Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren Fourth Quarter and Full Year Fiscal 2015 Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Instructions on how to ask a question will be given at that time.
As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Ms. Evelyn Kopelman. Please go ahead.
Good morning and thank you for joining us on Ralph Lauren's 4th quarter and full year fiscal 2015 conference call. The agenda for this morning's call includes an overview of the year and an update on our broader strategic initiatives from Jackie Nemeroff, our President and COO, followed by operational and financial perspective on the Q4 and our expectations for fiscal 2016 from Chris Peterson, our President of Global Brands. After the company's prepared remarks, we will open up the call for your questions, which we ask that you limit to 1 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.
Our expectations contain many risks and uncertainties. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. And now I'd like to turn the call over to Jackie.
Thank you, Evren, and good morning, everyone. Fiscal 2015 has been a year of solid accomplishments despite a challenging operating environment and substantial foreign currency
headwinds in the back half of
the year. I'm pleased to report that, headwinds in the back half of the year. I'm pleased to report that our 4th quarter results exceeded our expectations, driven by strong demand in North America wholesale and global e commerce. While we continue to experience the negative impact of a strengthening U. S.
Dollar and lower tourist traffic, our product across core and emerging categories was well received and we achieved strong sell through in most regions. Revenue growth of 7% in constant currency in the 4th quarter was ahead of our guidance. We delivered profits above expectations driven by better top line performance and the attention to disciplined operational and expense management by our teams. Now let me turn to some highlights for the quarter. Our North America wholesale business was the standout performer in the 4th quarter and achieved record sales and profitability.
Our 3 largest and most developed businesses men's, women's and children's were all up, which speaks to the appeal of our brand and product. Our design and merchandising teams continue to produce fresh compelling assortments that resonate with both new and existing customers. In terms of product category highlights, our dress, accessories and footwear offerings and the Denim and Supply brand delivered strong growth in stores and online, driven by door expansion and positive consumer response to our unique voice. We grew market share for the full year in a competitive retail environment, which we believe is due not only to our product, but also our steady investment in shop environments and marketing that express the distinction of our brands. Global e commerce revenues grew in the high teens for the 4th quarter, representing strong momentum for one of our most important areas of strategic focus.
Traffic to our website in all regions increased significantly, including a 48% increase in mobile traffic in North America. Additionally, enhanced site search functionality has led to higher conversion. We are on track with the design and architecture of our new e commerce platform and are confident its capabilities will enable us to achieve our goal of $1,000,000,000 in sales in this channel. Another highlight in the quarter was our luxury business, where we saw strong performance in our men's and women's lines. We saw higher conversion rates in our retail stores and believe that they are the result of terrific product as well as a sharp focus on store level execution and new approaches to educating our sales associates.
This offsets some of the challenging traffic trends due to a decline in global travel by the luxury tourist customer. We are also seeing the positive impact of our SKU reduction initiatives with sales up on a third fewer SKUs in our women's business. Speaking to our luxury product highlights in the quarter, the newest addition to our silhouette supported by a strong advertising and marketing campaign garnered a great deal of editorial attention in the fashion press and on social media and that has translated to an encouraging consumer response. Our new lightweight cashmere scarf collection was introduced in limited palette and was expanded to offer a spectacular assortment of bright colors for which Ralph Lauren's brand is so well known. We remain committed to the growth of all of our accessory categories and expect to see their higher purchase frequency bring customers into the store and online more frequently.
Finally, we made the decision to merge our luxury lines in both men's and women's into a single label Ralph Lauren Collection for women and Ralph Lauren Purple Label for men. We believe this will clarify our luxury message driving consistent global brand presentation and marketing synergies. Response to the change from our retail partners and sales associates has been extremely positive and we are optimistic that this will not only drive strong sales performance, but will also reduce expenses by maximizing productivity and creating focused assortments. We expect to transition these businesses for the pre spring 2016 season. Now I'd like to provide some perspective on sales trends by region.
In the Americas, our largest region, revenues grew percent in constant currency during the Q4. This was led by double digit growth in our North America wholesale business and mid teen growth in our U. S. E commerce business. Retail sales continued to be impacted by lower retail sales continued to be impacted
by lower tourist traffic due
to the stronger U. S. Dollar. Our European revenues rose 5% in constant currency during the Q4, led by strong spring wholesale shipments and an increase in reorders. Our men's apparel business saw especially strong demand at wholesale.
