RL - Earnings call transcript Q3 2022 | Ralph Lauren Corporation

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren Third Quarter Fiscal Year 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn over the conference to our host, Ms. Corinna Van der Ghinst. ahead. go Please

Corinna Van der Ghinst

Jane thank open Fiscal and caller. limit Patrice joining Lauren's questions, prepared ask Officer; Ralph the Chief we Officer Good Officer. which the Financial Conference you one call Call. to Quarter After and Executive Chief XXXX President we are you Chief With Third per Operating company's and will morning, remarks, and for Nielsen, up me that Louvet, your today for

making some the be statements today's within including of will During call, meaning forward-looking federal our the we financial laws securities outlook.

and Forward-looking statements statements. are actual differ not or the guarantees, materially expressed from forward-looking implied in our those may results

results, Our To that discussing could are website. reconciliations current expectations call that and earnings expectations measures and Patrice. results our and when to find our use risks over of on we in non-GAAP Investor should found from financial Principal morning's uncertainties cause this turn refer the SEC release now our I'll be our disclosures our contain detailed filings that and filings. to many SEC to risks to you uncertainties. our can differ And materially Relations

Patrice Louvet

pleased you quarter season. Thank morning, Good everyone, We and strong performance report joining you, today's call. thank were during the Cory. holiday to third for important

to to better-than-expected across reposition pivot business, in fundamentally including done work our regions and all teams are X our a our North Our is have results our well offense, turnaround outstanding testament to America, the elevate underway. where brand

is work significant behind us. reset Our

higher-value potential channel strong, geographic supported expansion recruiting brand consumers by new and categories. is multiple and is high growth developing product and from Our to our levers,

and impacts COVID. driving of the deliver our levels. sustainable And through year delivered many the to still levers to world broad-based are future, growth positive this our we of all of regions these expect markets with growth, while are they be last in managing increases performance and pre-pandemic profitable the reporting we While already around

me X of the from we quarter third the plan. the a Let Next start share our Chapter that across pillars at strategic Great few highlights outlined

over increase year's globally. a also our our First, we brand our our creation than we evident on fiscal full-price generation, this not brand, investments and strategy outperformance of quarter, portion a product metaverse, with the of honed momentum existing ways. celebrity consumers Together for ever line in new exciting range the activities. world new connecting through particularly efforts demand are engaging recruit on our to helped drove consumers significant a more channels. digital to portfolio. brand in our diverse significant multifaceted From win the quarter, third This a is positioning share are top and particularly drive shifted in where only digital in around both consumers to the we but of the across activations strong to drove voice activations younger to These pandemic,

LLY, XX New our penetration XX% consumers. consumers grew under increased digital next-generation of to including and on an sites higher-value

significantly QX. consumer increased data of holiday also brand in a high-impact grew brands gifting double destination in further key Lauren last that Online markets for period, the regions. critical tracking strong trends of perceptions our our the For campaigns our family our peers search Ralph digits across showed as in largest year, all outperforming

of holiday Winter and apparel included: exclusive million theme and users. Escape Ralph on of with ways the maintain Lauren enabled and Z, where traction our the quarter's brands world #X and experience world, innovative in top particularly another to over consumers continue an brand ZEPETO, date with Ralph platforms follows metaverse program Lauren with on the all one visits gain Roblox, X.X for is the Gen new first, million user to leadership on that Lauren shop the among with where in Roblox engage recreated the drove the platform. to with holiday launch in digital collection of digital and we we popular XX our our metaverse, purchase. expanded last world for of Some we Ralph interactive campaigns This heat brand immersive rank

up mobile You and celebrate drones holiday, sky synchronized may festive dressing hundreds return pop-ups select have featuring seen to our drone gifts. our shows of the in and cities of this night lighting customizable the

brand with during our China, this Xiao the singer, key period of units We In Singles' collaboration with highly X-hour live live fragrance first leverage successful a FARFETCH our continue accompanying of also in drove December. in work XX,XXX influencers, our market and Day elevating popular the quarter, in events streams. streaming including major Club fall, we holiday Zhan, sold and our the fragrance launch actor Ralph's to

sponsorship see Olympics fourth Winter to momentum and New drive sports and of our digital fashion in USA moments in our Looking will second all the amplified culture, 'XX the iconic quarter, brand continue which our across Australian our opening will global of year show in to the we Team this with Spring you sponsoring today York, including Open, campaigns.

