In the second quarter of Fiscal 2018, Ralph Lauren revenue decreased by 9% to $1.7 billion on a reported basis, driven by initiatives to increase quality of sales, reduce promotional activity, and elevate our distribution, as well as brand exits and lower consumer demand.
The second quarter revenue decline is in line with the Company’s guidance of a 9%-10% revenue decline, excluding approximately 40 basis points of negative foreign currency impact. Foreign currency benefited revenue growth by approximately 40 basis points in the second quarter, which is better than guidance, as foreign exchange rates moved favorably during the quarter.
Gross profit for the second quarter of Fiscal 2018 was $996 million on both a reported basis and an adjusted basis, excluding restructuring-related and other charges. Gross margin was 59.8% on a reported and 59.9% on an adjusted basis, and 300 basis points above the prior year on an adjusted basis.
The gross margin increase was driven by initiatives to improve quality of sales through reduced promotional activity, favorable geographic and channel mix shifts, and improved product costs. Foreign currency benefited gross margin by 10 basis points in the second quarter.
The Company ended the second quarter of Fiscal 2018 with $1.7 billion in cash, short and long term investments and $590 million in total debt, compared to $1.1 billion and $692 million, respectively, at the end of second quarter of Fiscal 2017.
For Fiscal 2018, the Company continues to expect net revenue to decrease 8% to 9%, excluding the impact of foreign currency. Foreign currency is now expected to have approximately 80 basis points of benefit to revenue growth in Fiscal 2018 versus previous guidance of minimal impact, given recent movements in foreign exchange rates.
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