Ralph Lauren Reports Third Quarter Fiscal 2016 Results
-
Third Quarter Net Revenues were
$1.9 Billion in Constant Currency - Better-Than-Expected Operating Margin of 13.7%, Excluding Restructuring and Other Charges, Reflects Better Expense Management
-
Earnings Per Diluted Share Was
$2.27 in the Third Quarter, Excluding Restructuring and Other Charges - The Company Adjusts Its Fiscal 2016 Outlook
“2015 was a year of transition,” said
“I am excited to be part of Ralph Lauren,” said
Third Quarter Fiscal 2016 Income Statement Review
Net Revenues. Net revenues for the third quarter of Fiscal
2016 declined 1% on a constant currency basis and 4% on a reported basis
to
-
Wholesale Sales. In the third quarter of Fiscal 2016, wholesale
segment sales decreased 3% on a constant currency basis as a decline
in sales in
North America offset increased sales inEurope . Reported wholesale segment sales declined 6% to$786 million . -
Retail Sales. Retail sales were in line with the prior year on
a constant currency basis in the third quarter as growth in new stores
and e-commerce was offset by negative comparable store sales. Reported
retail segment sales declined 3% to
$1.1 billion . Consolidated comparable store sales decreased 5% on a constant currency basis during the third quarter and declined 7% on a reported basis. -
Licensing. Licensing revenues of
$47 million in the third quarter were in line with the prior year period in both constant currency and on a reported basis.
Gross Profit. Gross profit for the third quarter of Fiscal
2016 was
Operating Expenses. Operating expenses in the third
quarter of Fiscal 2016 were
Operating Income. Operating income in the third quarter of
Fiscal 2016 was
-
Wholesale Operating Income. Wholesale operating income in the
third quarter of Fiscal 2016 was
$184 million , excluding restructuring and other charges, compared with$207 million in the prior year period. Wholesale operating margin decreased 120 basis points to 23.5% driven by fixed expense deleverage inNorth America and negative foreign currency effects, partially offset by strong performance inEurope . -
Retail Operating Income. Retail operating income in the third
quarter of Fiscal 2016 was
$154 million , excluding restructuring and other charges, compared with$194 million in the prior year period. Retail operating margin declined 300 basis points to 13.9%, due to fixed expense deleverage and negative foreign currency effects. -
Licensing Operating Income. Licensing operating income of
$42 million in the third quarter of Fiscal 2016 was in line with the prior year period.
Net Income and Diluted EPS. Net income for the third
quarter of Fiscal 2016 was
The Company had an effective tax rate of approximately 25.1%, excluding restructuring and other charges, in the third quarter of Fiscal 2016, which compared to an effective tax rate of 28.6% in the third quarter of Fiscal 2015. On a reported basis, the effective tax rate was 27.5% in the third quarter.
Third Quarter Fiscal 2016 Balance Sheet and Cash Flow Review
The Company ended the third quarter with
The Company had
Global Retail Store Network
The Company ended the third quarter of Fiscal 2016 with 501 directly
operated stores, comprised of 151
Fiscal 2016 Outlook
The Company is adjusting its Fiscal 2016 outlook. The company expects consolidated net revenues for Fiscal 2016 to be up approximately 1% in constant currency and down approximately 3% on a reported basis. This compares to previous guidance of flat on a reported basis and up 3-5% in constant currency. Based on current exchange rates, the Company continues to expect that foreign currency will have an approximate 400 basis point negative impact on Fiscal 2016 revenue growth.
Operating margin for Fiscal 2016 is now expected to be 290-320 basis points below the prior year’s level due primarily to negative foreign currency effects. This guidance excludes restructuring and other charges that are primarily associated with our global brand reorganization and a pending customs audit charge. This compares to previous guidance of a 180-230 basis point decline. The full year Fiscal 2016 tax rate is now estimated at 28% versus previous guidance of 30%.
In the fourth quarter of Fiscal 2016, the Company expects consolidated net revenues to be flat to down 2% on a reported basis, and based on current exchange rates, foreign currency will have an approximate 150 basis point negative impact on revenue growth. Operating margin for the fourth quarter of Fiscal 2016 is expected to be approximately 400-450 basis points below the comparable prior year period, primarily due to proactive action the Company is taking to clear end-of-season inventories related to the sales challenges the Company faced in the third quarter, as well as infrastructure investments and negative foreign exchange impacts. The fourth quarter tax rate is estimated at 32%.
