Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ralph Lauren Corp (RL, Financial) delivered strong second quarter performance, exceeding expectations across key metrics, including revenue growth and operating margins.
- The company reported double-digit comparable growth in its retail business across every region, highlighting the strength of its brand and pricing power.
- Ralph Lauren Corp (RL) successfully added 1.5 million new consumers to its direct-to-consumer business, predominantly younger and higher-value cohorts.
- The company achieved significant brand visibility during major global events like the Paris Olympics and Wimbledon, enhancing brand desirability.
- Ralph Lauren Corp (RL) raised its full-year outlook, driven by strong performance and confidence in its strategic growth initiatives.
Negative Points
- The global operating environment remains choppy, posing challenges to Ralph Lauren Corp (RL)'s growth strategy.
- North America wholesale revenues decreased by 3%, reflecting a planned decline and normalization from previous trends.
- The company faces ongoing geopolitical and macroeconomic uncertainties, particularly in China, which could impact future growth.
- Ralph Lauren Corp (RL) is navigating supply chain disruptions, including potential impacts from port strikes and geopolitical tensions.
- Despite strong performance, the company acknowledges the need for continued discipline in expense management to maintain profitability.
Q & A Highlights
Q: International has been a key driver of your consistent outperformance. Could you elaborate on the enablers driving growth in Europe and China, and what gives you confidence in sustaining this momentum?
A: Patrice Louvet, President and CEO, highlighted three core reasons for the strong performance: the unique and timeless brand, the resonating product designs across geographies and generations, and a proven elevated go-to-market strategy. The company remains committed to investing in its brand and executing its strategy with agility and excellence.
Q: Can you talk about Ralph Lauren's pricing power in a potentially less favorable pricing environment, and how much further can you go with pricing?
A: Justin Picicci, CFO, emphasized the brand's strong backbone for pricing power, supported by strategic investments in brand elevation and product quality. The company plans to continue focusing on product elevation and strategic channel mix to maintain pricing power, while being flexible to adapt to the macro environment.
Q: Could you provide further detail on North America's sales performance and outlook, and the results from changes made in stores?
A: Patrice Louvet noted strong performance in North America's brick-and-mortar stores, driven by traffic and favorable mix from full-price selling. The company expects continued strength but anticipates a moderation in growth due to a compressed holiday period and channel shifts.
Q: Can you elaborate on your outlook for China for the rest of the fiscal year and the potential for expanding your door count in China?
A: Patrice Louvet expressed confidence in China's growth potential, driven by new customer acquisition, solid comp growth, and new store openings. The company plans to open about 70 stores in Asia this year, with a disciplined approach to expansion in China, focusing on long-term brand building.
Q: How close are you to optimal discount rates in North America, and what are your plans for pricing and promotions moving into the holiday season?
A: Patrice Louvet stated that the company has been reducing promotional activity, contributing to stronger-than-expected AUR growth. The direction is towards further elevation and reduced promotions, while remaining nimble to adapt to the competitive environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
