 Ralph Lauren Reports Third Quarter Fiscal 2018 Results |
Continued Execution Across Key Initiatives Delivers Better Than
Expected Results; The Company Raises the Low End of Operating Margin
Guidance for Fiscal 2018
NEW YORK--(BUSINESS WIRE)--Feb. 1, 2018--
Ralph Lauren Corporation (NYSE:RL), a global leader in the design,
marketing, and distribution of premium lifestyle products, today
reported earnings per diluted share of ($1.00) on a reported basis and
$2.03 on an adjusted basis, excluding restructuring and related charges
as well as the impact of tax reform, for the third quarter of Fiscal
2018. This compared to earnings per diluted share of $0.98 on a reported
basis and $1.86 on an adjusted basis, excluding restructuring-related
and other charges, for the third quarter of Fiscal 2017.
“As we prepare to celebrate our 50th anniversary and look
ahead to the future, we continue to focus on evolving the expression of
our iconic brand and its rich heritage to connect with today’s consumers
in all the ways they experience our brand,” said Ralph Lauren, Executive
Chairman and Chief Creative Officer. “Our teams across the company are
united around our common goals and I have great confidence in their
capabilities, passion, and dedication.”
“Focused execution on our key initiatives, especially during the
important holiday period, delivered better-than-expected results for the
third quarter as we drove lower discounting and better quality of sales
overall,” said Patrice Louvet, President and Chief Executive Officer.
“There is still a lot of work to be done to return to industry-leading
revenue and earnings growth, but these results give us confidence that
we are on the right track.”
We delivered across the following key initiatives in the third quarter:
-
Elevating Our Brand Through Improved Quality of Sales, Distribution
and Product
-
Average unit retail across our direct-to-consumer network was up
4% to last year
-
Discount rates were down across all regions in retail
-
Adjusted gross margin was up 250 basis points compared to last year
-
Continued to close unproductive distribution and reduce off-price
penetration within wholesale, and began to upgrade our store
environments
-
Evolving Product, Marketing and Shopping Experience to
Increase Reach and Appeal with New Consumers
-
Evolved our product assortment by renewing our core styles and
focusing on our icons, which drove improvements in Polo
Fall/Holiday seasonal product sell-out trend
-
Increased marketing effectiveness with significant growth in
digital and social media reach with the Create-Your-Own
Customization launch and Polo Teddy Bear Holiday campaign
-
Expanding Our Digital and International Presence
-
In Asia, expanded our store network and delivered 3% constant
currency comp growth
-
Continued to drive sales growth in our wholesale digital business
globally and grow market share in our key categories
-
Successfully transitioned our directly operated U.S. ecommerce
site to a new technology platform to improve functionality and the
consumer experience
-
Working In New Ways to Drive Productivity and Agility
-
Reduced adjusted operating expenses in constant currency despite a
27% increase in marketing investment year-over-year, as we
increased efficiencies
-
Lowered inventory levels by 16% to last year and improved
inventory turns
-
Continued the progress to achieve lead time goals and increase SKU
productivity
Third Quarter Fiscal 2018 Income Statement Review
Net Revenues. In the third quarter of Fiscal 2018, revenue
decreased by 4% to $1.6 billion on a reported basis and was down 6% in
constant currency, 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 third quarter revenue decline was at the top end of the Company’s
guidance of a 6%-8% constant currency revenue decline. Foreign currency
benefited revenue growth by approximately 190 basis points in the third
quarter, above the guidance of 160-170 basis points of benefit, as
foreign exchange rates moved favorably during the quarter.
Revenue performance for the Company’s reportable segments in the third
quarter compared to the prior year period was as follows:
-
North America Revenue. North America revenue in the third
quarter decreased 11% to $886 million. The decline was due to lower
sales in both the retail and wholesale channels, driven by
distribution and brand exits, a strategic reduction in shipments and
promotional activity to increase quality of sales, as well as lower
consumer demand. On a constant currency basis, comparable store sales
in North America were down 10%, including a 3% decline in brick and
mortar stores and a 27% decrease in e-commerce, primarily due to a
planned reduction in promotional activity and lower traffic.
-
Europe Revenue. Europe revenue in the third quarter increased
8% to $378 million on a reported basis and was flat in constant
currency. On a constant currency basis, comparable store sales in
Europe were down 8%, driven by a 9% decline in brick and mortar stores
and a 1% decline in e-commerce, as the Company continued to intensify
its focus on driving quality of sales with a pullback in promotions.
-
Asia Revenue. Asia revenue in the third quarter increased 7% on
both a reported and constant currency basis to $251 million, driven by
strength in both retail and wholesale channels. Comparable store sales
increased 3% in constant currency driven by improved conversion,
average unit retail and the number of transactions.
Gross Profit. Gross profit for the third quarter of Fiscal
2018 was $996 million. Gross margin was 60.7% on both a reported and
adjusted basis, 250 basis points above the prior year, excluding
restructuring and related charges.
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 30 basis points in the third quarter.
Operating Expenses. Operating expenses in the third
quarter of Fiscal 2018 were $807 million on a reported basis, including
$27 million in restructuring-related and other charges. On an adjusted
basis, excluding such charges, operating expenses were $780 million,
approximately flat to prior year, as savings from expense initiatives
and store closures were offset by a 27% increase in marketing spend.
Adjusted operating expense rate was 47.5%, 210 basis points above the
prior year period, excluding restructuring-related and other charges
from both periods. This increase was due to fixed expense deleverage and
an unfavorable channel mix shift, as a greater portion of our revenue
was generated by our international retail businesses, which typically
carry a higher operating expense rate.
Operating Income. Operating income in the third quarter of
Fiscal 2018 was $189 million on a reported basis, including
restructuring-related and other charges of $27 million. On an adjusted
basis, operating income of $216 million declined 1% to the prior year
period and operating margin was 13.2%, 40 basis points above the prior
year period, excluding restructuring-related and other charges from both
periods. The higher operating margin was attributable to gross margin
expansion and foreign currency benefit of 50 basis points which was
partially offset by fixed expense deleverage.
The adjusted operating margin was above the Company’s guidance of down
50-70 basis points in constant currency. The outperformance was driven
by our quality of sales initiatives and Fall/Holiday product performance
that exceeded our expectations. Foreign currency benefit of 50 basis
points on operating margin in the third quarter was above the guidance
of 10-20 basis points of benefit, as foreign exchange rates moved
favorably during the quarter.
-
North America Operating Income. North America operating income
in the third quarter was $197 million on a reported basis and $198
million on an adjusted basis. Adjusted North America operating margin
was 22.4%, 160 basis points above last year, driven by gross margin
improvement attributable to quality of sales initiatives.
-
Europe Operating Income. Europe operating income in the third
quarter was $81 million on both a reported and adjusted basis.
Adjusted Europe operating margin was 21.4%, which was 270 basis points
higher than the prior year period and 220 basis points higher in
constant currency, driven by both gross margin improvement
attributable to quality of sales initiatives and lower expense rate.