Conference Call
As previously announced, the Company will host a conference call and
live online webcast today,
An online archive of the broadcast will be available by accessing the
Company's investor relations website at http://investor.ralphlauren.com.
A telephone replay of the call will be available from
ABOUT
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release and oral statements made from time to time by
representatives of the Company contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the statements
under “Fiscal 2016 Outlook” and statements regarding, among other
things, our current expectations about the Company's future results and
financial condition, revenues, store openings and closings, employee
reductions, margins, expenses and earnings and are indicated by words or
phrases such as "anticipate," "estimate," "expect," "project," "we
believe" and similar words or phrases. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause actual results, performance or achievements to be materially
different from the future results, performance or achievements expressed
in or implied by such forward-looking statements. Forward-looking
statements are based largely on the Company's expectations and judgments
and are subject to a number of risks and uncertainties, many of which
are unforeseeable and beyond our control. The factors that could cause
actual results to materially differ include, among others: the loss of
key personnel or other changes in our executive and senior management
team or to our operating structure and our ability to effectively
transfer knowledge during periods of transition; our ability to achieve
anticipated operating enhancements and/or cost reductions from our
restructuring plans, including our transition to a global brand-based
operating structure; our ability to successfully implement our
anticipated growth strategies and to capitalize on our repositioning
initiatives in certain regions and merchandise categories; our exposure
to currency exchange rate fluctuations from both a transactional and
translational perspective, and risks associated with increases in the
costs of raw materials, transportation, and labor; our ability to secure
the technology facilities and systems used by the Company and those of
third party service providers from, among other things, cybersecurity
breaches, acts of vandalism, computer viruses or similar events; our
ability to continue to maintain our brand image and reputation and
protect our trademarks; the impact of the volatile state of the global
economy, stock markets, and other economic conditions on us, our
customers, our suppliers, and our vendors, and our ability and their
ability to access sources of liquidity; the impact of changes in
consumers’ ability or preferences on purchases of premium lifestyle
products that we sell and our ability to forecast consumer demand;
changes in the competitive marketplace; risks associated with our
international operations, including risks related to the importation and
exportation of products, and risks associated with compliance with the
Foreign Corrupt Practices Act or violations of other anti-bribery and
corruption laws prohibiting improper payments and the burdens of
complying with a variety of foreign laws and regulations, including tax
laws; the impact to our business of events of unrest and instability
that are currently taking place in certain parts of the world; our
ability to continue to expand our business internationally; changes in
our effective tax rates or credit profile and ratings within the
financial community; changes in the business of, and our relationships
with, major department store customers and licensing partners; our
efforts to improve the efficiency of our distribution system and enhance
