Ralph Lauren Corporation (NYSE:RL) Q3 2023 Earnings Call Transcript

So while the environment remains choppy and we expect it to remain choppy around the world, we believe we are well positioned to continue to attract higher-value consumers and drive growth and value creation. If I double-click on your question regarding consumers and at the risk of repeating myself, a few things to call out. First of all, our core consumer is resilient and in good shape. And so we’re seeing him and her respond nicely to the work we’re doing on brand elevation, product elevation, shopping experience elevation. I’m very encouraged by the fact that the teams are able to continue to bring in large numbers of new consumers, 1.6 million, I think, is the highest we’ve done in several quarters now. We’ve been around 1.3 million, 1.4 million.

And again, the makeup of that customer group is higher value, less price sensitive. So we feel good about that. We did mention last quarter that our more value-oriented consumer, which is a much smaller part of our business today, is obviously feeling the inflationary pressures and is having to be more discerning in terms of how they spend, but they’re still buying clothes. And here, we’re encouraged by our share progress because we’re growing share particularly on the wholesale channel that you touched on, Dana. We’re growing share in men’s. We’re growing share in women’s. We’re growing share in kids. So we’re staying very focused on making sure our value perception continues to strengthen, and it did again this quarter such that across all channels, across all consumer groups, we win the consumer level.

Jane Nielsen : And we had that win in North America specifically with AURs up 10%. So that elevation journey continued on a promotional day base that was about equal to last year. Really happy with that quality.

Operator: The next question comes from Matthew Boss with JPMorgan.

Matthew Boss : So Patrice, could you speak to demand relative to plan that you’re seeing for the Polo brand? And maybe just outline market share gains that you’re seeing in the women’s category? And then, Jane, just in relation to your larger picture comments, how best to think about North America next year relative to your mid-single-digit multiyear target? And just any change in the path to mid-teens constant currency operating margins by FY ’25 that we should consider based on anything that you’re seeing today?

Patrice Louvet : Sure. So sorry, on demand on the Polo brands, particularly in the Polo brand, as you know, is the heart of this company. We are seeing progress on men’s consistently. And what I’m excited about, we touched on it in our prepared remarks, is the introduction of the Polo Originals line that kind of pays homage to the Polo roots, which is just a view the full line of products that our teams have being around to allow us with really a communication that’s really resonating with the customers. So continuing to drive that elevation and tapping into the breadth of the portfolio so that if you want athleisure, we have that available with exciting products. But we also have investments in the more tailored proposition, which is where we’re seeing the consumer gravitate more and more to this more elevated casual proposition.

So Polo Men is really nice momentum with a number of engines of growth that were very promising for the future. Outerwear is obviously an area of strength on the Polo Men. On the women’s side, across all the key categories actually, we’re seeing Polo Women’s get significant traction. And as we’re seeing the consumer gravitate to this more elevated casual dimension, then we’re able to leverage the breadth of the portfolio and that ranges from sweaters to dresses to acceleration in outerwear, and we expect that to continue. Obviously, we see significant growth opportunities ahead on Polo Women. And then on Polo Kids, we’re also continuing to see nice traction and share growth, we’ve seen share growth for quite a while on that business as well and expect that to continue as we throw a relatively wide net when it comes to attracting new consumers and leveraging the presence we have across multiple categories.