Q3 2022 Ralph Lauren Corp Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by.
I'll come to the Ralph Lauren third quarter fiscal year 2022 earnings call.
Speaker 1: Welcome to the Ralph Lauren Third Quarter.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session.
On how to ask a question will be given at that time, if you should require assistance during the call. Please press Star then zero.
Reminder, this conference is being recorded.
Now I'd like to turn over the conference.
Please go ahead.
Good morning, and thank you for joining Ralph Lauren's third quarter fiscal 2022 conference call with me today are Patrice will obey the company's president and Chief Executive Officer, and Jane Nielsen, Chief Operating Officer, and Chief Financial Officer.
Speaker 1: Good morning and thank you for joining Ralph Lauren's third quarter fiscal 2022 conference call. With me today are Patrice Louvee, the company's president and chief executive officer and Jane Nielsen, chief operating officer and chief financial officer. After the paired remarks, we will open up the call for your questions, which we ask that you limit to one per caller.
After prepared remarks, we will open up the call for your questions, which we ask that you limit to one per caller.
During today's call, we will be making some forward looking statements within the meaning of the federal securities laws, including our financial outlook forward looking statements are not guarantees and our actual results may differ materially from those expressed or implied in the forward looking statements.
Speaker 1: During today's call, we will be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Forward-looking statements are not guaranteed, and our actual results may differ materially from those expressed or implied in the forward-looking statement.
Our expectations contain many risks and uncertainties principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings.
Speaker 2: Our expectations contain many risks and uncertainties. Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filing.
To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results you should refer to this morning's earnings release and to our SEC filings that can be found on our Investor Relations website, and now I will turn the call over to Patrice.
Speaker 2: To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results, you should refer to this morning's earnings release and to our SEC filings that can be found on our Investor Relations website. And now, I'll turn the call over to Patrice.
Thank you Corey.
Good morning, everyone and thank you for joining today's call.
Speaker 3: Thank you, Corey. Good morning, everyone. And thank you for joining today's call.
We were pleased to report strong third quarter performance during the important holiday season.
Speaker 3: We were pleased to report strong third quarter performance during the important holiday season.
Our better than expected results across all three regions are a testament to the outstanding work our teams have done so.
Speaker 3: are better than expected results across all three regions, or a testament to the outstanding work or teams have done to fundamentally reposition our business, elevate our brand, and pivot to offense, including in North America, where our turnaround is well underwent.
To fundamentally reposition our business elevate our brand and pivot to offense, including in North America.
Turnaround is well underway.
Our significant reset work is behind US our brand is strong.
Speaker 3: Our significant reset work is behind us. Our brand is strong, and our growth is supported by multiple levers. From geographic and...
And our growth is supported by multiple levers.
From geographic and channel expansion too.
To recruiting new higher valued consumers.
Developing high potential product categories.
Speaker 3: to recruiting new higher value consumers and developing high potential product categories.
While we expect these wolf nabors to be sustainable and deliver in the future.
Speaker 3: While we expect these growth levers to be sustainable and deliver in the future, they are already driving profitable growth.
We're already driving profitable growth.
With all of our regions reporting positive increases to last year and pre pandemic levels.
Speaker 3: with all of our regions reporting positive increases to last year and pre-pandemic levels.
And we delivered this broad based performance, while many of our markets around the world.
Speaker 3: And we delivered this broad-based performance while many of our markets around the world are still managing through the impacts of COVID.
Managing through the impacts of Covid.
Let me share a few highlights from the third quarter across the five strategic pillars that we outlined at the start of our next great Chapter plan.
Speaker 3: Let me share a few highlights from the third quarter across the five strategic pillars that we outlined at the start of our next great chapter.
First on our efforts to win over a new generation.
Consumers around the world are connecting more than ever to our brand positioning and product portfolio.
Speaker 3: First, on our efforts to win over a new generation.
Speaker 3: Consumers around the world are connecting more than ever to our brand positioning and product portfolio.
Together with our multifaceted strategy for demand creation hold through the pandemic, we are engaging both new and existing consumers in exciting ways.
Speaker 3: Together with our multifaceted strategy for demand creation honed through the pandemic, we are engaging both new and existing consumers in exciting ways.
This is particularly evident in our fiscal third quarter, where.
Where we shifted a significant portion of this year's investments to drive brand momentum across a diverse range of activities.
Speaker 3: This is particularly evident in our fiscal third quarter, where we shifted a significant portion of this year's investments to drive brand momentum across a diverse range of activities.
From celebrity Activations to the meta versus we drove a significant increase in digital share of voice globally.
Speaker 3: From celebrity activations to the metaverse, we drove a significant increase in digital share of voice globally.
These activations not only drove our strong top line outperformance in the quarter.
Speaker 3: These activations not only drove our strong top-line outperformance in the quarter,
But also help recruit younger full price consumers to the brand, particularly on our digital channels.
Speaker 3: but also help recruit younger, full price consumers to the brand, particularly on our digital channel.
New consumers on our digital sites grew 58% to double L y.
Speaker 3: New consumers on our digital sites grew 58% to double LY, including an increased penetration of next generation under 35 and higher value consumers.
Including an increased penetration of next generation under 35.
Higher valued consumers.
For the critical holiday period, our brand tracking data showed that our high impact campaigns further increased consumer perceptions of Ralph Lauren as a key destination for gifting in all regions.
Speaker 3: For the critical holiday period, our brand tracking data showed that our high impact campaigns further increased consumer perceptions of Ralph Lauren as a key destination for gifting in all regions.
Online shorts trends across our family of brands also grew strong double digits. The last year significantly outperforming peers in our largest markets in Q3.
Speaker 3: online search trends across our family of brands also lose strong double digits to last
Speaker 3: significantly outperforming peers in our largest markets in Q3.
Some of the innovative holiday campaigns that drove brand heat and enabled consumers to engage with and shop our brand in new ways included first.
Speaker 3: Some of the innovative holiday campaigns that drove brand heat and enabled consumers to engage with and shop our brand in new ways included. First, we expanded our leadership in the metaverse.
We expanded our leadership in the meta versus.
With our Ralph Lauren Winter escape program on roadblocks, where we recreated the world of Ralph Lauren with an immersive holiday themed user experience and.
Speaker 3: with our Ralph Lauren Winter Escape Program on Rollblog.
Speaker 3: where we re-created the world of Ralph Lauren with an immersive holiday-themed user experience and exclusive digital apparel collection for purchase.
And exclusive digital apparel collection for purchase.
All blocks is one of the top interactive digital platforms in the world and particularly for Gen Z.
Speaker 3: WorldBlock is one of the top interactive digital platforms in the world, and particularly for Gen Z, with 47 million users.
With 47 million users.
This follows last quarter's world of Ralph Lauren launched on another popular met averse ZIP Petzel, where we continued to gain traction with over two and a half million visits to date.
Speaker 3: This follows last quarters, World of Ralfloren launched on another popular metaverse, Zepetal, where we continue to gain traction with over 2.5 million visits to date and maintain the number one rank among all brands on the platform.
And maintain the number one ranked among all brands on the platform.
You may have seen our mobile pop ups and synchronized grown chosen select cities. This holiday featuring hundreds of drones lighting up the night sky to celebrate the return of festive dressing and our customizable gifts.
Speaker 3: You may have seen our mobile pop-ups and synchronized drone shows in select cities this holiday, featuring hundreds of drones lighting up the night sky to celebrate the return of festive dressing and our customizable gifts.
We also drove highly successful live streaming events during the quarter, including our brand elevating Singles' day, and Farfetch holiday live streams.
Speaker 3: We also drove highly successful live streaming events during the quarter, including our brand elevating singles day and far-fetched holiday live stream.
In China, we continue to leverage our work with key Influencers.
The accompanying the launch of our first major fragrance in the market. This fall our.
Speaker 3: In China, we continue to leverage our work with key influencers.
Our collaboration with popular actor and singer shall John sold 40000 units of Rob's club fragrance and a six hour period in December .
Speaker 3: accompanying the launch of our first major fragrance in the market this fall, our collaboration with popular actor and singer, Xiao Zhan sold 40,000 units of Rob's Club fragrance in a six hour period in December .
Looking to the fourth quarter, we will continue to drive this momentum with iconic brand moments in sports and culture.
Speaker 3: Looking to the fourth quarter, we will continue to drive this momentum with iconic grand moments in sports and culture, including our Spring 22 fashion show in New York.
Including our spring 'twenty two fashion show in New York.
Our sponsorship of team USA in the Winter Olympics opening today.
And our second year sponsoring the Australian open.
Speaker 3: our sponsorship of Team USA in the Winter Olympics opening today and our second year sponsoring
All of which you will see amplified across our global digital campaigns.
Speaker 3: all of which you will see amplified across our global digital campaign.
Moving to our second key initiative energize core products and accelerate high potential underdeveloped categories.
Speaker 3: Moving to our second key initiative, Energize Core Products, and accelerate high potential underdeveloped categories.
Ralph created the quintessential American luxury lifestyle brand more than 50 years ago.
Speaker 3: Ralph created the quintessential American luxury lifestyle brand more than 50 years ago.
His vision is one that has always been about a world to aspire to rather than any single product category or fashion cycle.
Speaker 3: His vision is one that has always been about a world to aspire to, rather than any single product, category, or fashion.
While the polo brand and elevated sportswear still sit at the heart of what we do.
Speaker 3: While the Polo brand and elevated sportswear still sit at the heart of what we do.
Ralph Lauren is one of the few brands in the marketplace with the authenticity quality and credibility to deliver products ranging from <unk> to evening gowns and from accessories to home.
Speaker 3: Ralph Lauren is one of the few brands in the marketplace with the authenticity, quality, and credibility to deliver products ranging from flea's hoodies to evening gowns and from accessories to home. Our multi-cada-
Our multi category lifestyle proposition.
Affords us the flexibility and competitive advantage to deliver for consumers whatever the backdrop.
Speaker 3: affords us the flexibility and competitive advantage to deliver for consumers whatever the backdrop.