our information technology systems and e-commerce platform; the impact
to our business resulting from potential costs and obligations related
to the early termination of our long term, non-cancellable leases; the
potential impact to the trading prices of our securities if our Class A
Common Stock share repurchase activity and/or cash dividend rate differs
from investors' expectations; the potential impact on our operations and
on our customers resulting from natural or man-made disasters; and other
risk factors identified in the Company's Annual Report on Form 10-K,
Form 10-Q and Form 8-K reports filed with the
RALPH LAUREN CORPORATION | |||||||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
(Unudited) | |||||||||||||||||||||||||
December 26, | March 28, | December 27, | |||||||||||||||||||||||
2015 |
2015 |
2014 | |||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 527 | $ | 500 | $ | 763 | |||||||||||||||||||
Short-term investments | 688 | 644 | 644 | ||||||||||||||||||||||
Accounts receivable, net of allowances | 473 | 655 | 416 | ||||||||||||||||||||||
Inventories | 1,271 | 1,042 | 1,211 | ||||||||||||||||||||||
Income tax receivable | 70 | 57 | 60 | ||||||||||||||||||||||
Deferred tax assets | 154 | 145 | 149 | ||||||||||||||||||||||
Prepaid expenses and other current assets | 269 | 281 | 276 | ||||||||||||||||||||||
Total current assets | 3,452 | 3,324 | 3,519 | ||||||||||||||||||||||
Property and equipment, net | 1,564 | 1,436 | 1,454 | ||||||||||||||||||||||
Deferred tax assets | 38 | 45 | 49 | ||||||||||||||||||||||
Goodwill | 901 | 903 | 917 | ||||||||||||||||||||||
Intangible assets, net | 248 | 267 | 273 | ||||||||||||||||||||||
Other non-current assets (a) | 138 | 131 | 130 | ||||||||||||||||||||||
Total assets | $ | 6,341 | $ | 6,106 | $ | 6,342 | |||||||||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||
Short-term debt | $ | 15 | $ | 234 | $ | 113 | |||||||||||||||||||
Accounts payable | 195 | 210 | 229 | ||||||||||||||||||||||
Income tax payable | 55 | 27 | 132 | ||||||||||||||||||||||
Accrued expenses and other current liabilities | 949 | 715 | 784 | ||||||||||||||||||||||
Total current liabilities | 1,214 | 1,186 | 1,258 | ||||||||||||||||||||||
Long-term debt | 596 | 298 | 298 | ||||||||||||||||||||||
Non-current liability for unrecognized tax benefits | 80 | 116 | 112 | ||||||||||||||||||||||
Other non-current liabilities | 647 | 615 | 599 | ||||||||||||||||||||||
Total liabilities | 2,537 | 2,215 | 2,267 | ||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||
Common stock | 1 | 1 | 1 | ||||||||||||||||||||||
Additional paid-in-capital | 2,236 | 2,117 | 2,089 | ||||||||||||||||||||||
Retained earnings | 6,015 | 5,787 | 5,706 | ||||||||||||||||||||||
Treasury stock, Class A, at cost | (4,248 | ) | (3,849 | ) | (3,699 | ) | |||||||||||||||||||
Accumulated other comprehensive loss | (200 | ) | (165 | ) | (22 | ) | |||||||||||||||||||
Total equity | 3,804 | 3,891 | 4,075 | ||||||||||||||||||||||
Total liabilities and equity | $ | 6,341 | $ | 6,106 | $ | 6,342 | |||||||||||||||||||
Net Cash (incl. LT Investments) | 612 | 620 | 996 | ||||||||||||||||||||||
Cash & Investments (ST & LT) | 1,223 | 1,152 | 1,407 | ||||||||||||||||||||||
Net Cash (excl. LT Investments) | 604 | 612 | 996 | ||||||||||||||||||||||
Cash & ST Investments | 1,215 | 1,144 | 1,407 | ||||||||||||||||||||||
(a) Includes non-current investments of: | $ | 8 | $ | 8 | $ | - | |||||||||||||||||||
RALPH LAUREN CORPORATION | |||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||||||||
(in millions, except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended |
|||||||||||||||||
December 26, | December 27, | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
Wholesale net sales | $ | 786 | $ | 837 | |||||||||||||
Retail net sales | 1,113 | 1,149 | |||||||||||||||
