Despite a Decline in North American Sales, Strong Gains in International Markets Drive Financial Success
Ralph Lauren Corp. reported a significant profit increase of 27.6 percent for the first quarter, despite a slowdown in North American sales. This positive financial outcome comes after the brand’s prominent appearance at the Olympic opening ceremony in Paris, where it outfitted Team USA.
For the quarter ending June 29, net income rose to $168.6 million, or $2.61 per diluted share, from $132.1 million, or $1.96 per share, a year earlier. Revenue for the quarter increased by 1 percent to $1.51 billion from $1.5 billion, with a 3 percent rise in constant currency.
Patrice Louvet, President and CEO, highlighted the company’s performance, stating, “We delivered a solid start to the year, with first quarter performance exceeding our expectations on the top- and bottom-line led by our direct-to-consumer and international businesses. The powerful combination of our brand strength and diverse growth drivers — together with our culture of agility and operating discipline — gives us confidence that our long-term strategy will continue to deliver even through these dynamic times.”
Adjusted earnings were reported at $2.70 per share, 23 cents higher than the $2.47 expected by analysts, according to Yahoo Finance. This led to a 4.3 percent increase in stock price, reaching $172 in premarket trading on Wednesday.
Geographically, revenue growth was driven by strong performances in Europe and Asia. European sales increased by 6 percent on a reported basis and 7 percent in constant currency, while Asia saw a 4 percent rise on a reported basis and a 9 percent increase in constant currency. In particular, China showed robust growth with high-single-digit increases on a reported basis and low-double-digit growth in constant currency.
Conversely, North American revenues declined by 4 percent to $608 million, primarily due to a 13 percent drop in wholesale sales, impacted by the timing of Easter and reduced sales to off-price retailers. However, the direct-to-consumer segment in North America performed strongly, partially offsetting the wholesale decline.
Looking forward, Ralph Lauren Corp. maintains a positive outlook for the full year, projecting revenue growth in the low-single digits on a constant currency basis.