- First Quarter Revenues Grew 3% to $1.4 billion
- Earnings Per Diluted Share Increased Double-Digits on Both a
Reported and Adjusted Basis
- Operating Margins Increased 60 Basis Points on a Reported Basis
and 110 Basis Points on an Adjusted Basis
- The Company Repurchased 1.3 Million Shares of Class A Common
Stock During the First Quarter
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 $1.47 on a reported
basis and $1.77 on an adjusted basis, excluding
restructuring-related and other charges, for the first quarter of
Fiscal 2020. This compared to earnings per diluted share of $1.31
on a reported basis and $1.54 on an adjusted basis, excluding
restructuring-related and other charges, for the first quarter of
Fiscal 2019.
“Our Company continues to evolve with the world around us while
staying true to our values and creating inspiring style that
endures,” said Ralph Lauren, Executive Chairman and Chief Creative
Officer. “And more than 50 years in, I am very encouraged by the
work we are doing to strengthen the foundations of our business,
energize our teams and elevate our iconic brands.”
“We delivered first quarter results in line with our overall
expectations, with better than expected operating margin and
double-digit EPS growth,” said Patrice Louvet, President and Chief
Executive Officer. “Our performance was driven by strong continued
momentum in our international markets and expense discipline across
the organization, while we continued to invest in elevating our
brands and stabilize our North America business against a more
volatile backdrop.”
We delivered across the following strategic initiatives in the
first quarter of Fiscal 2020:
- Win Over a New Generation of Consumers
- Increased marketing investment by 19% to last year. Key
marketing activities included: our ‘Family is Who You Love’ and
Pride campaigns, celebrating our brands’ multi-generational appeal
and the diversity of modern families, our spring golf partnerships,
and the Earth Day launch of our Earth Polo, made entirely of
recycled plastic bottles and a water-less dyeing process
- Elevated our brand voice with our Limited Edition Polo Sport,
Pride capsule, and Polo Golf x Justin Thomas Collection as we
kicked off our Summer of Sports program
- Energize Core Products and Accelerate Under-Developed
Categories
- Average unit retail across our direct-to-consumer network was
up 1% in the first quarter, on top of an 8% increase last year,
with continued increases in Europe and Asia partly offset by a 1%
decline in North America as we moved through Spring inventory
- We continue to expect low to mid-single digit AUR growth for
Fiscal ’20, in-line with our long-term plan, driven by our brand
elevation and product mix strategy, particularly in our
international regions
- Under-developed categories continued to outpace overall growth,
led by momentum in denim and outerwear
- Drive Targeted Expansion in Our Regions and Channels
- Continued momentum in international markets, including constant
currency revenue growth of 7% in Europe and 8% in Asia, with nearly
30% revenue growth in Mainland China
- Delivered 5% constant currency comp growth and expanded our
store network in Asia, driven by 25 new owned and partnered
doors.
- Lead With Digital
- Total digital ecosystem sales increased 1%, with nearly 10%
growth in International partly offset by softer performance in
North America
- Strong continued global expansion on digital pure play partners
with a focus on winning over a new generation of consumers
- Operate With Discipline to Fuel Growth
- Adjusted operating margins expanded 110 basis points in the
quarter, driven by disciplined cost management and SG&A
leverage
- Adjusted operating expenses, excluding double-digit growth in
marketing investments, declined to last year on improved supply
chain efficiencies
First Quarter Fiscal 2020 Income Statement Review
Net Revenue. In the first quarter of Fiscal 2020, revenue
increased by 3% to $1.4 billion on a reported basis and was up 5%
in constant currency, driven by positive results across regions.
Foreign currency negatively impacted revenue growth by
approximately 220 basis points in the first quarter.
Revenue performance for the Company’s reportable segments in the
first quarter compared to the prior year period was as follows:
- North America Revenue. North America revenue in the first
quarter increased 3% to $719 million. North America wholesale
revenue increased 2%. In retail, comparable store sales in North
America were up 1%, driven by a 1% comp in brick and mortar stores
and flat comps at ralphlauren.com.
