Jane Nielsen
Chief Operating Officer and Chief Financial Officer at Ralph Lauren
Thank you, Patrice, and good morning, everyone. We closed our fiscal '22 with strong fourth quarter and full year results that demonstrated meaningful progress toward our next great chapter goal along with execution excellence by our teams and broad-based performance across our business. All three regions are back to topline growth. Our revenues are now slightly ahead of pre-pandemic level. And our operating profit dollars are also 30% higher all while ramping up investments and marketing, digital, new stores, and people.
Compared to two years ago, our businesses are over 25% bigger in Asia, nearly 10% bigger in Europe, and North America is reset and delivering growth on a much healthier foundation. At the same time, our balance sheet enabled us to return significant excess cash to shareholder in line with our capital allocation principle. And we resumed our quarterly dividend and share repurchases this year. With the reset behind us, we are driving multiple growth engines across our brands, channels, and geographies that will not only deliver more sustainable growth but also help to mitigate ongoing macro challenges.
Let me take you through our fourth quarter financial highlights. Total Company revenues increased 18% to last year on a reported basis, and 22% in constant currency, with double-digit growth in every region. This includes roughly five points of negative impact from our deliberate North America resets last year. Revenues exceeded both our fiscal '19 and '20 pre-pandemic results despite the resets.
Ralph Lauren digital ecosystem sales grew low double-digits in constant currency on top of the challenging compare of more than 60% growth last year. Our owned Ralph Lauren digital sites grew 18%, reflecting our strong product assortments, new consumer acquisition, expanded connected retail capabilities, and high-impact marketing. Digital margins remain strongly accretive to our profitability again this quarter.
Total Company adjusted gross margin was 63.3%, up 40 basis points to last year on a reported basis and 120 basis points in constant currency as we continue to successfully mitigate a dynamic inflationary environment. Fourth quarter AUR was up 13% on top of 31% growth last year, with growth across every region. This strong AUR growth along with favorable channel and geographic mix, more than offset higher than expected ocean freight costs with steep increases in oil prices following the evasion of Ukraine.
We expect higher freight raw material and labor costs to remain elevated into fiscal '23. Particularly in the first-half until we start to lap higher cost increases in the second-half of the year. We plan to leverage our multi-pronged elevation strategy to continue driving AUR significantly above our long-term targets in order to mitigate mid-to-high single-digit product cost inflation in fiscal '23. Adjusted operating margin of 3.6% expanded 20 basis points to last year on a reported basis and 140 basis points in constant currency driven by continued operating discipline. Adjusted operating expenses increased 19% to 59.8% of sales, up 30 basis points on a reported basis, but down 20 basis points in constant currency.
Marketing grew 48% to 9.5% of sales in the fourth quarter. We shifted a significant portion of our marketing investment from the first-half to the second-half of the year, as planned to accelerate our brand momentum and direct-to-consumer expansion coming out of the pandemic. Full year marketing was 7.3% of sales, in line with our guidance. For fiscal '23, we still expect marketing of about 6% to 7% of sales. As we continue to support our new digital site, mobile apps, content creation, new consumer acquisition, and key brand moments, also drive desirability and purchase intent.
Moving to segment performance, starting with North America. The region's turnaround continues with fourth quarter revenues, up 19%. These results included a 13-point headwind from our strategic distribution reset and license of chaps implying strong underlying growth. In North America retail, comps increased 21% to last year. Growth was driven by improved traffic, transactions and 19% AUR growth on top of 30% last year, reflecting our continued elevation around product mix, marketing and more targeted pricing and promotions.
Brick and mortar comps grew 19% driven by double-digit growth in AUR, basket sizes, traffic, and conversion. Performance was strong in both our full price and factory stores on growing domestic demand, even as foreign tourism remains muted. We drove further momentum in our own digital commerce business this quarter with comps up 27% on top of 25% growth last year. Our continued focus on high-value, new consumer acquisition helped deliver growth in AUR and basket sizes, while further reducing our discount rates. In North America, wholesale revenues increased 1% to last year, slightly above our expectations.
