Ralph Lauren Corporation, a global leader in the design, marketing, and distribution of premium lifestyle products, reported earnings per diluted share of ($1.75) on a reported basis and ($1.82) on an adjusted basis, excluding certain net benefits partially offset by restructuring-related charges, for the first quarter of fiscal 2021.
This compared to earnings per diluted share of $1.47 on a reported basis and $1.77 on an adjusted basis, excluding restructuring-related and other net charges, for the first quarter of fiscal 2020.
“We are living through an incredible period of change — whether related to the devastating spread of COVID-19 around the world or the call to systemically address racial injustice. Through it all, we are focused on continuing to build a business that stands the test of time — staying true to who we are while taking action that enables us to deliver our brand vision for decades to come,” said Ralph Lauren, Executive Chairman and Chief Creative Officer.
“The past few months have marked a period of extraordinary challenge, but also agility and resilience. Our financial performance this quarter reflects an unprecedented three months of COVID-19-related impact around the world. We are taking the opportunity to leverage this period of disruption to accelerate our core strategic focus areas, drive new areas of growth, and realign our resources accordingly,” said Patrice Louvet, President and Chief Executive Officer.
Currently, nearly all physical owned stores have reopened across North America, Europe, and Asia. Following reopening, stores continued to operate at limited hours and consumer capacity, in accordance with local health guidelines. During the first quarter, the majority of stores in key markets were closed for an average of 8-10 weeks, resulting in significant adverse impact to its traffic and revenues.
Global digital flagship businesses continued to operate during the first quarter. As consumers increasingly embrace omni-channel retailing, the group is bolstering connected retailing capabilities including digital clienteling, Buy Online Ship From Store, Buy Online Pick Up From Store, curbside pickup, and other initiatives to facilitate and enhance the consumer experience.
The teams pivoted marketing investments away from in-store activations and major sporting events and toward values-based, digital brand-building activities during store closures. More selective marketing through the pandemic and timing shifts drove our first quarter marketing spend down 34% to last year.
Performance improved sequentially by month across all regions throughout the quarter, led by digital commerce comp growth of 13% in the first quarter Chinese mainland sales increased mid-teens to last year in constant currency, on track to return to pre-pandemic growth levels in the second quarter of fiscal 2021.
Strong digital momentum in the first quarter, with positive comps in its owned Ralph Lauren digital sites across all three regions. Global reported sell-out performance in our wholesale digital businesses was also up strongly to last year.
Adjusted operating expenses declined 30% to last year, primarily driven by savings from employee furloughs, lower rent and reduced corporate and selling expenses.
Inventories declined 22% at the end of the quarter, reflecting double-digit declines across all geographies to ensure healthy inventory positions across channels.
Improved cash conversion cycle to last year through a combination of lower accounts receivable and extended days payable, despite challenging global retail conditions
In the first quarter of fiscal 2021, revenue decreased by 66% to $487 million on a reported basis and was down 65% in constant currency, with declines across all regions due to COVID-19 business disruptions. Foreign currency negatively impacted revenue growth by approximately 100 basis points in the first quarter.
North America revenue in the first quarter decreased 77% to $165 million. In retail, comparable store sales in North America were down 64%, driven by a 77% decrease in brick and mortar stores and a 3% increase in digital commerce. North America wholesale revenue decreased 93%.
Europe revenue in the first quarter decreased 67% to $121 million on a reported basis and decreased 64% in constant currency. In retail, comparable store sales in Europe were down 62%, with a 75% decrease in brick and mortar stores partly offset by a 44% increase in digital commerce. Europe wholesale revenue decreased 71% on a reported basis and decreased 68% in constant currency.
Asia revenue in the first quarter decreased 34% to $172 million on a reported basis and decreased 32% in constant currency basis. Comparable store sales in Asia decreased 33%, with a 35% decline in our brick and mortar stores partly offset by a 68% increase in digital commerce.
Gross profit for the first quarter of fiscal 2021 was $349 million and gross margin was 71.5%. Adjusted gross margin was 71.8%, 730 basis points above the prior year on a reported basis and up 880 basis points in constant currency. Gross margin expansion was primarily driven by favorable geographic and channel mix shifts due to COVID-19 as well as AUR improvements across all regions.
Operating expenses in the first quarter of fiscal 2021 were $517 million on a reported basis. On an adjusted basis, operating expenses were $524 million, down 30% to last year, primarily driven by savings from employee furloughs and rent relief, as well as reduced corporate and selling expenses. Adjusted operating expense rate was 107.5%, compared to 52.3% in the prior year period.
Operating loss for the first quarter of fiscal 2021 was $168 million and operating margin was (34.5%) on a reported basis. Adjusted operating loss was $174 million and operating margin was (35.7%), compared to 12.2% in the first quarter of fiscal 2020.
In the first quarter of fiscal 2021, the company had an effective tax rate of approximately 26% on both a reported and an adjusted basis, resulting in an income benefit. This compared to an effective tax rate of approximately 20% on a reported basis and 21% on an adjusted basis in the prior year period, resulting in an income tax provision.
The company ended the first quarter of fiscal 2021 with $2.7 billion in cash and investments and $1.9 billion in total debt, compared to $2.0 billion and $692 million, respectively, at the end of the first quarter of fiscal 2020.
Inventory at the end of the first quarter of fiscal 2021 was $773 million, down 22% compared to the prior year period.