This Fall, we’ll open a 20,000- square-foot Ralph Lauren luxury flagship store in Greater China, a critical rand expression in an important market for us. As exciting as these first steps are now, the long-term potential is even more compelling. ” “Our better- than-expected first quarter profitability reflects excellent progress on our strategic initiatives, including double-digit revenue growth for our international and global e-commerce operations,” said Jacki Nemerov, President and Chief Operating Officer. I am proud of the team’s ability to navigate challenging market conditions while building robust platforms for sustainable growth over the long term. We’re supporting the growing global ppeal of our brands and products with prudent investments in world-class shopping environments; advertising and marketing; and our infrastructure. Our priorities are clear, and we have the talent and financial strength to execute them. ” First Quarter Fiscal 2015 Income Statement Review Net Revenues.
Net revenues for the first quarter of Fiscal 2015 increased 3% to $1. 7 billion, led by strong retail segment sales growth and double-digit expansion in international markets. Wholesale Sales. Wholesale segment sales were $708 million in the first quarter of Fiscal 201 5, 4% below the prior ear period. The decline in wholesale sales was due to higher revenues associated with the initial transition of Chaps men’s sportswear to a wholly- owned operation in the prior year period and a shift in the timing of shipments between quarters. Retail Sales.
Retail sales rose 9% to $960 million in the first quarter, reflecting the incremental contribution from new stores and double-digit growth in international markets and e-commerce. Consolidated comparable store sales increased 3% on a reported basis and were up 1% in constant currency during the first quarter. Licensing. Licensing evenues of $40 million in the first quarter were 4% above the prior year period, reflecting higher royalties from higher sales of Ralph Lauren products worldwide. Gross Profit. Gross profit for the first quarter of Fiscal 2015 increased 4% to $1. billion. Gross profit margin of 61. 0% was 30 basis points above the prior year period, due to favorable channel and geographic mix that was partially offset by negative foreign currency effects. Operating Expenses. Operating expenses of 5799 million in the first quarter were greater than the prior year period. The higher operating expenses primarily eflect business expansion; continued investment in the Company’s strategic growth initiatives and infrastructure; and costs associated with newly transitioned operations.
The increase in operating expenses was partially offset by disciplined operational management. Operating Income. Operating income for the first quarter of Fiscal 2015 was $244 million, 12% below the prior year, and operating margin was 14. 3%, 240 basis points below the first quarter of Fiscal 2014. The lower operating margin is attributable to incremental investments in the Company’s long-term growth strategies, igher restructuring charges, and a gain on the Chaps men’s sportswear license acquisition that benefited the prior year period.
Operating margin was better than the outlook that was provided in May due to disciplined operational management. Wholesale Operating Income. Wholesale operating income of $180 million in the first quarter of Fiscal 2015 declined 13% from the prior year period. Wholesale operating margin declined 260 basis points to 25. 5%, due to fixed cost deleverage on lower shipment volumes and unfavorable foreign currency effects. Retail Operating Income. Retail perating income of $1 68 million was 2% above the prior year period. Retail operating margin declined 1 30 basis points to 17. %, principally a result of costs associated with the Companys global store development efforts and newly transitioned operations. Licensing Operating Income. Licensing operating income of $36 million was 4% above the prior year period, consistent with the increase in licensing revenues. Net Income and Diluted EPS. Net income for the first quarter of Fiscal 2015 was $1 62 million, 10% below the $1 81 million achieved in the comparable period of Fiscal 2014, and et income per diluted share declined 7% to $1. 80 from $1. 94 for the same time period.
The contraction in net income per diluted share was a result of the decline in operating income that was partially offset by a lower effective tax rate and share count. First Quarter Fiscal 2015 Balance Sheet and Cash Flow Review The Company ended the first quarter with $1. 4 billion in cash and investments, or $1. 1 billion in cash and investments net of debt (“net cash”), compared to $1. 4 billion in cash and investments and $1. 1 billion in net cash at the end of the first quarter of Fiscal 2014. The first quarter ended ith inventory of $1. billion compared to $1. 1 billion in the prior year period. The increase in inventory primarily reflects investments to support anticipated sales growth for existing operations and new store openings, in addition to incremental inventory associated with newly transitioned operations. The Company had $85 million in capital expenditures in the first quarter of Fiscal 201 5, compared to $66 million in the prior year period. The Company repurchased approximately 1. 2 million shares of Class A Common Stock during the first quarter at an average cost of $152. 7 per share, utilizing 1 80 million of its authorized share repurchase programs. Approximately $400 million remained available under the Company’s authorized share repurchase programs at the end of the quarter. Global Retail Store Network The Company ended the first quarter of Fiscal 201 5 with 436 directly operated stores, comprised of 140 Ralph Lauren stores, 61 Club Monaco stores and 235 Polo factory stores. The Company also operated 503 concession shop locations worldwide at the end of the first quarter.
In addition to Company-operated locations, international licensing partners operated 65 Ralph Lauren stores and 17 dedicated shops, as well as 110 Club Monaco stores and shops at the end of the first quarter. Fiscal 2015 Outlook The Company continues to expect consolidated net revenues for Fiscal 201 5 to increase by 6%-8%. The Fiscal 201 5 operating margin is still estimated to be approximately 75-125 basis points below Fiscal 2014’s level, due to continued investment in the Company’s global retail development and infrastructure, in addition to increased advertising and marketing expense.
The full year Fiscal 201 5 tax rate is estimated at 30%. In the second quarter of Fiscal 2015, the Company expects consolidated net revenues to increase by 4%-6%, led by retail segment growth. Operating margin for the second quarter of Fiscal 201 5 is expected to be approximately 200-250 basis points below the comparable prior year period, primarily due to the timing of investments to su pport the Companys strategic growth objectives. The second quarter tax rate is estimated at 30%.
Conference Call As previously announced, the Company will host a conference call and live online webcast today, Wednesday, August 6, 2014, at 9:00 a. m. Eastern. Listeners may access a live broadcast of the conference call on the Company’s investor relations website at https://investor. ralphlauren. com or by dialing 517-623-4799. To access the conference call, listeners should dial in by 8:45 a. m. Eastern and request to be connected to the Ralph Lauren First Quarter Fiscal 2015 conference call.
An online archive of the broadcast will be available by accessing the Company’s investor relations website at https:// investor. ralphlauren. com. A telephone replay of the call will be available from 12:00 P. M. Eastern, Wednesday, August 6, 2014 through 6:00 P. M. Eastern, Wednesday, August 1 3, 2014 by dialing 203-369-3359 and entering passcode 7281. Ralph Lauren Corporation (NYSE: RL) is a leader in the design, marketing and istribution of premium lifestyle products in four categories: apparel, home, accessories and fragrances.
For more than 47 years, Ralph Lauren’s reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. The Company’s brand names, which include Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Blue Label, Lauren by Ralph Lauren, RRL RLX, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, American Living, Chaps and Club Monaco, constitute one of the orld’s most widely recognized families of consumer brands. For more information, go to https://investor. alphlauren. com. This press release and oral statements made from time to time by representatives of the Company contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. F-orward-looking statements include statements regarding among other things, our current expectations about the Company’s future results and financial condition, revenues, store openings, margins, expenses and earnings and are indicated by words or hrases such as “anticipate,” “estimate,” “expect,” “‘project,” “we believe” and similar words or phrases.
These fonvard-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements. Forward-looking statements are based largely on the Company’s expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control.