-
Asia Operating Income. Asia operating income in the third
quarter was $44 million on a reported basis and $45 million on an
adjusted basis. Adjusted Asia operating margin was 17.7%, up 140 basis
points to prior year and 10 basis points higher in constant currency,
driven by gross margin improvement.
Net Income and EPS. On a reported basis, net loss in the
third quarter of Fiscal 2018 was $82 million or $1.00 per diluted share.
On an adjusted basis, net income was $167 million, or $2.03 per diluted
share, excluding any impact from tax reform as well as restructuring and
related charges. This compared to a net income of $82 million, or $0.98
per diluted share on a reported basis, and net income of $155 million,
or $1.86 per diluted share on an adjusted basis, for the third quarter
of Fiscal 2017.
In the third quarter of Fiscal 2018, the Company had an effective tax
rate of 143.9% on a reported basis and 21.6% on an adjusted basis,
excluding any impact from tax reform as well as restructuring and
related charges, which was slightly below the Company’s guidance of 23%,
due to discrete one-time items. This compared to a reported and an
adjusted effective tax rate of 34% and 28%, respectively, in the prior
year period.
Tax reform increased our estimated tax expense for the third quarter of
Fiscal 2018 by approximately $231 million, primarily related to the
deemed repatriation of foreign earnings and revaluation of deferred tax
assets and liabilities. This estimate is based on the Company’s present
interpretations of tax reform and current available information, and are
subject to further refinement as additional information becomes
available. This amount has been excluded from our adjusted EPS of $2.03.
Balance Sheet and Cash Flow Review
The Company ended the third quarter of Fiscal 2018 with $2.1 billion in
cash, short and long term investments and $589 million in total debt,
compared to $1.5 billion and $589 million, respectively, at the end of
third quarter of Fiscal 2017.
Inventory at the end of third quarter Fiscal 2018 was $825 million, down
16% to the prior year period, driven primarily by improvement in
operating processes, including a proactive pullback in receipts and
moving towards a demand driven supply chain.
The Company had $48 million in capital expenditures in the third quarter
of Fiscal 2018, compared to $60 million in the prior year period,
primarily driven by lower IT and infrastructure investments and an
increased focus on return on investment.
Full Year and Fourth Quarter Fiscal 2018 Outlook
As a reminder, the full year Fiscal 2018 and fourth quarter guidance
excludes restructuring-related and other charges expected to be recorded
primarily in connection with the Company’s Way Forward plan as well as
the one-time tax charge recorded during the third quarter related to tax
reform.
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 100 basis points of benefit to
revenue growth in Fiscal 2018 versus previous guidance of approximately
80 basis points of positive impact, given recent movements in foreign
exchange rates.
Based on the year-to-date performance, the Company now expects operating
margin for Fiscal 2018 to be 10.0%-10.5%, excluding the impact of
foreign currency, and versus previous guidance of 9.5%-10.5%. Foreign
currency is now expected to have 30 basis points of benefit to operating
margin for Fiscal 2018 versus previous guidance for minimal impact,
given recent movements in foreign exchange rates.
In the fourth quarter of Fiscal 2018, the Company expects net revenue to
be down 8%-10%, excluding the impact of foreign currency. Foreign
currency is expected to have approximately 330 basis points of benefit
to revenue growth in the fourth quarter of Fiscal 2018.
Operating margin for the fourth quarter of Fiscal 2018 is expected to be
down 240-260 basis points, excluding the impact of foreign currency.
Foreign currency is estimated to benefit operating margin by
approximately 90 basis points in the fourth quarter.
The full year Fiscal 2018 tax rate is estimated at approximately 23%,
below our previous guidance of 25%, and fourth quarter of Fiscal 2018
tax rate is estimated at approximately 3%, due to the lower U.S. federal
statutory income tax rate as a result of tax reform and discrete items.
Both of these rates include the impact of ASU 2016-09.
We expect capital expenditures of approximately $200 million for Fiscal
2018, lower than our previous guidance of $225 million, as we shift
certain capital investments into Fiscal 2019 and focus on
consumer-facing initiatives that have demonstrated a proof of concept
and healthy rates of return.
Fiscal Year 2018 Outlook – Non-GAAP Disclosure:
The Company is not able to provide a full reconciliation of the non-GAAP
financial measures to GAAP because certain material items that impact
these measures, such as the timing and exact amount of charges related
to our Way Forward plan, have not yet occurred or are out of the
Company’s control. Accordingly, a reconciliation of our non-GAAP
financial measure guidance to the corresponding GAAP measures is not
available without unreasonable effort. The Company has identified the
estimated impact of the items excluded from its Fiscal 2018 guidance.
This Fiscal 2018 non-GAAP guidance excludes estimated pretax
restructuring-related and other charges expected to be recorded
primarily in connection with the Company’s Way Forward plan. Of the
approximately $200 million of estimated charges, we expect to recognize
approximately $130 million in Fiscal 2018 and $75-$85 million in Fiscal
2019 based on the timing of certain lease-related costs. The Fiscal 2018
non-GAAP guidance also excludes one-time charges of $231 million
recorded during the third quarter related to tax reform.
Conference Call
As previously announced, the Company will host a conference call and
live online webcast today, Thursday, February 1st, at 9:00
a.m. Eastern. Listeners may access a live broadcast of the conference
call on the Company's investor relations website at http://investor.ralphlauren.com
or by dialing 517-623-4963 or 800-857-5209. To access the conference
call, listeners should dial in by 8:45 a.m. Eastern and request to be
connected to the Ralph Lauren Third Quarter Fiscal 2018 conference call.
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 12:00 P.M.
Eastern, Thursday, February 1, 2018 through 6:00 P.M. Eastern, Thursday,
February 8, 2018 by dialing 203-369-3293 or 800-570-8796 and entering
passcode 9451.
Future announcements regarding the timing of future earnings release
dates and conference calls will be posted on the Company’s investor
relations website at http://investor.ralphlauren.com
and will not be issued through news wire services unless otherwise noted
by the Company.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the design,
marketing and distribution of premium lifestyle products in four
categories: apparel, home, accessories and fragrances. For 50 years,
Ralph Lauren's reputation and distinctive image have been consistently
developed across an expanding number of products, brands and
international markets. The Company's brand names, which include Ralph
Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph
Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children,
Chaps, and Club Monaco, among others, constitute one of the world's most
widely recognized families of consumer brands. For more information, go
to http://investor.ralphlauren.com.
