- Strengthened Balance Sheet and Near-Term Liquidity with over $2
Billion in Cash & Investments and Key Expense Reduction
Actions
- Solid Underlying Progress on the Company’s Next Great Chapter
Plan in the Fourth Quarter and Fiscal 2020, Excluding COVID-19 and
Hong Kong-Related Business Disruptions
- Fourth Quarter Average Unit Retail Increased 8% Driven by
Ongoing Brand Elevation and Quality of Sales Initiatives
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 ($3.38) on a reported
basis and ($0.68) on an adjusted basis, excluding
restructuring-related and other charges, for the fourth quarter of
Fiscal 2020. This compared to earnings per diluted share of $0.39
on a reported basis and $1.07 on an adjusted basis, excluding
restructuring-related and other charges, for the fourth quarter of
Fiscal 2019.
For Fiscal 2020, earnings per diluted share was $4.98 on a
reported basis and $6.56 on an adjusted basis, excluding
restructuring-related and other charges. This compared to earnings
per diluted share of $5.27 on a reported basis and $7.19 on an
adjusted basis, excluding restructuring-related and other charges,
for the full year of Fiscal 2019.
“For more than 50 years, we have embraced the idea of
timelessness - it defines not only our products but our business
and our culture. It has guided us through the best and the worst of
times and will carry us through this unprecedented challenge too,”
said Ralph Lauren, Executive Chairman & Chief Creative Officer.
“Together our leaders and teams worldwide remain focused on not
only enduring through this global pandemic but thriving for decades
to come, and supporting the communities where we operate around the
world.”
“From the onset of COVID-19, our teams moved quickly around the
world to protect the safety and well-being of our employees,
consumers, and communities, while also taking steps to ensure our
long-term financial health and bring relevant digital commerce and
experiences to our consumers,” said Patrice Louvet, President &
Chief Executive Officer. “As we manage for the near- and long-term,
we remain committed to consistently delivering sustainable growth
and value creation for all of our stakeholders. We are confident in
our ability to do this thanks to the strength of our business, our
balance sheet and our brands, and especially the resilience and
commitment of our diverse global teams.”
Mr. Louvet continued, “Reflecting on our performance prior to
the crisis, our underlying progress was strong, as our AUR and
overall brand elevation journey continued across every region,
exceeding our expectations for both the quarter and year.”
COVID-19-Related Business Actions
From the onset of the global COVID-19 pandemic, our priority has
been to ensure the safety and well-being of our employees,
consumers and the communities in which we operate around the world.
Taking into account the guidance of local governments and global
health organizations, we previously announced several actions in
response to the pandemic, including:
- Employee Support. We took steps from the start of the crisis to
protect our teams including freezing all travel, asking employees
to work from home, deploying deep cleanings in all work locations
and implementing staggered work schedules in our distribution
centers. We continue to offer our teams, including those placed on
furlough, access to our Employee Relief Fund, which provides grants
to Ralph Lauren employees facing special circumstances and
financial hardships during this time, including medical, eldercare
or childcare needs.
- Giving Back. The Ralph Lauren Corporate Foundation committed
$10 million toward emergency COVID-19 relief, with funds allocated
to the World Health Organization, our longstanding partners in
cancer care, Employee Relief Fund for Ralph Lauren employees, and
the Council of Fashion Designers of America (CFDA) / Vogue Fashion
Fund for COVID-19 relief. In addition, the Company announced the
production of 250,000 masks and 25,000 isolation gowns for donation
to workers on the front lines, in partnership with our U.S.
manufacturing partners. The Company is also donating 1.5 million
clothing products to support hundreds of thousands of frontline
workers and families in need around the world through charity
networks as well as many of the Company’s long-standing Pink Pony
partners focused on cancer care.
- Executive Compensation. Our Executive Chairman and Chief
Creative Officer, Ralph Lauren, will forego his entire salary for
Fiscal Year 2021 in addition to his full Fiscal Year 2020 bonus.
Our President & Chief Executive Officer, Patrice Louvet, will
reduce his salary by 50% during the crisis. Every other member of
the Executive and Global Leadership Team, a group of 140 business
leaders across the Company, will reduce their salaries by 20% for
the first quarter of Fiscal 2021. Lastly, our Board of Directors
will forego their quarterly cash compensation for the first quarter
of Fiscal 2021.
