Ralph Lauren Exceeds Q1 Expectations With Strong International Sales, But Warns Of Currency Headwinds

Ralph Lauren Corporation RL reported first-quarter FY25 adjusted earnings per share of $2.70, beating the analyst consensus of $2.47. Quarterly revenues of $1.512 billion beat the street view of $1.492 billion.

In the first quarter, Ralph Lauren reported a 1% increase in revenue on a reported basis and a 3% increase in constant currency, surpassing expectations. This growth was driven by strong performance in Europe and Asia.

Global direct-to-consumer comparable store sales grew by 5%, reflecting positive retail comps across all regions. The company also achieved adjusted gross and operating margin expansion that exceeded its projections, with brand elevation and expense discipline effectively offsetting investments in marketing and ecosystem expansion.

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Ralph Lauren held $1.8 billion in cash and short-term investments and reduced inventories by 13% compared to the previous year. The company returned approximately $225 million to shareholders through dividends and the repurchase of Class A common stock.

“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,” said Patrice Louvet, President and Chief Executive Officer.

Outlook: For fiscal 2025, the company continues to expect revenues to increase approximately low-single digits to last year on a constant currency basis, centering around 2% to 3%.

The company continues to expect capital expenditures for fiscal 2025 of approximately $300 million to $325 million.

Based on current exchange rates, foreign currency is now expected to negatively impact revenue growth by approximately 150 basis points in fiscal 2025.

The company continues to expect operating margin for the year to expand approximately 100 to 120 basis points in constant currency, driven by gross margin expansion and operating expense leverage.

Gross margin is expected to increase approximately 50 to 100 basis points in constant currency. Foreign currency is now expected to negatively impact gross and operating margins by approximately 40 basis points.

For the second quarter, the company expects constant currency revenues to grow approximately low—to mid-single digits compared to last year, in a range centered around 3% to 4%.

Price Action: RL shares are trading higher by 1.38% to $167.23 at last check Wednesday.

Photo via Shutterstock

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