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 “Full Year and Fourth Quarter Fiscal 2018 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, including
Mr. Ralph Lauren, 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; the
potential impact to our business and future strategic direction
resulting from our transition to our new Chief Executive Officer; our
ability to successfully implement our long-term growth strategy and
achieve anticipated operating enhancements and cost reductions from our
restructuring plans; the impact to our business resulting from
investments and other costs incurred in connection with the execution of
our long-term growth strategy, including restructuring-related charges,
which may be dilutive to our earnings in the short term; our ability to
effectively manage inventory levels and the increasing pressure on our
margins in a highly promotional retail environment; the impact to our
business resulting from potential costs and obligations related to the
early closure of our stores or termination of our long-term,
non-cancellable leases; our efforts to successfully enhance, upgrade,
and/or transition our global information technology systems and
e-commerce platform; our ability to secure our facilities and systems
and those of our third-party service providers from, among other things,
cybersecurity breaches, acts of vandalism, computer viruses, or similar
Internet or email events; the impact to our business resulting from the
recently enacted U.S. tax legislation commonly referred to as the Tax
Cuts and Jobs Act, including related changes to our tax obligations and
effective tax rate in future periods, as well as the one-time
enactment-related charges that were recorded during the third quarter of
Fiscal 2018 on a provisional basis based on a reasonable estimate and
are subject to change, all of which could differ materially from our
current expectations and/or investors' expectations; changes in our tax
obligations and effective tax rate due to a variety of other factors,
including potential additional changes in U.S. or foreign tax laws and
regulations, accounting rules, or the mix and level of earnings by
jurisdiction in future periods that are not currently known or
anticipated; a variety of legal, regulatory, tax, political, and
economic risks, including risks related to the importation and
exportation of products, tariffs, and other trade barriers which our
operations are currently subject to, or may become subject to as a
result of potential changes in legislation, and other risks associated
with our international operations, such as 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, trade and
labor restrictions, and related laws that may reduce the flexibility of
our business; our exposure to currency exchange rate fluctuations from
both a transactional and translational perspective; the impact to our
business resulting from increases in the costs of raw materials,
transportation, and labor; the potential impact to our business
resulting from the financial difficulties of certain of our large
wholesale customers, which may result in consolidations, liquidations,
restructurings, and other ownership changes in the retail industry, as
well as other changes in the competitive marketplace, including the
introduction of new products or pricing changes by our competitors; the
impact to our business resulting from changes in consumers' ability or
preferences to purchase premium lifestyle products that we offer for
sale and our ability to forecast consumer demand, which could result in
either a build-up or shortage of inventory; our ability to maintain our
credit profile and ratings within the financial community; our ability
to access sources of liquidity to provide for our cash needs, including
our debt obligations, tax obligations, payment of dividends, capital
expenditures, and potential repurchases of our Class A common stock, as
well as the ability of our customers, suppliers, vendors, and lenders to
access sources of liquidity to provide for their own cash needs; the
potential impact to the trading prices of our securities if our Class A
common stock share repurchase activity and/or cash dividend payments
differ from investors' expectations; the impact of the volatile state of
the global economy, stock markets, and other global economic conditions
on us, our customers, suppliers, vendors, and lenders; the impact to our
business of events of unrest and instability that are currently taking
place in certain parts of the world, as well as from any terrorist
action, retaliation, and the threat of further action or retaliation;
our ability to open new retail stores, concession shops, and e-commerce
sites in an effort to expand our direct-to-consumer presence; our
ability to continue to expand or grow our business internationally and
the impact of related changes in our customer, channel, and geographic
sales mix as a result; our ability to continue to maintain our brand
image and reputation and protect our trademarks; our intention to
introduce new products or enter into or renew alliances and exclusive
relationships; changes in the business of, and our relationships with,
major department store customers and licensing partners; the potential
impact on our operations and on our suppliers and customers resulting
from natural or man-made disasters; the impact to our business resulting
from the United Kingdom's decision to exit the European Union and the
uncertainty surrounding the terms and conditions of such a withdrawal,
as well as the related impact to global stock markets and currency
exchange rates; our ability to make certain strategic acquisitions and
successfully integrate the acquired businesses into our existing
operations; 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
Securities and Exchange Commission. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
|
RALPH LAUREN CORPORATION
|
CONSOLIDATED BALANCE SHEETS
|
Prepared in accordance with U.S. Generally Accepted Accounting
Principles
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 30,
|
|
April 1,
|
|
December 31,
|
|
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,175.7