His single our energize has about cycle. underdeveloped been or a to aspire accelerate high is and second products initiative, categories. key Ralph product, world lifestyle one American more created fashion any that XX than years quintessential category potential than to Moving core brand vision luxury always rather ago. the to

Polo to from the is and authenticity, gowns the credibility the brand fleece elevated few the Lauren do, with in deliver the While heart brands to we one to still products from Ralph of accessories home. quality evening marketplace sportswear and of and at ranging what hoodies sit

whatever flexibility of shift multi-category hybrid us for agile cashmere be example, joggers our affords our deliver backdrop. to women's advantage to competitive the sophisticated their Sawyer And as wool casual tuxedo this the with styles, mixing proposition consumers a to comfortable consumers us enables elevated new flexibility and for but Our jacket. wardrobes lifestyle mix

translating how capturing Ralph our and into share teams world. example performance are market the effectively great gains around is of fall mix, holiday in a Our which QX design is this

share a these me of just Let highlights. few

Our our an most with expanded assortment in Boston consumers. our collection Common apparel stores icons elevated heritage aspirational driving sales introduced of strong

shearling, collection Cortina celebrated along in strong the our with outerwear, one to an continue styles, insulated for business fueled strategy. outsized of sales of models, our in We a expanded sweater Great XX% of drove men newest about active blues including sophisticated by performance holiday an of elevated Chapter cashmere Performance for women. well our as our and range palette outerwear since of And offering start high-potential return expanded collection were our categories, whites. of iconic has new Our we grown cashmere RLX of which the introduction a QX with models. Next style of Alpine wools,and hybrid modern drive active as

heat capsule, generation brand brand acquisition, included: on regions Shifting at and kicking rooted Street our consumer X and Days, with our Drops active skateboard inspiring this in Polo our on As Black; off our and skateboarder, event and new Evan initiative, we our and decks bold new store. drive bear Prince in Black special X new our targeted latest third a gears key performance limited-edition U.S. Polo continue our quarter for drop; drive capsules to Mock, the with Baseball Gossip Olympics the app, loyalist channels. expansion Girl mitts; star Major to and League fleece looks outerwear,

ecosystems with strategy were our long-term the brand-elevating key investing first very top quarter in new store digits. momentum since in world third around opening openings recurring majority This stores by remains Milan city COVID plans in Asia in our Mainland, XX flagship early opening and Chinese despite cities included the brand the strong double with continued XXXX of of shutdowns. globally. our The where in performance We our concessions our European and particularly beating our

of approach. were ahead respective Beijing last XX% year perform in up promotional constant performance expectations, in The less our our significantly we to XX% more ecosystems, competition to the opened Our stores continued than trends city despite Shanghai year, and their innovative to and growth our highly in still Mainland Day LLY lifting overall emblematic Singles concept currency. and earlier sales outpaced this

are several market of couple past moving margin-accretive year and discipline, Having our city this home around selling the the a in Detroit. our represents our full ecosystem offerings, America years North store world, a operational over and in in Chicago, blueprint price of North years expand X As open North full we America new retail following of we our quarter reset of new full-price Atlanta over we the repositioning. were dozen growth fleet and full-price start commences with successful plan X of open about This forward years. stores openings in excited number particularly highest new in new of category ways next profitability America to through our in to Miami, key phase stores substantially the price to enhanced

grew our invest full-priced pull selling XX%. our with ecosystem, This commerce, own sales more players sites, our total promotions targeting quarter digital. product, to new Lauren and Ralph pure ahead XX% primarily of in on and our back than priority Departmentstore.com, and more our mix for than the AI-powered holiday digital currency Moving operated in deliver grew to driven leading consumer than of we and digital XX% by third Within in was more the including plan. LLY, constant sites, Sales as social right directly full-price acquisition. of

up virtual the capabilities We to store, to in launched the continue from first endless to content-rich product seamlessly most platform connected mobile connected We to pick retail ever time scale app our personalized retail and for in holiday, selling availability. leveraging to during expand appointments online, deliver Ralph on our Lauren our we buy launched aisle full shopping capabilities and date. catalog pandemic

on to discipline to with Now our growth. touching work fuel operate

to quarter. into operating mitigate operate XXXX. highly chain margins cost inflation and dynamic. to with COVID, in supply headwinds, calendar macro again gross still the operating coming pressure global points Notably delivering continue teams third Our agility and remains better-than-expected The environment with

pricing also innovation. in further, universities. access We work commitment we and the place and Campaign our long-term commitment us for a Corporate at XXX% is Human a LGBTQ talent. headwinds, few broader the A to fuel earned designation growth to in education strategic Foundation's programs the Black and $X Rights colleges for on and recent following: the This students as culture people also the growth. best advancing with investments students However, invest includes development investing in This Black achieve our is million through highlights Equality once operating historically December, recently power donation Foundation scholarships to the And to again were proud our to discipline cost score manage our and our of Black of future equality. a remain part and further in Lauren expansion margin proven part these well deliver announced of our discipline. ability include Corporate in investing Ralph our our helping as to to as confident business Index recruitment of of directly in to in for enhanced