- Employee Furloughs and Compensation. The majority of our store
employees in North America, Europe, and other parts of the world
were paid at their normal compensation from the time store closures
went into effect in mid-March through April 11, 2020. Subsequent to
that date, a substantial portion of our store employees and a
portion of our corporate employees were placed on unpaid temporary
furlough, with benefits including healthcare. International store
employees in regions where retail operations remain closed will
receive compensation as guided by local governments and
authorities.
- Temporary Store Closures. Since the start of the pandemic, we
closed a substantial number of stores across each of our reportable
regions. We are assessing reopenings on a location-by-location
basis, as guided by local governments and health authorities. We
have also reopened approximately two thirds of our stores in Europe
and nearly half of our stores in North America through the last
half of May. As we reopen stores, we are implementing new health
and safety protocols and required training for all store employees
before returning to work, along with new ways of engaging with
consumers.
- Online Operations. Our digital flagship businesses and
fulfillment operations resumed following a brief closure period in
late March to enhance health and safety protocols in our
distribution centers. We continue to adhere to health protocols in
our distribution centers including extensive deep cleanings, social
distancing and staggered work shifts and break schedules. As
consumers increasingly embrace omni-channel retailing, we are
bolstering our connected retailing capabilities including digital
clienteling, Buy Online Ship From Store, Buy Online Pick Up From
Store, curbside pickup, and other initiatives.
- Balance Sheet and Liquidity Considerations. In addition to a
robust balance sheet going into the pandemic, the Company has taken
further preemptive actions to preserve cash and strengthen its
liquidity while navigating the evolving global pandemic, including:
careful management of expenses; reduced or delayed capital
expenditures and inventory commitments; drawing down $475 million
from the Company’s Global Credit Facility to bolster cash balances;
halting any incremental share repurchases during the COVID-19
crisis; and temporary suspension of the Company’s quarterly cash
dividend.
- Supplier Payments. Our suppliers around the world are another
critical stakeholder for our Company. In accordance with our
responsible purchasing practices, we committed to settling payment
for all finished goods and goods already in production.
Key Achievements in Fiscal 2020
We delivered across the following strategic initiatives in the
fourth quarter and full year Fiscal 2020:
- Win Over a New Generation of Consumers
- Marketing investments increased 3% to last year in Fiscal 2020
in constant currency, driven by unique and engaging brand building
campaigns and social media activations including Ralph's Club
Fashion Show, Wimbledon and US Open Partnerships, Earth Polo
launch, and our Holiday campaigns
- As consumer priorities and behavior shifted in the fourth
quarter due to the spread of COVID-19 across each of our key
regions, we focused our communication on more socially-relevant
topics including our philanthropic investments; we also pivoted to
highlight relevant categories like loungewear and home, which
successfully drove increased consumer engagement
- Energize Core Products and Accelerate Under-Developed
Categories
- Average unit retail across our direct-to-consumer network grew
8% in the fourth quarter and 3% for full year Fiscal 2020 driven by
our ongoing initiatives to elevate our product assortment, improve
quality of sales, and drive targeted price increases
- Continued to build our high-potential under-developed
categories, with ongoing momentum led by outerwear and denim
- Drive Targeted Expansion in Our Regions and Channels
- Expanded our global distribution with 25 net new stores and
concessions globally and partnered with over 40 new digital pure
players as part of our ecosystem approach of high productivity,
small-format stores and digital commerce
- Strong continued momentum in Chinese mainland, with Fiscal 2020
sales up double-digits to last year in constant currency, despite
declines in the fourth quarter due to COVID-19
- Encouraging recent path to recovery in Chinese mainland and
Korea, with strong digital growth in the fourth quarter and a
return to positive sales growth in mainland China in early May
- Lead with Digital
- Global digital revenue grew high-single digits to last year in
constant currency in Fiscal 2020, led by strong double-digit growth
in Asia and Europe
- Continued to invest in digital partnerships and capabilities,
including: launch of localized digital sites in Europe, innovative
new omni-channel functionality, and expansion into new digital
distribution platforms including rental, subscription, resale, and
social commerce, with the recent launch of Instagram Checkout
- Operate with Discipline to Fuel Growth
- Maintained balance sheet strength with $2.1 billion in cash and
investments, providing ample near-term liquidity
- Inventories declined 10% at the end of Fiscal 2020, reflecting
a higher level of inventory reserves to keep inventories current
and healthy across our distribution channels
- Successfully completed the consolidation of our corporate real
estate footprint in New York and New Jersey, driving cost savings
and enhanced collaboration among our teams
Fourth Quarter Fiscal 2020 Income Statement Review
Net Revenue. In the fourth quarter of Fiscal 2020,
revenue declined 15% to $1.3 billion on a reported basis and was
down 14% in constant currency. The decline in revenue reflects
adverse impacts related to COVID-19 and Hong Kong protest business
disruptions.