|
|
|
$
|
668.3
|
|
|
$
|
928.3
|
|
Short-term investments
|
|
|
|
862.3
|
|
|
|
684.7
|
|
|
|
453.2
|
|
Accounts receivable, net of allowances
|
|
|
|
295.2
|
|
|
|
450.2
|
|
|
|
284.7
|
|
Inventories
|
|
|
|
825.4
|
|
|
|
791.5
|
|
|
|
984.1
|
|
Income tax receivable
|
|
|
|
69.8
|
|
|
|
79.4
|
|
|
|
63.4
|
|
Prepaid expenses and other current assets
|
|
|
|
304.8
|
|
|
|
280.4
|
|
|
|
320.1
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
3,533.2
|
|
|
|
2,954.5
|
|
|
|
3,033.8
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
1,215.9
|
|
|
|
1,316.0
|
|
|
|
1,514.2
|
|
Deferred tax assets
|
|
|
|
133.1
|
|
|
|
125.9
|
|
|
|
90.6
|
|
Goodwill
|
|
|
|
935.0
|
|
|
|
904.6
|
|
|
|
899.7
|
|
Intangible assets, net
|
|
|
|
201.5
|
|
|
|
219.8
|
|
|
|
224.7
|
|
Other non-current assets(a)
|
|
|
|
180.3
|
|
|
|
131.2
|
|
|
|
203.3
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
6,199.0
|
|
|
$
|
5,652.0
|
|
|
$
|
5,966.3
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
$
|
298.3
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Accounts payable
|
|
|
|
184.3
|
|
|
|
147.7
|
|
|
|
157.8
|
|
Income tax payable
|
|
|
|
138.5
|
|
|
|
29.5
|
|
|
|
37.8
|
|
Accrued expenses and other current liabilities
|
|
|
|
1,089.1
|
|
|
|
982.7
|
|
|
|
955.4
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
1,710.2
|
|
|
|
1,159.9
|
|
|
|
1,151.0
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
290.3
|
|
|
|
588.2
|
|
|
|
588.8
|
|
Income tax payable
|
|
|
|
150.8
|
|
|
|
-
|
|
|
|
-
|
|
Non-current liability for unrecognized tax benefits
|
|
|
|
76.4
|
|
|
|
62.7
|
|
|
|
77.2
|
|
Other non-current liabilities
|
|
|
|
563.8
|
|
|
|
541.6
|
|
|
|
538.7
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
2,791.5
|
|
|
|
2,352.4
|
|
|
|
2,355.7
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
1.3
|
|
|
|
1.2
|
|
|
|
1.2
|
|
Additional paid-in-capital
|
|
|
|
2,365.1
|
|
|
|
2,308.8
|
|
|
|
2,299.6
|
|
Retained earnings
|
|
|
|
5,751.5
|
|
|
|
5,751.9
|
|
|
|
5,996.5
|
|
Treasury stock, Class A, at cost
|
|
|
|
(4,579.8
|
)
|
|
|
(4,563.9
|
)
|
|
|
(4,463.7
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(130.6
|
)
|
|
|
(198.4
|
)
|
|
|
(223.0
|
)
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
3,407.5
|
|
|
|
3,299.6
|
|
|
|
3,610.6
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
$
|
6,199.0
|
|
|
$
|
5,652.0
|
|
|
$
|
5,966.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (incl. LT Investments)
|
|
|
|
1,532.7
|
|
|
|
786.2
|
|
|
|
875.0
|
|
Cash & Investments (ST & LT)
|
|
|
|
2,121.3
|
|
|
|
1,374.4
|
|
|
|
1,463.8
|
|
|
|
|
|
|
|
|
|
Net Cash (excl. LT Investments)
|
|
|
|
1,449.4
|
|
|
|
764.8
|
|
|
|
792.7
|
|
Cash & ST Investments
|
|
|
|
2,038.0
|
|
|
|
1,353.0
|
|
|
|
1,381.5
|
|
|
|
|
|
|
|
|
|
(a) Includes non-current investments of:
|
|
|
$
|
83.3
|
|
|
$
|
21.4
|
|
|
$
|
82.3
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Prepared in accordance with U.S. Generally Accepted Accounting
Principles
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 30,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
886.4
|
|
|
$
|
1,000.8
|
|
Europe
|
|
|
|
378.5
|
|
|
|
349.2
|
|
Asia
|
|
|
|
251.0
|
|
|
|
235.2
|
|
Other non-reportable segments
|
|
|
|
125.9
|
|
|
|
129.4
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
1,641.8
|
|
|
|
1,714.6
|
|
|
|
|
|
|
|
Cost of goods sold(a)
|
|
|
|
(645.6
|
)
|
|
|
(731.4
|
)
|
|
|
|
|
|
|
Gross profit
|
|
|
|
996.2
|
|
|
|
983.2
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses(a)
|
|
|
|
(773.8
|
)
|
|
|
(771.9
|
)
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(6.0
|
)
|
|
|
(6.0
|
)
|
|
|
|
|
|
|
Impairment of assets
|
|
|
|
(3.9
|
)
|
|
|
(10.3
|
)
|
|
|
|
|
|
|
Restructuring and other charges(a)
|
|
|
|
(23.3
|
)
|
|
|
(66.7
|
)
|
|
|
|
|
|
|
Total other operating expenses, net
|
|
|
|
(807.0
|
)
|
|
|
(854.9
|
)
|
|
|
|
|
|
|
Operating income
|
|
|
|
189.2
|
|
|
|
128.3
|
|
|
|
|
|
|
|
Foreign currency gains (losses)
|
|
|
|
0.6
|
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(4.8
|
)
|
|
|
(3.6
|
)
|
|
|
|
|
|
|
Interest and other income, net
|
|
|
|
2.8
|
|
|
|
2.5
|
|
|
|
|
|
|
|
Equity in losses of equity-method investees
|
|
|
|
(1.5
|
)
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
186.3
|
|
|
|
123.1
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
|
(268.1
|
)
|
|
|
(41.8
|
)
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(81.8
|
)
|
|
$
|
81.3
|
|
|
|
|
|
|
|
Net income (loss) per share - Basic
|
|
|
$
|
(1.00
|
)
|
|
$
|
0.98
|
|
|
|
|
|
|
|
Net income (loss) per share - Diluted
|
|
|
$
|
(1.00
|
)
|
|
$
|
0.98
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Basic
|
|
|
|
81.7
|
|
|
|
82.6
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Diluted
|
|
|
|
81.7
|
|
|
|
83.3
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
(a) Includes total depreciation expense of:
|
|
|
$
|
(66.7
|
)
|
|
$
|
(71.9
|
)
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Prepared in accordance with U.S. Generally Accepted Accounting
Principles
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
December 30,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
2,471.7
|
|
|
$
|
2,901.2
|
|
Europe
|
|
|
|
1,165.0
|
|
|
|
1,172.6
|
|
Asia
|
|
|
|
676.9
|
|
|
|
662.8
|
|
Other non-reportable segments
|
|
|
|
339.5
|
|
|
|
350.8
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
4,653.1
|
|
|
|
5,087.4
|
|
|
|
|
|
|
|
Cost of goods sold(a)
|
|
|
|
(1,809.9
|
)
|
|
|
(2,255.4
|
)
|
|
|
|
|
|
|
Gross profit
|
|
|
|
2,843.2
|
|
|
|
2,832.0
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses(a)
|
|
|
|
(2,248.9
|
)
|
|
|
(2,389.9
|
)
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(18.0
|
)
|
|
|
(18.1
|
)
|
|
|
|
|
|
|
Impairment of assets
|
|
|
|
(24.8
|
)
|
|
|
(56.7
|
)
|
|
|
|
|
|
|
Restructuring and other charges(a)
|
|
|
|
(78.7
|
)
|
|
|
(193.9
|
)
|
|
|
|
|
|
|
Total other operating expenses, net
|
|
|
|
(2,370.4
|
)
|
|
|
(2,658.6
|
)
|
|
|
|
|
|
|
Operating income
|
|
|
|
472.8
|
|
|
|
173.4
|
|
|
|
|
|
|
|
Foreign currency gains
|
|
|
|
2.4
|
|
|
|
0.8
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(14.4