weeks latest while moisture and before wastewater of sustainably businesses, sustainability by synthetic and fossil on female-led scaling move natural fiber XXX% on world's focused a materials, which that technologies this scalable our heels were to performance first last in our exciting And the with investment first-to-market announced progress our to welding, the backed solutions last as Valley, sourcing Venture Ralph proud this cotton we pandemic, time recycled front, first we few high-performance target first challenge. announced and fiber we've delivered quarters fashion all closing, on excited patented come with of Demand, Franklin limited commitments In we potential in Developed comes positively through incredibly All materials year our and introduction recycled of of This use cotton such are increasingly our and we innovation, polyester cotton in launch by comfort, build well new of the Partners disruptive synthetics the management On to I year, Clarus, partnership equity performance groundbreaking a ago, fabric. showing is of are features the diversity, sustainability channels the a geographies leveraging have our inclusion. started technology an as partnership including natural to our cotton product system. lastly, investment and the through a CLARUS that the fuels consumer an work create reliance Silicon XXXX. to our the fiscal our healthy in teams from long-standing Like zero just incredibly key an momentum of but breathability critical accelerated transform underscores and dying on made nylon. Color use and strong the on foundation, the making welding, with reducing like we launch year. uses has step expect This that of on industry. X

our it on the turn and Looking Day with Investor focused investments across key and summer. well ahead, as growth over we more at financial questions. markets our to to our continued as end sustainable We demand are discuss categories. to personalized that, supported and digital, by this driving Jane creation look answer brand your building you at more sharing her I'll join to With I'll results, forward

Jane Nielsen

Thank and good you, Patrice, morning, everyone.

results very third ahead Our of quarter well were and our strong expectations.

initiatives. agility. particularly strong double-digit our passion produced report businesses operating versus pre-pandemic across all We encouraged across to digital and and growth broad-based and to delivering key delivered both response Consumer of XX%. America's teams growth and strong high-quality margin Asia of navigating growth improved across Europe investing growth progress and with offerings tireless North operating multiple levels, Their levers continued strong for our expansion. and our were margin revenue and momentum, and back Our profit chain strategic was and business profit pivot each work growth while our in was and to are operating challenges growth supply fall holiday

increased We dividend flow of generate continue and share shareholders to and the strong repurchases. our in to cash cash our returns form

growth ecosystem than strongly better quarter LLY. business expanded an North distribution basis Lauren more negative year favorable underlying margins LLY of better despite up consumer the to currency basis these a revenues year, reset points approximately or currency, and every highly constant last basis which strategic XX% of achieved Compared increased reported led assortments, Gross points. along adjusted environment. results context Strong more in double-digit a year's fiscal XX% than new grew This includes LLY. positive our high-impact Total moved margin X%. lapping connected to growth expected Digital despite profitable in navigating XX mix. and with to growth retail Europe. business, points increased in third 'XX benefits, Ralph license and constant basis. XXX ecosystems. XX% was LLY, capabilities XX% uncertain COVID third X% and than company remain to digital to includes we accretive of than points marketing. in XXX in continued to our more impact pricing digital basis gross increased freight last acquisition, strong our a last were Adjusted points on year's and still digital This to Chaps gross with XX to our and mix third X quarter margins product region, margins headwinds Total owned increased basis Importantly, profitability. our product unusual revenues implying by reflecting company to the and driven of on in quarter, promotions our year growth sales model, macro in low XX% last from last America by

third power work XX% and quarter Our year, by strong of with our last with ability navigate in we AUR top product in XX% every are Driven favorable up continued to confident on region. across this mix the cycle. growth inflationary brand increases elevation marketplace, pricing

digital XX% support new increased XXX our operating XX% cost to We marketing of markets initiatives the quarter increase around expect categories X% AUR Marketing sales consumer a holiday, but to to 'XX a and number product to to acquisition. decline third sales, a and into LLY inflation. new Adjusted basis above point increased investments. long-term point our expansion of of on year, single-digit to in to grew expenses to growing mid- basis fiscal high XXX targets mitigate continue last into XX.X%

accelerate shifted As discussed investments a of our the pandemic. and half to of significant our the last the quarter, marketing of brand coming expansion second portion direct-to-consumer half to out momentum we from the first year

'XX as Open Spring quarter in confidence support activities, range fiscal to and continued We moments of now focus level the of the sales. Lauren Ralph coming of This content new key including and level supporting demand well Australian elevated the new acquisition. brand of operating the on include margin consumer of year's peak of acquisition, Adjusted 'XX, pandemic. activations X% to fourth creation, quarter our launches, increased openings investment is store similar Year Other the mobile new X.X% third XX% out our and Olympics our high-value expect shop. on for LLY. driven operating our gross points new fourth by above and we New our creation XX.X%, as consumer was home dollar marketing sales. increased was to Winter to guidance spend XX.X% and and in quarter points digital margins on Lunar to basis digital expense XXX of leverage our app XXX higher last year in margin, Based a campaigns, stronger This Beijing the expect basis up digital marketing