And this flexibility enables us to be agile as consumers shift their wardrobes to a new hybrid mix of elevated but comfortable casual styles.
Speaker 3: And this flexibility enables us to be agile as consumers ship their wardrobes to a new hybrid mix of elevated but comfortable casuals.
For example, mixing our women's cashmere joggers with our sophisticated Sawyer, we'll succeed jacket.
Speaker 3: For example, mixing our women's cashmere joggers with our sophisticated, soyer wool, Fuxedo Jock.
Our fall holiday performance in Q3 is a great example of how Ralph and our design teams are effectively capturing this mix.
Speaker 3: Our fall holiday performance in Q3 is a great example of how Ralph and our design teams are effectively capturing this mix, which is translating into market share gains around the world.
Which is translating into market share gains around the world.
Let me share just a few of these highlights.
Our Boston Commons apparel collection.
Introduced an expanded assortment of elevated heritage icons driving strong sales in our stores with our most aspirational consumers.
Speaker 3: Our Boston Commons apparel collection introduced an expanded assortment of elevated heritage icons driving strong sales in our stores with our most aspirational consumers.
Our holiday Cortina collection celebrated alpine style, and a sophisticated palate of blues and whites.
Speaker 3: Our holiday Cortina collection celebrated Alpine style in its sophisticated palette of views and whites.
We drove a strong return of our sweater business with an expanded offering of our iconic cashmere styles.
Speaker 3: We drove a strong return of our sweater business with an expanded offering of our iconic cashmere styles, along with the introduction of new, modern, active hybrid models.
Along with the introduction of new modern active hybrid models.
And we continue to drive outsized performance in outerwear.
One of our high potential categories, which has grown about 50% since the start of our next great chapter strategy.
Speaker 3: and we continue to drive outsized performance and outerwear.
Speaker 3: one of our high potential categories, which has grown about 50% since the start of our next great chapter strategy.
Q3, outerwear sales were fueled by an expanded range of active insulated models, including our newest collection of <unk> performance for men as well as elevated surely rules in Kashmir for women.
Speaker 3: Q3 outer wear sales were fueled by an expanded range of active insulated models, including our newest collection of RLX performance for men, as well as elevated churling, walls, and cashmere for women.
As we continue to drive brand heat and new consumer acquisition.
Speaker 3: As we continue to drive brand heat and new consumer acquisitions.
Special capsules this quarter included black.
Black on Black our latest limited edition Major League baseball drop.
Speaker 3: Special capsules this quarter included, Black on Black, our latest limited edition Major League Baseball drop.
Our bold new U S Olympics capsule inspire.
Inspiring a new generation with looks rooted in active and performance outerwear fleece and knits.
Speaker 3: Our bold new U.S. Olympics capsule inspiring a new generation with looks rooted in active and performance outerwear, fleece and knit.
And for our brand loyalists on the polo App are seven days southern drops polo bear skateboard decks with.
Speaker 3: and for our brand loyalist on the polo app, our seven days, seven drops polo bear skateboard deck.
With gossip girls Star and Skateboarder, Evan Marc kicking off the events at our Prince Street store.
Speaker 3: with Gossip Girl star and skateboarder Evan Mach kicking off the event at our Prince Street store.
Shifting gears to our third key initiative.
Drive targeted expansion in our regions and channels.
Speaker 3: drive targeted expansion in our regions and channels.
We continued our long term strategy of investing in our brand elevating key city ecosystems around the world in the third quarter.
Speaker 3: We continued our long-term strategy of investing in our brand-elevating key city ecosystems around the world in the third quarter.
With 40, new stores and concessions opening in top cities globally.
This included our first European flagship openings since 2010 in Milan with early performance, beating our plans by double digits.
Speaker 3: with 40 new stores and confessions opening in top cities global.
Speaker 3: This included our first European flagship opening since 2010 in Milan with early performance beating our plans by double digits.
The majority of our store openings were in Asia, and particularly the Chinese mainland where our brand momentum remains very strong despite recurring COVID-19 shutdowns.
Speaker 3: The majority of our store openings were in Asia, and particularly the Chinese mainland, where our brand momentum remains very strong despite recurring COVID shutdowns.
Our mainland sales were still up more than 20% for last year, and 65% of double L y in constant currency.
Speaker 3: Our mainland sales were still up more than 20% the last year and 65% to double L.Y. in constant currency.
The highly innovative emblematic concept stores, we opened in Beijing, and Shanghai earlier this year.
Speaker 3: The highly innovative emblematic concept stores we open in Beijing and Shanghai earlier this year continue to perform ahead of our expectations, lifting overall growth trends in their respective city echoes.
Continued to perform ahead of our expectations lifted.
Lifting overall growth trends in their respective city ecosystems.
And our singles day performance significantly outpaced the competition, despite our less promotional approach.
Speaker 3: and our singles day performance significantly outpaced the competition despite our less promotional approach.
As we start to expand our successful key city ecosystem blueprint around the world.
Speaker 3: As we start to expand our successful key city ecosystem blueprint around the world, we were particularly excited to open four new full-price stores in North America this quarter in Miami, Chicago, Atlanta, and Detroit.
We were particularly excited to open four new full price stores in North America this quarter in Miami, Chicago, Atlanta and Detroit.
This represents our highest number of full price store openings in North America in six years.
Speaker 3: This represents our highest number of full-price store openings in North America in six years and commences a new phase of retail growth in our home market following several years of repositioning.
Commences, a new phase of retail growth in our home market following several years of repositioning.
Having substantially reset the profitability of our full price fleet over the past year.
Speaker 3: having substantially reset the profitability of our full price fleet over the past year.
True enhanced category offerings, new ways of selling and operational discipline.
Speaker 3: through enhanced category offerings, new ways of selling, and operational discipline. We are moving forward with our plan to open about a dozen new margin accreted full price stores in North America over the next couple of years.
We are moving forward with our plan to open about a dozen new margin accretive full price stores in North America over the next couple of years.
Moving to our priority of leading with digital.
Sales for our total Ralph Lauren digital ecosystem, including our directly operated sites Department store Dot com pure players and social commerce.
Speaker 3: Moving to our priority of leading with digital, sales for our total Ralph Lauren digital ecosystem, including our directly operated sites, DepartmentStore.com, PurePlayers, and SocialCommerce, grew more than 40% in the third quarter in constant currency and more than 60% to double LY.
Grew more than 40% in the third quarter in constant currency and more than 60% of the double L y <unk>.
Ahead of our plan.
Within our own sites digital sales grew more than 30%.
This was driven primarily by full priced holiday selling.
Speaker 3: Within our own sites, digital sales grew more than 30%.
Speaker 3: This was driven primarily by full-priced holiday selling as we deliver the right
As we deliver the right mix of product.
Pullback on promotions and invest in AI powered targeting and new full price consumer acquisition.
We continue to scale and expand on the connected retail capabilities, we launched during the pandemic.
Speaker 3: We continue to scale and expand on the connected retail capabilities we launched during the pandemic.
From virtual selling appointments to buy online pick up in store the endless aisle product availability.
Speaker 3: from virtual selling appointments, to buy online, pick up in store, to endless aisle product availability.
We launched our first ever full catalog, Ralph Lauren mobile shopping App in time for holiday.
Speaker 3: We launched our first ever full catalog Ralph Lauren mobile shopping app in time for holiday.
Seamlessly leveraging our connected retail capabilities to deliver almost personalized and content rich platform to date.
Speaker 3: seamlessly leveraging our connected retail capabilities to deliver our most personalized and content-rich platform to date.
Now touching on our work to operate with discipline to fuel growth.
Speaker 3: Now touching on our work to operate with discipline the fuel growth.
Our teams continue to operate with agility to mitigate macro headwinds delivering better than expected gross and operating margins again in the third quarter.
Speaker 3: Our teams continue to operate with agility to mitigate macro headwinds, delivering better than expected gross and operating margins again in the third quarter.
The global operating environment remains highly dynamic.
Notably with Covid supply chain and cost inflation still pressure points coming into calendar 2022 <unk>.
Speaker 3: The global operating environment remains highly dynamic, notably with COVID, supply chain, and cost inflation still pressure points coming into calendar 2022.
However, we remain confident in our ability to manage these headwinds to deliver further growth and operating margin expansion through our proven pricing power as well as our culture of cost discipline.
Speaker 3: However, we remain confident in our ability to manage these headwinds to deliver further growth and operating margin expansion through our proven pricing power, as well as our culture of costus.
This discipline is helping us to fuel our strategic investments in long term growth.
Speaker 3: This discipline is helping us to fuel our strategic investments in long-term growth.
And further.
Part of investing in our business also includes a commitment to investing in our people and innovation.
Speaker 3: And further, part of investing in our business also includes a commitment to investing in our people and innovation. A few recent highs.
A few recent highlights include the following.
In December the Ralph Lauren Corporate Foundation announced a $2 million donation and scholarships for students at historically black colleges and universities.
Speaker 3: In December , the Ralph Lauren Corporate Foundation announced a $2 million donation in scholarships for students at historically Black colleges and universities.
This is part of our broader commitment to invest directly in the future of black students with enhanced access to education, and advancing our recruitment and development programs for black talent.
Speaker 3: This is part of our broader commitment to invest directly in the future of Black students, with enhanced access to education, and advancing our recruitment and development programs for Black Town.
We were also recently proud to achieve a score of 100% once again on the human rights campaign Foundation's corporate equality index.
Speaker 3: We were also recently proud to achieve a score of 100% once again on the Human Rights Campaign Foundation's Corporate Equality Index.
And earn the designation as a best place to work for LGBTQ equality.
Speaker 3: and earn the designation as the best place to work for LGBTQ equality.
On the sustainability front, just a few weeks ago, we were incredibly excited to launch our first product made with Clarus a first to market patented technology that uses recycled cotton to create a high performance fabric.
Speaker 3: On the sustainability front, just a few weeks ago, we were incredibly excited to launch our first product made with Clarice, a first to market patent technology that uses recycled cotton to create a high performance fabric.