In our own retail stores, we continued to be impacted by lower tourist traffic, especially those coming from Russia and the Middle East, who have been most severely impacted by the volatility in both currency and commodity markets. Generally speaking, we saw the best trends in Northern and Central Europe, while the negative impact of the terrorist attacks has continued to challenge France and the Middle East is of course affected by lower oil prices and a decline in Russian tourists. In Asia, we achieved 1% constant currency revenue growth with trends varying by country. Korean sales remained challenging for the apparel sector, especially department stores, which represent the majority of our distribution. Hong Kong store traffic remained pressured and Southeast Asia was soft due to travel concerns.
In Greater China, double digit constant currency revenue growth largely reflects the investment we've made in new distribution. Highlights in the region included strong sell throughs on spring product and the continued positive response to women's Polo. I'd like to mention the efforts of our global supply chain organization during the quarter. This team has done an outstanding job navigating through the extended West Coast port situation and maintaining business continuity with limited incremental expense. This is a significant achievement given the breadth and scale of our product portfolio and distribution.
During this time, the team also supported record wholesale shipment volume in the Q4, while continuing to manage expenses. I want to extend my thanks for their extraordinary work. On our last call, I spoke about the next exciting endeavor for our iconic Polo brand, the global launch of Polo Sport. Beginning with the introduction of men's and boys' lines for the fall 2015 season, the product will be available for pre order on ralphlauren.com in June and available in our retail stores and wholesale partners around the world in August. The latter timing coincides with a dedicated advertising campaign featuring distinctive imagery that will position Polo Sport as authentic modern activewear.
Across the globe, feedback on this product has been terrific and Polo Sport is seen as a perfect fit with the athletic spirit and sensibility that have always been an important element of the Polo brand. As you know, the active segment of the apparel market is growing at a rapid rate and both we and our wholesale partners believe this is a significant long term market share opportunity. Finally, I'd like to update you on our progress with the new global brand management structure we first spoke about on our last call. At that time, I spoke briefly about the factors and opportunities that led us to make the decision to shift from a more decentralized regional and channel structure to a centralized global brand management model. Today, I want to provide more detail.
Over the nearly 48 years since the company began, we have grown significantly with the last dozen years realizing accelerated growth due to the acquisition of the majority of our product licenses and geographic territories. Licenses and geographic territories. This gave us greater control of our brand, but led to tremendous organizational complexity. Our new operating model and processes will allow us to fully leverage the power of each of our brands to ensure the greatest consistency of expression on our brands to ensure the greatest consistency of expression around the world and drive growth. We have always believed that our brands are our greatest assets and that will now be reflected in of the company.
We are not changing who we are, we are changing how we work and the opportunities associated with this transformation are very exciting. As the first step in the transition to the new operating model, last month we announced changes to our executive leadership, most notably the promotion of Chris Peterson to President of Global Brands. We will continue to share updates on future calls and expect to drive significant operating and cost efficiencies that will help support the strong sales and profit growth we expect over the next 5 years. Chris will take you through the details of the financial impact of our actions around the reorganization to fiscal 2016 and beyond. I'm very proud of our ability to focus on and invest in the company's long term growth objectives, while managing day to day operations to our exacting standards and most recently engage in the discussion and analysis required to set our future structure up for great success.
This speaks to the talent and the experience of our senior leaders, the dedication of our teams across every area, our rigorous attention to operational and expense management and of course the desirability of our products and the power of our brands. And with that, I'll turn the call over to Chris.
Thank you, Jackie, and good morning, everyone. I would like to start by welcoming Bob Madore, who is joining us on the call today. Last month, we named Bob Chief Financial Officer of the company reporting to me. You all have a chance to meet Bob over the next several months and I know he is looking forward to it. Now I'd like to turn to a brief recap of the quarter.
On a constant currency basis, revenues increased 7%, better than the mid single digit growth rate we guided to in February, driven by strength in the wholesale segment and global e commerce. Importantly, this growth was achieved on top of a 14% gain in the prior year period. The negative FX impact to revenue growth was 5.50 basis points in line with our expectations. Every geographic region grew in constant currency during the quarter. On a reported basis, net revenues rose 1% to $1,900,000,000 in the 4th quarter.