a of underlying stronger growth and trends. a XX-point Chaps, confidence an revenues Moving to to from in America. improved accelerated segment was levels our meaningful performance, wholesale our with retail basis. holiday with LLY, our last gains. revenue first increased season third These to implying pre-COVID headwind and to and A from selling improvement driven North future. to growth as X%, distribution assortments, North growth results year, significantly reinforce into a product Compared This America the quarter These market very XX% high-teens strong America starting expectations. North above by full-price even strategic new share driver both results half reset included strong on consumers performing

elevation to in sequential continued and year improvement by disproportionately by LLY. the been basket While improved Brick-and-mortar travel. increased to resets in impacted our We our around traffic, America growth and grew pandemic, XX% Comps on sizes a retail, targeted tourist accelerated improved on marketing factory we trends even North driven impact an mix, conversion reported product through AUR, stores, pricing have AUR In North expected encouraged have reflecting comps growth, traffic. an and on traffic larger last particularly foreign expect XX% basis which X% XX%, to underlying and promotions. by to continued LLY. lack more and weaker comps QX, double-digit revenues are in America to our were including of

levels. eased still border U.S. to pre-pandemic QX restrictions sales declined were While early foreign XX% in November, tourist

Omicron own business by continue We from commerce quarter in full-priced up potential further monitor digital comps We this with XX%, our impacts to momentum for drove closely. other selling. and holiday strong variants supported

sales focus on in deliberate expectations for to was our led partners. by price share deliver quarter, continued by site. of Our full significantly wholesale, at resets LLY and basket higher key businesses. the In XX% sales gains Underlying men's, North Chaps. revenues women's impact on from in full XX-point quarter, new last sellout larger continued quality year, the ready our our up acquisition helped America in exceed third price increased XX% wear to consumer to home to kids, a market negative continued led our growth including Total and quality sizes our of and

XX% momentum Our assortments than pulled clean we store digital of brand our growth end America on back of and wholesale to year partners as to promotions. continued healthy our to on full-price elevated elevation seasonal very more than quarter, sell-out and and our LLY. more LLY declining than at XX% up more the this department LLY. this to XX% North in the with channel Inventories XX% wholesale.com last drove remained And AUR fall at

Europe. to on Moving

constant the Germany performance above more near XXX stronger campaigns more on basis, and sellout and with a XX% accelerated launched COVID-related and U.K. in increased France expectations exceeded Europe reported quarter, Third online. with on XX% wholesale XX%. On again with closures the comps XX%, XX% partners million increased brick-and-mortar impressions currency, the top up our growth XX over driven our revenue and a increased of to deliver in the including Europe expectations. gifting LLY basis Netherlands end comps wholesale and increases our quarter. business revenue than the challenging year dot-com. COVID-related all Brick-and-mortar comps double-digit quarter holiday were offsetting stronger restrictions when in across XX% this a across experiences. commerce Digital by markets. We reorder last special quarter, shifted of trends X% top

Revenue Asia. increased currency. XX% a Turning XX% in to basis and on reported constant

operating This impacts. quarter despite highest represents and for profit the ongoing COVID region our ever revenue

increased in every due growth across comps XX% XX% retail commerce growth strong market our Asia with digital trends in primarily Performance led recovery exceeded Our into and going Japan brick-and-mortar by sales LLY. expectations quarter, key XX%, stores. closures quarter the remained including despite COVID Mainland in XX% areas. and last points to and in to controls year, Mainland COVID grew impact government-mandated XX% X Korea. sales of the grew China negative to robust from certain

triple-digit quarter #X both to momentum supported in where XX/XX luxury events ecosystem Singles' and Tmall's by our Day platform. brands digital like This Our on JD this also with continued was activations, ranked Asia our key growth and LLY. Pavilion Luxury

in and sheet. which ended on below X%, and shift some delays, year. the to last to in billion $X Net slightly plan into increased debt, and $X.X total global total supply due balance investments our investments QX. inventories in will $X.X our inventory which fiscal ongoing billion chain with debt billion quarter $X.X cash cash billion to Moving We compares the and in

spring thanks lead in highly to improvement line the to on sales teams Spring still some and growth with meet agility are demand the end Overall, the for dynamic, a roughly well inventory our wholesale support While positioned seeing to flexible to demand the times our and with direct-to-consumer inventories of we process. channels. season. closely inventories in to continue and fiscal inventories to we both our expect upcoming year manage are now our We season, 'XX allocation

our other COVID-related current and outlook on challenges, of global assessment our macro based including the environment, chain is disruptions. supply ahead, best Looking Omicron

to the basis. on geographies. raising 'XX, year full stronger-than-expected currency, demand to line fiscal range to top XX-week in now expect based from constant grow outlook a XX% XX% previously, on the all in across XX% we of again our are up For We revenues XX%

to impact negatively about Foreign revenues expected by XX points. basis currency is

full outlook and reflecting basis, to the LLY, approximately XX% margin also now raising operating quarters fiscal year. levels, with basis to 'XX, through currency XX revenues are our despite are or expanding We points reset, roughly higher track performance our more pre-pandemic year we updated from both XX% strategic line we of grow more about than in outlook of from on and a with the Compared than stronger by implies a end profitable X constant million up dollars our points $XXX to first off base. this reported headwind margin our as year XXX profit on XX.X% to operating healthier and previously, more

