The operator introduces the participants and reminds them that the call is being recorded. The host, Corinna Van der Ghinst, welcomes everyone and introduces the speakers, Patrice Louvet and Jane Nielsen. She also mentions that the financial performance will be discussed on a constant currency basis and that there will be forward-looking statements. Patrice Louvet thanks the host and gives a brief overview of the company's progress in the second quarter.

Despite an uncertain global macro environment, the company's iconic brand and timeless products continue to resonate with consumers worldwide. Multiple engines of growth in various categories and regions have enabled the company to exceed expectations in the second quarter, with positive retail performance and strong brand desirability. The company remains focused on balance sheet and expense discipline while investing in high-impact brand moments. With six consecutive years of AUR growth, the company is confident in its pricing power in the market and is able to react to inflationary pressures while driving long-term brand elevation. The company's second quarter performance was guided by its three strategic pillars for long-term growth and value creation.

The third strategic pillar for Ralph Lauren is to elevate and energize their lifestyle brand. This includes investing in their iconic brand and participating in cultural events, such as New York Fashion Week and sports sponsorships. They also continue to innovate in the world of gaming, with their latest partnership with Fortnite. This has resulted in high engagement and increased luxury perception ratings in North America.

The paragraph discusses the success of the Double RL brand's 30th anniversary celebration in China, as well as celebrity highlights such as dressing Beyoncé for her tour and Taylor Swift and Jennifer Lawrence wearing Polo looks. The company has added 1.3 million new consumers to its direct-to-consumer business, with a focus on attracting younger consumers. The brand's core products, representing 70% of its business, saw high single digit growth and increased penetration in sales. This was driven by iconic products such as cable knit sweaters, jackets, and blazers.

In the fifth paragraph, the company discusses the success of their children's business, particularly in girls' clothing and seasonal items. They also mention the growth potential in their women's, outerwear, and home categories. The launch of a new women's handbag line and special collections, such as the U.S. Open and Wimbledon, have exceeded expectations. The company also released a book celebrating their home collections. They plan to continue leveraging their brand and assortment to drive customer loyalty and focus on winning in key cities through their consumer ecosystem.

Ralph Lauren's direct-to-consumer channels make up two-thirds of the company's sales and have contributed to strong retail comps this quarter. The company has seen improved performance in its outlet business, particularly in North America, and has opened new stores and renovated existing ones in key cities around the world. In China, sales have increased by over 20% and there are still opportunities for growth with global Chinese consumers. The company's enablers, including strategic priorities, continue to support its business.

The company shared updates on their digital technology and sustainability efforts, including enhancements to their website and app, early testing of generative AI, and a new solar power agreement. They also announced the opening of a new cancer center in California, as part of their efforts to improve access to cancer services for underserved communities. The company remains focused on delivering growth through brand desirability, pricing power, and consistent execution, and believes in the enduring power of their iconic brand to inspire people globally.

Jane Nielsen, the speaker, begins by thanking Patrice for the introduction and then discusses the financial results for the company. She mentions that the second quarter revenue was higher than expected due to strong performance in North America, Europe, and Asia. Despite cost headwinds and strategic investments, gross and operating margins were also above expectations. The company has been focusing on brand elevation, cost savings, and productivity to drive sustainable growth. They have also delivered $275 million to shareholders this fiscal year and have a strong balance sheet. The company remains committed to their fiscal '24 outlook and three-year targets, but acknowledges the uncertainty of the current environment. Revenues increased by 2% in the second quarter, with double-digit growth in Asia.

In the second quarter, revenue in North America and Europe slightly declined, but the company saw a 6% increase in total company comp, with all regions showing positive comp growth. Adjusted gross margin also expanded, exceeding expectations due to strong AUR growth, lower freight expenses, and favorable channel and geographic mix. The company expects even stronger gross margin expansion in the second half of the year. AUR increased 10% with balanced growth across all regions and channels. Adjusted operating expense also increased, driven by higher marketing and investments in key areas. In North America, second quarter revenue declined 1%, but retail comps increased 4%.

In the second quarter, Ralph Lauren saw positive comps in all channels, including outlet and owned RalphLauren.com. The North America Wholesale channel saw a decline in revenues, but the top 100 doors outperformed the rest of the fleet due to targeted investments. In Europe, there was a slight decline in revenue, but retail comps increased and AUR grew. Digital comps were higher than expected due to new sites and targeted promotions.

In the second quarter, Europe wholesale declined 7% due to various factors, and this trend is expected to continue in the third and fourth quarter. However, Asia saw a 13% increase in sales, with China leading the growth. Licensing revenue also declined as a result of transitioning out of a men's suiting license. The company's strong balance sheet and cash flows allow for strategic investments and returning cash to shareholders. Inventory levels decreased in North America and Europe but remained strong in Asia. The company expects to end fiscal 2024 with inventory levels below the previous year.

The company's outlook for the future is based on current geopolitical and macroeconomic factors, including inflation and consumer spending. They expect low single-digit revenue growth, with Asia leading the way and North America experiencing a decline. Operating margin and gross margin are expected to expand, with investments in strategic initiatives. This guidance is in line with their long-term targets.

