Ralph Lauren(US:RL)2024-05-23 21:19Financial Data and Key Metrics Changes - The company achieved 3% top line growth for fiscal year '24, with 40 basis points of operating margin expansion, resulting in over 20% adjusted EPS growth [2][36] - Adjusted gross margin expanded by 510 basis points in Q4 and 210 basis points for the full year, driven by low double-digit AUR growth and lower freight expenses [37][40] - Operating margin is expected to expand by approximately 100 to 120 basis points to 13.5% to 13.7% for fiscal '25 [10][89] Business Line Data and Key Metrics Changes - North America revenue grew 2% in Q4, with retail comps increasing by 3%, while wholesale declined by 2% [41][42] - Europe saw slight revenue growth in Q4, with retail comps up 12% and wholesale down 8% due to timing issues [43][44] - Asia led growth with a 7% revenue increase, driven by strong performance in China, which saw sales up low double digits [45][5] Market Data and Key Metrics Changes - The company expects Asia to lead growth in fiscal '25, with revenues up high-single digits, followed by Europe and North America with low-single-digit growth [9][7] - China now represents 7% of total company sales, having more than doubled since pre-pandemic levels, with significant growth opportunities ahead [5][103] Company Strategy and Development Direction - The company focuses on three strategic pillars: elevating the lifestyle brand, driving core business, and winning in key cities with a consumer ecosystem [2][12] - The pivot to direct-to-consumer (DTC) channels continues, now representing about two-thirds of total business, which allows for better brand expression and customer engagement [47][48] - The company plans to invest in digital technology and analytics to enhance inventory management and sales conversion [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing macroeconomic challenges, including inflation and supply chain disruptions, but remains optimistic about achieving growth targets [7][8] - For fiscal '25, the company expects constant-currency revenues to increase by 2% to 3%, with stronger growth anticipated in DTC channels [7][8] - Management emphasizes the importance of agility and diversified growth drivers in navigating the current environment [17] Other Important Information - The company returned approximately $600 million to shareholders through dividends and share repurchases in fiscal '24, with a 10% increase in the quarterly dividend announced for fiscal '25 [35] - The company generated over $900 million in free cash flow, exceeding pre-pandemic levels, and ended the year with $1.8 billion in cash and short-term investments [46] Q&A Session All Questions and Answers Question: Can you talk about what you are seeing in the business that will enable continued momentum? - Management noted that the strategy is working, with continued brand elevation and strong consumer connection across various markets [16] Question: How are you thinking about direct-to-consumer channel growth versus wholesale channel growth? - Management expects DTC to lead growth in fiscal '25, while wholesale is anticipated to improve but still face challenges [18][89] Question: How do you see the brand positioned today versus your ultimate goal in both the US and Europe? - Management expressed confidence in brand positioning and noted strong consumer perception data, with significant runway for growth [72] Question: How do you think about AUR versus units in the North America channel? - Management indicated that AUR growth is expected to continue, driven by brand mix and channel mix, despite challenges in unit sales [85][68]