For currency the quarter, XX%. we about fourth expect to increase to XX% constant revenues

basis to Foreign XXX currency is points. about revenues negatively impact expected by

margin basis We XXX to XX basis. points constant expect currency, points XX XXX in reported on basis gross of to about or a expansion

than Continued material offset freight growth increased should in more AUR costs. and

than fourth marketing expect offsetting gross margin X.X% in future expansion increased to quarter XX fuel operating to We growth. currency expand more with margin investments continued basis constant approximately points to

margin XXX Foreign by operating currency is to expected points. negatively basis approximately impact

We expect around rate fourth XX%. tax year quarter to XX% and full

focus with levers, our million Lastly, unchanged, of allocation cash share in shareholders world on third share key the completed form multiple a in volatile brand the free initiatives deliver across and reinvesting $XXX excess additional in and with agility remaining approximately current on closing, to growth repurchases. approved billion strategic teams $XXX repurchase drive around passion largely flow plan are our all desirability priorities and quarter dividends and million returning while environment. In capital an by to recently operating behind our authorization, global We our $X.X navigating with the buybacks still remain a our Board. plus

and creative our of vision, the Our strong timelessness strengthening underscores brand. our the of performance consumer year-to-date power base Ralph's

playing the to for value We momentum open leverage key to growth questions. With creation. let's offense our strategic your initiatives call invest the that, in our up are long-term and support and

Operator

Instructions] first Suisse. with comes [Operator from Credit question The Binetti Michael

Michael Binetti

lot a the for all detail. Thanks

all Maybe You to here, lifting over there. start repositioning I'll COVID a the and gave been from a moving parts once. they're years at of us look last off areas the strategic There's lot a lot lot like choose X we're resets. through of through

maybe how with we're in the guys go-forward the talk biggest are we us in Lauren strategy? and future line with the then, you about for at see the new enter you the 'XX to you As see where mid-teens year. Ralph little And long-term could calendar EBIT guidance. your bit guidance, here, differences That's positioned a Jane, you margins here for

thinking So what's I next? all How the as about is, think arguably costs EBIT there given industry question we guess now, some calendar 'XX, should experiencing we which about the given the them you but your or see but tertiary, transitory? the be profile really maybe -- of margins you quarter. will the margin on But in just 'XX, right think is longer-term forward, how on margins, acute I'm also focused delivered rolling what

Patrice Louvet

few the things. question, would I on your first good, Listen, of Michael. outline a Sounds part

we quarters. back past closed as the offense. And this opening remarks, of clearly And through business over visible the the not prior performance, highlighted, just company is the couple repositioned over on you clearly, but also Jane quarter, our have fundamentally First, is years. as in her this

I that, year's on confidence lot based growth ahead. have our ability to recovery in outsized and so comp this sustainable of deliver And a growth

Here's why, years fundamentally is our X was than company healthier it ago.

you If our world. consumer, We're value around different broad-based: elements, less look the elevated, is brands. channels it's higher desirable at the strong, younger, consumer. price-sensitive in is a growth it's geographies, bringing and brand the And

confident we for call sustainable delivering that to clearly are now, the we mid I And and looking out. So multiple are the to term. are long growth would engines for have really both are there future, X that

like scale lifestyle our front, to positioning core, others. product the can means high-potential while also on continuing drive all, of outerwear unique we home, First and underdeveloped our categories

that's haven't on our is or healthy particularly voting, we the you by one now think this in the past growth, at digital quarter And fact And past clicks. our we're compelling then business now the digital if done categories, share, blueprint at performance our almost front, a players rightsized. is as seen energized is core and strong, got across that second wholesale quarter. our opening is on we're the is this consumer It's market I'm which own stores whether right? looking for growing pure you've in quarters, third and retail foundation. the area the way a broad-based, the and The prior again U.S., through a or channel decade. I bricks in look share We've

the opportunities top see geographical standpoint, a North notably standpoint. then lots finally, markets, So know lens the we America. a key from the And world, at cities and around to key take of growth across our world in city from XX you channel a look and opportunities all we we

we're obviously and work all built AUR we elevation a that again not with quarter. have we've power hope pricing in years for now. that challenges, as and immune this consistent but elevating that to both chain been and Now we've supply demonstrated strong see are business several our you And saw I past macro you resilient, a brand

growth, So on Jane we will over levers the the we're get our to that. -- well next is about to margin. And perspective just but multiple give our future, the us optimistic beyond fuel question, not short answer, Michael, that have year now your

Jane Nielsen

All right.