Revenue performance for the Company’s reportable segments in the
fourth quarter compared to the prior year period was as
follows:
- North America Revenue. North America revenue in the fourth
quarter decreased 11% to $629 million, including adverse impacts
related to COVID-19 business disruptions across distribution
channels. North America wholesale revenue was down 12% to last
year. In retail, comparable store sales in North America were down
13%, including a 15% decline in brick and mortar stores and a 7%
decrease in digital commerce.
- Europe Revenue. Europe revenue in the fourth quarter decreased
19% to $353 million on a reported basis and decreased 16% to last
year in constant currency, reflecting adverse impacts related to
COVID-19 business disruptions across channels. In retail,
comparable store sales in Europe were down 16% on a constant
currency basis, driven by an 18% decrease in brick and mortar
stores and a 2% decrease in digital commerce. Europe wholesale
revenue decreased 21% on a reported basis and decreased 18% in
constant currency.
- Asia Revenue. Asia revenue in the fourth quarter decreased 22%
to $214 million on a reported basis and decreased 21% in constant
currency, including adverse impacts related to COVID-19 and Hong
Kong protest business disruptions. Comparable store sales in Asia
decreased 23% in constant currency, with a 15% increase in digital
commerce operations more than offset by brick and mortar declines
during the period due to COVID-19-related store closures.
Gross Profit. Gross profit for the fourth quarter of
Fiscal 2020 was $594 million and gross margin was 46.7%. On an
adjusted basis, gross margin was 59.1% compared to 60.1% in the
prior year period. Foreign currency negatively impacted gross
margin by 20 basis points in the fourth quarter.
Operating Expenses. Operating expenses in the fourth
quarter of Fiscal 2020 were $878 million on a reported basis,
including $82 million in restructuring-related and other charges.
On an adjusted basis, excluding such charges, operating expenses
were $796 million, down 2% to prior year.
Adjusted operating expense rate was 62.5%, compared to 53.8% in
the prior year period, excluding restructuring-related and other
charges, primarily due to fixed expense deleverage.
Operating Income. Operating loss for the fourth quarter
of Fiscal 2020 was $284 million on a reported basis, including
restructuring-related and other charges of $241 million, and
operating margin was (22.3%). Adjusted operating loss was $43
million, compared to adjusted operating income of $96 million for
the fourth quarter of Fiscal 2019, excluding restructuring-related
and other charges from both periods. Foreign currency negatively
impacted operating margin by 40 basis points in the fourth
quarter.
- North America Operating Income. North America operating loss in
the fourth quarter was $74 million on a reported basis and $69
million on an adjusted basis. Adjusted North America operating
margin was 10.9%, compared to adjusted operating margin of 15.9%
for the fourth quarter of Fiscal 2019.
- Europe Operating Income. Europe operating income in the fourth
quarter was $4 million on a reported basis and $49 million on an
adjusted basis. Adjusted Europe operating margin was 13.8%,
compared to 23.6% for the fourth quarter of Fiscal 2019. Foreign
currency negatively impacted adjusted operating margin rate by 90
basis points in the fourth quarter.
- Asia Operating Income. Asia operating loss in the fourth
quarter was $11 million on a reported basis. On an adjusted basis,
Asia operating income was $8 million. Adjusted Asia operating
margin was 3.5%, compared to 14.3% for the fourth quarter of Fiscal
2019. Foreign currency negatively impacted adjusted operating
margin rate by 10 basis points in the fourth quarter.