- Europe Revenue. Europe revenue in the first quarter increased
2% to $361 million on a reported basis and 7% in constant currency.
Europe wholesale revenue was flat on a reported basis and grew 5%
in constant currency. In retail, comparable store sales in Europe
were up 4%, driven by a 2% increase in brick and mortar stores and
a 22% increase in digital commerce.
- Asia Revenue. Asia revenue in the first quarter increased 4% to
$259 million on a reported basis and increased 8% in constant
currency, driven by solid growth in retail. Comparable store sales
in Asia increased 5%, reflecting growth in both brick and mortar
and digital commerce operations.
Gross Profit. Gross profit for the first quarter of
Fiscal 2020 was $921 million and gross margin was 64.4%. Adjusted
gross margin was 10 basis points above the prior year on a reported
basis and flat in constant currency.
Gross margin benefited from favorable product, geographic, and
channel mix, partly offset by increased promotional activity to
keep inventories current and healthy.
Operating Expenses. Operating expenses in the first
quarter of Fiscal 2020 were $778 million on a reported basis,
including $31 million in restructuring-related and other charges.
On an adjusted basis, excluding such charges, operating expenses
were $747 million, up 1% to prior year. Excluding marketing
investments, adjusted operating expenses were down slightly to last
year.
Adjusted operating expense rate was 52.3%, 100 basis points
below the prior year period, excluding restructuring-related and
other charges. This decrease was driven by leverage of fixed
expenses on sales growth and cost reduction initiatives, partly
offset by planned increases in marketing investments.
Operating Income. Operating income for the first quarter
of Fiscal 2020 was $143 million on a reported basis, including
restructuring-related and other charges of $31 million, and
operating margin was 10.0%. Adjusted operating income was $175
million and adjusted operating margin was 12.2%, 110 basis points
above the prior year, excluding restructuring-related and other
charges from both periods.
- North America Operating Income. North America operating income
in the first quarter was $158 million on both a reported and
adjusted basis. Adjusted North America operating margin was 21.9%,
down 100 basis points from last year.
- Europe Operating Income. Europe operating income in the first
quarter was $79 million on a reported and $80 million on an
adjusted basis. Adjusted Europe operating margin was 22.0%, up 100
basis points to the prior year period. In constant currency, the
adjusted operating margin increased 10 basis points.
- Asia Operating Income. Asia operating income in the first
quarter was $48 million on a reported and $49 million on an
adjusted basis. Adjusted Asia operating margin was 18.8%, up 150
basis points to the prior year and 180 basis points higher in
constant currency.
Net Income and EPS. On a reported basis, net income in
the first quarter of Fiscal 2020 was $117 million or $1.47 per
diluted share. On an adjusted basis, net income was $142 million,
or $1.77 per diluted share, excluding restructuring-related and
other charges. This compared to net income of $109 million, or
$1.31 per diluted share on a reported basis, and net income of $128
million, or $1.54 per diluted share on an adjusted basis, for the
first quarter of Fiscal 2019.
In the first quarter of Fiscal 2020, the Company had an
effective tax rate of 20.1% on a reported basis and 20.5% on an
adjusted basis, excluding restructuring and related other charges.
This compared to an effective tax rate of 18% on both a reported
and adjusted basis, excluding restructuring and related other
charges, in the prior year period.
Balance Sheet and Cash Flow Review
The Company ended the first quarter of Fiscal 2020 with $2.0
billion in cash and short and long term investments and $692
million in total debt, compared to $2.1 billion and $587 million,
respectively, at the end of the first quarter of Fiscal 2019.
Inventory at the end of the first quarter of Fiscal 2020 was
$989 million, up 11% compared to the prior year period, including
increases in Europe and Asia to support growth initiatives.
The Company repurchased approximately $150 million of Class A
Common Stock during the first quarter. Approximately $1.1 billion
remained available under the Company’s authorized share repurchase
programs at the end of the first quarter.