|
)
|
|
|
(11.1
|
)
|
|
|
|
|
|
|
Interest and other income, net
|
|
|
|
7.1
|
|
|
|
5.7
|
|
|
|
|
|
|
|
Equity in losses of equity-method investees
|
|
|
|
(3.6
|
)
|
|
|
(5.2
|
)
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
464.3
|
|
|
|
163.6
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
|
(342.8
|
)
|
|
|
(58.9
|
)
|
|
|
|
|
|
|
Net income
|
|
|
$
|
121.5
|
|
|
$
|
104.7
|
|
|
|
|
|
|
|
Net income per share - Basic
|
|
|
$
|
1.49
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
Net income per share - Diluted
|
|
|
$
|
1.47
|
|
|
$
|
1.25
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Basic
|
|
|
|
81.7
|
|
|
|
82.9
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Diluted
|
|
|
|
82.5
|
|
|
|
83.6
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
|
$
|
1.50
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
(a) Includes total depreciation expense of:
|
|
|
$
|
(201.4
|
)
|
|
$
|
(213.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Prepared in accordance with U.S. Generally Accepted Accounting
Principles
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
December 30,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
|
$
|
121.5
|
|
|
$
|
104.7
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
|
219.4
|
|
|
|
231.9
|
|
Deferred income tax expense (benefit)
|
|
|
|
(8.0
|
)
|
|
|
9.8
|
|
Equity in loss of equity-method investees
|
|
|
|
3.6
|
|
|
|
5.2
|
|
Non-cash stock-based compensation expense
|
|
|
|
56.3
|
|
|
|
46.4
|
|
Non-cash impairment of assets
|
|
|
|
24.8
|
|
|
|
56.7
|
|
Non-cash restructuring-related inventory charges
|
|
|
|
1.3
|
|
|
|
149.4
|
|
Other non-cash charges
|
|
|
|
6.7
|
|
|
|
18.1
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
|
158.9
|
|
|
|
214.9
|
|
Inventories
|
|
|
|
(11.6
|
)
|
|
|
(36.5
|
)
|
Prepaid expenses and other current assets
|
|
|
|
(4.2
|
)
|
|
|
(72.8
|
)
|
Accounts payable and accrued expenses
|
|
|
|
105.0
|
|
|
|
98.4
|
|
Income tax receivables and payables
|
|
|
|
279.7
|
|
|
|
(2.6
|
)
|
Deferred income
|
|
|
|
3.8
|
|
|
|
(15.5
|
)
|
Other balance sheet changes
|
|
|
|
(6.1
|
)
|
|
|
42.6
|
|
Net cash provided by operating activities
|
|
|
|
951.1
|
|
|
|
850.7
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(123.0
|
)
|
|
|
(225.5
|
)
|
Purchases of investments
|
|
|
|
(985.5
|
)
|
|
|
(460.5
|
)
|
Proceeds from sales and maturities of investments
|
|
|
|
795.3
|
|
|
|
704.8
|
|
Acquisitions and ventures
|
|
|
|
(4.6
|
)
|
|
|
(2.5
|
)
|
Net cash provided by (used in) investing activities
|
|
|
|
(317.8
|
)
|
|
|
16.3
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of short-term debt
|
|
|
|
-
|
|
|
|
3,735.2
|
|
Repayments of short-term debt
|
|
|
|
-
|
|
|
|
(3,851.3
|
)
|
Payments of capital lease obligations
|
|
|
|
(21.2
|
)
|
|
|
(19.4
|
)
|
Payments of dividends
|
|
|
|
(121.7
|
)
|
|
|
(123.7
|
)
|
Repurchases of common stock, including shares surrendered for tax
withholdings
|
|
|
|
(15.9
|
)
|
|
|
(115.0
|
)
|
Proceeds from exercise of stock options
|
|
|
|
0.1
|
|
|
|
4.7
|
|
Net cash used in financing activities
|
|
|
|
(158.7
|
)
|
|
|
(369.5
|
)
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
|
|
|
|
36.8
|
|
|
|
(29.0
|
)
|
Net increase in cash, cash equivalents, and restricted cash
|
|
|
|
511.4
|
|
|
|
468.5
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
|
|
711.8
|
|
|
|
502.1
|
|
Cash, cash equivalents, and restricted cash at end of period
|
|
|
$
|
1,223.2
|
|
|
$
|
970.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
OTHER INFORMATION
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION
|
|
|
|
|
|
|
|
|
|
Net revenues and operating income (loss) for the periods ended
December 30, 2017 and December 31, 2016 for each segment were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
December 30,
|
|
December 31,
|
|
December 30,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
886.4
|
|
|
$
|
1,000.8
|
|
|
$
|
2,471.7
|
|
|
$
|
2,901.2
|
|
Europe
|
|
|
|
378.5
|
|
|
|
349.2
|
|
|
|
1,165.0
|
|
|
|
1,172.6
|
|
Asia
|
|
|
|
251.0
|
|
|
|
235.2
|
|
|
|
676.9
|
|
|
|
662.8
|
|
Other non-reportable segments
|
|
|
|
125.9
|
|
|
|
129.4
|
|
|
|
339.5
|
|
|
|
350.8
|
|
Total net revenues
|
|
|
$
|
1,641.8
|
|
|
$
|
1,714.6
|
|
|
$
|
4,653.1
|
|
|
$
|
5,087.4
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
196.6
|
|
|
$
|
206.4
|
|
|
$
|
549.3
|
|
|
$
|
574.6
|
|
Europe
|
|
|
|
81.0
|
|
|
|
63.8
|
|
|
|
273.6
|
|
|
|
239.2
|
|
Asia
|
|
|
|
44.3
|
|
|
|
23.3
|
|
|
|
101.0
|
|
|
|
(80.3
|
)
|
Other non-reportable segments
|
|
|
|
37.1
|
|
|
|
33.2
|
|
|
|
96.9
|
|
|
|
91.0
|
|
|
|
|
|
359.0
|
|
|
|
326.7
|
|
|
|
1,020.8
|
|
|
|
824.5
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate expenses
|
|
|
|
(146.5
|
)
|
|
|
(131.7
|
)
|
|
|
(469.3
|
)
|
|
|
(457.2
|
)
|
Unallocated restructuring and other charges
|
|
|
|
(23.3
|
)
|
|
|
(66.7
|
)
|
|
|
(78.7
|
)
|
|
|
(193.9
|
)
|
Total operating income
|
|
|
$
|
189.2
|
|
|
$
|
128.3
|
|
|
$
|
472.8
|
|
|
$
|
173.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
Constant Currency Financial Measures
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Comparable Store Sales Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 30, 2017 %
Change
|
|
Nine Months Ended December 30, 2017 %
Change
|
|
|
As Reported
|
|
Constant Currency
|
|
As Reported
|
|
Constant Currency
|
North America
|
|
|
|
|
|
|
|
|
E-commerce
|
|
|
(27
|
%)
|
|
|
(27
|
%)
|
|
(23
|
%)
|
|
(23
|
%)
|
Excluding E-commerce
|
|
|
(3
|
%)
|
|
|
(3
|
%)
|
|
(5
|
%)
|
|
(5
|
%)
|
Total North America
|
|
|
(10
|
%)
|
|
|
(10
|
%)
|
|
(9
|
%)
|
|
(9
|
%)
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
|
E-commerce
|
|
|
8
|
%
|
|
|
(1
|
%)
|
|
(2
|
%)
|
|
(6
|
%)
|
Excluding E-commerce
|
|
|
(2
|
%)
|
|
|
(9
|
%)
|
|
(5
|
%)
|
|
(8
|
%)
|
Total Europe
|
|
|
(1
|
%)
|
|
|
(8
|
%)
|
|
(5
|
%)
|
|
(7
|
%)
|
|
|
|
|
|
|
|
|
|
Asia(a)
|
|
|
3
|
%
|
|
|
3
|
%
|
|
1
|
%
|
|
3
|
%
|
Total Ralph Lauren
|
|
|
(5
|
%)
|
|
|
(6
|
%)
|
|
(6
|
%)
|
|
(6
|
%)
|
|
|
|
|
|
|
|
|
|
(a) Comparable store sales for our Asia segment were
comprised primarily of sales made through our stores and concession
shops.