We're guiding And third that feel quarter is from And us. confidence long-term as our think growth, What tell us going into deliver challenges the achieve. So sequential as our still about I next right you now. mid-teens into along called the fiscal year. that it we were clear-eyed move right year. that's able Michael, our mindset to I right us now, margin encouraging are OI our to for But course, not specifically. you've we seen next target us expansion we you is is margin the very just out, we can that very of gives progress

we've planning of Day we're it term. that's we more about out way the Investor fourth long much but the thinking We're expansion more think for perspective, as next to is a margin expansion help stated us into that expect growth we and gross We'll for still into now. you provide I be year, EBIT deliver the to leverage we move even come increased SG&A to us driver margin revenue going as have an to our quarter.

Operator

with The Beth next from comes question Truist Securities. Reed

Beth Reed

quarter? of margin you most AUR running high ability further or the Can drove channels relatedly, beyond outlook, on out? I some your call expectations. with give increased margin curious you're your that color or you single-digit well trends guess, given also, gives what And outperformance where headwinds? seeing drive confidence regions just in third the your expansion, in ahead this certain then year-to-date gross categories there cost us year, just raised gross more And to you'd the Are what versus then upside

Jane Nielsen

course. Of

and we've quarter that performance, were with in I As margin gross year's to able outsized last again pleased we're context raise QX this outlook been our we said, of all our gross very this were pleased while the margin logistics and across momentum gross able chain pre-pandemic our year's that on channel and gaining still gains supply mix-driven, all offsetting of pressures, primarily even margin a raise to we're basis. regions comping

full This what performance holiday our our was shopped drove very early price. encouraged. which outsized shopped So at specifically, and really consumers,

on we curve through year. than that last the the less were year So the promotional ahead this promotional We were we pulling momentum holiday, without of and we got levers. much holiday significant maintained

the of products. based reaction think and strong the scores to brand. our that in desirability on We're our that that's very I mentioned Patrice consumer seeing

there. encouraging So very

As we of leverage. them. upcoming well again, we feel the leverage multiple positioned to term, given think cycle, our have we tailwinds about to really And the view long inflationary

increasing all, our there's brand. of of First the desirability

AUR Second, there's doing: new purchasing. we're the sizes, consumer acquisitions that bigger full-price basket higher

balance take across environment. long-proven multiple into personalization. We driving like-for-like really some, look a the just We the I'd across pricing at also don't capabilities competitive have We We that promotion, increase pricing with say, levers. board.

tools, be All next into we'll those leveraging year. of

side. product and have and gross margin, elevation channel we and our favorable is both AUR on mix category working our enhancing geographic and and Our our migration

Michael, SG&A expect leverage early Now on and be tempered what really the side, called modest gross raw doing improve. I headwind allows in margin the materials managing costs, spring to some with capability is gross this future. passion clear what we've and by our just confidence really margin been inflation, and cost of through I us talk last that through out right is and without in can't expansion gross agility a job the out which and to the us we which mid-teens margin about especially guidance we still challenging reiterate of said our combined magnificent done that And guidance sequentially teams. calling to They've the will 'XX with committed quarter, my 'XX. they're But in we environments, to we is fiscal very be expansion believe magnitude finally, of the know

Patrice Louvet

clearly different specific or channels XX% on AUR approach of thing total the think America by it growth of our the have broad-based with the the in saw, strategy, overall across fastest -- was highlight right? And we all motoring product saw pricing we're AUR have pretty partnership AUR company, proposition. you of as our on our wholesale delivering wholesale. well And to strong business North plus fully acceleration I We particularly wholesale, players top where we've actually AUR progression regions. because brick-and-mortar we one thing North strong elevation growth, right, saw now as the appreciate But on we're year very actually rate seen ahead, channel I want AUR digital I here key America, we how because pretty aligned And growth give as growth plus right? or is engines very presence. of color part really and on growth our in our And in on We all Beth, is to would the geographies the and categories some XX% last broad-based. promotional

We're is started Europe then North first early America. innings, started in So the journey Really, in this X now and Asia, latest one in in wholesale. all regions, still that right? particularly of the very

through it many certainly look Maybe quarters forward. we in AUR. we growth there ability lens, AUR come moving think are this drive as delivered but consistent to year, to the at our many, that we've more So not pace at

Operator

Exane. The comes with Paribas next Vasilescu Laurent from question BNP

Laurent Vasilescu

that mentioned I you And Jane, XQ think to said North reset America. XQ. basis impact the a about bigger XXX I impact was point a think in you that it have may

that on Just behind your significantly can And remarks, want in the said you reset this you then if think hear is think, quantify. to sure you. to note, I I great prepared be Patrice,

any consider we your when Investor to think Just there and left curious out is the about more know, Day? year to