These results included 25 points of negative impact from our deliberate reset and chaps. Underlying growth and quality of sales continued to exceed our expectations. This was led by our full price businesses with sell out growth of more than 20% to last year, and 45% to LLY. We drove continued market share gains in Men's and kids in our key partners along with three consecutive quarters of gains in women's ready to wear. Our wholesale AUR was also up more than 25% to last year, as we elevated our assortments and pulled back on seasonal promotions. As we close out fiscal '22, we are very encouraged by our strong foundation and broad based momentum across North America, setting the path for long-term future growth.
Moving on to Europe, fourth quarter revenue increased 26% on a reported basis and 34% in constant currency, retail comps increased 77% led by triple digit comps in brick-and-mortar stores. While we experienced Omicron related disruptions in the first few weeks of the quarter, it was a significant improvement from the prior-year period, when roughly 50% of our physical stores were closed due to COVID.
Digital commerce comps declined slightly on top of an outsized 79% comp last year, when the widespread store closures shifted a disproportionate share of business online. We expect growth in both owned and wholesale digital in fiscal '23 driven by further site expansion and our healthy partnerships, despite strong compares. Europe wholesale exceeded our expectations again this quarter up 5% on a reported basis, and 12% in constant currency on top of a 41% reported growth last year, driven by stronger sell out and reorder trends.
In the fourth quarter, we suspended our wholesale shipments to Russia and also paused operations in Ukraine given the devastating events unfolding there. Combined, these markets represented less than 1% of Company sales prior to the war. We're not assuming any sales to these countries in our fiscal '23 outlook. While Europe remains our most dynamic market heading into fiscal '23, due to macro pressures and the war, our business remains fundamentally healthy, our consumers are resilient, and our teams continue to execute with agility.
Turning to Asia, full year fiscal '22 represents our highest ever revenue and operating profit for the region. Combined with five consecutive years of AUR growth, and the highest AURs in the Company, Asia gives us strong confidence in the brand elevating ecosystem model we implemented over four years ago. These results in the midst of ongoing COVID impacts are especially strong and are testament to the outstanding work of our teams.
For the fourth quarter, revenue increased 20% on a reported basis and 26% in constant currency. Asia retail comps grew 12% with digital commerce increasing 46% and brick-and-mortar stores up 10%. We maintain strong momentum across our total digital ecosystem in the region, with more than 50% growth this quarter. This was supported by gains across our own sites and wholesale digital businesses.
All of our key markets in Asia increased double-digits in constant currency this quarter, led by 45% growth in Korea. And despite COVID related disruptions, our Chinese Mainland sales grew 27% while Japan sales increased 17% to last year. Both markets accelerated sequentially despite stricter containment measures across our top cities, roughly 40% of our own stores in China experienced some form of closure or operating restrictions late in this quarter.
Overall, we continue to see meaningful near and long-term growth opportunities for our business in China, where our brands are resonating with consumers and the underlying health of our business remain strong. While we are still navigating COVID disruptions, particularly in China, continued momentum across Japan, Korea and Australia are helping to offset these near-term headwinds.
Moving on to the balance sheet, our strong balance sheet continues to be a competitive advantage, that gives us the flexibility to balance strategic investments with returning cash to shareholders, and opportunistic M&A, even through these dynamic times. This year, we returned approximately $600 million in dividends and share repurchases and ended the year with $2.6 billion in cash and short-term investments and $1.6 billion in total debt. This compares to $2.8 billion in cash and short-term investments, and $1.6 billion in total debt last year.