For the full year fiscal 2015 period, net revenues grew 4% in constant currency and 2% on a reported basis to $7,600,000,000 Gross profit margin of 55.4 percent in the 4th quarter was 80 basis points below the prior below the prior year period. The decline in gross profit margin was due to unfavorable foreign currency effects and mix shift impacts. Operating margin of 10.1% in the 4th quarter was 190 basis points below the prior year, attributable to the negative impact of foreign exchange and incremental investments in the company's long term growth initiatives. Operating margin was better than the outlook provided in February of 250 to 300 basis point decrease. The outperformance was driven by better than expected revenues and disciplined expense management throughout the organization.
For the full year 2015 period, operating margin declined 160 basis points to 13.6 percent due to investments we made to strengthen the company's infrastructure and global store network expansion initiatives as well as negative foreign exchange impacts. Net income for the Q4 was $124,000,000 or $1.41 per diluted share. Excluding foreign currency impacts, earnings per share was $1.69 for 4th quarter, essentially in line with the $1.68 we reported in the prior year period. For the full year 2015, net income was $702,000,000 or $7.88 per diluted share. Excluding foreign currency impacts, EPS was $8.19 for fiscal 2015 compared to $8.43 in fiscal 2014.
The effective tax rate of 28% in the 4th quarter was lower than expected due to one time discrete items and compared to an effective tax rate of 30% in the prior year period. Moving on to segment performance. Wholesale revenues increased 8% in constant currency during the Q4, which was achieved on top of a 24% gain in the prior year period. On a reported basis, wholesale revenues of $1,000,000,000 were 2% above the prior year period. North America posted double digit increases and Europe grew mid single digits in constant currency as we gained market share in both regions.
Growth was driven in part by accelerated demand for spring merchandise by our customers as Easter was 2 weeks earlier than last year and strong reorders in Europe. Wholesale operating margin of 30.7% in the 4th quarter was 60 basis points above the prior year period due to improved profitability of core operations, partially offset by foreign exchange impacts. Retail sales rose 6% in constant currency to 8.4 $1,000,000 and were roughly in line with last year on a reported basis. Growth was driven by the incremental contribution from new stores and high teens growth for global e commerce. Comparable store sales were up 1% in constant currency and declined 4% on a reported basis due to foreign exchange impacts.
Constant dollar comp trends reflect strong e commerce performance that was somewhat offset by challenging traffic trends at brick and mortar stores, especially in markets where currency movements impacted tourist traffic. By region, constant currency comps increased in the Americas and Europe, while Asia was slightly down. Retail operating margin in the 4th quarter was 3.4%, 2 70 basis points below the prior year period, reflecting investments in new store development and lower profitability in core operations. Licensing revenue declined 5% and operating income was down 6% in the 4th quarter, primarily due to negative foreign currency effects and the anniversary of the launch of Polo Red Fragrance in the prior year period. Consolidated inventory was $1,000,000,000 at the end of the fiscal year, up 2% year over year, reflecting investments to support anticipated sales growth and new store openings.
We spent $391,000,000 on capital expenditures during the year, mostly to support new retail stores and infrastructure projects. The company repurchased 3,200,000 shares of its common stock during fiscal 2015 at a cost of $500,000,000 and returned an additional $158,000,000 to shareholders via dividend payments. In total, the company returned approximately $658,000,000 to shareholders during the year, which represents an almost 6% effective yield. Yesterday, the company's Board of Directors authorized an additional 5 $100,000,000 stock repurchase program. This amount is in addition to the $80,000,000 available at the end of the Q4 of fiscal 2015 as part of a previously authorized stock repurchase program, bringing the company's total current authorization to $580,000,000 We ended the year with approximately $1,200,000,000 in cash and investments on the balance sheet.
Overall, we are pleased with the better than expected 4th quarter results. Disciplined planning and day to day execution enabled us to offset meaningful foreign exchange and environmental headwinds. Now I'd like to turn to fiscal 2016. We expect fiscal 2016 to be a year of significant transformation for the company. We will move to the new brand management structure, make important infrastructure investments, continue retail store development and take decisive action to mitigate foreign currency pressures.