Full Year Fiscal 2020 and Second Quarter Outlook
The full year Fiscal 2020 and second quarter guidance excludes
restructuring-related and other charges, as described in the
“Non-U.S. GAAP Financial Measures” section of this press
release.
For Fiscal 2020, the Company continues to expect net revenues to
increase 2% to 3%. Foreign currency is expected to negatively
impact revenue growth by 90 to 100 basis points in Fiscal 2020.
The Company continues to expect operating margin for Fiscal 2020
to increase 40 to 60 basis points in constant currency. Foreign
currency is expected to negatively impact operating margin by about
10 to 20 basis points in Fiscal 2020.
In the second quarter of Fiscal 2020, the Company expects net
revenue to be up about 1% in constant currency. Foreign currency is
expected to pressure revenue growth by approximately 90 to 100
basis points in the second quarter of Fiscal 2020.
Operating margin for the second quarter of Fiscal 2020 is
expected to be up 40 to 60 basis points in constant currency.
Foreign currency is expected to negatively impact operating margin
by about 20 basis points in the second quarter.
We continue to expect the full year Fiscal 2020 tax rate to be
approximately 22%. Second quarter of Fiscal 2020 tax rate is
estimated at approximately 23%.
The Company continues to plan capital expenditures of
approximately $300 million for Fiscal 2020.
Conference Call
As previously announced, the Company will host a conference call
and live online webcast today, Tuesday, July 30th, 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 First Quarter 2020 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, Tuesday, July 30, 2019
through 6:00 P.M. Eastern, Tuesday, August 6, 2019 by dialing
203-369-1401 or 866-463-4964 and entering passcode 3914.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the
design, marketing and distribution of premium lifestyle products in
five categories: apparel, accessories, home, fragrances and
hospitality. For more than 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 https://corporate.ralphlauren.com.
This press release and oral statements made from time to time by
representatives of the Company may contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the
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, earnings, and citizenship and sustainability
goals and are indicated by words or phrases such as “anticipate,”
“estimate,” “expect,” “project,” “we believe,” “can,” “will,” 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; our
ability to successfully implement our long-term growth strategy;
our ability to continue to expand and grow our business
internationally and the impact of related changes in our customer,
channel, and geographic sales mix as a result, as well as our
ability to accelerate growth in certain product categories; our
ability to open new retail stores and concession shops, as well as
enhance and expand our digital footprint and capabilities, all in
an effort to expand our direct-to-consumer presence; our ability to
respond to constantly changing fashion and retail trends and
consumer demands in a timely manner, develop products that resonate
with our existing customers and attract new customers, and execute
marketing and advertising programs that appeal to consumers; our
ability to effectively manage inventory levels and the increasing
pressure on our margins in a highly promotional retail environment;
our ability to continue to maintain our brand image and reputation
and protect our trademarks; our ability to competitively price our
products and create an acceptable value proposition for consumers;
the impact to our business resulting from changes in consumers’
ability, willingness, or preferences to purchase discretionary
items and luxury retail products, which tends to decline during
recessionary periods, and our ability to accurately forecast
consumer demand, the failure of which could result in either a
build-up or shortage of inventory; our ability to achieve
anticipated operating enhancements and cost reductions from our