Developed by natural fiber welding, which we announced an investment in last year.
Speaker 3: Developed by Natural Fiber Welding, which we announced an investment in last year, CLARIS has all the features we've come to expect from synthetic performance materials like comfort, breathability, and moisture management, while reducing our reliance on synthetics that use fossil fuels such as polyester and nylon.
Paris has all the features we have come to expect from synthetic performance materials like comfort breathability and moisture management, while reducing our reliance on synthetics that use fossil fuels, such as polyester and nylon.
This is a critical step in scaling our use of recycled cotton.
Speaker 3: This is a critical step in scaling our user recycled cotton and making progress on our target of sustainably sourcing 100% of our key materials, including cotton by 2020.
And making progress on our target of sustainably sourcing, 100% of our key materials, including carbon by 2025.
This latest launch comes on the heels of our groundbreaking introduction last year of color on demand the world's first scalable zero wastewater cotton dying system.
Speaker 3: This latest launch comes on the heels of our groundbreaking introduction last year of Color on Demand, the world's first scalable zero-wastewater cotton dyeing system.
And lastly, we announced an exciting new limited partnership with Franklin venture partners in Silicon Valley.
Speaker 3: And lastly, we announced an exciting new limited partnership with Franklin Venture Partners in Silicon Valley.
Focused on female led businesses the partnership backs disruptive technologies and consumer solutions with the potential to positively transform the fashion industry.
Speaker 3: focused on female led businesses, the partnership back disruptive technologies and consumer solutions with the potential to positively transform the fashion industry.
Like our investment in Nashville fiber welding this move underscores our long standing commitments to innovation sustainability and diversity equity and inclusion.
Speaker 3: Like our investment in natural fiber welding, this move underscores our long-standing commitments to innovation, sustainability, and diversity, equity, and inclusion.
In closing.
Ralph and I are incredibly proud of the performance our teams have delivered through the first three quarters of the fiscal year.
Speaker 3: Ralph and I are incredibly proud of the performance our teams have delivered through the first three quarters of the fifth week.
All channels and geographies are showing strong momentum as we build on an increasingly healthy foundation leveraging work that we started well before the pandemic, but accelerated through this time of challenge.
Speaker 3: All channels and geographies are showing strong momentum as we build on an increasingly healthy foundation, leveraging work that we started well before the pandemic, but accelerated through this time of challenge.
Looking ahead, we are focused on driving sustainable growth supported by continued investments across digital our brand building and more personalized demand creation as well as key markets and categories.
Speaker 3: Looking ahead, we are focused on driving sustainable growth, supported by continued investments across digital, our brand building and more personalized demand creation, as well as key markets and categories.
We look forward to sharing more with you at our Investor Day. This summer.
With that I'll turn it over to James to discuss our financial results and I'll join her at the end to answer your questions.
Speaker 3: We look forward to sharing more with you at our investor day this summer.
Speaker 3: With that, I'll turn it over to Jane to discuss our financial results, and I'll join her at the end to answer your question.
Thank you Patrice and good morning, everyone.
Our third quarter results were very strong and well ahead of our expectations. Our growth was broad based across multiple levers in our business.
Speaker 4: Thank you Patrice and good morning everyone. Our third quarter results were very strong and well ahead of our expectations. Our growth was broad-based across multiple levers in our business.
And delivered improved operating margin and profit growth of 52%.
Speaker 4: and delivered improved operating margin and profit growth of 52%.
Consumer response to our fall and holiday offerings was strong and our teams are navigating supply chain challenges with agility.
Speaker 4: Consumer response to our fall and holiday offerings was strong. And our teams are navigating supply chain challenges with agility.
Their passion and tireless work produced strong progress across each of our key strategic initiatives.
Speaker 4: their passion and tireless work produced strong progress across each of our key strategic
We were particularly encouraged to report.
North Americas pivot back to high quality revenue and operating profit growth versus pre pandemic levels.
Speaker 4: We were particularly encouraged to report North America's pivot back to high-quality revenue and operating profit growth versus pre-pandemic levels.
Continued double digit growth across Europe , and Asia businesses.
Speaker 4: continue double-digit growth across Europe and Asia businesses.
And strong digital momentum.
All while investing for growth and delivering both growth and operating margin expansion.
Speaker 4: all while investing for growth and delivering both growth and operating margin expense.
We continued to generate strong cash flow and increased our cash returns to shareholders in the form of our dividend and share repurchases importantly, we achieved these results in the context of navigating a still uncertain macro environment.
Speaker 4: We continued to generate strong cash flow and increased our cash returns to shareholders in the form of our dividend and share reperto-
Speaker 4: Importantly, we achieved these results in the context of navigating a still uncertain macrochen Am ?? Tasking On Outnotes From Approaching Macro In The????
Total company revenues increased 27% to last year with positive growth in every region led by North America and Europe .
Speaker 4: Total company revenues increased 27% to last year, with positive growth in every region, led by North America and Europe .
Compared to third quarter fiscal 'twenty or double L Y revenues increased 4%.
Speaker 4: Compared to third quarter fiscal 20 or WLY, revenues increased 4%. This 4% includes seven points of negative impact from last year's strategic reset of our distribution and our CHAPS business, which moved to a licensed model, implying low double digit growth to WLY on an underlying basis.
This 4% includes seven points of negative impact from last year's strategic reset of our distribution and our chaps business, which moved to a license model.
Implying low double digit growth to double L y on an underlying basis.
Strong and highly profitable growth continued in our digital ecosystems, Ralph Lauren digital ecosystem sales grew more than 40% in constant currency to last year and more than 60% to double L y.
Speaker 4: Strong and highly profitable growth continued in our digital ecosystem.
Speaker 4: Ralph Lauren Digelika System sales grew more than 40% in constant currency to last year, and more than 60% to double L.Y.
This includes more than 30% growth in our owned digital business, reflecting our strong product assortments, new consumer acquisition expanded connected retail capabilities and high impact marketing.
Speaker 4: This includes more than 30% growth in our own digital business, reflecting our strong product of shortcomings, new consumer acquisition, expanded connected retail capabilities, and high impact markets.
Digital margins remained strongly accretive to our third quarter profitability.
Speaker 4: Digital margins remain strongly accretive to our third-quarter profitability.
Total company adjusted gross margin was 66% in the third quarter up 60 basis points to last year on a reported basis and 90 basis points in constant currency.
Speaker 4: Total company adjusted gross margin was 66 percent in the third quarter. Up 60 basis points to last year on a reported basis and 90 basis points in constant current
Despite increased freight headwinds of approximately 150 basis points.
Speaker 4: despite increased freight headwinds of approximately 150 bases.
Gross margins were better than expected despite lapping last year's unusual COVID-19 mixed benefits driven by better pricing and promotions along with favorable product mix adjusted gross margins increased 380 basis points to double L y.
Speaker 4: Gross margins were better than expected, despite lapping last year's unusual COVID-19.
Speaker 4: driven by better pricing and promotions along with favorable products.
Speaker 4: Adjust the gross margins increase 380 basis points to 00Y.
Our brand elevation work continued with third quarter AUR up 18% on top of 19% growth last year with increases across every region.
Speaker 4: Our brand elevation work continued with third quarter AUR up 18%. On top of 19% growth last year, with increases across every week.
Driven by favorable product mix and strong pricing power in the marketplace. We are confident in our ability to navigate this inflationary cycle.
Speaker 4: Driven by favorable product mix and strong pricing power in the marketplace, we are confident in our ability to navigate this inflationary site.
We expect to continue growing AUR above our long term targets into fiscal 'twenty three to mitigate mid to high single digit product cost inflation.
Speaker 4: We expect to continue growing AUR above our long-term targets into fiscal 23 to mitigate mid-to-high single-digit product costs inflation.
Adjusted operating expenses increased 22% to 51% of sales a 210 basis point decline to last year, but a 190 basis point increase to double our Y on increased marketing investments.
Speaker 4: Adjusted operating expenses increase 22% to 50.1% of sales, a 210 basis point declined to last year, but a 190 basis point increase to double LY on increased marketing investments.
Marketing grew 78% to 8% of sales in the third quarter to support a number of initiatives around holiday, our digital expansion into new markets and categories and new consumer acquisition.
Speaker 4: Marketing grew 78% to 8% of sales in the third quarter. To support a number of initiatives around holiday, our digital expansion into new markets and categories, and new consumer acquisitions.
As discussed last quarter, we shifted a significant portion of our marketing investments from the first half to the second half of the year to accelerate our brand momentum and direct to consumer expansion coming out of the pandemic.
Speaker 4: As discussed last quarter, we shifted a significant portion of our marketing investments from the first half to the second half of the year to accelerate our brand momentum and direct to consumer expansion coming out of the pandemic.
We expect a similar level of marketing dollar spend in the fourth quarter to support our spring 'twenty to <unk>.
Speaker 4: We expect a similar level of marketing dollars spend in the fourth quarter to support our spring 22 Lunar New Year and digital campaigns Including our new Ralph Lauren mobile app and digital home shop
Lunar new year, and digital campaign, including our new Ralph Lauren Mobile App and digital home shop.
Other fourth quarter Activations include Beijing Winter Olympics, and the Australian open as well as our continued focus on high value new consumer acquisition.
Speaker 4: Other fourth quarter activations include Beijing Winter Olympics and the Australian Open, as well as our continued focus on high-value new consumer acquisitions.
Based on increased confidence in our demand creation activities. We now expect marketing in the range of seven to seven 5% of fiscal 'twenty. Two sales. This year's elevated level of investment is supporting increased content creation new consumer.
Speaker 4: based on increased confidence in our demand creation activities. We now expect marketing in the range of seven to seven and a half percent of fiscal 22 sales. This year's elevated level of investment is supporting increased content creation, new consumer acquisition, our digital launches, new store openings, and key brand moments coming out of the peak of the pandemic.
<unk>, our digital launches new store openings and key brand moments coming out of the peak of the pandemic.
