Maverick Capital and Ralph Lauren
Maverick Capital added new positions in CBS Corp. (CBS), Alibaba Group (BABA), and 21st Century Fox (FOXA). The fund’s top exits were Ralph Lauren Corp. (RL), Walgreen’s (WAG), and Ctrip.com (CTRP). The fund added to its stakes in Qihoo 360 Technology (QIHU), FleetCor Technologies (FLT), and AbbVie Inc. (ABBV). Its top stake decreases were in Baidu, Inc. (BIDU) and TransDigm Group (TDG).
Maverick Capital sold its position in RL in 3Q14. The position accounted for 1.67% of the fund’s total portfolio in 2Q14.
About Ralph Lauren
RL is a leader in the design, marketing, and distribution of premium lifestyle products in four categories:
RL’s brand names include Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Lauren by Ralph Lauren, RRL, RLX, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, American Living, Chaps, and Club Monaco. RL’s brand names are one of the world’s most widely recognized families of consumer brands.
Revenue grew while operating margin declined
Net revenues for 2Q15 increased 4% to $2 billion. The increase was led by expansion in the Retail segment. The expansion included double-digit international growth. Gross profit for 2Q15 increased 4% due to a favorable channel and geographic mix.
RL’s operating margin was 14.4%. It was 100 basis points below the operating margin in 2Q14. The decrease was due to higher operating expenses associated with incremental investments in RL’s long-term growth strategies. Net income for 2Q15 was $201 million. This is 2% below the $205 million achieved in the same period in 2014. Net income per diluted share increased 1% to $2.25—compared to $2.23 in the same period last year.
On December 11, 2014, RL’s board of directors declared a regular quarterly dividend of $0.45 per share on RL’s common stock. The dividend is payable on January 9, 2015. It’s payable to shareholders of record at the close of business on December 26, 2014.
Revised 2015 outlook
Considering the impact of foreign currency movements, RL expects consolidated net revenues for fiscal year 2015 to increase by 5%–7%—compared to its previous outlook of 6%–8% growth. The fiscal year 2015 operating margin is still estimated to be ~75–125 basis points below the level in fiscal year 2014.
The next part of this series will review Maverick Capital’s exit from WAG.