restructuring plans, as well as the impact to our business
resulting from restructuring-related charges, which may be dilutive
to our earnings in the short term; 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; a variety of legal, regulatory, tax,
political, and economic risks, including risks related to the
importation and exportation of products 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; the potential impact to our
business resulting from the imposition of additional duties,
tariffs, taxes, and other charges or barriers to trade, including
those resulting from current trade developments with China and the
related impact to global stock markets, as well as our ability to
implement mitigating sourcing strategies; 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; the impact to our
business resulting from increases in the costs of raw materials,
transportation, and labor, including wages, healthcare, and other
benefit-related costs; 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; our efforts to
successfully enhance, upgrade, and/or transition our global
information technology systems and digital commerce platforms;
changes in our tax obligations and effective tax rate due to a
variety of other factors, including potential 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; our exposure to currency exchange
rate fluctuations from both a transactional and translational
perspective; 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 of economic, political, and other
conditions on us, our customers, suppliers, vendors, and lenders;
the potential impact to our business if any of our distribution
centers were to become inoperable or inaccessible; the potential
impact on our operations and on our suppliers and customers
resulting from natural or man-made disasters; 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 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; our ability to
maintain our credit profile and ratings within the financial
community; our intention to introduce new products or brands, or
enter into or renew alliances; changes in the business of, and our
relationships with, major department store customers and licensing
partners; our ability to achieve our goals regarding environmental,
social, and governance practices; 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)
June 29, March 30, June 30,
2019
2019
2018
ASSETS Current assets: Cash and cash equivalents
$
648.4
$
584.1
$
532.3
Short-term investments
1,280.7
1,403.4
1,487.7
Accounts receivable, net of allowances
290.7
398.1
260.0
Inventories
988.6
817.8
890.0
Income tax receivable
33.0
32.1
37.3
Prepaid expenses and other current assets
412.7
359.3
342.8
Total current assets
3,654.1
3,594.8
3,550.1
Property and equipment, net
987.0
1,039.2
1,141.7
Operating lease right-of-use assets
1,415.8
-
-
Deferred tax assets
94.3
67.0
70.7
Goodwill
925.3
919.6
928.7
Intangible assets, net
158.2
163.7
181.4
Other non-current assets(a)
109.0
158.5
162.7
Total assets
$
7,343.7
$
5,942.8
$
6,035.3
LIABILITIES AND EQUITY Current liabilities: Current
portion of long-term debt
$
-
$
-
$
299.0
Accounts payable
351.5
202.3
202.7
Income tax payable
45.3
29.4
45.4
Current portion of operating lease liabilities
293.8
-
-
Accrued expenses and other current liabilities
900.4
968.4
1,016.6
Total current liabilities
1,591.0
1,200.1
1,563.7
Long-term debt
692.1
689.1
288.0
Long-term operating lease liabilities
1,483.9
-
-
Income tax payable
146.7
146.7
124.8
Non-current liability for unrecognized tax benefits
77.9
78.8
77.8
Other non-current liabilities
339.3
540.9
560.0
Total liabilities
4,330.9
2,655.6
2,614.3
Equity: Common stock
1.3
1.3
1.3
Additional paid-in-capital
2,516.8
2,493.8
2,426.7
Retained earnings
5,878.6
5,979.1
5,805.4
Treasury stock, Class A, at cost
(5,274.7)
(5,083.6)
(4,711.0)
Accumulated other comprehensive loss
(109.2)
(103.4)
(101.4)
Total equity
3,012.8
3,287.2
3,421.0
Total liabilities and equity
$
7,343.7
$
5,942.8
$
6,035.3
Net Cash (incl. LT Investments)
1,271.1
1,343.3
1,502.5
Cash & Investments (ST & LT)
1,963.2
2,032.4
2,089.5