Adjusted operating margin for the third quarter was 15, 9% up 260 basis points to last year, and 190 basis points to double L y.
Speaker 4: Adjusted operating margin for the third quarter was 15.9%, up 260 basis points to last year, and 190 basis points to LLY. This was above our guidance of 13% to 13.5% margin, driven by stronger gross margins and operating expense leverage on higher sales. Moving to SED.
This was above our guidance of 13% to 13, 5% margin driven by stronger gross margins and operating expense leverage on higher sales.
Moving to segment performance, starting with North America.
A very strong holiday selling season accelerated third quarter revenue to 30% growth to last year with both wholesale and retail performing significantly above our expectation.
Speaker 4: A very strong holiday selling season accelerated third quarter revenue to 30% growth to last year with both wholesale and retail performing significantly above our expectations.
This was driven by improved product assortments, new full price consumers.
Speaker 4: This was driven by improved product assortments, new full-priced consumers, and market share.
And market share gains.
These strong results reinforce our confidence in North America, as a driver of growth into the future.
Speaker 4: These strong results reinforce their confidence in North America as a driver of growth into the future.
Compared to double L Y North America revenues increased 2% a meaningful improvement from first half trends. These results included a 15 point headwind from our strategic distribution reset and chaps, implying even stronger high teens growth too.
Speaker 4: Compared to WLY, North America revenues increased 2%, a meaningful improvement from first half trends. These results included a 15-point headwind from our strategic distribution reset and taps, implying even stronger high-teens growth to pre-COVID levels on an underlying basis.
Pre COVID-19 levels on an underlying basis.
Well resets are expected to have an even larger impact on our reported North America revenues in Q4, we expect continued sequential improvement on an underlying basis to double out why.
Speaker 4: While we sets our expected to have an even larger impact on our reported North America revenues in Q4, we expect continued sequential improvement on an underlying basis to double out Y.
In North America retail comps grew 38% to last year, and 9% to double L Y comps increased on improved traffic conversion and 24% AUR growth, reflecting our continued elevation around product mix marketing.
Speaker 4: In North America, retail comps grew 38% to last year, and 9% to WLY. Comp's increased on improved traffic, conversion, and 24% AUR growth. Reflecting our continued elevation around product mix, marketing, and more targeted pricing and promotion.
And more targeted pricing and promotions.
Brick and mortar comps accelerated to 40% driven by double digit growth in AUR basket sizes and traffic.
Speaker 4: Brick and mortar comps accelerated to 40 percent, driven by double digit growth in AUR, basket sizes, and traps.
We were particularly encouraged by improved trends in our factory stores, which have been disproportionately impacted by weaker traffic through the pandemic, including a lack of foreign tourists travel.
Speaker 4: We were particularly encouraged by improved trends in our factory stores, which have been disproportionately impacted by weaker traffic through the pandemic, including a lack of foreign tourist traps.
While U S border restrictions were eased in early November Q3, foreign Tourist's sales still declined 35% to pre pandemic levels, we continue to monitor for potential impacts from omnicom and other variants closely.
Speaker 4: While U.S. border restrictions were eased in early November , Q3, foreign tourists sales still declined 35% to pre-pandemic levels.
Speaker 4: We continued to monitor for potential impacts from Omicron and other variants close to
We drove further momentum in our own digital commerce business this quarter with comps up 32% supported by strong full priced holiday selling.
Speaker 4: We drove further momentum in our own digital commerce business this quarter with comps up 32 percent supported by strong full-priced holiday selling.
Our continued focus on full price new consumer acquisition helped deliver larger basket sizes at significantly higher quality of sales on our site.
Speaker 4: Our continued focus on full price new consumer acquisition helps deliver larger basket sizes at significantly higher quality of sales on our sites.
In North America wholesale revenues increased 11% to last year, including a 16 point negative impact from our deliberate resets and chaps.
Speaker 4: In North America wholesale, revenues increased 11% to last year, including a 16-point negative impact from our deliberate resets and chats.
Underlying growth and quality of sales continued to exceed our expectations for the quarter led by our full price businesses.
Speaker 4: Underlying growth and quality of sales continue to exceed our expectations for the quarter. Led by our full price business.
Total sell out was up 25% to double L Y in the third quarter led by continued market share gains in men's and kids.
Speaker 4: Total sellout was up 25% to WLY in the third quarter. Led by continued market share gains and men's, kids, home, and women's ready to wear in our key parts.
Home and women's ready to wear in our key partners.
Our brand elevation in this channel continued with wholesale AUR up more than 30% to double L. Y. This fall as we elevated our assortments and pulled back on seasonal promotions.
Speaker 4: Our brand elevation in this channel continued with wholesale AUR up more than 30% to double-ly this fall. As we elevated our assortments and pulled back on seasonal promotion.
And our momentum on wholesale dot com digital sell out growth of more than 35% to last year and 50% to double L y.
Speaker 4: and our momentum on wholesale.com drove digital sell out growth of more than 35% to last year and 50% to double L.Y.
Inventories at a full price North America Department store partners remain very healthy and clean at the end of the quarter declining more than 20% to double L y.
Speaker 4: Inventories at our full price North America department store partners remained very healthy and clean at the end of the quarter, declining more than 20% to double out a lot.
Moving on to Europe third quarter revenue increased 47% on a reported basis and 50% in constant currency above our expectations on a double L Y basis revenue growth accelerated 6% with stronger performance in France and the UK.
Speaker 4: Moving on to Europe . The recorded revenue increased 47% on a reported basis and 50% in constant currency. Above our expectations.
Speaker 4: On a double LY basis, revenue growth accelerated 6 percent with stronger performance in France and the UK more than offsetting COVID-related restrictions in Germany and the Netherlands near the end of the quarter.
More than offsetting COVID-19 related restrictions in Germany, and the Netherlands near the end of the quarter.
Europe comps increased 55% brick and mortar comps were up 68% with double digit increases across all markets.
Speaker 4: Europe COMPs increased 55%. Brick and mortar comps were up 68% with double-digit increases across all.
Digital commerce comps increased 27% on top of a challenging 68% last year, when COVID-19 related closures shifted more business online.
Speaker 4: Digital Commerce Cumps increased 27%. On top of a challenging 68% last year, when COVID-related closures shifted more business on-
Europe wholesale exceeded our expectations again, this quarter driven by stronger sell out and reorder trends across wholesale brick and mortar and dot com, we launched 30 campaigns with our top partners to deliver 500 million impressions over the quarter, including special.
Speaker 4: Your poll sale exceeded our expectations again this quarter, driven by stronger sellout and reorder trends across wholesalebrickinworderand.com. We launched 30 campaigns with our top partners to deliver 500 million impressions over the quarter, including special holiday gifting experience.
Holiday gifting experiences.
Turning to Asia.
Revenue increased 16% on a reported basis and 20% in constant currency.
Speaker 4: Turning to Asia. Revenue increased 16% on a reported basis and 20% in constant current.
This quarter represents our highest ever revenue and operating profit for the region. Despite ongoing COVID-19 impacts our Asia retail comps increased 14% with 64% growth in digital commerce, and 12% growth in brick and mortar store.
Speaker 4: This quarter represents our highest ever revenue and operating profit for the region despite ongoing COVID impacts. Our Asia retail comps increased 14 percent with 64 percent growth in digital commerce and 12 percent growth in brick and mortar stores.
Tours.
Performance exceeded our expectations going into the quarter, primarily due to strong recovery trends across every key market led by Japan and Korea.
Speaker 4: Performance exceeded our expectations going into the quarter. Primarily due to strong recovery trends across every key market led by Japan and Korea.
China mainland sales remained robust despite government mandated COVID-19 controls in certain areas.
Speaker 4: China mainland sales remained robust despite government mandated COVID controls in certain areas.
Mainland sales grew 22% to last year, including two points of negative impact from Covid closures in the quarter.
Speaker 4: mainland sales grew 22% to last year, including two points of negative impact from COVID closures in the quarter, and grew 65% to double a lot.
And grew 65% to double L y.
Our digital ecosystem momentum also continued in Asia this quarter with triple digit growth to double L y.
Speaker 4: Our digital ecosystem momentum also continued in Asia this quarter with triple digit growth to WLY. This was supported by key events like Singles Day and our 12-12 activations. Where our brands ranked number two on both P-MALL's luxury pavilion and JD luxury plaps.
This was supported by key events like Singles' day, and our 12 12, Activations, where our brands ranked number two umble tmall luxury pavilion and JD luxury platform.
Moving on to the balance sheet, we ended the quarter with 3 billion in cash and investments and $1 6 billion in total debt, which compares to $2 8 billion in cash and investments and $1 6 billion in total debt last year.
Speaker 4: Moving on to the balance sheet. We ended the quarter with 3 billion in cash and investments and 1.6 billion in total debt, which compares to 2.8 billion in cash and investments and 1.6 billion in total debt last year.
Net inventory increased 7% slightly below our plan due to ongoing global supply chain delays, which will shift some inventories into our fiscal Q4.
Speaker 4: Net inventory increased 7%. Slightly below our plan due to ongoing global supply chain delays, which will shift some inventories into our fiscal Q4.
While still highly dynamic we are seeing some improvement on lead times and our inventories are well positioned to meet demand for the spring season, thanks to the agility of our teams and a flexible inventory allocation process.
Speaker 4: While still highly dynamic, we are seeing some improvement on lead times and our inventories are well positioned to meet demand for the spring season. Thanks to the agility of our teams and a flexible inventory allocation process.
We now expect to end the fiscal year with inventories roughly in line with sales growth to support the upcoming spring 'twenty. Two season overall, we continue to manage our inventories closely to demand in both our direct to consumer and wholesale channels.
Speaker 4: We now expect to end the fiscal year with inventories roughly in line with sales growth to support the upcoming spring 22 season. Overall, we continue to manage our inventories closely to demand in both our directed consumer and wholesale channels.
Looking ahead, our outlook is based on our best assessment of the current macro environment, including global supply chain challenges omicron.
