![American brand Ralph Lauren’s revenue up 5 per cent in Q2 FY23 American brand Ralph Lauren’s revenue up 5 per cent in Q2 FY23](https://myfashionguardian.com/wp-content/uploads/2022/11/shutterstock-767777539_295706-768x510.jpg)
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North America revenue in the second quarter increased 3 per cent to $727 million compared to Q2 FY22. In retail, comparable store sales in North America were flat, with a flat compare in brick-and-mortar stores and a 1 per cent decrease in digital commerce. North America wholesale revenue increased by 8 per cent, the company said in a media release.
Global fashion brand Ralph Lauren has delivered a revenue growth of 5 per cent to $1.6 billion on a reported basis and 13 per cent in constant currency, ahead of expectations, during the second quarter (Q2) of fiscal 2023 (FY23) compared to Q2 FY22. Foreign currency negatively impacted revenue growth by approximately 800 basis points in the second quarter.
Europe revenue in the second quarter was flat to last year at $494 million on a reported basis and increased 15 per cent in constant currency. In retail, comparable store sales in Europe were up 3 per cent, with a flat compare in brick-and-mortar stores and a 15 per cent increase in digital commerce. Europe wholesale revenue increased 9 per cent on a reported basis and increased 24 per cent in constant currency.
Asia revenue in the second quarter increased 17 per cent to $316 million on a reported basis and 33 per cent in constant currency compared to last year. Comparable store sales in Asia increased 25 per cent, with a 25 per cent increase in our brick-and-mortar stores and a 22 per cent increase in digital commerce.
Gross profit for Q2 FY23 was $1 billion and gross margin was 64.8 per cent. Adjusted gross margin was 64.6 per cent, 270 basis points below the prior year on a reported basis and down 80 basis points in constant currency, with better pricing and promotions more than offset by increased product costs as well as higher freight costs to mitigate ongoing global supply chain delays. Compared to Q2 FY20, adjusted gross margins expanded 310 basis points on strong pricing and product elevation.
Operating expenses in Q2 FY23 were $816 million on a reported basis. On an adjusted basis, operating expenses were $809 million, up 7 per cent to last year, and adjusted operating expense rate was 51.2 per cent, compared to 50.2 per cent in the prior year period.
Operating income for Q2 FY23 was $207 million and operating margin was 13.1 per cent on a reported basis. Adjusted operating income was $211 million and operating margin was 13.4 per cent, 370 basis points below the prior year. North America operating income in the second quarter was $127 million on a reported basis and $125 million on an adjusted basis. Europe operating income in the second quarter was $135 million on both a reported basis and an adjusted basis and Asia operating income in the second quarter was $66 million on both a reported basis and an adjusted basis.
Net income in Q2 FY23 was $151 million, or $2.18 per diluted share on a reported basis. On an adjusted basis, net income was $154 million, or $2.23 per diluted share. This compared to net income of $193 million, or $2.57 per diluted share on a reported basis, and a net income of $197 million, or $2.62 per diluted share on an adjusted basis, for Q2 FY22.
In Q2 FY23, the company had an effective tax rate of approximately 25 per cent on both a reported basis and an adjusted basis. This compared to an effective tax rate of approximately 19 per cent on both a reported basis and an adjusted basis in the prior year period, the release added.
For fiscal 2023, the company continues to expect constant currency revenues to increase approximately high-single digits to last year, or about 8 per cent, on a 52-week comparable basis. Based on current exchange rates, foreign currency is now expected to negatively impact revenue growth by approximately 730 basis points in fiscal 2023. On a 53-week comparable basis, fiscal 2023 revenue growth is still expected to be negatively impacted by approximately 100 basis points due to the absence of the 53rd week compared to the prior year.
The company expects operating margin for FY23 at the low end of its previous range of 14 per cent to 14.5 per cent in constant currency. Foreign currency is expected to negatively impact operating margin by approximately 200 basis points in FY23. This compares to operating margin of 13.1 per cent on a 52-week comparable basis and 13.4 per cent on a 53-week basis in the prior year, both on a reported basis. Gross margin is still expected to increase approximately 30 to 50 basis points in constant currency on a 52-week comparable basis.
For the third quarter, the company expects revenue to increase low- to mid-single digits in constant currency to last year. Foreign currency is expected to negatively impact revenue growth by approximately 780 basis points. Operating margin for the third quarter is expected to be in a range of 17.3 per cent to 17.8 per cent in constant currency, driven primarily by gross margin expansion.
Third quarter and full year FY23 tax rates are both expected to be in the range of 25 per cent to 26 per cent, assuming a continuation of current tax laws. The company moderated its plan for capital expenditures for FY23 to approximately $250 million to $275 million based on timing of projects.
Fibre2Fashion News Desk (KD)
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