Ralph Lauren has recorded $996 million gross profit for the third quarter of fiscal 2018. Gross margin was 60.7 per cent on both reported and adjusted basis. The gross margin increase was driven by initiatives to improve quality of sales through reduced promotional activity, favourable geographic and channel mix shifts, and improved product costs.
The company reported earnings per diluted share of ($1.00) on a reported basis and $2.03 on an adjusted basis, excluding restructuring and related charges as well as the impact of tax reform, for the third quarter of fiscal 2018. This compared to earnings per diluted share of $0.98 on a reported basis and $1.86 on an adjusted basis, excluding restructuring-related and other charges, for the third quarter of fiscal 2017.
In the third quarter, revenue decreased by 4 per cent to $1.6 billion on a reported basis and was down 6 per cent in constant currency, driven by initiatives to increase quality of sales, reduce promotional activity, and elevate our distribution, as well as brand exits and lower consumer demand.
Operating income for the reported period was $189 million on a reported basis, including restructuring-related and other charges of $27 million. On an adjusted basis, operating income of $216 million declined 1 per cent to the prior year period and operating margin was 13.2 per cent, excluding restructuring-related and other charges from both periods.
The company ended the third quarter of 2018 with $2.1 billion in cash, short and long term investments and $589 million in total debt, compared to $1.5 billion and $589 million, respectively, at the end of third quarter of 2017.
“As we prepare to celebrate our 50th anniversary and look ahead to the future, we continue to focus on evolving the expression of our iconic brand and its rich heritage to connect with today’s consumers in all the ways they experience our brand,” said Ralph Lauren, executive chairman and chief creative officer. “Our teams across the company are united around our common goals and I have great confidence in their capabilities, passion, and dedication.”
In the fourth quarter of 2018, the company expects net revenue to be down 8-10 per cent, excluding the impact of foreign currency. It continues to hope net revenue to decrease 8- 9 per cent for 2018, excluding the impact of foreign currency.
“Focused execution on our key initiatives, especially during the important holiday period, delivered better-than-expected results for the third quarter as we drove lower discounting and better quality of sales overall,” said Patrice Louvet, president and chief executive officer. “There is still a lot of work to be done to return to industry-leading revenue and earnings growth, but these results give us confidence that we are on the right track.