|
|
|
|
|
|
|
|
|
|
Operating Segment Net Revenue Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
% Change
|
|
|
|
December 30, 2017
|
|
December 31, 2016
|
|
As Reported
|
|
Constant Currency
|
North America
|
|
$
|
886.4
|
|
|
$
|
1,000.8
|
|
|
(11.4
|
%)
|
|
(11.6
|
%)
|
Europe
|
|
|
378.5
|
|
|
|
349.2
|
|
|
8.4
|
%
|
|
0.3
|
%
|
Asia
|
|
|
251.0
|
|
|
|
235.2
|
|
|
6.7
|
%
|
|
6.6
|
%
|
Other non-reportable segments
|
|
|
125.9
|
|
|
|
129.4
|
|
|
(2.7
|
%)
|
|
(4.0
|
%)
|
Net revenues
|
|
$
|
1,641.8
|
|
|
$
|
1,714.6
|
|
|
(4.2
|
%)
|
|
(6.1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
% Change
|
|
|
|
December 30, 2017
|
|
December 31, 2016
|
|
As Reported
|
|
Constant Currency
|
North America
|
|
$
|
2,471.7
|
|
|
$
|
2,901.2
|
|
|
(14.8
|
%)
|
|
(14.9
|
%)
|
Europe
|
|
|
1,165.0
|
|
|
|
1,172.6
|
|
|
(0.7
|
%)
|
|
(3.1
|
%)
|
Asia
|
|
|
676.9
|
|
|
|
662.8
|
|
|
2.1
|
%
|
|
3.9
|
%
|
Other non-reportable segments
|
|
|
339.5
|
|
|
|
350.8
|
|
|
(3.2
|
%)
|
|
(3.2
|
%)
|
Net revenues
|
|
$
|
4,653.1
|
|
|
$
|
5,087.4
|
|
|
(8.5
|
%)
|
|
(8.9
|
%)
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
Global Retail Store Network
|
|
|
|
|
|
|
|
|
|
December 30,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
Ralph Lauren Stores
|
|
|
44
|
|
50
|
Polo Factory Stores
|
|
|
174
|
|
172
|
Total Directly Operated Stores
|
|
|
218
|
|
222
|
Concessions
|
|
|
2
|
|
1
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
Ralph Lauren Stores
|
|
|
20
|
|
25
|
Polo Factory Stores
|
|
|
62
|
|
62
|
Total Directly Operated Stores
|
|
|
82
|
|
87
|
Concessions
|
|
|
25
|
|
34
|
|
|
|
|
|
|
Asia
|
|
|
|
|
|
Ralph Lauren Stores
|
|
|
49
|
|
46
|
Polo Factory Stores
|
|
|
54
|
|
47
|
Total Directly Operated Stores
|
|
|
103
|
|
93
|
Concessions
|
|
|
599
|
|
598
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
Club Monaco Stores
|
|
|
78
|
|
83
|
Club Monaco Concessions
|
|
|
2
|
|
2
|
|
|
|
|
|
|
Global Directly Operated Stores and
Concessions
|
|
|
|
|
|
Ralph Lauren Stores
|
|
|
113
|
|
121
|
Polo Factory Stores
|
|
|
290
|
|
281
|
Club Monaco Stores
|
|
|
78
|
|
83
|
Total Directly Operated Stores
|
|
|
481
|
|
485
|
Concessions
|
|
|
628
|
|
635
|
|
|
|
|
|
|
Global Licensed Stores and Concessions
|
|
|
|
|
|
Ralph Lauren Licensed Stores
|
|
|
87
|
|
102
|
Club Monaco Licensed Stores
|
|
|
62
|
|
59
|
Total Licensed Stores
|
|
|
149
|
|
161
|
Licensed Concessions
|
|
|
122
|
|
102
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
Reconciliation of Certain Non-U.S. GAAP Financial Measures
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
Total Adjustments(a)(b)
|
|
As Adjusted
|
Net revenues
|
|
|
$
|
1,641.8
|
|
|
$
|
-
|
|
$
|
1,641.8
|
|
Gross profit
|
|
|
|
996.2
|
|
|
|
-
|
|
|
996.2
|
|
Gross profit margin
|
|
|
|
60.7
|
%
|
|
|
|
|
60.7
|
%
|
Total other operating expenses, net
|
|
|
|
(807.0
|
)
|
|
|
27.2
|
|
|
(779.8
|
)
|
Operating expense margin
|
|
|
|
49.2
|
%
|
|
|
|
|
47.5
|
%
|
Operating income
|
|
|
|
189.2
|
|
|
|
27.2
|
|
|
216.4
|
|
Operating margin
|
|
|
|
11.5
|
%
|
|
|
|
|
13.2
|
%
|
Income before income taxes
|
|
|
|
186.3
|
|
|
|
27.2
|
|
|
213.5
|
|
Income tax provision
|
|
|
|
(268.1
|
)
|
|
|
222.0
|
|
|
(46.1
|
)
|
Effective tax rate
|
|
|
|
143.9
|
%
|
|
|
|
|
21.6
|
%
|
Net income (loss)
|
|
|
$
|
(81.8
|
)
|
|
$
|
249.2
|
|
$
|
167.4
|
|
Net income (loss) per diluted share
|
|
|
$
|
(1.00
|
)
|
|
|
|
$
|
2.03
|
|
Weighted average shares outstanding - Basic
|
|
|
|
81.7
|
|
|
|
|
|
81.7
|
|
Weighted average shares outstanding - Diluted
|
|
|
|
81.7
|
|
|
|
|
|
82.6
|
|
SEGMENT INFORMATION -
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
196.6
|
|
|
$
|
1.7
|
|
$
|
198.3
|
|
Operating margin
|
|
|
|
22.2
|
%
|
|
|
|
|
22.4
|
%
|
Europe
|
|
|
|
81.0
|
|
|
|
-
|
|
|
81.0
|
|
Operating margin
|
|
|
|
21.4
|
%
|
|
|
|
|
21.4
|
%
|
Asia
|
|
|
|
44.3
|
|
|
|
0.2
|
|
|
44.5
|
|
Operating margin
|
|
|
|
17.6
|
%
|
|
|
|
|
17.7
|
%
|
Other non-reportable segments
|
|
|
|
37.1
|
|
|
|
0.1
|
|
|
37.2
|
|
Operating margin
|
|
|
|
29.5
|
%
|
|
|
|
|
29.6
|
%
|
Unallocated corporate expenses and restructuring and other charges,
net
|
|
|
|
(169.8
|
)
|
|
|
25.2
|
|
|
(144.6
|
)
|
Total operating income
|
|
|
$
|
189.2
|
|
|
$
|
27.2
|
|
$
|
216.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
Total Adjustments(a)(c)
|
|
As Adjusted
|
Net revenues
|
|
|
$
|
4,653.1
|
|
|
$
|
-
|
|
$
|
4,653.1
|
|
Gross profit
|
|
|
|
2,843.2
|
|
|
|
1.3
|
|
|
2,844.5
|
|
Gross profit margin
|
|
|
|
61.1
|
%
|
|
|
|
|
61.1
|
%
|
Total other operating expenses, net
|
|
|
|
(2,370.4
|
)
|
|
|
103.5
|
|
|
(2,266.9
|
)
|
Operating expense margin
|
|
|
|
50.9
|
%
|
|
|
|
|
48.7
|
%
|
Operating income
|
|
|
|
472.8
|
|
|
|
104.8
|
|
|
577.6
|
|
Operating margin
|
|
|
|
10.2
|
%
|
|
|
|
|
12.4
|
%
|
Income before income taxes
|
|
|
|
464.3
|
|
|
|
104.8
|
|
|
569.1
|
|
Income tax provision
|
|
|
|
(342.8
|
)
|
|
|
