Ralph Lauren Q2 2015 Earnings

Ralph Lauren reported better than expected earning this morning for their second quarter 2015. They reported net income of $201 million, or $2.25 per diluted share compared to net income of $205 million, or $2.23 per diluted share year-over-year. Net revenues increased 4% to $2.0 billion led by retail segment expansion, including double-digit international growth. Retail sales grew 7% on double-digit international growth and global e-commerce. Consolidated same-store sales edged up 1%. Wholesale segment sales rose 2% to $943 million, and licensing revenue increased 2% on higher royalties.

Jacki Nemerov, President and COO, was very pleased with the results and stated, "Our better-than-expected second quarter results showcase the operational discipline of our organization. Despite the challenging global macroeconomic environment, we continue to experience strong momentum in key areas of strategic focus, including double-digit revenue growth internationally and for our e-commerce business. We’re also delivering improved profitability for underlying operations, which is helping to fund investments in our longer-term objectives. I am confident we are well-positioned for the upcoming Holiday season, supported by the distinctiveness of our luxury lifestyle positioning and the desirability of our products." 

For fiscal year 2015, RL adjusted its outlook due to foreign currency impacts. Ralph Lauren said it now expects a 5%-7% bump in fiscal 2015 consolidated net revenue, down from prior guidance for a 6%-8% rise. In the third quarter, the Company expects consolidated net revenues to increase by 3%-5%, including a 2% negative impact from foreign currency impacts. Operating margin for the third quarter is expected to be approximately 1-1.5% below y-o-y. The thesis for RL remains intact and I expect in the future they will continue to gain global market share. My yearly price target is adjusted to 194$ which represents a 21% upside from today’s closing price.