Net sales | 1,899 | 1,986 | |||||||||||||||
Licensing revenue | 47 | 47 | |||||||||||||||
Net revenues | 1,946 | 2,033 | |||||||||||||||
Cost of goods sold(a) | (852 | ) | (874 | ) | |||||||||||||
Gross profit | 1,094 | 1,159 | |||||||||||||||
Selling, general, and administrative expenses(a) | (833 | ) | (837 | ) | |||||||||||||
Amortization of intangible assets | (5 | ) | (6 | ) | |||||||||||||
Impairment of assets | (9 | ) | - | ||||||||||||||
Restructuring and other charges | (58 | ) | (1 | ) | |||||||||||||
Total other operating expenses, net | (905 | ) | (844 | ) | |||||||||||||
Operating income | 189 | 315 | |||||||||||||||
Foreign currency losses | (3 | ) | (8 | ) | |||||||||||||
Interest expense | (6 | ) | (3 | ) | |||||||||||||
Interest and other income, net | 2 | - | |||||||||||||||
Equity in losses of equity-method investees | (1 | ) | (3 | ) | |||||||||||||
Income before provision for income taxes | 181 | 301 | |||||||||||||||
Provision for income taxes | (50 | ) | (86 | ) | |||||||||||||
Net income | $ | 131 | $ | 215 | |||||||||||||
Net income per share - Basic | $ | 1.55 | $ | 2.44 | |||||||||||||
Net income per share - Diluted | $ | 1.54 | $ | 2.41 | |||||||||||||
Weighted average shares outstanding - Basic | 84.9 | 88.1 | |||||||||||||||
Weighted average shares outstanding - Diluted | 85.5 | 89.0 | |||||||||||||||
Dividends declared per share | $ | 0.50 | $ | 0.45 | |||||||||||||
(a) Includes total depreciation expense of: | $ | (71 | ) | $ | (72 | ) | |||||||||||
RALPH LAUREN CORPORATION | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Nine Months Ended |
||||||||||||||||||
December 26, | December 27, | |||||||||||||||||
2015 | 2014 | |||||||||||||||||
Wholesale net sales | $ | 2,355 | $ | 2,488 | ||||||||||||||
Retail net sales | 3,044 | 3,115 | ||||||||||||||||
Net sales | 5,399 | 5,603 | ||||||||||||||||
Licensing revenue | 135 | 132 | ||||||||||||||||
Net revenues | 5,534 | 5,735 | ||||||||||||||||
Cost of goods sold(a) | (2,361 | ) | (2,401 | ) | ||||||||||||||
Gross profit | 3,173 | 3,334 | ||||||||||||||||
Selling, general, and administrative expenses(a) | (2,494 | ) | (2,461 | ) | ||||||||||||||
Amortization of intangible assets | (17 | ) | (19 | ) | ||||||||||||||
Impairment of assets | (24 | ) | (2 | ) | ||||||||||||||
Restructuring and other charges | (123 | ) | (7 | ) | ||||||||||||||
Total other operating expenses, net | (2,658 | ) | (2,489 | ) | ||||||||||||||
Operating income | 515 | 845 | ||||||||||||||||
Foreign currency losses | (9 | ) | (14 | ) | ||||||||||||||
Interest expense | (14 | ) | (12 | ) | ||||||||||||||
Interest and other income, net | 5 | 4 | ||||||||||||||||
Equity in losses of equity-method investees | (7 | ) | (9 | ) | ||||||||||||||
Income before provision for income taxes | 490 | 814 | ||||||||||||||||
Provision for income taxes | (135 | ) | (236 | ) | ||||||||||||||
Net income | $ | 355 | $ | 578 | ||||||||||||||
Net income per share - Basic | $ | 4.15 | $ | 6.53 | ||||||||||||||
Net income per share - Diluted | $ | 4.11 | $ | 6.46 | ||||||||||||||
Weighted average shares outstanding - Basic | 85.7 | 88.5 | ||||||||||||||||
Weighted average shares outstanding - Diluted | 86.3 | 89.5 | ||||||||||||||||
Dividends declared per share | $ | 1.50 | $ | 1.35 | ||||||||||||||
(a) Includes total depreciation expense of: |
$ | (210 | ) | $ | (200 | ) | ||||||||||||
RALPH LAUREN CORPORATION | ||||||||||||||||||||||||
OTHER INFORMATION | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||||||||||
Net revenues and operating income for the periods ended December 26, 2015 and December 27, 2014 for each segment were as follows: | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
December 26, | December 27, | December 26, | December 27, | |||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Net revenues: | ||||||||||||||||||||||||