Net Cash (excl. LT Investments)
1,237.0
1,298.4
1,433.0
Cash & ST Investments
1,929.1
1,987.5
2,020.0
(a) Includes non-current investments of:
$
34.1
$
44.9
$
69.5
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
June 29, June 30,
2019
2018
North America
$
719.4
$
697.6
Europe
360.8
355.3
Asia
258.6
248.0
Other non-reportable segments
90.0
89.7
Net revenues
1,428.8
1,390.6
Cost of goods sold
(508.0)
(494.9)
Gross profit
920.8
895.7
Selling, general, and administrative expenses
(746.7)
(741.9)
Impairment of assets
(1.2)
(1.3)
Restructuring and other charges
(29.6)
(22.4)
Total other operating expenses, net
(777.5)
(765.6)
Operating income
143.3
130.1
Interest expense
(4.2)
(4.4)
Interest income
11.6
9.2
Other expense, net
(4.1)
(2.0)
Income before income taxes
146.6
132.9
Income tax provision
(29.5)
(23.9)
Net income
$
117.1
$
109.0
Net income per common share - Basic
$
1.50
$
1.33
Net income per common share - Diluted
$
1.47
$
1.31
Weighted average common shares outstanding - Basic
78.2
81.9
Weighted average common shares outstanding - Diluted
79.9
83.3
Dividends declared per share
$
0.6875
$
0.625
RALPH LAUREN CORPORATION CONSOLIDATED STATEMENTS
OF CASH FLOWS Prepared in accordance with U.S. Generally
Accepted Accounting Principles (in millions)
(Unaudited) Three Months Ended June 29,
June 30,
2019
2018
Cash flows from operating activities: Net income
$
117.1
$
109.0
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization expense
66.2
70.3
Deferred income tax expense (benefit)
(8.1)
7.3
Non-cash stock-based compensation expense
23.0
21.5
Non-cash impairment of assets
1.2
1.3
Non-cash restructuring-related inventory charges
0.6
-
Other non-cash charges (benefits)
(1.9)
5.8
Changes in operating assets and liabilities: Accounts receivable
108.6
153.8
Inventories
(166.3)
(147.1)
Prepaid expenses and other current assets
(48.8)
(35.9)
Accounts payable and accrued liabilities
82.9
(0.1)
Income tax receivables and payables
13.3
19.4
Deferred income
1.8
(4.8)
Other balance sheet changes
7.8
30.1
Net cash provided by operating activities
197.4
230.6
Cash flows from investing activities: Capital
expenditures
(49.4)
(42.3)
Purchases of investments
(173.5)
(1,250.1)
Proceeds from sales and maturities of investments
308.4
469.8
Acquisitions and ventures
0.9
(4.5)
Proceeds from sale of property
20.8
-
Net cash provided by (used in) investing activities
107.2
(827.1)
Cash flows from financing activities: Repayments of
short-term debt
-
(9.9)
Payments of finance lease obligations
(4.9)
(5.7)
Payments of dividends
(48.8)
(40.6)
Repurchases of common stock, including shares surrendered for tax
withholdings
(191.1)
(130.0)
Proceeds from exercise of stock options
-
21.8
Net cash used in financing activities
(244.8)
(164.4)
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash
5.1
(18.8)
Net increase (decrease) in cash, cash equivalents, and restricted
cash
64.9
(779.7)
Cash, cash equivalents, and restricted cash at beginning of period
626.5
1,355.5
Cash, cash equivalents, and restricted cash at end of period
$
691.4
$
575.8
RALPH LAUREN CORPORATION OTHER INFORMATION
(in millions) (Unaudited) SEGMENT
INFORMATION Effective beginning in the first quarter of Fiscal
2020, operating results related to the Company's business inLatin
America are included within its Europe segment due to a change in
the way in which the Companymanages this business. Previously, such
results were included within the Company's other
non-reportablesegments. All prior period segment information has
been recast to reflect this change on a comparative basis.
Net revenues and operating income for the periods ended June 29,
2019 and June 30, 2018 for each segmentwere as follows:
Three Months Ended
June 29,
June 30,
2019
2018
Net revenues: North America
$
719.4
$
697.6
Europe
360.8
355.3
Asia
258.6
248.0
Other non-reportable segments
90.0
89.7
Total net revenues
$
1,428.8
$
1,390.6
Operating income: North America
$
157.9
$
159.9
Europe
79.4
73.7
Asia
48.1
42.7
Other non-reportable segments
32.9
31.0
318.3
307.3
Unallocated corporate expenses
(145.4)
(154.8)
