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Ralph Lauren posts Q3 revenue and earnings growth, raises outlook

By Prachi Singh

Feb 3, 2022

Business

Image: Polo Ralph Lauren, photography by Joel Griffith

Ralph Lauren Corporation reported earnings per diluted share of 2.93 dollars on a reported basis and 2.94 dollars on an adjusted basis for the third quarter of fiscal 2022. This compared to earnings per diluted share of 1.61 dollars on a reported basis and 1.67 dollars on an adjusted basis, for the third quarter of fiscal 2021.

In the third quarter, revenue increased by 27 percent to 1.8 billion dollars on a reported basis and was up 28 percent in constant currency. Foreign currency negatively impacted revenue growth by approximately 150 basis points in the third quarter.

"We were pleased to report strong third quarter performance during the important holiday season," said Patrice Louvet, the company’s president and chief executive officer, adding, “Our better-than-expected results across all three regions are a testament to the outstanding work our teams have done to fundamentally reposition our business, elevate our brand and pivot to offense – including in North America, where our turnaround is well underway."

Revenue performance of Ralph Lauren’s reportable segments

The company’s North America revenue in the third quarter increased 30 percent to 929 million dollars. In retail, comparable store sales in North America were up 38 percent, with a 40 percent increase in brick and mortar stores and a 32 percent increase in digital commerce. North America wholesale revenue increased 11 percent.

The company said, Europe revenue increased 47 percent to 463 million dollars on a reported basis and increased 50 percent in constant currency. In retail, comparable store sales in Europe were up 55 percent, with a 68 percent increase in brick and mortar stores and a 27 percent increase in digital commerce. Europe wholesale revenue increased 45 percent on a reported basis and increased 48 percent in constant currency.

Revenues in Asia increased 16 percent to 383 million dollars on a reported basis and 20 percent in constant currency. Comparable store sales in Asia increased 14 percent, with a 12 percent increase in brick and mortar stores and a 64 percent increase in digital commerce.

Gross profit for the quarter was 1.2 billion dollars and gross margin was 66 percent on both a reported basis and an adjusted basis. Adjusted gross margin was 60 basis points above the prior year on a reported basis and up 90 basis points in constant currency. Compared to third quarter fiscal 2020, adjusted gross margins expanded 380 basis points on a reported basis on strong AUR growth.

Operating income was 289 million dollars and operating margin was 15.9 percent on both a reported basis and an adjusted basis. Adjusted operating income was 260 basis points above the prior year. Net income was 218 million dollars or 2.93 dollars per diluted share on a reported basis. On an adjusted basis, net income was 218 million dollars or 2.94 dollars per diluted share.

Ralph Lauren raises FY22 revenue forecast

For fiscal 2022, the company now expects constant currency revenue growth of approximately 39 percent to 41 percent to last year on a 53-week reported basis, compared to its previous outlook of 34 percent to 36 percent growth. Foreign currency is expected to negatively impact revenue growth by approximately 70 basis points.

The Company also raised its outlook for operating margin for fiscal 2022 to approximately 13 percent on both a reported and constant currency basis, compared to a range of 12 percent to 12.5 percent previously. This compares to 4.8 percent in the prior year period and 10.3 percent in fiscal 2020. Gross margin is expected to increase 70 to 90 basis points to last year, up from 50 to 70 basis points previously.

For the fourth quarter, revenues are expected to increase approximately 17 percent to 18 percent in constant currency to last year. Foreign currency is expected to negatively impact revenue growth by approximately 400 basis points.

Operating margin is expected to be approximately 4.2 percent in constant currency. Foreign currency is expected to negatively impact operating margin by approximately 120 basis points.

RALPH LAUREN