Speaker 4: Looking ahead, our outlook is based on our best assessment of the current macro environment, including global supply chain challenges, on the Crom and other COVID related disruptions.
And other COVID-19 related disruptions.
For the full year fiscal 'twenty two we are again, raising our top line outlook based on stronger than expected demand across geographies. We now expect revenues to grow in the range of 39% to 41% in constant currency up from 34% to 36%.
Speaker 4: For the full year fiscal 22, we are again raising our top line outlook based on stronger than expected demand across geographies.
Speaker 4: We now expect revenues to grow in the range of 39 to 41% in constant currency, up from 34 to 36% previously. All on a 50%
Sent previously.
On a 53 week basis foreign currency is expected to negatively impact revenues by about 70 basis points.
Speaker 4: Foreign currency is expected to negatively impact revenues by about 70 bases.
We are also raising our operating margin outlook to approximately 13% on both a reported and constant currency basis up from 12 to 12, 5% previously.
Speaker 4: We are also raising our operating margin outlook to approximately 13% on both a reported and constant currency basis, up from 12 to 12.5% previous.
Reflecting our stronger performance through the first three quarters of the year.
Speaker 4: reflecting our stronger performance through the first three quarters of the year.
Compared to fiscal 'twenty or double L Y our updated outlook now implies we are on track to end this year with full year revenues roughly in line with pre pandemic levels. Despite about 10 points of headwind from our strategic resets.
Speaker 4: Compared to fiscal 20 or double LY, our updated outlook now implies we are on track to end this year with full-year revenues roughly in line with pre-pandemic levels, despite about 10 points of headwind from our strategic research.
Operating margin more than 250 basis points higher.
And profit dollars expanding by more than $175 million as we grow off a healthier and more profitable base.
Speaker 4: operating margin more than 250 basis points higher and profit dollars expanding by more than 175 million as we grow off a healthier and more profitable dates.
For the fourth quarter, we expect constant currency revenues to increase about 17% to 18%.
Speaker 4: For the fourth quarter, we expect constant currency revenues to increase about 17 to 18%.
Foreign currency is expected to negatively impact revenues by about 400 basis points.
Speaker 4: Foreign currency is expected to negatively impact revenues by about 400 bases.
We expect gross margin expansion of about 160 to 180 basis points in constant currency or.
Speaker 4: We expect gross margin expansion of about 160 to 180 basis points in constant current.
Or 50 to 70 basis points on a reported basis.
Speaker 4: or to C just 70 basis points on a reported
Continued growth in AUR should more than offset increased freight and material costs.
Speaker 4: Continued growth in AUR should more than offset increased freight and material costs.
We expect fourth quarter operating margin to expand approximately 80 basis points to four 2% in constant currency with continued gross margin expansion more than offsetting increased marketing investments to fuel future growth.
Speaker 4: We expect fourth quarter operating margin to expand approximately 80 basis points to 4.2% in constant currency with continued gross margin expansion, more than offsetting increased marketing investments to fuel future growth.
Foreign currency is expected to negatively impact operating margin by approximately 120 basis points.
Speaker 4: Foreign currency is expected to negatively impact operating margin by approximately 120 bases.
We expect fourth quarter and full year tax rate around 21% to 22%.
Speaker 4: We expect fourth quarter and full year tax rates around 21 to 22%
Lastly, our capital allocation priorities remain largely unchanged with our focus on reinvesting behind our key strategic initiatives and returning excess free cash flow to shareholders in the form of dividends and share repurchases.
Speaker 4: Lastly, our capital allocation priorities remain largely unchanged with a focus on reinvesting behind our key strategic initiatives and returning excess free cash flow to shareholders in the form of dividends and share repayments.
We completed $300 million in share buybacks in the third quarter with approximately $280 million remaining on our current authorization plus an additional $1 5 billion repurchase plan recently approved by our board.
Speaker 4: We completed 300 million in share buybacks in the third quarter, with approximately 280 million remaining on our current authorization.
Speaker 4: plus an additional 1.5 billion repurchase plan recently approved by our board.
In closing our teams around the world are operating with agility and passion to drive brand desirability and deliver growth across multiple levers.
Speaker 4: in closing. Our teams around the world are operating with agility and passion to drive brand desireability and deliver growth across multiple levels.
All while navigating a still volatile global environment.
Our strong year to date performance underscores the timelessness of Ralph's creative vision, our strengthening consumer base and the power of our brand.
Speaker 4: all while navigating a still volatile global environment.
Speaker 4: our strong year-to-date performance underscores the timelessness of Ralph's creative vision, our strengthening consumer base, and the power of our brains.
We are playing offense to leverage our momentum and invest in key strategic initiatives to support our long term growth and value creation.
Speaker 4: We are playing offense to leverage our momentum and invest in the key strategic initiatives to support our long-term growth and value creation. With that, let's open up the call for your questions. Ladies and gentlemen.
Let's open up the call for your questions.
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One moment please for the first question.
The first question comes from Michael Binetti with Credit Suisse.
Hey, guys good morning.
Thanks, a lot for all the detail you gave us a lot to choose from here and a lot of areas of the repositioning looked like they're lifting off all at once maybe I'll start there you know there's been a lot of moving parts over the last two years through Covid and through the strategic resets as you guys enter calendar 'twenty. Two here, maybe you could talk to us a little bit about how you see Ralph Lauren position for the future where do you see the biggest difference.
Speaker 5: Thanks a lot for all the details. You have a lot to choose from here and a lot of areas of the repositioning look like they're lifting off all at once. Maybe I'll start there. There's been a lot of moving parts.
Speaker 5: over the last two years through COVID and through the strategic reset.
Speaker 5: As you guys enter calendar 22 here, maybe you could talk to us a little bit about how you see Ralph Lauren position for the future, where you see the biggest differences in the go-forward strategy. And then Jane, here we are with the new guidance we're at mid-teens, even margins for the year. That's in line with your long-term guide. So I guess the question there is, what's next, how should we think about?
<unk> is in the go forward strategy.
And then Jane you know here, we are with the new guidance, we're at mid teens EBIT margins for the year. That's in line with your long term guide. So I guess the question there is.
What's next how should we think about EBIT margins as we think about calendar 'twenty two given all the acute cost the industry is experiencing right now which are arguably some of them will be tertiary but are a transitory so but maybe your longer term thinking on margins, but also I'm really focused on 'twenty two how you see the the margin profile rolling forward given what you've.
Speaker 5: As we think about calendar 22, given all the acute costs, the industry is experiencing right now, which arguably some of them will be tertiary, but are at transdory so, but maybe you're longer term thinking on margins, but also I'm really focused on 22, how do you see the margin profile rolling forward, given what you just delivered in the quarter? Thanks.
You just delivered in the quarter. Thanks.
Sounds good morning, Michael.
Listen on the first part of your question I would outline a few things.
Speaker 3: Sounds good. Good morning, Michael. Listen, on the first part of your question, I would outline a few things. First, we have fundamentally...
First we are fundamentally repositioned our business.
Over the past couple of years.
And this.
Is clearly visible through the performance not just this quarter as you highlighted but also over the prior quarters and clearly as James closed in her opening remarks.
Speaker 3: And this is clearly visible through the performance not just this quarter, as you highlighted, but also over the prior quarters. And clearly, as Jane closed in her opening remarks, the company is back on off.
The company is back on offense.
And so based on that I have a lot of confidence in our ability to comp this year's outsized recovery growth.
Speaker 3: And so based on that, I have a lot of confidence in our ability to comp this year's outsized recovery growth and deliver sustainable growth ahead.
And deliver sustainable growth ahead and.
Here's what.
Our company is fundamentally healthier than it was two years ago.
If you look at the different elements.
Speaker 3: Our company is fundamentally healthier than it was two years ago.
This elevated strongest desirable around the world, we're bringing in a younger higher value consumer less price sensitive consumer and our growth is broad based geographies channels and brands.
Speaker 3: The brand is elevated, strong, it's desirable around the world. We're bringing in a younger, higher value consumer, less price-hunting.
So looking to the future we clearly have multiple engines for growth that are delivering both now.
Speaker 3: And our growth is based on geography, channels and...
Speaker 3: So looking to the future, we clearly have multiple engines for growth that are delivering both now and we are confident are sustainable.
And we are confident are sustainable for the mid to long term.
And there were really three that I would call out first of all on the product front, our unique lifestyle positioning means we can drive our core.
While also continuing to scale high potential undeveloped underdeveloped categories like home.
Speaker 3: while also continuing to scale high potential underdeveloped categories like home, out-of-wear, and others.
Outerwear and others.
The second one is on the channel front.
Alright, I think as you've seen through the performance this past quarter than in prior quarters, our digital business is strong.
Speaker 3: I think as you've seen through the performance of this past quarter and the prior quarters, our digital business is strong.
Rob base, whether that's our own digital or pure players our bricks and clicks.
Speaker 3: broad-based, whether that's our own digital or pure players or bricks.
We've got a compelling blueprint for retail growth and I'm, particularly energized by the fact that we're now opening stores in the U S, which we haven't done in almost a decade.
Speaker 3: You've got a compelling blueprint for retail growth, and I'm particularly energized by the fact that we're now opening stores in the US, which you haven't done in almost a decade.
And then the third area is our wholesale is now right sized its on a healthy foundation and.
Speaker 3: And then the third area is our wholesale is now right size. It's on a healthy foundation. And if you look at the way the
And if you look at the way the consumer is voting.
Looking at market share, we're growing share across our core categories again this past quarter.
Speaker 3: Looking at market share, we're growing share across our core categories.
So lots of opportunities from a channel standpoint, and then finally from a geographical standpoint, you know it takes a key city lens to the world and we look at our top 30 cities around the world.
Speaker 3: So lots of opportunities from a channel standpoint. And then finally from a geographical standpoint, you know we take a key city lens to the world, and we look at our top 30 cities around the world. And we see growth opportunities across all the key markets, notably in North America. Now, we're obviously not immune to macro challenges, but I hope.
And we see growth opportunities across all the key markets.