Net Income and EPS. On a reported basis, net loss in the
fourth quarter of Fiscal 2020 was $249 million or ($3.38) per
diluted share. On an adjusted basis, net loss was $50 million, or
($0.68) per diluted share, excluding restructuring-related and
other charges. This compared to a net income of $32 million, or
$0.39 per diluted share on a reported basis, and net income of $85
million, or $1.07 per diluted share on an adjusted basis, for the
fourth quarter of Fiscal 2019.
In the fourth quarter of Fiscal 2020, the Company had an
effective tax rate of approximately 13% on a reported basis and
(28%) on an adjusted basis, excluding restructuring-related and
other charges. This compared to a reported and adjusted effective
tax rate of approximately 11% and 18%, respectively, in the prior
year period.
Full Year Fiscal 2020 Income Statement Review
Net Revenues. For Fiscal 2020, revenue decreased 2% to
$6.2 billion on a reported basis and decreased 1% in constant
currency. Full year revenue includes adverse impacts related to
COVID-19 and Hong Kong protest business disruptions.
- North America Revenue. For Fiscal 2020, North America revenue
decreased 2% on a reported basis to $3.1 billion.
- Europe Revenue. For Fiscal 2020, Europe revenue decreased 3% to
$1.6 billion on a reported basis. In constant currency, revenue
increased 1%.
- Asia Revenue. For Fiscal 2020, Asia revenue decreased 2% to
$1.0 billion on a reported basis. In constant currency, revenue
decreased 1%.
Gross Profit. Gross profit for Fiscal 2020 was $3.7
billion on a reported basis, including $160 million in
inventory-related charges, and gross margin was 59.3%. On an
adjusted basis, gross margin was 61.9%, 20 basis points higher than
the prior year, excluding non-routine inventory-related charges
from both periods. Foreign currency negatively impacted gross
margin by 10 basis points in Fiscal 2020.
Operating Expenses. For Fiscal 2020, operating expenses
were $3.3 billion on a reported basis, including $155 million in
restructuring-related and other charges. On an adjusted basis,
operating expenses were $3.2 billion, flat to the prior year.
Adjusted operating expense rate was 51.6%, 140 basis points above
Fiscal 2019, excluding restructuring-related and other charges from
both periods.
Operating Income. Operating income for Fiscal 2020 was
$317 million, including restructuring-related and other charges of
$315 million. On an adjusted basis, operating income was $632
million compared operating income of $725 million for the prior
year period, excluding restructuring-related and other charges from
both periods.
- North America Operating Income. North America operating income
in Fiscal 2020 was $487 million and operating margin was 15.5% on a
reported basis, including restructuring-related and other charges.
On an adjusted basis, North America operating income in Fiscal 2020
was $630 million and operating margin was 20.1% compared to
adjusted operating margin of 21.5% in Fiscal 2019.
- Europe Operating Income. Europe operating income in Fiscal 2020
was $336 million and operating margin was 20.6% on a reported
basis, including restructuring-related and other charges. On an
adjusted basis, Europe operating income in Fiscal 2020 was $381
million and operating margin was 23.3%, compared to adjusted
operating margin of 23.9% in Fiscal 2019.
- Asia Operating Income. Asia operating income in Fiscal 2020 was
$125 million and operating margin was 12.3% on a reported basis,
including restructuring-related and other charges. On an adjusted
basis, Asia operating income in Fiscal 2020 was $147 million and
operating margin was 14.4%, compared to adjusted operating margin
of 16.0% in Fiscal 2019.
Net Income and EPS. In Fiscal 2020, on a reported basis,
net income was $384 million or $4.98 per diluted share. On an
adjusted basis, net income was $506 million, or $6.56 per diluted
share, excluding restructuring-related and other charges. This
compared to a net income of $431 million, or $5.27 per diluted
share on a reported basis, and net income of $588 million, or $7.19
per diluted share, excluding restructuring-related and other
charges, for Fiscal 2019.
For Fiscal 2020, the Company had an effective tax rate of
approximately (18%) on a reported basis and 22% on an adjusted
basis, excluding restructuring-related and other charges. This
compared to a reported and adjusted effective tax rate of
approximately 26% and 21%, respectively, in the prior year.