Net inventory increased 29% to support continued strong demand coming out of the pandemic, a deliberate increase in goods and transit, as we take inventory earlier to help mitigate supply chain delays, particularly in wholesale, increased product costs including freight and cotton, which we will start to lap in the second-half of fiscal '23 and continued elevation of our product mix. We are managing inventory carefully in this dynamic environment in order to satisfy growing consumer demand and to maintain our long-term growth and quality of sales trajectory.
Looking ahead, our outlook is based on our best assessment of the current macro environment, including disruptions from inflationary pressures, the global supply chain, COVID-19, foreign currency volatility and the war in Ukraine. For fiscal '23, we expect constant currency revenues to increase high single-digits with our current outlook at about 8% versus fiscal '22 on a 52-week comparable basis.
Based on current spot rates, foreign currency is expected to negatively impact revenue growth by approximately 400 basis points. Last year's 53rd week negatively impacts fiscal '23 growth by about 100 basis points in constant currency in addition to the headwind from foreign currency impact. We currently expect all three regions to drive positive revenue growth this year, with the largest dollar contribution from North America and highest growth rate in Asia. Our topline outlook also includes significant foreign currency headwinds primarily related to the Euro and the Japanese Yen, especially in the first-half of the year, potentially softer consumer sentiment in Europe from inflationary headwinds and the war with no sales to Russia or Ukraine assumed this year.
COVID impacts notably in China, where we expect key city lockdowns to continue through the first quarter of fiscal '23 and a limited contribution from foreign tourist sales. We expect operating margin in the range of 14% to 14.5% in constant currency. Foreign currency is expected to negatively impact operating margin by approximately 130 basis points. This compares to operating margin of 13.1% on a 52-week basis, and 13.4% on a 53-week basis last year, both on a reported basis. Gross margin is expected to increase 30 to 50 basis points on a constant currency 52-week basis in line with our long-term plan. We plan to continue driving stronger AUR and favorable product and channel mix more than offsetting increased freight and material costs.
Foreign currency is expected to negatively impact gross margins by approximately 110 basis points in fiscal '23. We expect first-half gross margins to be lower with the highest freight pressures in Q2 followed by gross margin expansion in the second-half of the year as we start to lap the significant increases in freight and raw material costs.
For the first quarter, we expect revenue growth in a range centered around 8% in constant currency, foreign currency is expected to negatively impact revenue growth by approximately 480 to 500 basis points. Our first quarter outlook reflects known COVID related restrictions, notably in China. We expect first quarter operating margin in a range centered around 13.5% in constant currency, reflecting increased headwinds from higher freight and marketing expense, which are expected to normalize in the second-half of the year as we start to lap cost increases from the prior-year. Foreign currency is expected to negatively impact operating margin by about 130 basis points in the quarter. First quarter gross margin is expected to contract slightly to last year in constant currency with strong AUR growth more than offset by increased freight and product costs along with more normalized channel mix compared to last year store closures.
Foreign currency is expected to negatively impact gross margins by about 100 basis points in the first quarter. We expect our tax rates in the range of 25% to 26% for the full year, and 24% to 25% for the first quarter. Lastly, our capital allocation priorities remain largely unchanged, with a focus on reinvesting behind our key strategic initiatives and returning excess cash flow to shareholders in the form of our dividend and share repurchases. We completed approximately $150 million in share buybacks in the fourth quarter, with $1.6 billion remaining on our current authorization and we recently raised our dividend for fiscal '23 by 9% to $3 per share.
We're planning fiscal '23 capital expenditures of approximately $290 million to $310 million, or around 4% to 5% of sales. In closing, our teams around the world continue to execute with agility to drive brand desirability, and deliver growth across multiple levers all while navigating a still volatile global environment. Our strong performance this year underscores the timelessness of Ralph's creative vision, our strengthening consumer base and the power of our brand. As we accelerate our topline momentum, we remain strongly committed to balancing our pivot to offense with long-term profitability, leveraging our culture of operating discipline that has been embedded across our organization over the last four years.
With that, let's open up the call for your questions.