Notably in North America.
No, we're obviously not immune to macro challenges.
But I hope you all see that we built a business.
The supply chain that are both <unk>.
Strong and resilient.
And we have demonstrated pricing power as we've been elevating AUR consistent with our brand elevation work from for several years now.
Speaker 3: And we have demonstrated pricing power as we've been elevating AUR consistent with our brand elevation work for several years.
You saw that again in this past quarter. So the short answer Michael to your question is that we're optimistic about the future we have multiple levers to fuel our growth not just over the next year, but well beyond that.
Speaker 3: saw that again in this past quarter. So the short answer, Michael, to your question is that we're optimistic about the future. We have multiple levers to fuel our growth, not just over the next year, but well beyond.
And they'll get to give his.
Your perspective on our margins alright, So microchip review called out our third quarter is very encouraging to us from you know the margin expansion that we were able to achieve and of course it gives us confidence.
Speaker 4: and they'll train them to get us perspective on our margin. All right. So, Michael, just as you called out, our third quarter is very encouraging to us from the margin expansion that we were able to achieve. And of course, it gives us confidence as we move into our next fiscal year. We're not guiding specifically, but I can tell you right now, we still feel that our mid-teens OI margin is the right one.
As we move into <unk>.
Our next fiscal year, we're not guiding specifically, but I can tell you right now we still feel that our mid teens Oi margin is the right long term target for us what I think you've seen US go river is sequential progress.
Speaker 4: What I think you've seen, the deliver is sequential progress along that growth. That's our mindset right now. And we are very clearized about the challenges going in...
Along that growth that's our mindset right now and we are very clear eyed about the challenges going into next year. I think we've stated that you know we still expect gross margin expansion to be a driver for us into next year.
Speaker 4: I think we've stated that we still accept close margin expansion to be a driver.
And our increased revenue growth is going to hell is going to leverage SG&A to help us deliver our EBIT.
Speaker 4: and our increased revenue growth is going to leverage S-GNA to help us deliver EBITMARG.
EBIT margin expansion as we move into the long term, but much more for you as we come out of the fourth quarter, We're planning an investor day.
Speaker 4: Well, much more for you as we come out of the fourth quarter. We're planning an investor day to drive even more perspective, but that's the way we're thinking about it now.
To for IV to drive even more perspective, but that's the way we're thinking about it now.
Thanks, a lot guys. Please.
Thank you. The next question comes from Beth Reed with choice Securities.
Hi, Good morning, Thank you and can you give us some more color on what drove the gross margin outperformance in the third quarter and then also what gives you confidence in your ability to drive further gross margin expansion I guess just beyond this year given increased cost headwinds and then relatedly with AUR trends year to date running well ahead of you.
Speaker 6: Hi, good morning. Thank you. Can you give us a more color on what drove the gross margin out performance in the third quarter? And then also what gives you confidence in your ability to drive further, gross margin expansion? I guess this beyond this year, given increased cost headwinds. And then, relatedly, which AUR trends year-to-date, running well ahead of your raised high single digit outlook, just curious where you've seen the most upside versus your expectations. You know, are there certain categories or channels or regions that you'd call out? Thank you. You still haven't gone ahead. Left corner. Right? Right. Left corner. Right corner, left corner, right corner. Right corner, right corner, left corner, left corner. Right corner, right corner, left corner, left corner. Right corner, left corner, left corner. Right corner, left corner, left corner. Right corner. Right corner, left corner. Right corner. Right corner. Right corner ch Chase at. Right corner Chin drive. Right corner sides. linear Side Turn. right corner Flat bottom power up side. Right corner end. Left corner Not water Moving backs Next east bustling and pulling back. right corner box
Raised high single digit outlook I'm, just curious where you're seeing the most upside versus your expectations. You know are there certain categories or channels or regions that you'd call out. Thank you.
Of course, good morning, Beth. Thank you yeah as I said, we were very pleased with our Q3 performance.
Speaker 4: Good morning, Beth. Thank you. You know, as I said, we were very pleased with our Q3 performance, and we're pleased that we've been able to raise our gross margin outlook again this quarter, you know, all in the context of comping last year's outsized gross margin gains that were primarily channel mix-driven.
And we're pleased that we've been able to raise our gross margin outlook again this quarter.
All in the context of Comping last year's outsized gross margin gains that were primarily channel mix driven.
Offsetting this year supply chain and logistics pressures and were able to raise gross margin, while still gaining momentum across all of our regions. Even on a P. Pre pandemic basis. So very encouraged this holiday specifically what drove.
Speaker 4: offsetting this year's supply chain and logistics pressures.
Speaker 4: and was able to raise growth margin while still gaining momentum across all of our
Speaker 4: even on a pre-pandemic basis. So very encouraging.
Our outsized performance was really our consumers, which shopped early.
Speaker 7: This holiday specifically, what drove our outsized performance was really our consumers, which shopped early.
And shopped at full price.
Got ahead of the curve on the holiday and we maintained that momentum through the holiday without pulling significant promotional lever we were much less promotional this year than we were last year I think that's based on the desirability of our brands, we're seeing that in the consumer scores that Patrice mentioned.
Speaker 7: and shopped at full price, so we got ahead of the curve on the holiday, and we maintained that momentum through the holiday without pulling significant promotional levers. We were much less promotional this year than we were last year. I think that's based on the desirability of our brand. We're seeing that in the consumer scores that Patrice mentioned.
And it's very strong reaction to our product so very encouraging there.
Speaker 7: and very strong reaction to our products, so very encouraging there. As we think about the long term, we really have multiple tailwinds to leverage. And again, given our view of the upcoming inflationary cycle, we feel well-positioned to leverage them. First of all, there's the increasing desirability.
As we think about the long term, we really have multiple tailwind to leverage and again, given our view of the of the upcoming inflationary cycle, we feel well positioned to leverage them. You know first of all there's increasing desirability of our brand.
There's the new full price consumer acquisitions that we're doing bigger basket sizes higher AUR purchasing.
Speaker 4: Second, there's the new full-priced consumer acquisitions that we're doing. Bigger basket sizes, higher AURP.
We also have some I'd say long proven pricing capabilities across the multiple levers.
Speaker 4: We also have some, I'd say, long-proven pricing capabilities across the mold.
You know, we don't just take a like for like pricing increase.
Increase across the board, we really look at the competitive environment.
Speaker 7: don't just take a life for like pricing increase across the board. We really look at the competitive environment. We balance that with promotion, driving into personalization. All of those tools will be leveraging into next.
That was pretty much promotion driving into personalization all of those tools will be leveraging into next year, our product elevation and category migration is working.
Both our AUR in our gross margin.
Speaker 7: Our product elevation and category migration is working and enhancing both our AUR and our gross margin.
And we have favorable geographic and channel mix on our side.
Speaker 7: And we have favorable geographic and channel mix on.
Now on the headwind side, we've been very clear that the magnitude of gross margin expansion in fiscal 'twenty, three will be tempered by crop by cost inflation, especially raw materials costs.
Speaker 7: Now on the headwind side, we've been very clear that the magnitude of gross margin expansion in fiscal 23 will be tempered by cost inflation. It's that.
Which we called out early last quarter.
We expect to be with us through the spring of 'twenty.
Speaker 7: which we called out early last quarter, and we expect to be with us through the spring of 2020.
Yeah.
But this modest gross margin expansion combined with SG&A leverage is really what allows us to reiterate what I just said to Michael which is we still believe our mid teens guidance is the right guidance and sequentially improve filings yeah, I cant talk about my confidence in gross margin without really calling.
Speaker 7: But this modest gross margin expansion combined with SCNA leverage is really what allows us to reiterate what I just said to Michael, which is we still believe our mid-teens guidance is the right guidance and sequentially improved. And finally, you know, I can't talk about my confidence in gross margin without
Out the agility and capability and passion of our team they've done a magnificent job managing through some challenging environments and we know they are committed to doing that in the future.
Speaker 7: really calling out the agility and capability and passion of our teams. They've done a magnificent job.
Speaker 7: managing through some challenging environments and we know they're committed.
To give some color on specific categories or channels or geographies, where we've seen different AUR growth.
Speaker 3: and best to give some color on specific categories or channels or joggers.
The one thing I would highlight because it was actually pretty broad based and you saw right plus 18% on top of plus 19% last year total company.
Speaker 3: where we've seen different AUR growth. The one thing I would highlight, because it was actually pretty broad-based, and you saw it, right? Plus 18% on top of plus 19% last year total company. Pretty broad-based. But the thing we're clearly delivering on is the acceleration in North Korea.
Pretty broad based but the thing we're clearly delivering on is the acceleration in North America.
Alright, and our AUR growth rate progression is actually the fastest of all the regions and.
Speaker 3: Right, and our AUR grow through a progression is actually the fastest of all the
And we now have all the engines of AUR growth by channel.
Speaker 3: And we now have all the engines of AUR growth by channel.
Motoring ahead, particularly wholesale right.
Speaker 3: motoring ahead, particularly wholesale. And I really appreciate the partnership we have with our key wholesale players here in North America, because I think we're fully aligned on how we want to approach promotional strategies.
I really appreciate the partnership we have with our key wholesale players here in North America, because I think we're fully aligned on how we want to approach promotional strategy pricing.
And product elevation as part of our overall proposition we saw very strong AUR growth in wholesale we saw very strong AUR growth on our digital business as well as across our brick and mortar presence. So.
Speaker 3: pricing and product elevation as part of our overall proposition.
Speaker 3: We saw very strong a UR growth in wholesale. We saw very strong a UR growth in our digital business as well as across.
This is the one that started later.
All three regions right really the journey started first in Asia, then in Europe and now in North America, we're still very early innings, particularly in wholesale.
Speaker 3: This is the one that started latest of all three regions, right? Really the journey started first in Asia.
Speaker 3: then in Europe and now in North America, we're still very early earnings, particularly in wholesale. So as we look at it through that lens, we think there are many, many more quarters to come in our ability to drive AUR. Maybe not at the pace we've delivered this year, but certainly consistently.
