million, driven by a decline in North America, as the U.S. department store channel continued to experience challenging traffic trends.
Sales for the premium designer has been struggling with the changes in consumer preference as customers are preferring to splash their money on experiences like travel and dining out over clothes. Furthermore, the rise of e-commerce, fast fashion retailers which create products reflecting the runway styles at a fraction of cost and retails which sell branded clothing at fraction of cost has not helped matter, have all raised competition and seen traditional names struggle to lure customers back to their shops.
The Way Forward Plan Takes Shape
In June 2016, Mr. Larsson, who was appointed as CEO in November 2015, outlined a restructuring plan which involve rightsizing the cost structure and implement an ROI-driven financial model to free up resources to invest in the brand and drive high-quality sales. The new plan includes strengthening the leadership team and creating a more nimble organization by moving from an average of 9 to 6 layers and reduces the time it takes to get products from design to stores. The plan aims to generate annual savings of $180 million to $220 million in FY17, included closing 50 company owned retail stores and eliminating about 8% of the full-time staff.
In Q1 FY17, the company recorded $104 million in restructuring and related impairment charges and $50 million in inventory charges.
Buyback
During Q1 FY17, Ralph Lauren repurchased shares worth $100 million, leaving it with $200 million remaining for share buybacks, at the end of the quarter.
Outlook
Ralph Lauren anticipates consolidated net revenues to fall at a low-double digit rate in fiscal 2017. For Q2 FY17, the company expects consolidated net revenues to be down mid-to-high single digits on a reported basis. Analysts were expecting revenue of $1.77 billion.
Stock Performance
Ralph Lauren's shares declined marginally by 0.47% at the close of trading session on August 12, 2016, at $108.19, with a total volume of 1.34 million shares traded for the day. The company's stock price has gained 9.37% in the past one month and 27.26 in the last three months.
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