Balance Sheet and Cash Flow Review
The Company ended Fiscal 2020 with $2.1 billion in cash and
investments and $1.2 billion in total debt, compared to $2.0
billion and $689 million, respectively, at the end of Fiscal 2019.
During the fourth quarter, the Company drew down $475 million from
its Global Credit Facility as part of several pre-emptive actions
to preserve cash and strengthen its liquidity while navigating the
evolving global pandemic.
Inventory at the end of Fiscal 2020 was $736 million, down 10%
compared to the prior year period. The decline in inventory
primarily reflected a significant increase in inventory reserves
related to COVID-19 business disruptions.
The Company had $270 million in capital expenditures in Fiscal
2020, compared to $198 million in the prior year period. The
increase was primarily related to office consolidation in the New
York/New Jersey area and continued enhancements to our global
information technology systems, partly offset by lower expenditures
in our North America business compared to the prior year
period.
Prior to the COVID-19 crisis, the Company repurchased
approximately $152 million of Class A Common Stock in the fourth
quarter for a total of approximately $650 million in Fiscal
2020.
Full Year Fiscal 2021 and First Quarter Outlook
Due to the high level of uncertainty and evolving situation
surrounding COVID-19, we are suspending all future guidance.
We expect our financial results for both periods to be
significantly negatively impacted by the pandemic. Though the
timing and path of recovery in each market presents many
uncertainties, we have developed scenarios through which we plan to
safely return our businesses to growth and value creation.
Conference Call
As previously announced, the Company will host a conference call
and live online webcast today, Wednesday, May 27, 2020, 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 Fourth 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, Wednesday, May 27, 2020
through 6:00 P.M. Eastern, Wednesday, June 3, 2020 by dialing
203-369-3154 or 888-437-4641 and entering passcode 5933.
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, footwear
& 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
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, may contain certain
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include 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,” “outlook,” “estimate,” “expect,” “project,”
“believe,” “envision,” “can,” “will,” “goal,” “target,” 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 certain 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
impact to our business resulting from the COVID-19 pandemic,
including the temporary closure of our stores, distribution
centers, and corporate facilities, as well as those of our
wholesale customers, licensing partners, suppliers, and vendors,
and potential changes to consumer behavior, spending levels, and/or
shopping preferences, such as their willingness to congregate in
shopping centers or other populated locations; our ability to
access capital markets and maintain compliance with covenants
associated with our existing debt instruments; our ability to
maintain adequate levels 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 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;
the impact of economic, political, and other conditions on us, our
customers, suppliers, vendors, and lenders, including business
disruptions related to pandemic diseases such as COVID-19 and
political unrest such as the recent protests in Hong Kong; 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; 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; 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 exit
from the European Union and the uncertainty surrounding its future
relationship with the European Union, including trade agreements,
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; 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 man-made or natural disasters, including
pandemic diseases such as COVID-19, severe weather, geological
events, and other catastrophic events; 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 impact