If you look at it through that lens. We think there are many many more quarters to come and our ability to drive AUR, maybe not at the pace. We've delivered this year, but certainly consistent AUR growth moving forward.
The next question.
Thank you. The next question comes from Lauren that's a rescue with BNP Paribas Exane.
Oh, good morning, and thank you very much for taking my question.
Jane I think you said that the reset was about 700 basis point impact to <unk> North North America.
Speaker 8: Oh, good morning and thank you very much for taking my question. Jane, I think you said that the reset was about 700 bases point impact to 3CN North America.
I think you mentioned that it might have a bigger impact in <unk> just wanted to be sure. If you can quantify and then I think Patrice.
Speaker 8: And I think you mentioned that it might have a bigger impact than 4Q. Just want to be sure if you can quantify it. And then I think the trees.
On this note I think you said in the prepared remarks.
Great to hear that the reset is significantly behind you just curious to know is there any more left to consider when we think about the year out at your Investor day.
Speaker 8: On this note, I think you said in your prepared remarks, it's great to hear that the reset is significantly behind you. Just curious to know, is there any more left to consider when we think about the year out and your investor day?
Yeah, let me take the the.
First part of your question, Yes, It was 700 basis points to full pump and full company and obviously much more significant to North America.
Speaker 7: The first part of your question, yes, it was 700 basis points to full company, and obviously much more significant to North America.
And Ah about 15 basis points 15 point impact in North America as we move forward.
Speaker 7: about 15 basis point 15 point impact in North America. As we move forward, and you think about the reset, we'll anniversary the department store exits.
When you think about the resets, we will anniversary the department store exits.
This year, along with the di do reset as we as we say as we come out of the fourth quarter, there will still be some pressure, notably in wholesale because of our chaps conversion.
Speaker 4: this year along with the Daigou resets as we come out of the fourth quarter. There will still be some pressure, notably in wholesale, because of our CHAPS conversion to a licensed model, and that pressure point will be notable in North America in the fourth quarter. So it's important to look at those resets. The fourth quarter is meaningful.
To a licensed model and that pressure point will be notable in North America in the fourth quarter. So it's important to look at those resets the fourth quarter is meaningful.
Of course, we laugh out as a total company of club Monaco as of June , but that you're right to keep a look out, especially in North America on that reset impact in the fourth quarter.
And just to double down on the North American number therefore, I think from a double L Y standpoint, North America was up something like 16, or 17% like for like Reits, which.
Hopefully you feel the enthusiasm and the confidence we have in our trajectory in North America, because the numbers are clearly playing that out.
Speaker 3: Right, which that's what hopefully you feel the enthusiasm and the confidence we have in our trajectory in North America because the numbers are clearly playing
Beyond the things that gene mentioned in terms of reset level I think we are complete so we will continuously challenge every location in which the brand is sold.
Speaker 3: Beyond the things that Jane mentioned in terms of Reset Laurent, I think we are complete. So we will continuously challenge every location in which the brand is sold.
But that's part of our ongoing model as we continue to make sure that the kind of showing up in the right place and that is obviously delivering.
Speaker 3: Part of our ongoing model was we continued to make sure that kind of showing up in the right place and is obviously delivered.
Attractive returns, but the heavy lifting from a brand portfolio standpoint from a door closure standpoint from a pullback on Daegu online and a major pullback relative to promotional activity.
Speaker 3: attractive returns, but the heavy lifting from a brand portfolio standpoint, from a door closure standpoint, from the pullback on Daigoo Online.
That will be behind us as we close out this fiscal year.
Speaker 3: and major pullback relative to promotional activity that will be behind us as we close out this fiscal year.
Thank you next question.
Thank you. The next question comes from Matthew Boss with Jpmorgan.
Great. Thanks, and congrats on a nice quarter. Thanks, Matt Thank you Matt.
So two part question Patrice can you elaborate on the hybrid wardrobes behavior that you cited just changes that you've made to position the brand for this backdrop and then Jane if we think about your low to mid single digit top line growth algorithm before the pandemic.
Speaker 9: So two part questions. Patrice, can you elaborate on the hybrid war-drobbing behavior that you cited and just changes that you've made to position the brand for this backdrop? And then, Jane, if we think about your low-demand single-digit top-line growth algorithm before the pandemic could happen...
I guess, maybe what's your confidence today potentially exiting the pandemic as we think about growth drivers in North America, Europe , and Asia, maybe relative to those drivers as we saw a couple of years ago before the crisis.
Speaker 9: I guess maybe what's your confidence today, potentially exiting the pandemic, is we think about growth drivers in North America, Europe and Asia, maybe relative to those drivers as we saw a couple of years ago before the crisis.
Sure good morning, so listen on product.
The first thing I would call out is that the our lifestyle positioning the breadth of our offering really puts us in a strong competitive position to flex with consumer needs and their wardrobe evolution.
Speaker 3: Sure, morning mat. So listen, on product, you know, the first thing I would call out is that our lifestyle positioning, the breadth of our offering, really puts us in a strong competitive position to flex with consumer needs and their wardrobe ever.
And I think that's a real differentiating point for our company relative to many peers in this in this industry.
Speaker 3: And I think that's a real differentiating point for our company relative to many peers and
The second thing I would call out is the fact that we've seen a new product apparel cycle start in the spring.
Speaker 3: The second thing I would call out is the fact that we've seen a new product apparel cycle start in the spring. And then we talked it together last time.
We talked it together last time and accelerated in the fall.
And what's exciting about it is I think it's still very early innings with many tailwind because the consumer hasn't really fully returned to work and certainly hasnt fully returned to do more regular external activities. So what we're seeing on the hybrid.
Speaker 3: And what's exciting about it is I think it's still very early innings with many tailwinds ahead because the consumer hasn't really fully returned to work and certainly hasn't fully returned to do more regular external activities.
Approach by consumers is.
On the one hand, a replenishment of their core wardrobe.
Speaker 3: approach by consumers is on the one hand a replenishment of their core work.
And on the other hand, the gravitation towards newness and sophistication, let me, let me Peel the onion, a little bit on that to give you a specific product category. Examples so replenishing core elements of their wardrobe those are things like denim.
Speaker 3: And on the other hand, a gravitation towards newness and sophistication. Let me peel the onion a little bit on that to give you specific product quality.
Speaker 3: So there'll be finishing core elements of the reward role. Those are things like denim sweat.
Sweaters those types of products.
On the pivoting towards newness and sophistication of two things I would call out one is the elevation of casual looks right.
Speaker 3: On the pivoting towards newness and sophistication, there are two things I would call that. One is the elevation of casual look.
Brian This is clearly driving newness in our Assortments to give you a specific set of examples cashmere hoodies.
Speaker 3: Right, and this is clearly driving newness in our assortment to give you a specific set of examples, caching your hoodies. Prudence?
Novelty and matching fleece for example.
And then the other element to call out here is items two were outside of the house right items were outside of the house during the day through we're seeing a significant pick up in our sports coats things significant pick up in our outerwear and then elements to where in the evening as people go out that's a smaller parts of our business, but it has an important halo effect.
Speaker 3: And then the other element to call out here is items to wear outside of the house, right? Items to wear outside of the house during the day, so we're seeing a significant pickup in our sportswear.
Speaker 3: can pick up in our outerwear. And then elements to wear in the evening as people go out, now that's the smaller parts of our business, but it has an important halo effect overall, so those are evening gowns and tuxedos. We, based on where the consumer is and where the consumer is going, are uniquely positioned to serve this hybrid need and expectation. And as I mentioned a couple minutes ago, we expect this to continue and I think this will be actually a really nice tailwind based on how we
Overall, so those are evening gowns and tuxedos.
Based on where the consumer is and where the consumer is going are uniquely positioned to serve this hybrid need and expectation and as I mentioned a couple of minutes ago. We expect this to continue and I think this will be actually a really nice tailwind based on how we are positioned.
Great Matt just to answer the second part of your question.
On what has changed since our last Investor day, when we had a.
Speaker 4: Great Matt, just to answer the second part of your question.
Speaker 4: on what's changed since our last investor day when we had a load of mid single-digit
Low to mid single digit growth algorithm I would say the biggest change is that our business is now on a healthier base from which to grow so at that time, we still had we still had died due that we had to address we work to where we want it to be a strict.
Speaker 7: I would say the biggest change is that our business is now on a healthier face from which to grow. So at that time,
Speaker 7: We still had Daigoo that we had to address. We weren't where we wanted to be.
T generally in off price, we knew we had some wholesale cleanup to do.
Speaker 4: in off-priced, we knew we had some wholesale cleanup to do and that worked.
And that work is done we also were very nascent in our pricing journey, so what's different today.
Speaker 4: We also were very nascent in our pricing journey, so what's different today is that we have proven our pricing capabilities across all three regions. At the time, we had Asia that we had a good proof case in, Europe was sort of early innings on that journey, and North America was still to come. We now have confidence across.
Is that we have proven our pricing capabilities across all three regions at the time, we had Asia that we had a good proof case in Europe , which was you know sort of early innings on that journey and North America was still to come we now have confidence across our regions and I think that.
That underscores what's different as we think about the future that North America is now positioned for growth that's it.
Speaker 4: And I think that that underscores what's different as we think about the future that North America is now positioned for growth. That's probably that's the biggest driver, and it's all, you can always go stronger and faster.
Probably that's the biggest driver and it's all you can always go.
Stronger and faster with a three piston engine.
Next question please.
Thank you and our next question comes from Erinn Murphy with Piper Sandler.
Great. Thank you and good morning, and congrats on the momentum in the business and my question is for Jane on North America I'm curious at what point you would expect to see unit growth again, and then if I can just follow up with Patrice on China. It definitely felt that that region has been a positive outlier for you versus many other peers, particularly this earnings season.