196.3
|
|
|
(146.5
|
)
|
Effective tax rate
|
|
|
|
73.8
|
%
|
|
|
|
|
25.7
|
%
|
Net income
|
|
|
$
|
121.5
|
|
|
$
|
301.1
|
|
$
|
422.6
|
|
Net income per diluted share
|
|
|
$
|
1.47
|
|
|
|
|
$
|
5.12
|
|
Weighted average shares outstanding - Basic
|
|
|
|
81.7
|
|
|
|
|
|
81.7
|
|
Weighted average shares outstanding - Diluted
|
|
|
|
82.5
|
|
|
|
|
|
82.5
|
|
SEGMENT INFORMATION -
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
549.3
|
|
|
$
|
3.4
|
|
$
|
552.7
|
|
Operating margin
|
|
|
|
22.2
|
%
|
|
|
|
|
22.4
|
%
|
Europe
|
|
|
|
273.6
|
|
|
|
1.3
|
|
|
274.9
|
|
Operating margin
|
|
|
|
23.5
|
%
|
|
|
|
|
23.6
|
%
|
Asia
|
|
|
|
101.0
|
|
|
|
1.1
|
|
|
102.1
|
|
Operating margin
|
|
|
|
14.9
|
%
|
|
|
|
|
15.1
|
%
|
Other non-reportable segments
|
|
|
|
96.9
|
|
|
|
9.1
|
|
|
106.0
|
|
Operating margin
|
|
|
|
28.6
|
%
|
|
|
|
|
31.2
|
%
|
Unallocated corporate expenses and restructuring and other charges,
net
|
|
|
|
(548.0
|
)
|
|
|
89.9
|
|
|
(458.1
|
)
|
Total operating income
|
|
|
$
|
472.8
|
|
|
$
|
104.8
|
|
$
|
577.6
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
Reconciliation of Certain Non-U.S. GAAP Financial Measures
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
Total Adjustments(a)(d)
|
|
As Adjusted
|
Net revenues
|
|
|
$
|
1,714.6
|
|
|
$
|
-
|
|
|
$
|
1,714.6
|
|
Gross profit
|
|
|
|
983.2
|
|
|
|
14.4
|
|
|
|
997.6
|
|
Gross profit margin
|
|
|
|
57.3
|
%
|
|
|
|
|
58.2
|
%
|
Total other operating expenses, net
|
|
|
|
(854.9
|
)
|
|
|
77.0
|
|
|
|
(777.9
|
)
|
Operating expense margin
|
|
|
|
49.9
|
%
|
|
|
|
|
45.4
|
%
|
Operating income
|
|
|
|
128.3
|
|
|
|
91.4
|
|
|
|
219.7
|
|
Operating margin
|
|
|
|
7.5
|
%
|
|
|
|
|
12.8
|
%
|
Income before income taxes
|
|
|
|
123.1
|
|
|
|
91.4
|
|
|
|
214.5
|
|
Income tax provision
|
|
|
|
(41.8
|
)
|
|
|
(17.8
|
)
|
|
|
(59.6
|
)
|
Effective tax rate
|
|
|
|
34.0
|
%
|
|
|
|
|
27.8
|
%
|
Net income
|
|
|
$
|
81.3
|
|
|
$
|
73.6
|
|
|
$
|
154.9
|
|
Net income per diluted share
|
|
|
$
|
0.98
|
|
|
|
|
$
|
1.86
|
|
Weighted average shares outstanding - Basic
|
|
|
|
82.6
|
|
|
|
|
|
82.6
|
|
Weighted average shares outstanding - Diluted
|
|
|
|
83.3
|
|
|
|
|
|
83.3
|
|
SEGMENT INFORMATION -
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
206.4
|
|
|
$
|
2.3
|
|
|
$
|
208.7
|
|
Operating margin
|
|
|
|
20.6
|
%
|
|
|
|
|
20.8
|
%
|
Europe
|
|
|
|
63.8
|
|
|
|
1.6
|
|
|
|
65.4
|
|
Operating margin
|
|
|
|
18.3
|
%
|
|
|
|
|
18.7
|
%
|
Asia
|
|
|
|
23.3
|
|
|
|
15.0
|
|
|
|
38.3
|
|
Operating margin
|
|
|
|
9.9
|
%
|
|
|
|
|
16.3
|
%
|
Other non-reportable segments
|
|
|
|
33.2
|
|
|
|
5.6
|
|
|
|
38.8
|
|
Operating margin
|
|
|
|
25.7
|
%
|
|
|
|
|
29.9
|
%
|
Unallocated corporate expenses and restructuring and other charges,
net
|
|
|
|
(198.4
|
)
|
|
|
66.9
|
|
|
|
(131.5
|
)
|
Total operating income
|
|
|
$
|
128.3
|
|
|
$
|
91.4
|
|
|
$
|
219.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
Total Adjustments(a)(d)
|
|
As Adjusted
|
Net revenues
|
|
|
$
|
5,087.4
|
|
|
$
|
-
|
|
|
$
|
5,087.4
|
|
Gross profit
|
|
|
|
2,832.0
|
|
|
|
149.4
|
|
|
|
2,981.4
|
|
Gross profit margin
|
|
|
|
55.7
|
%
|
|
|
|
|
58.6
|
%
|
Total other operating expenses, net
|
|
|
|
(2,658.6
|
)
|
|
|
250.6
|
|
|
|
(2,408.0
|
)
|
Operating expense margin
|
|
|
|
52.3
|
%
|
|
|
|
|
47.3
|
%
|
Operating income
|
|
|
|
173.4
|
|
|
|
400.0
|
|
|
|
573.4
|
|
Operating margin
|
|
|
|
3.4
|
%
|
|
|
|
|
11.3
|
%
|
Income before income taxes
|
|
|
|
163.6
|
|
|
|
400.0
|
|
|
|
563.6
|
|
Income tax provision
|
|
|
|
(58.9
|
)
|
|
|
(102.0
|
)
|
|
|
(160.9
|
)
|
Effective tax rate
|
|
|
|
36.0
|
%
|
|
|
|
|
28.6
|
%
|
Net income
|
|
|
$
|
104.7
|
|
|
$
|
298.0
|
|
|
$
|
402.7
|
|
Net income per diluted share
|
|
|
$
|
1.25
|
|
|
|
|
$
|
4.82
|
|
Weighted average shares outstanding - Basic
|
|
|
|
82.9
|
|
|
|
|
|
82.9
|
|
Weighted average shares outstanding - Diluted
|
|
|
|
83.6
|
|
|
|
|
|
83.6
|
|
SEGMENT INFORMATION -
|
|
|
|
|
|
|
|
OPERATING INCOME/(LOSS):
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
574.6
|
|
|
$
|
34.8
|
|
|
$
|
609.4
|
|
Operating margin
|
|
|
|
19.8
|
%
|
|
|
|
|
21.0
|
%
|
Europe
|
|
|
|
239.2
|
|
|
|
15.7
|
|
|
|
254.9
|
|
Operating margin
|
|
|
|
20.4
|
%
|
|
|
|
|
21.7
|
%
|
Asia
|
|
|
|
(80.3
|
)
|
|
|
144.6
|
|
|
|
64.3
|
|
Operating margin
|
|
|
|
(12.1
|
%)
|
|
|
|
|
9.7
|
%
|
Other non-reportable segments
|
|
|
|
91.0
|
|
|
|
10.2
|
|
|
|
101.2
|
|
Operating margin
|
|
|
|
25.9
|
%
|
|
|
|
|
28.8
|
%
|
Unallocated corporate expenses and restructuring charges, net
|
|
|
|
(651.1
|
)
|
|
|
194.7
|
|
|
|
(456.4
|
)
|
Total operating income
|
|
|
$
|
173.4
|
|
|
$
|
400.0
|
|
|
$
|
573.4
|
|
|
|
|
|
|
|
|
|
|
|
|
RALPH LAUREN CORPORATION
|
|
Footnotes to Non-U.S. GAAP Financial Measures
|
|
|
|
|
|
(a)
|
|
Adjustments for inventory-related charges are recorded within cost
of goods sold in the consolidated statements of operations.