Let me take these each in turn. As Jackie spoke about, we have made meaningful progress on our transition to the new global brand management organization structure. The most important aspect of this new operating model is that it brings disparate functions of design, merchandising, planning, creative and marketing to form dedicated brand groups. We are creating 6 global brand groups, each run by a brand president. These brand groups will define global design, merchandising and marketing strategies and be accountable for the global financial performance of the business.
Brand and business strategies will be developed in concert with the leaders of the regions and channels who understand the critical dynamics and nuances of these specialized areas. These brand groups will also rely on the strong knowledge and capabilities of our shared services teams. The new model processes and single view visibility to each brand will allow us to be more nimble and responsive to the marketplace and operate as a truly global business. This will enable us to maximize growth and achieve meaningful operating and financial efficiencies. For example, the new structure and processes will enable a significant reduction in SKUs, which will lead to better inventory turns, better gross margins and SG and A cost savings.
From a timing standpoint, it will take several months to transition to the new operating model. Overall, we are on track to achieve over $100,000,000 of annual expense savings from this initiative. Only a modest amount of this will be realized in fiscal 2016 with more significant savings to come in fiscal 2017 and beyond. We expect to incur restructuring and other one time related charges of approximately $70,000,000 to $100,000,000 as a result of this reorganization. From a timing perspective, we expect these charges to be heavily weighted in the first half of the year.
This charge encompasses 2 elements. 1st is the cost of separation associated with employee headcount reduction. We expect to reduce our full time workforce by approximately 5%. The second element is the cost of store and shop repositioning related to providing more clarity across our different brand presentations, including the merging of our luxury labels. We are very excited about the move to the new structure as we believe it will create a platform for profitable growth by allowing us to both improve our global brand equities and drive operating efficiency over time.
Moving to store development, we plan to open approximately 40 to 50 directly operated stores in fiscal 2016 on a global basis. We expect that our new store investments will be neutral to year on year margins in fiscal 2016 as our accelerated store opening pace is now in our base. On infrastructure investments, our e commerce replatform initiative will begin to ramp up in fiscal 20 16. This is a multi year initiative to significantly improve the company's omnichannel capabilities and the online customer shopping experience. Our SAP implementation is substantially Our SAP implementation is substantially complete in North America and we began SAP implementation for Europe this year.
We expect our infrastructure investments to create a year on year drag of approximately 60 basis points on operating margin in fiscal 2016, 16, largely driven by the e commerce replatforming initiative. Moving to foreign exchange. We have taken decisive actions to mitigate the negative currency impacts. First, we are raising pricings in certain markets that have been impacted by currency devaluation, including Japan, Canada, Australia and Europe. These pricing actions are generally in the mid to high single digit range and will be effective in the back half of the fiscal year.
2nd, our supply chain organization has negotiated lower costs across our manufacturing base as a result of lower raw material and oil prices as well as the strength of the U. S. Dollar. These lower costs will also become effective in the back half of the fiscal year. Finally, we will reduce operating costs by restructuring the organization.
With that as a backdrop, I'd like to review our detailed outlook for fiscal 2016. We continue to expect mid single digit constant currency revenue growth for the full year similar to the view we shared with you in February. The growth will be supported by significant contributions from the strategic initiatives in which we've invested over the last several years. These include new product development, new stores and global e commerce. Retail segment revenues are expected to grow faster than wholesale due to new store development and continued momentum in e commerce.
Based on current exchange rates, foreign currency will have about a 4 50 basis point negative impact on fiscal 2016 revenue growth. Moving on to operating income. On a constant currency basis, we expect an improvement in operating margin from continuing operations in fiscal 2016, which we intend to reinvest in our infrastructure build out, primarily the new global e commerce replatforming and ongoing SAP implementation. On a reported basis, we expect our full year fiscal 16 operating margin to be approximately 180 to 230 basis points below fiscal 20 fifteen's level due entirely to unfavorable currency impacts. This guidance excludes restructuring and other one time related charges associated with our global brand organization reorganization.
We continue to expect the negative impact of FX on operating income to approximate $185,000,000 similar to what we projected in February based on current exchange rates. In terms of the sensitivity of our operating income to movements in exchange rates, a change of about a 0.0 in the euro to U. S. Dollar rate would impact our operating income by approximately $20,000,000 on a full year basis. Our fiscal 2016 tax rate is expected to be 30%.
