=Ralph Lauren (RL) reported earnings on Thur 7 Nov 19 (b/o)

Ralph Lauren beats by $0.16, reports revs in-line; guides Q3 revs below consensus; reaffirms FY20 revs guidance

Reports Q2 (Sep) earnings of $2.55 per share, excluding non-recurring items, $0.16 better than the S&P Capital IQ Consensus of $2.39; revenues rose 0.9% year/year to $1.71 bln vs the $1.69 bln S&P Capital IQ Consensus.

• Adjusted operating income was $254 million and adjusted operating margin was 14.9%, 100 basis points above the prior year, excluding restructuring-related and other charges from both periods.
• North America revenue in the second quarter decreased 1% to $881 million. In retail, comparable store sales in North America were up 2%, driven by a 2% comp increase in brick and mortar stores and 2% increase at ralphlauren.com. North America wholesale revenue decreased 6%.
• Asia revenue in the second quarter increased 4% to $255 million on a reported basis and 5% in constant currency, driven by solid growth in retail. Comparable store sales in Asia increased 1%, reflecting growth in both brick and mortar and digital commerce operations, partly offset by declines in Hong Kong.

Co issues downside guidance for Q3, sees Q3 revs of about flat to $1.726 in 3Q19 vs. $1.75 bln S&P Capital IQ Consensus.

• Foreign currency is expected to pressure revenue growth by approximately 70 to 90 basis points in the third quarter of Fiscal 2020.
• Operating margin for the third quarter of Fiscal 2020 is expected to be flat to down about 20 basis points in constant currency.

Co reaffirms guidance for FY20, continues to expect net revenue growth of 2% to 3% (implying $6.46-6.53 bln) on a constant currency basis but now expects results at the low end of this range, primarily based on intensifying headwinds in Hong Kong vs. $6.4 bln S&P Capital IQ Consensus.

• The Company continues to expect operating margin for Fiscal 2020 to increase 40 to 60 basis points in constant currency.