The American group has announced a satisfactory performance for the 2023-2024 financial year. But 2024-25 looks more difficult for the group, which has just appointed a new creative director at Polo Ralph Lauren and a new CFO.
Ralph Lauren is pleased with its financial year 2023-24, which closed at the end of March, but it is beginning the new one with caution. The group, which owns the various variations of the eponymous brand (Ralph Lauren, Ralph Lauren Collection, Polo Ralph Lauren, Ralph Lauren Home, Double RL…) and Chaps, explained that it had “exceeded expectations” not only for fourth-quarter sales but also for its full financial year.
Sales rose by 2% on a reported basis (+3% in constant currency) in the fourth quarter to $1,567.9 million, and by 3% for the full year 2024, both on a reported basis and in constant dollars.
In the fourth quarter, net income grew by 180% to $90.7 million.
Over the full 2023-24 financial year, net income rose by 23.5% to $646 million, or $9.71 per diluted share on a reported basis (versus $7.58 in 2022-23).
Asia a driving force
“Our teams continued to make progress in delivering on our strategic and financial commitments in the second year of our Next Great Chapter: Accelerate plan. Underpinned by the growing desirability of our brand and multiple growth drivers, this year’s performance underlines the strength of our long-term strategy, even as we navigate a very dynamic global operating environment,” said Patrice Louvet, President and CEO.
Geographically, fourth-quarter sales were driven by Asia, where they rose by 1% on a reported basis (+7% at constant exchange rates) to $394 million. On a like-for-like basis, sales were boosted by digital commerce (+6%), compared with an increase of “only” +4% in physical stores. Growth in China was itself up single digits in reported terms, and double digits at constant exchange rates.
For the year as a whole, Asia was also the most buoyant, with an increase of 10% on a reported basis and 14% in constant currency, with China leading the way with growth of over 25% in both reported and constant dollars.
North America and Europe
Sales in North America and Europe each rose by 2% on a reported basis in the fourth quarter, with higher direct-to-consumer sales more than offsetting lower wholesale sales.
In North America, sales reached $668 million in the fourth quarter. In the retail sector, same-store sales in North America rose by 3%, with a 6% increase in physical stores, while wholesale sales fell by 2% (although this was “slightly higher” than the Group’s expectations), while digital trade itself declined by 4%.
The group continues to “evaluate the presence” of its “brands door by door”, hence “the closure of around 20 department stores in the region during the year”.
Largest store renovated in Chicago
In its own network across the Atlantic, Ralph Lauren has just unveiled the new face of its Chicago flagship, revamped in the style of a mansion, in the same spirit as its New York flagship store. The 37,000-square-foot (3,437 m2 ) store, inaugurated more than 25 years ago, not only stands out as the largest of its kind in the world, but also as the first to open an adjacent RL restaurant. It also houses a Ralph’s Coffee shop, in addition to the complete Ralph Lauren universe, with all its brands.
In Europe, sales reached $469 million in the fourth quarter, boosted by same-store sales, with a 13% increase in physical stores and 11% in digital commerce. On the other hand, wholesale in Europe declined by 6% year-on-year on a reported basis (8% at constant exchange rates).
Over the past year, Ralph Laurent said it had “continued to expand and develop” its “ecosystems in key cities, including the opening of new iconic stores in Amsterdam and Singapore, our first Ralph Lauren store and digital commerce site in Canada, and our first Ralph’s Coffee in Paris, Shenzhen and Dubai.”
Modest forecasts for 2025
For the fiscal year 2024-2025 now underway, Ralph Lauren expects revenues to increase by 2-3% year-on-year at constant exchange rates. Based on current exchange rates, foreign currencies are expected to have “a negative impact on revenue growth of around 90 basis points during the fiscal year”. These “modest” forecasts were judged by the trade press to be “somewhat disappointing for investors”.
In addition to the “headwinds” of the complicated geo-political and macro-economic context mentioned by the group (inflationary pressures, consumer spending, foreign currency volatility, “among others”…), there has been a change in creative direction at the head of Polo Ralph Lauren.
New creative director at Polo Ralph Lauren
In mid-May, the group announced that Michael Rider, who had worked for the brand since 2018, would be stepping down, without specifying a precise date.
There are rumors of his possible appointment as creative director of Celine, where he was creative director of ready-to-wear for almost ten years, under Phoebe Philo.
According to WWD magazine, Hedi Slimane is set to leave the LVMH-owned fashion house, and Michael Rider, who knows the company well, has been approached to replace him. Rider also spent four years working with Nicolas Ghesquière at Balenciaga.
At Ralph Lauren, Karen Brown will be appointed Senior Creative Director of the Polo women’s brand. No further announcements have been made for Polo’s other divisions.
Karen Brown began working for Ralph Lauren in 2006 and “has held progressive design roles within the company, including designer of Ralph Lauren Home and design lead for Women’s Polo”.
She also oversaw the Women’s Polo collection as the brand’s senior creative director, where she was responsible for the brand’s design and image, playing “an instrumental role” in its “repositioning alongside Michael.”
In her new role, she will report directly to Ralph Lauren.
New CFO
Another important change in the group’s top management: Justin Picicci has just been appointed Ralph Lauren’s new Chief Financial Officer (CFO), effective May 23.
He joined Ralph Lauren 18 years ago, taking on progressive responsibilities in sales and finance functions in Asia and North America, most recently as the company’s CFO. “His appointment is part of a multi-year strategic succession plan to enable a smooth transition.” Jane Nielsen, who joined the company as CFO in 2016 and has served as CFO and COO since 2019, will remain the company’s COO, continuing to lead key operational and strategic functions until March 2025.
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Featured Photo: Spring-Summer 2024 Polo Ralph Lauren Campaign © Ralph Lauren
