Welcome to the Ralph Lauren Fourth Quarter and Full-Year Fiscal 2022 Earnings Call. And you saw -- take our CapEx up largely for growth-oriented initiatives, new stores. The Company expects to incur restructuring charges of $100-$150 million in connection with its Fiscal 2019 Restructuring Plan, associated with activities primarily related to the rightsizing and consolidation of its global distribution network and corporate offices, and through severance actions. Underlying growth and quality of sales continued to exceed our expectations. Within our own Ralph Lauren digital sites, sales grew 18% in the fourth quarter, and more than 70% to LLY. We expect first quarter operating margin in a range centered around 13.5% in constant currency, reflecting increased headwinds from higher freight and marketing expense, which are expected to normalize in the second-half of the year as we start to lap cost increases from the prior-year. Is it fair to assume that North America should grow about mid single-digit rate, Asia should grow low double-digit rate? And we're growing share in men's meaningfully, we're growing share in kids, we're growing share in home. Full-year marketing was 7.3% of sales, in line with our guidance. And we've fully contemplated some of the impact of the Ukraine war and impact to European sentiment in their guidance. View source version on businesswire.com: https://www.businesswire.com/news/home/20180607005247/en/, Ralph Lauren Corporation 0000024922 00000 n Now, on North America wholesale, what you've seen, in up 1% in terms of overall, there is about 20 points of headwind from Chaps in that number. 0000019041 00000 n At 9:00 A.M. Eastern, on the same day, the Company will host a conference call for analysts, investors and other interested parties. This year, we returned approximately $600 million in dividends and share repurchases and ended the year with $2.6 billion in cash and short-term investments and $1.6 billion in total debt. NEW YORK--(BUSINESS WIRE)--Jun. For fiscal '23, we still expect marketing of about 6% to 7% of sales. Net inventory increased 29% to support continued strong demand coming out of the pandemic, a deliberate increase in goods and transit, as we take inventory earlier to help mitigate supply chain delays, particularly in wholesale, increased product costs including freight and cotton, which we will start to lap in the second-half of fiscal '23 and continued elevation of our product mix. Can you just talk a little bit more about the outlook for underlying sales growth in Europe ex-FX? And Jane, I thought it was interesting that it was up 1%. 0000002759 00000 n or And hold it longer due to some of the supply chain delays that we are still experiencing and expect to experience through the first few quarters of this year. As we continue to drive brand heat and new consumer acquisition, special collections this quarter included the Polo Color Shop, our pre-Spring ode to the easy luxurious style of the Cte d'Azur; our Morehouse and Spelman Colleges Collection, which sold out almost immediately; our Team USA Olympic styles featuring Intelligent Insulation technology and inspiring our next generation of outerwear; and our Lunar New Year gifting celebrating the Year of the Tiger. Thanks for taking my question. Ralph Lauren Corporation (NYSE:RL) is a global leader in the design, marketing and distribution of premium lifestyle products in five categories: apparel, footwear & accessories, home, fragrances and hospitality. In addition, marketing spend is expected to grow to approximately 5% of revenue by Fiscal 2023. So, we don't guide our regions exclusively, but we think that North America is positioned for strong growth as we move forward. So, Patrice, with the macro backdrop having changed across many of your key markets, since the February call, I guess what gives you confidence entering FY'23 to continue your pivot to offense despite the tougher backdrop, maybe what structural changes support your pricing structure? This offer is not applicable to purchases being shipped internationally. Overall, we continue to see meaningful near and long-term growth opportunities for our business in China, where our brands are resonating with consumers and the underlying health of our business remain strong. The next question comes from Omar Saad with Evercore ISI. Our owned Ralph Lauren digital sites grew 18%, reflecting our strong product assortments, new consumer acquisition, expanded connected retail capabilities, and high-impact marketing. After prepared remarks, we will open up the call for your questions, which we ask that you limit to one per caller. You may now disconnect. 18, 2022-- Ralph Lauren Corporation (NYSE: RL) announced that its Board of Directors has declared a regular quarterly dividend of $0.6875 per share on Ralph Lauren Corporation Common Stock. During today's call, we will be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Now, specifically on the space that we play in, and you know, we've been on the brand elevation journey now for multiple years, right, working to get closer to the luxury groups. 0000020565 00000 n Thanks for taking my question. The Companys Board of Directors declared a 25% increase in the regular quarterly cash dividend on the Company's Common Stock. Regular charges will apply to all other shipping methods. And it further gets to your point, Omar, of no longer really segmenting, this is brick and mortar, and this is digital, but for it to be a completely connected experience. Why it's so effective? Hey, good morning, guys. Yes, you look -- you see, Michael, through our share performance, I think, a truer reflection of how we're doing in that channel. Looking ahead, our outlook is based on our best assessment of the current macro environment, including disruptions from inflationary pressures, the global supply chain, COVID-19, foreign currency volatility and the war in Ukraine. As part of its strategic plan, the Company intends to execute on the following five strategic priorities: As we reflect on 50 years, I am so energized by the work we are doing to build the future for our Company and iconic brand, said Ralph Lauren, Executive Chairman and Chief Creative Officer. And third, we are maintaining new consumer acquisition momentum of younger and higher-quality consumers through this journey, and we intend to continue that and investing in that. In addition and as I think as we've talked about, we made a move to take inventory earlier, especially for our wholesale account. Good morning. And let me give you a few reasons why. 0000018723 00000 n By putting the consumer back at the center of our business, elevating and energizing our brands and balancing productivity with growth, well be well-positioned to deliver our next great chapter.. Evren Kopelman, 212-813-7862 So, we actually think, well, the Polo brand is really well-positioned within this total addressable market and from everything we're seeing so far in market, consumer healthy and strong in that space. Or. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS. Well, listen, thank you everyone for joining us today. Thank you, Patrice, and good morning, everyone. Our expectations contain many risks and uncertainties. We expect higher freight raw material and labor costs to remain elevated into fiscal '23. The Company is not able to provide a full reconciliation of the non-GAAP financial measures to GAAP because certain material items that impact these measures, such as the timing and exact amount of charges related to our restructuring plans, have not yet occurred or are out of the Companys control. And we are encourage by our opportunity to invest in our business. And I can't think of a moment where this has been more relevant as consumers come together again with a return to pre-pandemic activities. In addition to the recent announcement that Michael George joined the Companys Board of Directors and Angela Ahrendts agreed to be nominated to join in August, the Company today announced that Linda Findley Kozlowski, COO at Etsy, agreed to be nominated to join the Companys Board in August. And I believe our deep brand strength, our demonstrated pricing power, and more diversified growth strategy becomes even more important during these turbulent times. Is it mid single-digit to sustain the 8% constant currency revenue growth, maybe some thoughts there to help us understand how North America is positioned for the year? 0000019398 00000 n And then we're also seeing the consumer pivot towards newness and sophistication, examples for us would be cashmere hoodie or a novelty fleece. 0000009176 00000 n Total company revenues increased 18% to last year on a reported basis, and 22% in constant currency, with double-digit growth in every region. So, that that whole space for us continues to be healthy, continues to grow. NEW YORK July 12, 2022 Ralph Lauren Corporation (NYSE: RL) (the Company) will release its First Quarter Fiscal 2023 results for the period ended July 2, 2022 at approximately 8:00 A.M. Eastern on Tuesday, August 9, 2022. From the launch of digital product design and virtual showrooms to digitizing our supply chain in order to enable real-time visibility and planning, we also continue to make significant strides across our global citizenship and sustainability commitment over the past quarter and fiscal year. Last year's 53rd week negatively impacts fiscal '23 growth by about 100 basis points in constant currency in addition to the headwind from foreign currency impact. And we continued to strengthen our leadership in the world of sports through our high-visibility sponsorships of the Australian Open and Team USA at the Winter Olympics. Operating margin is expected to expand to mid-teens by Fiscal 2023, in constant currency. These rate fluctuations can have a significant effect on the Companys reported results. Use down arrow to navigate to the submenus, to read Ralph Lauren's privacy notice. Delivering $2 million donation in scholarship for students at historically black colleges and universities through their Ralph Lauren Foundation, launching the U.S. Regenerative Cotton Fund to support long-term sustainable cotton production in the U.S., unveiling color on demand, the world's first scalable zero waste water cotton dyeing system, and bringing to market CLARUS, a first-to-market patented technology and critical step in scaling our use of recycled cotton. Good morning. 0000006214 00000 n Our consumer scores there are some of the highest we have around the world, and we have seen very strong continued digital momentum even store comps have come back. Gross margin is expected to increase 30 to 50 basis points on a constant currency 52-week basis in line with our long-term plan. 0000021536 00000 n Our top line outlook also includes significant foreign currency headwinds primarily related to the Euro and the Japanese Yen, especially in the first-half of the year, potentially softer consumer sentiment in Europe from inflationary headwinds and the war with no sales to Russia or Ukraine assumed this year. Ralph Lauren digital ecosystem sales grew low double-digits in constant currency on top of the challenging compare of more than 60% growth last year. This is in addition to the cost savings realized associated with the Companys Way Forward Plan. Adjusted operating margin of 3.6% expanded 20 basis points to last year on a reported basis and 140 basis points in constant currency driven by continued operating discipline. We plan to continue driving stronger AUR and favorable product and channel mix more than offsetting increased freight and material costs. We look forward to sharing more with you at our Investor Day on September 19. We still have 1.6 remaining on our authorization. In addition, the Company's Board of Directors authorized an additional $1 billion stock repurchase program permitting the Company to purchase shares of Class A Common Stock, subject to overall business and market conditions. We drove continued market share gains in Men's and kids in our key partners along with three consecutive quarters of gains in women's ready to wear. For the full-year, digital grew more than 40% to last year, and 65% to LLY, reaching 26% of total revenue. And we have confidence in our ability to navigate the macro headwinds doing that. Corporate Communications: They tend to be smaller markets. Digital commerce comps declined slightly on top of an outsized 79% comp last year, when the widespread store closures shifted a disproportionate share of business online. At this time, all participants are in a listen-only mode. With that, let's open up the call for your questions. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Its reputation and distinctive image have been developed across a wide range of products, brands, distribution channels and international markets. One, over the past three quarters, our sales numbers has significantly exceeded our inventory growth numbers. At the same time, our balance sheet enabled us to return significant excess cash to shareholder in line with our capital allocation principle. And so as we look at the consumer in that space right now, and this is both a reflection of what we're seeing in North America, but also in Europe and in Asia; that consumer is strong, that consumer is engaged in our category. The Company is reiterating its Fiscal 2019 guidance that was recently provided on its earnings call on May 23rd and introducing its five-year financial outlook. Performance was strong in both our full price and factory stores on growing domestic demand, even as foreign tourism remains muted. While Europe remains our most dynamic market heading into fiscal '23, due to macro pressures and the war, our business remains fundamentally healthy, our consumers are resilient, and our teams continue to execute with agility. 8 0 obj <> endobj xref Growth was driven by improved traffic, transactions and 19% AUR growth on top of 30% last year, reflecting our continued elevation around product mix, marketing and more targeted pricing and promotions. Touching on our second key initiatives, energize core products and accelerate high potential underdeveloped categories. 0000004128 00000 n Good morning, everyone, and thank you for joining today's call. This offer can only be combined with applicable offers for free shipping. We were also proud to open our first iconic World of Ralph Lauren home shop at Harrods this quarter, with more to come as we build on this high-potential category. 0000003167 00000 n 0000016625 00000 n These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements. So, we are very bullish about our China business. Just curious in terms of like how you are planning mainly the European market with the orders on a wholesale basis. We continued our long-term strategy of investing in our key city ecosystems around the world in fiscal '22, with a focus on elevating our touch points with the consumer across every channel. NEW YORK July 12, 2022 Ralph Lauren Corporation (NYSE: RL) (the Company) will release its First Quarter Fiscal 2023 results for the period ended July 2, 2022 at approximately 8:00 A.M. Eastern on Tuesday, August 9, 2022. The factors that could cause actual results to materially differ include, among others: the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, and our ability to effectively transfer knowledge during periods of transition; our ability to successfully implement our long-term growth strategy and achieve anticipated operating enhancements and cost reductions from our restructuring plans; the impact to our business resulting from investments and other costs incurred in connection with the execution of our long-term growth strategy, including restructuring-related charges, which may be dilutive to our earnings in the short term; our ability to continue to expand or grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result; our ability to open new retail stores, concession shops, and digital commerce sites in an effort to expand our direct-to-consumer presence; the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase premium lifestyle products that we offer for sale and our ability to forecast consumer demand, which could result in either a build-up or shortage of inventory; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases; the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders; our ability to secure our facilities and systems and those of our third-party service providers from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, or similar Internet or email events; our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platform; a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products, tariffs, and other trade barriers which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business; changes in our tax obligations and effective tax rate due to a variety of other factors, including potential additional changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated; the impact to our business resulting from the recently enacted U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act, including related changes to our tax obligations and effective tax rate in future periods, as well as the enactment-related charges that were recorded during Fiscal 2018 on a provisional basis based on a reasonable estimate and are subject to change, all of which could differ materially from our current expectations and/or investors' expectations; the impact to our business resulting from the United Kingdom's decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates; the impact to our business resulting from increases in the costs of raw materials, transportation, and labor; our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters; the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation; our ability to maintain our credit profile and ratings within the financial community; our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors' expectations; our intention to introduce new products or enter into or renew alliances; changes in the business of, and our relationships with, major department store customers and licensing partners; our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations; and other risk factors identified in the Company's Annual Report on Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission.
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