NEW YORK — Ralph Lauren Corporation weathered an uneven global operating environment with resilience, resulting in better-than-expected first quarter retail sales for fiscal 2014, which increased 3% to $879 million from $857 million in the first quarter last year.
The rise in retail sales reflects the incremental contribution from new stores and strong growth for e-commerce operations worldwide that was partially offset by the net negative impact of foreign currency translation. Excluding the impact of discontinued businesses and foreign currency effects, retail sales increased 6% from the prior year period. Consolidated comparable store sales declined 1% on a reported basis and were up 1% in constant currency during the first quarter. The shift in the timing of Easter is estimated to have mitigated comparable store sales growth by approximately 2% in the first quarter of fiscal 2014.
"We made important progress on several key initiatives during the first quarter," said Ralph Lauren, chairman and CEO. "We opened a spectacular men’s luxury flagship store in Hong Kong, our first Polo store in East Hampton and several additional, high profile projects around the world are developing nicely. We’ve got exciting new product initiatives planned for fall, particularly with accessories, and we intend to support them with innovative merchandising strategies and compelling advertising and marketing campaigns. I am confident that the investments we are making today can support profitable, sustainable growth for us over the long term."
Net revenues for the quarter rose 4% to $1.7 billion. Excluding the net negative impact from foreign currency translation and discontinued businesses, net revenues increased approximately 6% for the quarter.
Wholesale segment sales grew 6% to $735 million in the quarter. Wholesale revenue growth was primarily a result of the contribution from the newly transitioned Chaps men’s sportswear operations and continued growth for certain core North American merchandise categories. A planned reduction in shipments to certain European customers and the transition of certain Japanese wholesale distribution to directly operated concession shops partially mitigated wholesale revenue growth during the quarter.
Gross profit for the quarter increased 1% to $1 billion. Gross profit margin of 60.7% was 160 basis points below the prior year period, due to the integration of the Chaps men’s sportswear operations and unfavorable foreign currency dynamics.
Net income for the quarter was $181 million, 7% below the $193 million achieved in the comparable period of fiscal 2013, and net income per diluted share declined 4% to $1.94 from $2.03 for the same time period. The contractions in net income and net income per diluted share were principally the result of a decline in operating income.
The company ended the first quarter of fiscal 2014 with 396 directly operated stores, made up of 123 Ralph Lauren stores, 59 Club Monaco stores and 214 Polo factory stores. The company also operated 505 concession shop locations worldwide at the end of the first quarter. In addition to company-operated locations, international licensing partners operated 69 Ralph Lauren stores and 33 dedicated shops, as well as 89 Club Monaco stores and shops at the end of the quarter.