We are planning approximately $400,000,000 to $500,000,000 in capital expenditures in fiscal 2016 to support our global direct to consumer and infrastructure investments. For the Q1 of fiscal 2016, we expect net revenues to be flat in constant currency as retail segment growth is offset by a decline in wholesale revenue, which is impacted by our customers' receipt plans due to an earlier Easter this year. We estimate the negative currency impact on sales growth in the Q1 to be 600 basis points. Our operating margin for the Q1 is expected to be approximately 600 basis points to 6.50 basis points below the prior year period due to negative foreign currency effects, the quarterly revenue growth profile and timing of expense savings initiatives. The Q1 tax rate is estimated at 30%.
We are very excited about the company's potential for future growth. We are organizing the company to drive the power of brands, investing in key infrastructure projects and making strategic decisions to minimize the impact of near term market realities and maximize shareholder returns over time. With that, we'll open the call for your questions. Operator, can you assist us with that?
Our first question comes from Omar Saad with Evercore ISI.
Thank you. Good morning. Thanks for all the color and the information. I wanted to ask more about a lot of the reorganization activities both Chris and Jackie touched upon, especially in light of the simplification of the Luxury brand segment. Can you talk more about the 6 different brand groups?
What are the brand groups? Does it also include a simplification from the many different sub brands that have existed within the overall Ralph Lauren Halo? Are the systems now place to support these new organizational structures? What's the timeframe do we think this will kind of be executed? And then I guess lastly within that, as we think about all the changes going on with the company this year, I think you said a year of transformation, Chris.
How should we how do we get comfortable with the kind of underlying organic revenue growth rate you have planned for mid single digits this year, especially since comps have been a little bit sluggish in North America? Thank you.
Yes. So let's start on the reorganization. So I think we provided a little bit more color. The 6 brand groups that we're talking about are one that's going to be focused on our luxury business, which will include the Ralph Lauren brand and the RRL brand, which Valerie Hermann will lead as the Brand President. We will have a brand group focused on Polo.
We'll have a brand group focused on Denim and supply. We'll have a brand group focused on Lauren, Chaps and American Living as a group. We will have a brand group that's focused on the Ralph Lauren home business. And finally, Club Monaco will be the 6th brand group. And that's how we're organizing the brand groups.
Each of the brand groups will have a brand president and a dedicated leadership team to run the business. We believe that this is going to lead to simplification over time of many of the sub brands in terms of how we go to market from a consumer standpoint, because we think that what this is going to allow us to do is focus our resources and our consumer communication more at the master brand level than at the sub brands. The only sub brand that we have announced that we're merging at this point is the on the luxury side of the business with the Black Label and Purple Label and Women's Collection and Black Label business.
Thank you. The next question comes from Michael Binetti with UBS.
Well, let
me before we go to the next question, let me there were a couple of parts of Omar's question. From a systems perspective, let me provide a little bit more color on that as well. I think we feel very good about where we are from a systems standpoint, although there's still more work to do. The SAP implementation that we've done is now complete with regard to our global manufacturing and supply chain
system and complete in the
North America order to cash for 4 years. It's allowed
us to get to a point where we now have global financial
data by brand, which we've just, been able to now have global financial data by brand, which we've just been able to implement, which of course is one of the key enablers to moving to the global brand structure. So I think there's more work to do as we move into the new model, but I feel good about where we are and where we're headed from a systems standpoint. And finally, from a transition timing standpoint, I think we expect to form the brand groups over the next month or 2. But of course, as we form the new brand groups, it will take them some time to come up to speed. And then the first seasons that they will begin to impact, because of our development cycle will be probably 12 to 18 months from now.
Thank you. We'll move on to Michael Binetti with UBS.
Hey, good morning. First off, congrats to Bob and good to have you on the call. And then Chris, thanks for all the detail on the investment buckets. First off, I guess the first question would be if you could just help me clarify the guidance a little bit. It looks like the revenue impact from FX improved by 100 basis points, but the implied operating margin dollars you talked about stayed the same.
I think that leaves the underlying operating margin a little lower than what you mentioned in February and the Swiss dollar got a little better I think. So maybe you can just tell us about what changed from the February update? And then a little bit longer term on fiscal 2017 margins is a big focus for the stock recently. As we talked you seemed confident that fiscal 2017 would be the year when the investment buckets that we've talked about with you for a while now would start to lift off. And as you add in the organizational changes that you talked about today and sharpen your strategy around that.