Unallocated restructuring and other charges
(29.6)
(22.4)
Total operating income
$
143.3
$
130.1
RALPH LAUREN CORPORATION Constant Currency
Financial Measures (in millions) (Unaudited)
Comparable Store Sales Data Three Months
Ended June 29, 2019% Change Constant Currency
North America Digital commerce -% Excluding Digital commerce
1%
Total North America
1%
Europe Digital commerce
22%
Excluding Digital commerce
2%
Total Europe
4%
Asia Digital commerce
26%
Excluding Digital commerce
4%
Total Asia
5%
Total Ralph Lauren
2%
Operating Segment Net Revenue Data Three
Months Ended % Change June 29, 2019 June 30,
2018 As Reported Constant Currency North America
$ 719.4
$ 697.6
3.1%
3.3%
Europe
360.8
355.3
1.5%
7.1%
Asia
258.6
248.0
4.3%
7.8%
Other non-reportable segments
90.0
89.7
0.3%
0.5%
Net revenues
$ 1,428.8
$ 1,390.6
2.7%
4.9%
RALPH LAUREN CORPORATION Revenue by Sales
Channel (in millions) (Unaudited) Three
Months Ended June 29, 2019 June 30, 2018
NorthAmerica Europe Asia Other
Total NorthAmerica Europe Asia
Other Total Sales Channel: Wholesale
$ 316.3
$ 142.3
$ 12.1
$ 1.8
$ 472.5
$ 310.1
$ 142.7
$ 12.6
$ 0.8
$ 466.2
Retail
403.1
218.5
246.5
49.5
917.6
387.5
212.6
235.4
49.9
885.4
Licensing
-
-
-
38.7
38.7
-
-
-
39.0
39.0
Total net revenues
$ 719.4
$ 360.8
$ 258.6
$ 90.0
$1,428.8
$ 697.6
$ 355.3
$ 248.0
$ 89.7
$1,390.6
RALPH LAUREN CORPORATION Global
Retail Store Network June 29, June 30,
2019
2018
North America
Ralph Lauren Stores
41
42
Polo Factory Stores
183
178
Total Directly Operated Stores
224
220
Concessions
3
2
Europe Ralph Lauren
Stores
26
20
Polo Factory Stores
66
63
Total Directly Operated Stores
92
83
Concessions
29
25
Asia Ralph Lauren Stores
59
53
Polo Factory Stores
60
54
Total Directly Operated Stores
119
107
Concessions
624
604
Other Club Monaco Stores
75
74
Club Monaco Concessions
5
2
Global Directly Operated Stores and
Concessions Ralph Lauren Stores
126
115
Polo Factory Stores
309
295
Club Monaco Stores
75
74
Total Directly Operated Stores
510
484
Concessions
661
633
Global Licensed Stores
Total Licensed Stores
262
279
RALPH LAUREN CORPORATION Reconciliation of Certain
Non-U.S. GAAP Financial Measures (in millions, except per
share data) (Unaudited) Three Months Ended
June 29, 2019
As Reported
Total
Adjustments(a)(b)
As Adjusted
Net revenues
$
1,428.8
$
-
$
1,428.8
Gross profit
920.8
0.6
921.4
Gross profit margin
64.4%
64.5%
Total other operating expenses, net
(777.5)
30.8
(746.7)
Operating expense margin
54.4%
52.3%
Operating income
143.3
31.4
174.7
Operating margin
10.0%
12.2%
Income before income taxes
146.6
31.4
178.0
Income tax provision
(29.5)
(7.0)
(36.5)
Effective tax rate
20.1%
20.5%
Net income
$
117.1
$
24.4
$
141.5
Net income per diluted common share
$
1.47
$
1.77
Weighted average common shares outstanding - Diluted
79.9
79.9
SEGMENT INFORMATION - OPERATING INCOME: North America
$
157.9
$
-
$
157.9
Operating margin
21.9%
21.9%
Europe
79.4
0.1
79.5
Operating margin
22.0%
22.0%
Asia
48.1
0.5
48.6
Operating margin
18.6%
18.8%
Other non-reportable segments
32.9
-
32.9
Operating margin
36.5%
36.5%
Unallocated corporate expenses and restructuring and other charges
(175.0)
30.8
(144.2)
Total operating income
$
143.3
$
31.4
$
174.7
RALPH LAUREN CORPORATION Reconciliation of Certain
Non-U.S. GAAP Financial Measures (in millions, except per
share data) (Unaudited) Three Months Ended
June 30, 2018 AsReported
TotalAdjustments(a)(c) AsAdjusted Net revenues
$
1,390.6
$
-
$
1,390.6
Gross profit
895.7
-
895.7
Gross profit margin
64.4%
64.4%
Total other operating expenses, net
(765.6)
23.7
(741.9)
Operating expense margin
55.1%
53.3%
Operating income
130.1
23.7
153.8
Operating margin
9.4%
11.1%
Income before income taxes
132.9
23.7
156.6
Income tax provision
(23.9)
(4.8)
(28.7)
Effective tax rate
18.0%
18.3%
Net income
$
109.0
$
18.9
$
127.9
Net income per diluted common share
$
1.31
$
1.54
Weighted average common shares outstanding - Diluted
83.3
83.3
SEGMENT INFORMATION - OPERATING INCOME: North America
$
159.9
$
-
$
159.9
Operating margin
22.9%
22.9%
Europe
73.7
1.0
74.7
Operating margin
20.8%
21.0%
Asia
42.7
0.2
42.9
Operating margin
