Revenue decreased 8% compared to the prior year period (flat on a constant currency basis), inclusive of a 6% negative impact related to (i) a 4% reduction resulting from the Heritage Brands transaction (as defined under the heading “Non-GAAP Exclusionsâ€) and the exit from the Heritage Brands Retail business and (ii) a 2% reduction resulting from the war in Ukraine, including closures of Company stores in Russia, the cessation of wholesale shipments to Russia and Belarus, and a reduction in wholesale shipments to Ukraine.
Direct-to-Consumer revenue decreased 5% compared to the prior year period (increased 3% on a constant currency basis), inclusive of a 3% reduction resulting from the exit of the Heritage Brands Retail business.
Wholesale revenue decreased 11% compared to the prior year period (decreased 3% on a constant currency basis), inclusive of a 5% reduction resulting from the Heritage Brands transaction.
Total Digital revenue decreased 7% compared to the prior year period (increased 4% on a constant currency basis). This includes the sales through the Company’s digital commerce businesses and sales to the digital businesses of its traditional and pure play wholesale customers reflected in the Direct-to-Consumer and Wholesale revenues above. Digital penetration as a percentage of total revenue was approximately 25%.
Gross Margin was 57.2% as compared to 57.7% in the prior year period and included a negative impact of foreign currency translation of approximately 40 basis points.
Consolidated results:
Revenue decreased 8% to $2.132 billion compared to the prior year period (flat on a constant currency basis).
Earnings before interest and taxes (“EBITâ€) on a GAAP basis was $177 million, inclusive of a $29 million negative impact due to foreign currency translation, compared to $279 million in the prior year period. EBIT on a GAAP basis included net costs of $34 million in the current quarter and costs of $15 million in the prior year period described under the heading “Non-GAAP Exclusions†later in this release. EBIT on a non-GAAP basis for these periods excludes these amounts.
EBIT on a non-GAAP basis was $211 million, inclusive of a $29 million negative impact due to foreign currency translation, compared to $294 million in the prior year period. Excluding the negative impact of foreign currency translation, the decrease in EBIT on a non-GAAP basis was primarily driven by lower expenses in the prior year period, as stores in certain regions were closed and other stores were only beginning to re-open. ■