to our business resulting from potential costs and obligations
related to the early or temporary closure of our stores or
termination of our long-term, non-cancellable leases; 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 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; 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 wholesale 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
(Audited)
March 28, 2020
March 30, 2019
(millions)
ASSETS
Current assets:
Cash and cash equivalents
$
1,620.4
$
584.1
Short-term investments
495.9
1,403.4
Accounts receivable, net of allowances
277.1
398.1
Inventories
736.2
817.8
Income tax receivable
84.8
32.1
Prepaid expenses and other current
assets
160.8
359.3
Total current assets
3,375.2
3,594.8
Property and equipment, net
979.5
1,039.2
Operating lease right-of-use assets
1,511.6
—
Deferred tax assets
245.2
67.0
Goodwill
915.5
919.6
Intangible assets, net
141.0
163.7
Other non-current assets(a)
111.9
158.5
Total assets
$
7,279.9
$
5,942.8
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt
$
475.0
$
—
Current portion of long-term debt
299.6
—
Accounts payable
246.8
202.3
Income tax payable
65.1
29.4
Current operating lease liabilities
288.4
—
Accrued expenses and other current
liabilities
717.1
968.4
Total current liabilities
2,092.0
1,200.1
Long-term debt
396.4
689.1
Long-term operating lease liabilities
1,568.3
—
Income tax payable
132.7
146.7
Non-current liability for unrecognized tax
benefits
88.9
78.8
Other non-current liabilities
308.5
540.9
Total liabilities
4,586.8
2,655.6
Equity:
Common stock
1.3
1.3
Additional paid-in-capital
2,594.4
2,493.8
Retained earnings
5,994.0
5,979.1
Treasury stock, Class A, at cost
(5,778.4
)
(5,083.6
)
Accumulated other comprehensive loss
(118.2
)
(103.4
)
Total equity
2,693.1
3,287.2
Total liabilities and equity
$
7,279.9
$
5,942.8
Net Cash (incl. LT Investments)
$
945.3
$
1,343.3
Cash & Investments (ST & LT)
2,116.3
2,032.4
Net Cash (excl. LT Investments)
945.3
1,298.4
Cash & ST Investments
2,116.3
1,987.5
(a) Includes non-current
investments of:
$
—
$
44.9
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Three Months Ended
March 28, 2020
March 30, 2019
(millions, except per share
data)
North America
$
629.3
$
708.4
Europe
353.4
438.0
Asia
213.7
273.5
Other non-reportable segments
77.7
85.8
Net revenues
1,274.1
1,505.7
Cost of goods sold
(679.7
)
(604.2
)
Gross profit
594.4
901.5
Selling, general, and administrative
expenses
(852.2
)
(809.4
)
Impairment of assets
(9.9
)
(12.5
)
Restructuring and other charges
(16.1
)
(51.7
)
Total other operating expenses,
net
(878.2
)
(873.6
)
Operating income (loss)
(283.8
)
27.9
Interest expense
(4.8
)
(5.1
)
Interest income
5.9
11.3
Other income (expense), net
(4.5
)
1.2
Income (loss) before income
taxes
(287.2
)
35.3
Income tax benefit (provision)
38.2
(3.7
)
Net income (loss)
$
(249.0
)
$
31.6
Net income (loss) per common
share:
Basic
$
(3.38
)
$
0.40
Diluted
$
(3.38
)
$
0.39
Weighted average common shares
outstanding:
Basic
73.7
79.0
Diluted
73.7
80.1
Dividends declared per share
$
0.6875
$
0.625
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Audited)
Twelve Months Ended
March 28, 2020
March 30, 2019
(millions, except per share
data)
North America
$
3,140.5
$
3,202.9
Europe
1,632.2
1,683.0
Asia
1,017.2
1,041.0
Other non-reportable segments
369.9
386.1
Net revenues
6,159.8
6,313.0
Cost of goods sold
(2,506.5
)
(2,427.0
)
Gross profit
3,653.3
3,886.0
Selling, general, and administrative
expenses
(3,237.5
)
(3,168.3
)
Impairment of assets
(31.6
)
(25.8
)
Restructuring and other charges
(67.2
)
(130.1
)
Total other operating expenses,
net
(3,336.3
)
(3,324.2
)
Operating income
317.0
561.8
Interest expense
(17.6
)
(20.7
)
Interest income
34.4
40.8
Other income (expense), net
(7.4
)
0.6
Income before income taxes
326.4
582.5
Income tax benefit (provision)
57.9
(151.6
)
Net income
$
384.3
$
430.9
Net income per common share:
Basic
$
5.07
$
5.35
Diluted
$
4.98
$
5.27
Weighted average common shares
outstanding:
Basic
75.8
80.6
Diluted
77.2
81.7
Dividends declared per share
$
2.75
$
2.50
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Audited)