Speaker 10: Great. Thank you. And good morning and congrats on the momentum in the business. Uh, my question is for Jane on North America. I'm curious at what point you would expect to see unit gross again. And then if I can just follow up with Patrice on China, it definitely felt that that region has been a positive outlier for you versus many other peers, particularly this earnings season. So curious if you could talk a little bit more about what you're seeing on the ground and just what that interplay is between physical traffic versus digital. Thank you.
Curious if you could talk a little bit more about what you're seeing on the ground and just what that interplay is between physical traffic versus digital thank you.
Yeah, Erin Thanks for the question you know taking a step back we are really expect our growth to come from.
Speaker 7: Yeah, Erin, thanks for the question. You know, taking a step back, we are really expect our growth to come from.
AUR growth as you noted.
Unit growth in targeted high value areas over the past several years, we've been on a journey to <unk>.
Speaker 4: AUR growth, as you noted, unit growth in targeted high value areas. Over the last several years, we've been on a journey to restructure our business and really move away from low value, low AUR units and transition into higher value, higher AUR.
To restructure our business and really move away from low value.
Low AUR units and transition into higher value higher AUR units. So you know our exiting of the lower wholesale doors or licensing of chaps, we really transitioned those units and are moving in.
Speaker 4: So, you know, our exiting of the lower wholesale doors are licensing of the CHAP. We really transitioned those units and are moving into units like the elevated protestorsments, sweaters, outerwear.
Into units the elevated product Assortments sweaters outerwear.
Sneakers accessories. The denim it was higher priced AUR units are where we are where we are focused as we look at North America, we're going to continue that journey, but we do see that we're growing units in our digital business I think on a reset base will.
Speaker 4: sneakers, accessories, those denim, those higher price AUR units are where we are focused. As we look at North America, we're going to continue that journey, but we do see that we're growing units in our digital business. I think on our reset days we'll be growing.
Be growing and you know, we'll start to see some growth in the future.
Wholesale business, especially as we've gained share and we've had a couple of quarters of share gain in men.
Speaker 4: start to see some growth in the future in our wholesale business, especially as we've gained share. We've had a couple quarters of share gain in men's, kids and women's home and women's ready to wear. And we're very encouraged by the comp trends that we are seeing in our
And womens home and women's ready to wear.
And we're very encouraged by the comp trends that we're seeing in our stores.
And so we're confident about the future, but we're also we're also confident in our strategy about growing units in high value areas.
Speaker 7: And so, you know, we're confident about the future, but we're also confident in our strategy about growing units at high value.
Good morning, Eric So on China, specifically.
We've been really pleased with our continued performance in China and as you know this hasn't been just one quarter, we've been able to do this one by increases, but including this past quarter, just as a refresher of 22% versus all why up 65% versus double L Y. Despite omicron disruption, which I think we're all in touch with them and I have to say the team on the.
Speaker 3: Good morning, Aaron. So on China specifically, we've been really pleased with our continued performance in China. And as you know, this hasn't been just one quarter. We've been able to do this on a sustained basis, but including this past quarter, just as a refresher, up 22% versus LY, up 65% versus double LY, despite Omicron disruption, right, which I think we're all in touch with. And I have to say the team on the ground is doing an awesome job navigating the volatility.
The ground is doing an awesome job navigating the volatility of omicron and continuing to drive the brand. So we clearly see China, both as a near term opportunity and a long term opportunity.
From a brand perception standpoint, we track our brand equity on a monthly basis and we see the brand continued to strengthen.
Speaker 3: From a brand perceptions standpoint, we track our brand equity on a monthly basis, and we see the brand continue to strengthen.
And that market, particularly with the younger population and nicely balanced from a gender standpoint mens and womens.
Speaker 3: in that market, particularly with the younger population and nicely balanced from a gender standpoint, men and women.
As we look at our business digital versus physical to your specific question. You know, we really approached things through this key city ecosystem.
Speaker 3: As we look at our business digital versus physical to your specific question, you know, we really approach things through this key city ecosystem.
Omnichannel lens right Shenzhen Chengdu Shanghai.
<unk> is really where we're putting a lot of our emphasis and where we're building the cycle system that has a strong digital wrapper.
Speaker 3: Right, Shen Zeng, Shen Du, Shen Hai, Beijing is really where we're putting a lot of our emphasis and we're building this ecosystem that has...
With Ralph Lauren Dotcom, which we launched not that long ago doing, particularly well and our key partners T Mall J D.
Speaker 3: Strong Digital Wrapper, both raflorin.com, which we launched not that long ago and doing particularly well, and our key partners, Tmall, JD.
Chad as well combined with the flagship presence are really projects brand image as we've just done with the openings in Shanghai and Beijing and you heard in our prepared remarks, they're off to a really strong start the cross across the board we've been really pleased with that.
Speaker 3: reach out as well. Combined with the flagship presence that really projects brand image, as we've just done with the openings in Shanghai in Beijing. And you heard in our prepared remarks, they're off to a really strong start across the board. So we've been really pleased with that.
And then we are continuing to expand our store footprint beyond these flagships with these flexible polo formats that are really performing quite well for us. So we're working hard to make sure all of this is connected.
Speaker 3: And then we are continuing to expand our store footprint beyond these slides.
Speaker 3: flexible polo formats that are really performing quite well for us. So we're working hard to make sure all this is connected.
So the consumers at the center of it doesn't really matter, whether it's digital or brick and mortar because fundamentally what we want is to make sure. We give the consumer an amazing experience and we know he and she goes back and forth between these different channels, but I think we're really well positioned and we are very deliberate strategic approach to driving our expansion in that market.
Speaker 3: So that the consumers at the center of it, it doesn't really matter whether it's digital or brick and mortar, because fundamentally, what we want is to make sure we give that consumer an amazing experience. And we know he and she goes back and forth between.
Speaker 3: But I think we're really well positioned and we have a very deliberate strategic approach to driving our expansion in that mark.
What I, particularly like as well and we've been talking a lot of AUR since the beginning of this call is the elevation of the brand and the brand desirability in that market.
Speaker 3: What I particularly like as well, and we've been talking a lot of AERR since the beginning of this call, is the elevation of the brand and the brand's desirability in that market.
If you look at the data China is probably one of those markets, where the brand perception is the highest.
Speaker 3: You know, if you look at the data, China is probably one of those markets where the brand perception is the hype.
So one that gives us a lot of confidence in your long term for us to win in that market.
Speaker 3: So one, that gives us a lot of confidence in your long term for us to win in that market.
Simply because the team has done a nice job weaving the brine into the local fabric of the culture.
Speaker 3: are weaving the brand into the local fabric of the culture.
Two there are a lot of learnings that we pick up from China that we replicate outside than what some of the things you've seen recently relative to North America has actually been inspired by our success in the Chinese market.
Speaker 3: And two, there are a lot of learnings that we pick up from China that we replicate outside. And what some of the things you've seen recently relative to North America has actually been inspired by our success in the Chinese...
So just to wrap it China is still small for us which is good news because that means the significant upside right. It's still total China business about mid single digits for the company. When you look at some of our peers in the Chinese penetration of their business relative to ours that gives us a great deal of runway and I think we're nicely positioned.
Speaker 3: So, you know, just to wrap, it's China is still small for us, which, you know, it was good news.
Speaker 3: significant outside, right? Still, total China business about mid-single digits for the company. When you look at some of our peers and the Chinese penetration of their business relatives to ours, that gives us a great deal of run-way, and I think we're a nicely positioned, despite the volatility that we're seeing. Let's...
Some of the volatility that we're seeing let's go to the last question. Please Angela.
Thank you our final question comes from Paul Lajoie with Citigroup.
Hey, Thanks, guys, you guys have talked about bringing more new customers to the brand several occasions I'm kind of curious.
Speaker 11: Hey, thanks, guys. You guys have talked about bringing more new customers to the brand several occasions. I'm kind of curious what those customers are buying. How are you hooking them into the brand? And also curious what that younger customer wants from the brand, how that might be different from your older customer, and how that might differ by geography.
What those customers are buying how are you hooking them into the brand and also curious what that younger customer wants from the brand and how that might be different from from your older customer and how that might differ by geography.
Sure. Good morning call them that we've been excited about the progress you've made in terms of bringing new customers younger customers higher basket size customers less price sensitive customers to the brand and also more balance between men and women.
Speaker 3: Sure, good morning, Paul. Yeah, we've been excited about the progress we've made in terms of bringing new customers, younger customers, higher basket size customers, less price sensitive customers to the brand, and also more balance between men and women.
Well the headline fault is actually by you know a lineup that's pretty consistent with all that.
Speaker 3: The headline thought is actually by a line-up that's pre-consistent with R&D.
Historical customer.
Probably the areas of differentiation are in sneakers, you would expect that our in outerwear, we have the polo sport brand that we've relaunched and reposition that he's really getting fantastic traction with that younger customer and and they're also resonating really nicely with some of our innovation and product drops you heard us.
Speaker 3: Probably the areas of differentiation are in sneakers. You would expect that, are in outerwear. We have the Polo Sport brand that we've relaunched and repositioned that is really getting fantastic traction with that younger customer.
Speaker 3: And they're also resonating really nicely with some of our innovation and product drops. You heard us give a few examples and some of what we're doing.
Give a few examples of some of what we're doing there so.
So I would say pretty consistent with some areas of strengths, particularly tying actually to those high potential underdeveloped categories that we've recently been putting disproportionate emphasis on.
Speaker 3: So I would say pretty consistent with some areas of strengths, particularly tying actually to those high potential underdeveloped categories that we've recently been putting disproportionate emphasis on.
All right. Thank you good luck.
Thank you well listen thanks to everyone for joining our call today, we look forward to sharing our full year and fourth quarter of fiscal 'twenty. Two results with you in late May and then we'll have our investor day after that where we can provide you with perspective from a longer term standpoint. Thank you for calling in they safe and have a great day.
Speaker 3: Thank you. Well listen, thanks to everyone for joining our call today. We look forward to sharing our full year and fourth quarter fiscal 22 results with you in late May and then we'll have our investor day after that where we can provide you with perspective from a longer-term standpoint. Thank you for calling in. They say and have a great day.
Ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.