Are you comfortable at this point talking to us about how you see the long term margin trajectory beyond the guidance you gave us for 2016 at this point?
Yes. So let me try to take those each in turn. So the first question on the update on the FX impact to fiscal 2016. I think when we gave our guidance in February, it was before we had finalized our budgets and we had given an estimate in terms of the foreign exchange impact to the top line the bottom line. As we finalized our budgets, we also updated our exposure model.
And so the change in the expected revenue impact from 5.50 basis points on the top line to 450 basis points was really due to a sharpening of our exposure model. As we looked at the bottom line impact, the bottom line impact was in line with what we thought at the last time. So I think it was more a function of finalizing the budgets and updating the exposure model with regard to the change in the the slight change in the FX guidance for fiscal 2016. On the second question in terms of what does it mean for fiscal 2017, I think that there's going to be a couple of different things happening in fiscal 2017 and it's premature for us to give guidance that far out. But obviously, we would expect to see a full year impact of the pricing action that we're taking, which would be a positive.
We would expect to see a full year impact of the cost reductions that we're taking, which would be a positive. And we would expect to see a ramp up of the restructuring savings, which would be a positive. And so all of those would lead to a better operating margin outlook in 2017. On the negative side, we have hedged our FX exposure. And so as those hedges roll off, we will have a year on year hedge FX hurt continuing into fiscal 2017 from the portion of the business that was hedged in fiscal 2016.
Premature to talk about how those net against each other, but I think those are the underlying trends. And I think to your question about sort of the infrastructure investments being at the highest level. I do expect that fiscal 2016 will likely be the highest level of investment on the infrastructure investments in total.
Thank you. The next question comes from Kate McShane with Citi Research. Thank you. Good morning. My question, Chris, is around higher prices where you had mentioned that you're raising prices.
They sound fairly aggressive in the mid to high single digit range. What's giving you the confidence of the pass through of these prices? And are you increasing the price of products across the board on all your products in the countries you called out? Or is it more selective?
Yes. So I think a couple of things. We are increasing prices across the board on all of the products in the countries I called out, but the percentage increase will be different by product. So we're obviously looking at the pricing to hit key price points and so forth, but the numbers I gave you were sort of averages across the line in terms of the pricing actions that we're taking. Too soon to tell how those pricing actions are going to play out because obviously it's going to depend on how competitors respond as well in these markets.
But our view is that with the significant impact of foreign currency in these markets, all of the competitors that source product from similar countries should be seeing a similar transactional impact. And what we're trying to do is price for transactional foreign exchange, but not for translational foreign exchange. And that's how we came to the price increases that we're looking at here.
Thank you. The next question comes from Lindsay Drucker Meehan with Goldman Sachs. Thanks. Good morning, everyone. I just wanted to get some maybe some further detail on your U.
S. Wholesale business, which as you called out was up double digits in the quarter. As I look back at and I know that we don't get all the details, but it seemed like in Q1 through Q3 of fiscal 2014, your U. S. Wholesale sales may have been flat or down a little.
And then Q4 is obviously very strong and we're looking for deceleration in the Q1 of 2015. Can you help us understand kind of what the underlying sort of sell through trend has been for U. S. Wholesale? And how much of the 4th quarter benefit was a function of shipping timing versus maybe an acceleration in kind of run rate?
Thanks.
Sure. Yes. I think the way to think about this is that the seasons that we operate in don't match up with our fiscal quarter reporting periods. And because of that, sometimes our seasonal flow of inventory from a shipment standpoint isn't really indicative of the underlying trend. I think we felt like for the entire fiscal year when you look at the fall season and the cruise holiday season and into the spring season that we had plans that were growing market share in the U.
S. Wholesale business pretty consistently. And sometimes that doesn't necessarily show up in terms of the shipment pattern because of the way the customer receipt plans fall within our fiscal quarters. So our underlying view of the business continues to be very positive in terms of the market growth that or the market share gains that we've experienced in that
channel. Just to add to Chris' comments, we track our market share very carefully in all of our distribution and we continue to increase market share. As Chris spoke to, we also look very carefully at how we're tracking against every key competitor, every key department store. And as I said, we are very pleased with our results. All of our core businesses have been quite strong and we saw a nice acceleration within the spring season.
