Ralph Lauren (RL) reported Q2 EPS of $2.23, $0.16 better than the analyst estimate of $2.07. Revenue for the quarter came in at $1.6 billion versus the consensus estimate of $1.56 billion.
Full Year Fiscal 2023 and Third Quarter Outlook:
The Company's outlook is based on its best assessment of the current macroeconomic environment, including ongoing global supply chain and other inflationary pressures, foreign currency volatility, the war in Ukraine, COVID-19 variants and other COVID-related disruptions. The full year Fiscal 2023 and third quarter guidance excludes restructuring-related and other net charges, as described in the "Non-U.S. GAAP Financial Measures" section of this press release.
For Fiscal 2023, the Company continues to expect constant currency revenues to increase approximately high-single digits to last year, or about 8%, 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 Fiscal 2023 at the low end of its previous range of 14.0% to 14.5% in constant currency. Foreign currency is expected to negatively impact operating margin by approximately 200 basis points in Fiscal 2023. This compares to operating margin of 13.1% on a 52-week comparable basis and 13.4% 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, with stronger AUR and favorable product mix more than offsetting higher freight and product cost inflation. Foreign currency is expected to negatively impact gross margins by approximately 170 basis points in Fiscal 2023.
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. The third quarter and second half outlook reflects increased caution around consumer sentiment in Europe and North America.
Operating margin for the third quarter is expected to be in a range of 17.3% to 17.8% in constant currency, driven primarily by gross margin expansion. Foreign currency is expected to negatively impact third quarter operating margin by approximately 180 basis points and gross margin by approximately 170 basis points.
Third quarter and full year Fiscal 2023 tax rates are both expected to be in the range of 25% to 26%, assuming a continuation of current tax laws.
The Company moderated its plan for capital expenditures for Fiscal 2023 to approximately $250 million to $275 million based on timing of projects.