Ralph Lauren Corporation (RL) 2025 Q1 Earnings Call Summary
August 7, 2024 
Ralph Lauren Corporation (RL)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Strong International and Retail Comps: First quarter results exceeded expectations with strong performance in international markets and positive retail comps across all regions.
- Digital and DTC Growth: Continued momentum in global direct-to-consumer businesses and high single-digit increase in total digital ecosystem sales.
- Brand Elevation and Consumer Engagement: Successful marketing campaigns and activations, including fashion shows and sports sponsorships, leading to 1.3 million new consumers added in the DTC businesses.
- High Potential Categories Performance: Women's apparel, outerwear, and handbags grew mid-single digits, outpacing total company growth.
- Gross Margin Expansion: Adjusted gross margin expanded 210 basis points to 70.9%, driven by favorable mix shifts and AUR growth.
Pessimistic Highlights
- North America Wholesale Softness: Planned declines in North America wholesale, with a 13% decrease in revenues due to reduced sales into the off-price channel.
- Digital Challenges in North America: North America owned digital comps were down 4% in Q1, with efforts underway to improve performance.
- Macro and Consumer Spending Concerns: Cautious outlook due to ongoing volatility, including inflationary pressures and supply chain disruptions.
Company Outlook
- Full-Year Guidance Maintained: Despite a solid start to fiscal '25, the full-year outlook remains cautious, reflecting global macro uncertainties and wholesale channel challenges in North America.
- DTC and International Focus: Expectations for stronger growth in DTC channels and continued international expansion, particularly in Asia and Europe.
- Gross Margin and SG&A Leverage: Gross margin expected to expand 50 to 100 basis points for the full year, with SG&A leverage anticipated in the second half.
Q & A Highlights
Q: Why is Ralph Lauren's consumer holding up better than others in the market? (Michael Binetti, Evercore ISI)
A: The brand's powerful presence in fashion and culture, along with a diversified strategy and execution agility, supports consumer momentum. Elevated lifestyle portfolio and strategic wholesale presence contribute to resilience.
Q: Outlook for DTC growth, especially digital versus brick-and-mortar? (Rick Patel, Raymond James)
A: Growth in the digital business is a key priority, with balanced growth expected between stores and digital channels. Efforts are in place to improve North America's digital performance, with improvements expected in the second half of the fiscal year.