Many of the products that are smaller parts of our company have started to gain nice acceleration. Our footwear business, our accessory business, our Denim and Supply business, the dress business has been very strong. And of course, our core businesses continue as the backbone. So we're seeing door growth. We're seeing great sales growth and we see that strengthening.
As I said, we're also very optimistic about the our Polo women's business, which was new to us starting with last fall and we're seeing door growth there as well. And then of course, we're about to launch our new Polo Sport business, where there's tremendous enthusiasm about that opportunity, because that really puts us solidly into a new area of opportunity. And we believe that with the credibility that we have in the athletic area with our relationship with the U. S. Open, the Olympics, Wimbledon, etcetera, USGA that we have a tremendous amount of credibility with the consumer that we've really never tapped into.
So this really gives us the opportunity to put our great foot forward in a new area of opportunity for the company. And of course, we're a couple of months away from that launch, which we're excited about.
Thank you. The next question comes from Christian Boos with Credit Suisse.
Yeah. Could you talk a little bit about responsibilities under the new management structure? Who's responsible for the supply chain and the back office systems under the new architecture?
Sure. So the supply chain and the back office will continue to be operated as they are today by our shared service group. So we have a shared service group today that handles global manufacturing and supply chain, that handles finance, that handles HR, that handles real estate, that handles operational capabilities and that will continue because we believe that those groups are better leveraged across the entire enterprise and we don't intend to disrupt that. What we're talking about in the new structure is really organizing a lot of the front end parts of the organization as we talked about with design and merchandising and planning and creative and marketing into dedicated brand groups, so that we have a single global face to the consumer on a by brand basis.
Thank you. The next question comes from Joan Pason with Barclays.
Hi, good morning. Just going back to North America and maybe focusing on the retail business as well, it sounded like the comp, I think you said the Americas comp increased in constant currency, which I think was better than last quarter. So maybe you could talk a little bit about what changed this quarter and also how we can think about the overall North American business combined on a go forward basis? Yes.
We saw strong growth in the U. S. Business during the quarter and I think it was a function of several things. I think we talked about the wholesale business having very strong shipment growth. If you looked at the retail business though, the retail business on a constant currency basis also improved.
And I think that the outlet channel in the U. S. Comp improved versus what we were seeing previously and that was both a function of traffic trends getting a little bit better than what we saw in the Q3 as well as improvement in conversion rate that we drove during the quarter in the outlet channel. We also saw continued very strong comp store growth in our e commerce business that was in the high double digits. The one channel that was under a little bit of pressure during the quarter was the full price retail stores and that was really a function of the slowdown in international tourist traffic as we talked about primarily the Russian, Middle East and Brazilian consumers which were impacted.
But overall, an improvement in comp store sales trends in the Americas as well as in the wholesale shipment business.
Thank you. The next question comes from Barbara Wyckoff with CLSA.
Hi, everybody. Can you talk about how long SAP in Europe will take to be fully implemented? And then can we assume that Asia and the rest of the world will be an FY 2017 event? And then on the $100,000,000 in savings, FY 2016 versus 2017, you talked about most of it being in 2017. Can we assume that 25% to 30% will be in the second half of twenty sixteen and the rest in FY 2017?
Or is there another ratio we should be thinking about?
Sure. So on the savings piece, I think 25% to 30% being in fiscal 2016 is probably a reasonable estimate and obviously a much more significant portion being in fiscal 2017. So I think that's a reasonable estimate. On SAP in Europe, we're starting the program or we've started the program a few months ago. We expect to complete the we expect to complete the SAP implementation over the next 12 to 18 months in Europe.
And it's going to be in 2 phases. I think we're doing the HR implementation first and then we'll do in the 2nd phase, the financials and the order to cash part of the process in the wholesale business there. We don't intend to start the Asia SAP look until after we complete Europe. And so we don't have yet a timeline for when Asia will happen. But certainly, we would intend for it to be after the European implementation.
It may not be in fiscal 2017. It could be in 2018 or 2019 too soon for us to have that in our planning horizon at this point.
