Ralph Lauren Corporation (NYSE:RL) Q4 2019 Earnings Conference Call Transcript

May 14, 2019 • 09:00 am ET

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Ralph Lauren Corporation (NYSE:RL) Q4 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. At this time, we'd like to begin the question-and-answer session of the conference. (Operator Instructions) The first question comes from Ike Boruchow with Wells Fargo. You may ask your question.

Analyst
Ike Boruchow

Hi. Good morning, everyone, and congrats on a great year. I guess, first question for Patrice. As you reflect on the first year of the next great chapter plan, I guess my question is, how are you feeling about the long-term strategy one year in? Maybe could you go on -- let us know little bit more about where you think you've outperformed versus maybe underperformed versus prior expectations and any need to revise any of the information you gave us at the Analyst Day. And then a quick one, follow-up for Jane. Just North America wholesale, would love a little bit more detail on how to think about Q1 and the rest of the year, tying together the off-price pullback, spring fashion softness that you highlighted for 4Q. Just any other color on that channel would be great?

Executive
Patrice Louvet

Hey, good morning, Ike. So I guess on the first part of your question, overall, we are actually pleased with what we delivered in year one of our Next Great Chapter plan. While there's of course always more work to do, we believe our strategy is working and our plan is on track. So as a result, we remain very comfortable with the five-year targets we laid out last June at Investor Day. To your point on wins and opportunities, let me just touch on a few on both sides. So in terms of the things that we -- key highlights in terms of performance, one is we returned to growth a year ahead of plan and more importantly, we actually achieved this with a continued focus on profitable, quality growth, right. And you can see that through the progress that we've made on AURs throughout the fiscal year of high single digits and through the continued expansion in operating margins throughout the year as well.

Second thing I would highlight is the fact that we've significantly increased our brand building investments, with a strong focus on social and digital to really elevate the brand, energize the brand, and win over a new generation for our first strategy. The third area to highlight is, I think, terrific work by Ralph, the design team, and the overall organization on strengthening our core product, which has been a very important driver of the top line improvement over the past year. And then fourth and final point in terms of highlights is the digital space and the expansion space. So we completed the digital platform upgrades for our flagships in North America and in Europe, we launched our flagship in China. Both Europe and North America businesses inflected back to positive comps this year after a few challenging years. We also drove in the digital commerce space expansion on digital pure players around the world, and you've heard some examples in our prepared