Jane Nielsen

part Yes. -- points your of to Laurent, Yes, basis more impact it about let XXX me first question. and significant basis was full much take to XX-point company North points obviously America. the North in America, and XX

store will As as of we daigou the that still the to pressure, pressure notably you model. out our wholesale, quarter. in department in notable this forward, resets, Chaps point North the come be fourth with year And the There will because be reset America the we quarter. in about anniversary move we'll when conversion licensed along exits think some of a fourth

to you're The total of impact Club is we But those in that at course, company in meaningful. important as resets. out, Monaco lap it's And So quarter look a of look then, on quarter. keep of fourth to as fourth America a especially the right June. North reset out

Patrice Louvet

have right? a we Laurent, the like North down was confidence standpoint, America playing our from trajectory Which enthusiasm the XX% – America that are in XX% in out. LLY North numbers the that’s the you America North something and clearly because to think I double just feel up on And number. Therefore, hopefully, or like-for-like,

things that complete. mentioned terms Jane in reset, think we are Beyond the I Laurent, of

will we from kind attractive lifting behind a we major as portfolio be we make on year. to will a in door daigou our continue that’s to model is which and challenge brand the heavy the us standpoint, closure as standpoint, close that a pullback relative pullback brand this online from and out every the promotional activity, fiscal from But in a of So delivering right place sold. But continuously ongoing up of is location returns. showing that’s part obviously sure

Operator

comes JPMorgan. with from The Matthew question Boss next

Matthew Boss

nice Congrats on quarter. a

your question. hybrid Patrice, that position your to before cited, crisis? saw North guess algorithm you exiting line drivers to wardrobing a the the just growth mid-single-digit top So about backdrop? before those think potentially that as in you Jane, Europe the about ago I relative elaborate the the and couple what's maybe made America, And pandemic, drivers of years behavior confidence think can this brand maybe we and pandemic then, as Asia, for we we changes growth on X-part low you've if to today

Patrice Louvet

Sure.

So point that company really on first think breadth the strong wardrobe lifestyle to in our peers of the with flex puts call product, their a position in relative this industry. and for I our a out evolution. And is competitive positioning, needs differentiating our listen, us would that's to offering I real thing consumer many

apparel I fully about fall. very I and a and in think in thing activities. cycle to fact I would tailwinds to work the ahead second is spring out returned it, The product time, and this And accelerate hasn't talked we've think that certainly last external because innings what's about -- new it's the early the hasn't exciting call we many more start the seen with still regular really consumer returned fully together

hand the on hand, on on the and and wardrobe, the by a core approach other replenishment their a hybrid seeing of sophistication. we're one is, gravitation consumers what So towards newness

give bit specific examples. onion product little on me peel category a you the to that Let a

those products. of sweaters, elements those wardrobe, denim, So replenishing like core the things of types are

out. of to is there right? the I things X this of for of of sophistication, pivoting house the assortment. examples, element call is elevation And outside during specific right? a cashmere to out are then hoodies, the looks, On give would towards the driving newness To fleece, And example. in is other our to house, outside items One day. you newness the novelty clearly and and the matching here set casual wear wear call Items

And in elements our seeing we're people seeing wear significant outerwear. go sports to out. pick significant as in in we're pickup up a the then evening coats, So our

that's but our an has of effect halo part Now business, important smaller a it overall.

positioned and this So consumer of we the serve consumer to to those mentioned and be as how and I evening tailwind ago, based where expect will uniquely expectation. are need positioned. tuxedos. couple where hybrid minutes a the is this on based continue, We, are on I gowns going, really are think nice is actually a this and And we

Jane Nielsen

had I on which we grow. Day the the that when base on since second a to business to our of Investor algorithm. our is healthier changed is a last would low- now from mid-single-digit Great. answer Matt, what's growth say your just change part question, biggest to

to we to and So in we work some do, off-price. cleanup where had at we still be knew wanted to that address. wholesale weren't We we daigou that that time, done. had is strategically to We had

were pricing also nascent We in journey. our very

think today on had we that innings is what's We a time, the that, And have still that's different different So At Asia as sort regions. America now proven we confidence growth. and across for positioned That's regions. faster America future, -- now stronger biggest with early all North think good that what's proof X underscores the to that engine. come. it's North we Europe -- capabilities go always of I case is can that the was had about a our probably that pricing was we in, across all And and have our journey driver. [X-piston] you

Operator

Sandler. The next question Murphy from Piper with comes Erinn

Erinn Murphy

Jane curious growth China. you can region point for the a been many that I would follow what on America. positive definitely for to the peers, particularly up this question I'm in Patrice on business. that, felt It momentum on Congrats outlier you other then versus with has Great. if And at just My is earnings unit again. North see expect season.

you're what if about seeing and the traffic what So between more you could physical curious just interplay that versus talk is little bit a ground on digital?