Thank you. The next question comes from Erinn Murphy with Piper Jaffray. Great. Thank you. Good morning.
Could you speak a little bit more about what you're seeing broadly in Europe both in the Q4 and then how you're planning that in fiscal 2016? I recognize there's a lot of flux in global tourism, but would love any kind of color about local demand versus kind of tourist demand in that region?
Yes. So we were encouraged by what we saw in the Q4. We continued to drive mid single digit constant currency revenue growth trends both in the wholesale business and in the retail business during the quarter. I think we continue to see the trends being the strongest in Northern Europe, both the U. K.
And Scandinavia. We see Southern Europe, importantly, stabilizing and beginning to get back to a period where we think we can grow from. And I think Central Europe, France and others have been a little bit more under pressure. The biggest impact in Europe that we've seen is the traffic drop from the Russian and Middle Eastern tourists. And really the Russian tourist has dropped off more precipitously than the Middle Eastern tourist during that period.
But we continue to see strong influx of Chinese tourists into the region. And so that's sort of what we're seeing. I think given our penetration in Europe, we continue to believe that Europe will be a growth market for us for some time to come.
Thank you. The next question comes from Jay Sole with Morgan Stanley.
Hi, good morning. Good morning. Can you talk about as you went through the budget process this past quarter, what might have changed and how that could have influenced or impacted the EBIT margin guidance one way or the other? And then just my second question is on with the new operating structure, you mentioned it will help clarify the brand presentation. Can you give an example of how maybe that brand presentation isn't as clear as you would like it to be and how that might change and how that could impact how the consumer views the brand and how that might impact their willingness to buy the product?
Okay. So as we finalize the budget process, I think our view is that the FX impact came in virtually pretty close to in line with what we thought when we had done the initial estimates in February. So our view on the fiscal year guidance is that it really has not much changed from what we thought we were going to see in February. We're seeing the same constant currency revenue growth. We're seeing the same underlying operating margin trend that from the continuing operations, the same investment in the infrastructure and the same operating income impact from foreign exchange.
So we viewed it as pretty close to what we thought in February as the budget process finalized. So there isn't anything really to call out there of significance in terms of difference. On the
And on the product presentation, the brand presentation around the world, what we're really looking at and what we're really focused on is by narrowing our SKU presentation that we offer and through every channel and region, what we'll be able to do is through that narrowing and through that focus be able to represent the brand in the same way around the world. Today, because of the SKU proliferation and the style proliferation that we have, what happens is we actually have less than 10% of common styles that are represented in our presentations around the world. What we want to do is have that closer to 60% to 70%, so that the customer which has a world view today between how they're traveling and where they're shopping and the online experience, we want that to be the same experience. And so that's what we're really focused on. And we believe that that will allow us to not only present our product in a clearer way, but also be able to represent it in marketing in a much clearer way and in a much more focused presentation.
And so that's really what we feel the great benefit will be in terms of that brand presentation.
Thank you. The final question comes from Matthew Boss with JPMorgan. Hi. Thanks for taking the question. I was just hoping you could give us an update on your accessories business, how it's doing?
Do you continue to expect this business to grow at a faster rate than the balance and maybe some of the initiatives you have in this category? Thank you.
Sure. So accessories remains an area that we expect to grow faster than the balance of the business. We've been growing accessories consistently faster than the balance of the business and it has been increasing as a penetration of the total company's revenue. I think there's a number of things that we're trying to do in the accessory space to try to drive that. Notably, during the past few months, we launched the drawstring bag as Jackie talked about under the Ricky franchise in the luxury part of the accessories business, which is off to a very strong start.
I think the other thing that we've been working on is developing and launching as part of the women's polo business a more significant accessories offering under the women's polo line, which we're very excited about and is coming in the not too distant future. And then I think we continue to be encouraged by the strong results we've seen in the Lauren Accessories business. And so I think we've got a multi tiered strategy to go after the accessories business that I think we're confident will allow us to grow that business at an accelerated pace for the foreseeable future. All right. Well, thank you very much for joining us on the call today.
I think we're excited about the direction that we're headed. It is going to be a year of transformation for us and we look forward to talking more for us and we look forward to talking more with each of you about it over the next few months. Thanks very much. Ladies and gentlemen, that does conclude your conference for today. Thank you for
your participation. You may now disconnect.