17.2%
17.3%
Other non-reportable segments
31.0
-
31.0
Operating margin
34.6%
34.6%
Unallocated corporate expenses and restructuring and other charges
(177.2)
22.5
(154.7)
Total operating income
$
130.1
$
23.7
$
153.8
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-relatedcharges are recorded within impairment of assets
in the consolidated statements of operations. Adjustments for all
other charges are recorded within restructuringand other charges in
the consolidated statements of operations.
(b)
Adjustments for the three months ended June 29, 2019 include (i)
other charges of $22.6 million primarily related to the charitable
donation of the net cashproceeds received from the sale of the
Company's corporate jet, and rent and occupancy costs associated
with certain previously exited real estate locations forwhich the
related lease agreements have not yet expired; and (ii) charges of
$8.8 million recorded in connection with the Company's
restructuringplans, consisting of restructuring charges, impairment
of assets, and inventory-related charges.
(c)
Adjustments for the three months ended June 30, 2018 include (i)
charges of $16.0 million recorded in connection with the Company's
restructuring plans,consisting of restructuring charges and
impairment of assets; and (ii) other charges of $7.7 million
primarily related to its customs audit and depreciation
expenseassociated with the Company's former Polo store at 711 Fifth
Avenue in New York City.
NON-U.S. GAAP FINANCIAL MEASURES
Since Ralph Lauren Corporation is a global company, the
comparability of its operating results reported in U.S. Dollars is
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
accounting principles generally accepted in the U.S. ("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 for assessing how its businesses performed
excluding the effects of foreign currency exchange rate
fluctuations. Management believes this information is useful to
investors for facilitating comparisons of operating results and
better identifying 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.
This earnings release also includes certain other non-U.S. GAAP
financial measures relating to the impact of charges and other
items as described herein. The Company uses non-U.S. GAAP financial
measures, among other things, to evaluate its operating performance
and to better represent the manner in which it 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 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.
Adjustments made during the fiscal periods presented include
charges recorded in connection with the Company’s restructuring
plans, as well as certain other charges associated with other
non-recurring events, as described in the footnotes to the non-U.S.
GAAP financial measures above. 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. 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 adjustments.
Additionally, the Company’s full year Fiscal 2020 and second
quarter Fiscal 2020 guidance excludes certain anticipated
restructuring-related and other charges. The Company is not able to
provide a full reconciliation of these non-U.S. GAAP financial
measures to U.S. GAAP because certain material items that impact
these measures, such as the timing and exact amount of charges
related to our restructuring plans, have not yet occurred or are
out of the Company’s control. Accordingly, a reconciliation of our
non-U.S. GAAP based financial measure guidance to the most directly
comparable U.S. GAAP measures is not available without unreasonable
effort. However, the Company has identified the estimated impact of
certain items excluded from its financial outlook. Specifically,
the Company’s financial outlook excludes estimated pretax charges
of approximately $20 million to $45 million related to its Fiscal
2019 Restructuring Plan.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190730005319/en/
Ralph Lauren Investor Relations: Corinna Van der Ghinst
IR@ralphlauren.com or Corporate Communications:
rl-press@ralphlauren.com
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