Adjustments for impairment-related charges are recorded within
impairment of assets in the consolidated statements of operations.
Adjustments for one-time charges recorded in connection with the Tax
Cuts and Jobs Act (the "TCJA") are recorded within the income tax
provision in the consolidated statement of operations. Adjustments
for all other charges are recorded in restructuring and other
charges in the consolidated statements of operations.
|
|
|
|
|
|
(b)
|
|
Adjustments for the three months ended December 30, 2017 include (i)
charges of $22.0 million recorded in connection with the Way Forward
plan, consisting of restructuring charges, impairment of assets, and
accelerated stock-based compensation expense; (ii) additional
impairment of assets of $1.7 million related to underperforming
shop-within-shops as a result of on-going store portfolio
evaluation; and (iii) other charges of $3.5 million related to
depreciation expense associated with the Company's former Polo store
at 711 Fifth Avenue in New York City. The income tax provision
reflects one-time charges of $231.3 million recorded in connection
with the TCJA.
|
|
|
|
|
|
(c)
|
|
Adjustments for the nine months ended December 30, 2017 include (i)
charges of $79.0 million recorded in connection with the Way Forward
plan, consisting of restructuring charges, impairment of assets,
inventory-related charges, and accelerated stock-based compensation
expense; (ii) additional impairment of assets of $10.8 million
related to underperforming stores and shop-within-shops as a result
of on-going store portfolio evaluation; and (iii) net other charges
of $15.0 million primarily related to depreciation expense
associated with the Company's former Polo store at 711 Fifth Avenue
in New York City, the departure of Mr. Stefan Larsson, and the
reversal of reserves associated with the settlement of certain
non-income tax issues. The income tax provision reflects one-time
charges of $231.3 million recorded in connection with the TCJA.
|
|
|
|
|
|
(d)
|
|
Adjustments for the three-month and nine-month periods ended
December 31, 2016 include charges of $91.4 million and $400.0
million, respectively, recorded in connection with the Company’s
restructuring plans, consisting of restructuring charges, impairment
of assets, and inventory-related charges.
|
|
|
|
|
SUPPLEMENTAL FINANCIAL INFORMATION
Since Ralph Lauren Corporation is a global company, the comparability of
its operating results reported in U.S. Dollars is also affected by
foreign currency exchange rate fluctuations because the underlying
currencies in which it transacts change in value over time compared to
the U.S. Dollar. These rate fluctuations can have a significant effect
on the Company’s reported results. As such, in addition to financial
measures prepared in accordance with generally accepted accounting
principles ("U.S. GAAP"), the Company’s discussions often contain
references to constant currency measures, which are calculated by
translating the current-year and prior-year reported amounts into
comparable amounts using a single foreign exchange rate for each
currency. The Company presents constant currency financial information,
which is a non-U.S. GAAP financial measure, as a supplement to its
reported operating results. The Company uses constant currency
information to provide a framework to assess how its businesses
performed excluding the effects of foreign currency exchange rate
fluctuations. Management believes this information is useful to
investors to facilitate comparisons of operating results and better
identify trends in the Company’s businesses. The constant currency
performance measures should be viewed in addition to, and not in lieu of
or superior to, the Company’s operating performance measures calculated
in accordance with U.S. GAAP.
Additionally, this earnings release includes certain non-U.S. GAAP
financial measures relating to charges recorded in connection with the
Company’s restructuring plans, as well as depreciation expense
associated with the Company’s former Polo store at 711 Fifth Avenue in
New York City recorded after the store closed during the first quarter
of Fiscal 2018 in connection with the Way Forward plan. Although the
Company is no longer generating revenue or has any other economic
activity associated with its former Polo store, it continues to incur
depreciation expense due to its involvement at the time of construction.
Adjustments also include additional impairment of assets related to
underperforming stores and shop-within-shops as a result of the
Company’s on-going store portfolio evaluation and net other charges
primarily related to the departure of the Company’s former CEO, Mr.
Stefan Larsson, and the reversal of reserves associated with the
settlement of certain non-income tax issues. The income tax provision
has been adjusted for the tax-related effects of these charges, which
were calculated using the respective statutory tax rates for each
applicable jurisdiction. The income tax provision during the three-month
and nine-month periods ended December 30, 2017 has also been adjusted
for one-time charges of $231.3 million recorded in connection with the
Tax Cuts and Jobs Act. Included in this earnings release are
reconciliations between the non-U.S. GAAP financial measures and the
most directly comparable U.S. GAAP measures before and after these
charges. The Company uses non-U.S. 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. The Company’s full year and fourth
quarter Fiscal 2018 guidance excludes restructuring and other related
charges, as well as the impact of one-time charges recorded in
connection with the Tax Cuts and Jobs Act, all as previously described.
While the Company considers the non-U.S. 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 U.S. GAAP and may be different
from non-U.S. GAAP measures reported by other companies.

View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005642/en/
Source: Ralph Lauren Corporation
Ralph Lauren Corporation Investor Relations: Evren Kopelman,
212-813-7862 or Corporate Communications: Lindsay Knoll,
212-650-4401 rl-press@ralphlauren.com
|
|