Wholesale | $ | 786 | $ | 837 | $ | 2,355 | $ | 2,488 | ||||||||||||||||
Retail | 1,113 | 1,149 | 3,044 | 3,115 | ||||||||||||||||||||
Licensing | 47 | 47 | 135 | 132 | ||||||||||||||||||||
Total net revenues | $ | 1,946 | $ | 2,033 | $ | 5,534 | $ | 5,735 | ||||||||||||||||
Operating income: | ||||||||||||||||||||||||
Wholesale | $ | 183 | $ | 207 | $ | 567 | $ | 634 | ||||||||||||||||
Retail | 136 | 194 | 369 | 499 | ||||||||||||||||||||
Licensing | 42 | 42 | 120 | 120 | ||||||||||||||||||||
361 | 443 | 1,056 | 1,253 | |||||||||||||||||||||
Unallocated corporate expenses | (114 | ) | (127 | ) | (418 | ) | (401 | ) | ||||||||||||||||
Unallocated restructuring and other charges | (58 | ) | (1 | ) | (123 | ) | (7 | ) | ||||||||||||||||
Total operating income | $ | 189 | $ | 315 | $ | 515 | $ | 845 | ||||||||||||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||||
Constant Currency Financial Measures | |||||||||||||||||||||
(in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Same - Store Sales Data | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
December 26, 2015 | December 26, 2015 | ||||||||||||||||||||
% Change | % Change | ||||||||||||||||||||
As Reported | Constant Currency |
As Reported |
Constant Currency | ||||||||||||||||||
Total Ralph Lauren | (7%) | (5%) | (7%) | (3%) | |||||||||||||||||
Operating Segment Data | |||||||||||||||||||||
Three Months Ended | % Change | ||||||||||||||||||||
December 26, 2015 | December 27, 2014 | As Reported | Constant Currency | ||||||||||||||||||
Wholesale net sales | $ | 786 | $ | 837 | (6.0%) | (3.1%) | |||||||||||||||
Retail net sales | 1,113 | 1,149 | (3.1%) | 0.5% | |||||||||||||||||
Net sales | 1,899 | 1,986 | (4.4%) | (1.0%) | |||||||||||||||||
Licensing revenue | 47 | 47 | (0.4%) | 0.1% | |||||||||||||||||
Net revenues | $ | 1,946 | $ | 2,033 | (4.3%) | (1.0%) | |||||||||||||||
Nine Months Ended | % Change | ||||||||||||||||||||
December 26, 2015 | December 27, 2014 | As Reported | Constant Currency | ||||||||||||||||||
Wholesale net sales | $ | 2,355 | $ | 2,488 | (5.4%) | (1.7%) | |||||||||||||||
Retail net sales | 3,044 | 3,115 | (2.3%) | 2.8% | |||||||||||||||||
Net sales | 5,399 | 5,603 | (3.6%) | 0.8% | |||||||||||||||||
Licensing revenue | 135 | 132 | 2.4% | 4.2% | |||||||||||||||||
Net revenues | $ | 5,534 | $ | 5,735 | (3.5%) | 0.9% | |||||||||||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||||||||||||||||
Reconciliation of Certain Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||
Three Months Ended December 26, 2015 | |||||||||||||||||||||||||||||||||
As |
Adjustments (a) |
As Adjusted |
Foreign |
As Adjusted |
|||||||||||||||||||||||||||||
Net revenues | $ | 1,946 | $ | - | $ | 1,946 | $ | 67 | $ | 2,013 | |||||||||||||||||||||||
Gross profit | 1,094 | 10 | 1,104 | 49 | 1,153 | ||||||||||||||||||||||||||||
Gross profit margin |
56.2% | 56.8% | 57.3% | ||||||||||||||||||||||||||||||
Total other operating expenses | (905) | 67 | (838) | ||||||||||||||||||||||||||||||
Operating expense margin | 46.6% | 43.1% | |||||||||||||||||||||||||||||||
Operating income | 189 | 77 | 266 | ||||||||||||||||||||||||||||||
Operating margin | 9.7% | 13.7% | |||||||||||||||||||||||||||||||
Income before provision for income taxes | 181 | 77 | 258 | ||||||||||||||||||||||||||||||
Provision for income taxes | (50) | (15) | (65) | ||||||||||||||||||||||||||||||
Effective tax rate | 27.5% | 25.1% | |||||||||||||||||||||||||||||||
Net income | $ | 131 | $ | 62 | $ | 193 | |||||||||||||||||||||||||||
Net income per diluted share | $ | 1.54 | $ | 0.73 | $ | 2.27 | $ | 0.24 | $ | 2.51 | |||||||||||||||||||||||
SEGMENT INFORMATION - | |||||||||||||||||||||||||||||||||
OPERATING INCOME: | |||||||||||||||||||||||||||||||||
Wholesale | $ | 183 | $ | 1 | $ | 184 | |||||||||||||||||||||||||||