Jane Nielsen

AUR areas. the for really targeted unit question. growth as back, high-value to from growth growth, expect come we our step Taking noted, a thanks Erinn, Yes, you in

Over several units. to and we've journey low move into AUR a really AUR years, low units from value, the value, business higher away on our past transition and higher been restructure

transitioned accessories, the AUR elevated units sneakers, of into lower the outerwear, are units, we licensing like exiting our where our of higher-priced those units moving we those sweaters, really Chaps, are product denim, and doors, So those assortments: wholesale focused. are

we our continue going journey. see we're that do units we growing to But As that at North we're look America, digital business. in

men's, trends we've and on business, be especially a are ready-to-wear. had in some seeing the in we our we're -- women's the our see in we've wholesale of kid's reset future quarters gained think stores. days, growth share, that we'll I gain And in women's, encouraged and as in growing couple and of very to share comp our by start we'll home

And also confident in the so in units about high-value strategy future, we're growing our confident about areas. but we're

Patrice Louvet

all And with X Erinn, our pleased basis. performance past We've continued been you specifically, hasn't including just really sustained this do this But China. the we're despite up ground drive awesome LY, doing in brand. know, on is think the on versus to Omicron been versus touch this quarter, a team just to able up disruption, quarter. Omicron in right, XX% we've LLY to which XX% in an as been continuing a with. so on job navigating say China I as I And the have refresher, the of volatility

continue younger on track brand nicely So a standpoint, and monthly we From clearly strengthen from balanced the see particularly and population the equity and basis, see to with brand a China brand women's. opportunity. that gender men's a and long-term both in we as our standpoint, opportunity perception market, we near-term a a

putting really our that which the Beijing. with a city the Shanghai, we're the with of well, through our As JD, to we're start our Tmall, we've long Chengdu, approach launched ago you strong at really building combined really physical, that that off done specific and the wrapper, a as as really doing lens, openings And key heard WeChat they're omnichannel question, not board. where lot this emphasis. strong particularly right? business, Shanghai, we and a across to in things we key in digital brand image, Beijing in projects is well, And prepared just versus remarks, your Shenzhen, our look digital partners, presence flagship ecosystem both RalphLauren.com, ecosystem we has

Polo So pleased with we've flagships these been quite And performing formats really really expand continuing us. beyond then store to footprint our that. flexible we with are for are well these that

think the since highest. desirability brand at And we're of probably and deliberate expansion forth elevation know we we markets brick-and-mortar want approach matter make our positioned, it center of consumer really that is the in of talking really of whether what goes where I these and market. to the well, connected back hard that the this have is an digital a we been beginning But that AUR perception is that channels. the data, is market. experience. those So of make it, And we particularly brand is a the is sure and strategic amazing to look in all brand this China so to if we've working call, very I it's or consumer you she between because fundamentally, the at driving and the one doesn't well we're the like different give as lot sure he and What

pick the by that particularly gives that has of lot inspired North our a win success two, of and because to the there to the weaving are local fabric one, brand long we things us from nice And near term a that a relative recently job team some in the lot the has been of you've in in we up China So the America market, done into culture. And confidence -- that the learnings replicate Chinese us for outside. of actually seen what market.

ours, mid-single that of deal that runway. view relative nicely company. because news, the us is So look that the upside, for just small their -- When wrap, we're great is Chinese about China digits to at significant us, some the of you gives good it's positioned and is peers despite business total a a means Still, And business think to I right? some of which volatility for of still China our seeing. I we're still penetration

Corinna Van der Ghinst

the last question, Let’s please, go Angela. to

Operator

with question from final Paul comes Our Lejuez Citigroup.

Paul Lejuez

brand You more guys kind how geography. those customer the older customer be younger to curious brand? And I'm are into that of that from might have your what also differ are the brand, from customers wants that new and I'm them by customers talked curious the different about bringing occasions. How hooking buying? you what several how might

Patrice Louvet

between to been men of headline and actually also excited historical are more basket customers. lineup you are younger they differentiation balance made buy pretty of the would we've in the expect customers, outerwear. that, Paul, Yes, consistent price-sensitive areas less terms with customers, a Sure. customers new Probably about we've size is in brand women. higher thought progress that's the bringing in our and sneakers, customers, the

really that with nicely with drops. traction relaunched they're We innovation and have resonating we've that obviously that the And repositioned product Sport younger getting fantastic Polo really of our and customer. brand is some

heard some we're few us what there. of a on doing You give examples

and fiscal with and calling you then results our from longer-term actually Well, for joining say high putting particularly So pretty some tying after potential underdeveloped to I would emphasis where quarter great areas late Day for fourth that and those a Stay forward perspective you 'XX our strength, we we'll listen, consistent provide to thanks look year recently call you sharing Thank We of we to standpoint. have have in our everyone with today. disproportionate a in. with safe, All on. categories have been that Investor May, full can right. day.

Operator

conference your that for conclude you for gentlemen, does Thank today. your and Ladies participation.

You may now disconnect.

Ralph Lauren (RL) 3 Feb 222022 Q3 Earnings call transcript