The company expects a 1-2% increase in revenues for the third quarter, with Asia leading the growth. Foreign currency is expected to have a negative impact. North America is expected to have similar trends as the second quarter, with softness in wholesale offset by stronger direct-to-consumer sales. Europe will also be negatively impacted by earlier fall shipments and lapping last year's favorable wholesale allowances. Operating margin is expected to be flat, with gross margin expansion offset by increased marketing and ecosystem investments. The tax rate and capital expenditures are also expected to be in a certain range. The company's year-to-date performance demonstrates strong execution and progress on their Next Great Chapter Accelerate plan. The company's multiple growth engines and strong foundation put them in a position of strength to continue delivering on commitments and creating long-term value. The call is now open for questions from investors.

Michael Binetti asks Patrice Louvet about the company's outlook for the year and how they plan to maintain their commitments in the face of macro uncertainty. Louvet mentions that the brand's success is due to its strong marketing efforts, such as partnerships with sports events and celebrities, as well as investments in long-term brand appeal. He also discusses the potential for growth in the wholesale sector in North America in the future.

The second point discussed is the importance of iconic core products, such as sweaters and Oxford shirts, during challenging times for consumers. These timeless products provide stability and trust for consumers and the company also sees growth opportunities in women's and outerwear. The third point is the success of their direct-to-consumer channels, which now represent two-thirds of their business and have shown positive growth in both brick-and-mortar and online channels. The company has also implemented an agility muscle in their operating model, making quick changes to product assortment and staffing to improve the customer experience. This has resulted in increased average unit retail (AUR) in an environment with high levels of promotion.

Ralph Lauren is able to achieve double digit growth despite limited promotional actions for value-oriented consumers. They have the brand, growth drivers, and agility to stay on offense in an uncertain world. They also have operational discipline and a strong balance sheet for continued investment in growth. Wholesale is an important channel for consumer discovery and Ralph Lauren focuses on matching sell-in to demand and tight inventory management. They also leverage their core and work with partners to personalize marketing for loyal consumers. There is a distinction between top-tier and lower-tier wholesale, with Ralph Lauren seeing growth in top-tier doors.

The company has a strong balance sheet and is focused on managing it carefully in light of the current uncertain operating environment. They are committed to maintaining their operating discipline and using their agility to drive their plans forward. They are also evaluating their capital allocation strategies and monitoring country trends throughout Europe.

The company's disciplined management of their balance sheet and commitment to capital allocation is a strong differentiator for them. They have returned $1 billion to shareholders and have a strong cash position and low leverage. Their inventory is also down, and they expect it to continue to decrease. Despite a choppy environment, their core consumer remains resilient and they are seeing growth with this consumer in all three regions.

The company is experiencing positive performance in the current quarter, with growth in all regions and channels. They are also successfully attracting new, younger consumers who are less price-sensitive. The outlet channel has seen improvement, particularly with value-oriented consumers. In North America, DTC is growing while wholesale is facing some challenges. In Europe, they are seeing strong DTC performance and wholesale growth if timing shifts are taken into account.

The company is seeing positive growth in Europe and Asia, with strong performance in China and Japan. They are focused on brand elevation and expanding their product offerings through their direct-to-consumer ecosystem. The company has raised their gross margin outlook for the year and is targeting mid-teens operating margins for next year.

The company has implemented several short-term interventions that have been successful in the DTC market, including focusing on core products and enhancing digital capabilities. They have also adjusted their staffing model and implemented targeted promotional activity to appeal to the value-oriented consumer. The company is well positioned for the holiday season with a clear game plan and strategy in place.

The company is pleased with the response from consumers to their marketing and product offerings. They feel well-positioned for the holiday season due to their marketing efforts and pivot in product. The company is also raising their outlook for gross margin expansion and seeing upside in freight and AUR, while also realizing productivity initiatives. Despite the choppy environment, the company is confident in their mid-teens constant currency OI growth guidance for the year.

The company remains committed to its goals and outlook for FY '24, despite operating in a volatile environment. The focus is on driving top-line growth, cost productivity, and investments that will pay off in the second half of the year and into FY '25. The company saw strong results in the outlet channel due to leaning into core products, improving customer experience, and targeted marketing activities. These strategies will continue to be implemented for sustained growth.

The speaker discusses the success of their core product, which saw an improvement of high single digits compared to the previous quarter. They attribute this to the strength of their women's outerwear and home business, which saw growth in the low double digits. They mention potential factors contributing to this growth such as pricing, newness in product, and the introduction of the RL 888. They also mention a 10% growth in average unit retail (AUR) and how it may vary by region.

Patrice Louvet discusses the consumer trend towards sophisticated casual and elevated styles, which aligns with Ralph Lauren's focus on quality, luxury, and authenticity. They are seeing strong response to their core products such as cashmere, cable knit sweaters, and Oxford shirts. They are also expanding their Polo line with the silver label and seeing continued momentum in women's fashion. In terms of pricing, they expect the pressure to price with inflation to ease in the remainder of the year.

The company is expecting strong AUR growth in the high single-digit range as they see consumers buying higher-priced products. This has given them the flexibility to target value-oriented consumers with discounts using personalized marketing. They do not expect any changes in their AUR journey in the near term and will continue to focus on brand elevation, product mix elevation, and driving DTC growth. The company also sees significant growth opportunities in trade-up and trade-across, which will serve them for years to come. These levers of growth contribute to the company's diversification of growth drivers.

The speaker thanks the audience for joining the conference and announces that the third quarter results will be shared in February. The operator then concludes the conference and thanks the participants for their participation, allowing them to disconnect.

This summary was generated with AI and may contain some inaccuracies.