Operating margin | 23.3% | 23.5% | |||||||||||||||||||||||||||||||
Retail | 136 | 18 | 154 | ||||||||||||||||||||||||||||||
Operating margin | 12.2% | 13.9% | |||||||||||||||||||||||||||||||
Licensing | 42 | - | 42 | ||||||||||||||||||||||||||||||
Operating margin | 89.4% | 89.4% | |||||||||||||||||||||||||||||||
Unallocated corporate expenses and restructuring and other charges, net | (172) | 58 | (114) | ||||||||||||||||||||||||||||||
Total operating income | $ | 189 | $ | 77 | $ | 266 | |||||||||||||||||||||||||||
Nine Months Ended December 26, 2015 | |||||||||||||||||||||||||||||||||
As |
Adjustments (a) |
As Adjusted |
Foreign |
As Adjusted |
|||||||||||||||||||||||||||||
Net revenues | $ | 5,534 | $ | - | $ | 5,534 | $ | 253 | $ | 5,787 | |||||||||||||||||||||||
Gross profit | 3,173 | 13 | 3,186 | 202 | 3,388 | ||||||||||||||||||||||||||||
Gross profit margin | 57.3% | 57.6% | 58.6% | ||||||||||||||||||||||||||||||
Total other operating expenses | (2,658) | 147 | (2,511) | ||||||||||||||||||||||||||||||
Operating expense margin | 48.0% | 45.4% | |||||||||||||||||||||||||||||||
Operating income | 515 | 160 | 675 | ||||||||||||||||||||||||||||||
Operating margin | 9.3% | 12.2% | |||||||||||||||||||||||||||||||
Income before provision for income taxes | 490 | 160 | 650 | ||||||||||||||||||||||||||||||
Provision for income taxes | (135) | (43) | (178) | ||||||||||||||||||||||||||||||
Effective tax rate | 27.6% | 27.5% | |||||||||||||||||||||||||||||||
Net income | $ | 355 | $ | 117 | $ | 472 | |||||||||||||||||||||||||||
Net income per diluted share | $ | 4.11 | $ | 1.36 | $ | 5.47 | $ | 0.94 | $ | 6.41 | |||||||||||||||||||||||
SEGMENT INFORMATION - | |||||||||||||||||||||||||||||||||
OPERATING INCOME: | |||||||||||||||||||||||||||||||||
Wholesale | $ | 567 | $ | 6 | $ | 573 | |||||||||||||||||||||||||||
Operating margin | 24.1% | 24.3% | |||||||||||||||||||||||||||||||
Retail | 369 | 31 | 400 | ||||||||||||||||||||||||||||||
Operating margin | 12.1% | 13.2% | |||||||||||||||||||||||||||||||
Licensing | 120 | - | 120 | ||||||||||||||||||||||||||||||
Operating margin | 89.1% | 89.1% | |||||||||||||||||||||||||||||||
Unallocated corporate expenses and restructuring and other charges, net | (541) | 123 | (418) | ||||||||||||||||||||||||||||||
Total operating income | $ | 515 | $ | 160 | $ | 675 |
(a) |
Adjustments include Restructuring and Other Charges, Asset Impairment Charges, and Inventory-related Charges. Inventory-related charges are recorded within cost of goods sold in the unaudited interim consolidated statements of income. |
Note: The above non-GAAP financial measures exclude restructuring and other charges that are primarily related to activities associated with the Company’s global brand reorganization, a pending customs audit and the settlement of certain litigation claims. |
SUPPLEMENTAL FINANCIAL INFORMATION
This earnings release includes certain non-GAAP financial measures relating to restructuring and non-cash charges recorded in connection with the Company’s global brand reorganization, as well as other charges primarily related to a pending customs audit and the settlement of certain litigation claims. Included in this earnings release is a reconciliation between the non-GAAP financial measures and the most directly comparable GAAP measures before and after these charges. The related tax effects were calculated using the respective statutory tax rates for each applicable jurisdiction. The Company uses non-GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP and may be different from non-GAAP measures reported by other companies.
Additionally, since
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Source:
Ralph Lauren Corporation
Investor Relations:
Evren Kopelman,
212-813-7862
or
Corporate Communications:
Malcolm
Carfrae, 212-583-2262