Twelve Months Ended
March 28, 2020
March 30, 2019
(millions)
Cash flows from operating
activities:
Net income
$
384.3
$
430.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
269.5
281.3
Deferred income tax expense (benefit)
(168.8
)
8.5
Loss on sale of property
—
11.6
Non-cash stock-based compensation
expense
100.6
88.6
Non-cash impairment of assets, including
equity method investment
38.7
25.8
Bad debt expense
58.7
0.4
Other non-cash charges
(2.3
)
6.5
Changes in operating assets and
liabilities:
Accounts receivable
57.6
10.1
Inventories
72.3
(83.6
)
Prepaid expenses and other current
assets
58.2
(40.5
)
Accounts payable and accrued
liabilities
(64.3
)
(4.7
)
Income tax receivables and payables
(42.5
)
29.7
Deferred income
—
(16.5
)
Other balance sheet changes
(7.4
)
35.7
Net cash provided by operating
activities
754.6
783.8
Cash flows from investing
activities:
Capital expenditures
(270.3
)
(197.7
)
Purchases of investments
(1,289.7
)
(3,030.8
)
Proceeds from sales and maturities of
investments
2,240.4
2,357.5
Acquisitions and ventures
0.9
(4.5
)
Proceeds from sale of property
20.8
20.0
Settlement of net investment hedges
—
(23.8
)
Net cash provided by (used in)
investing activities
702.1
(879.3
)
Cash flows from financing
activities:
Proceeds from credit facilities
475.0
—
Repayments of borrowings on credit
facilities
—
(9.9
)
Proceeds from the issuance of long-term
debt
—
398.1
Repayments of long-term debt
—
(300.0
)
Payments of finance lease obligations
(13.6
)
(19.6
)
Payments of dividends
(203.9
)
(190.7
)
Repurchases of common stock, including
shares surrendered for tax withholdings
(694.8
)
(502.6
)
Proceeds from exercise of stock
options
—
21.8
Other financing activities
(0.9
)
(2.8
)
Net cash used in financing
activities
(438.2
)
(605.7
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(15.2
)
(27.8
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
1,003.3
(729.0
)
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
$
1,629.8
$
626.5
RALPH LAUREN
CORPORATION
SEGMENT INFORMATION
(Unaudited)
Effective beginning in the first quarter
of Fiscal 2020, operating results related to the Company's business
in Latin America are included within its Europe segment due to a
change in the way in which the Company manages this business.
Previously, such results were included within the Company's other
non-reportable segments. All prior period segment information has
been recast to reflect this change on a comparative basis.
Three Months Ended
Twelve Months Ended
March 28, 2020
March 30, 2019
March 28, 2020
March 30, 2019
(millions)
Net revenues:
North America
$
629.3
$
708.4
$
3,140.5
$
3,202.9
Europe
353.4
438.0
1,632.2
1,683.0
Asia
213.7
273.5
1,017.2
1,041.0
Other non-reportable segments
77.7
85.8
369.9
386.1
Total net revenues
$
1,274.1
$
1,505.7
$
6,159.8
$
6,313.0
Operating income:
North America
$
(73.9
)
$
108.8
$
486.6
$
682.8
Europe
4.4
98.6
336.3
392.8
Asia
(10.8
)
37.7
124.8
161.0
Other non-reportable segments
—
23.1
85.2
118.7
(80.3
)
268.2
1,032.9
1,355.3
Unallocated corporate expenses
(187.4
)
(188.6
)
(648.7
)
(663.4
)
Unallocated restructuring and other
charges
(16.1
)
(51.7
)
(67.2
)
(130.1
)
Total operating income
$
(283.8
)
$
27.9
$
317.0
$
561.8
RALPH LAUREN
CORPORATION
CONSTANT CURRENCY FINANCIAL
MEASURES
(Unaudited)
Comparable Store Sales Data
March 28, 2020
Three Months Ended
Twelve Months Ended
% Change
% Change
Constant Currency
Constant Currency
North America:
Digital commerce
(7
%)
1
%
Excluding digital commerce
(15
%)
(1
%)
Total North America
(13
%)
—
%
Europe:
Digital commerce
(2
%)
11
%
Excluding digital commerce
(18
%)
(2
%)
Total Europe
(16
%)
(1
%)
Asia:
Digital commerce
15
%
22
%
Excluding digital commerce
(24
%)
(5
%)
Total Asia
(23
%)
(4
%)
Total Ralph Lauren Corporation
(17
%)
(2
%)
Operating Segment Net Revenues
Data
Three Months Ended
% Change
March 28, 2020
March 30, 2019
As Reported
Constant Currency
(millions)
North America
$
629.3
$
708.4
(11.2
%)
(11.2
%)
Europe
353.4
438.0
(19.3
%)
(16.5
%)
Asia
213.7
273.5
(21.9
%)
(20.8
%)
Other non-reportable segments
77.7
85.8
(9.5
%)
(9.3
%)
Net revenues
$
1,274.1
$
1,505.7
(15.4
%)
(14.3
%)
Twelve Months Ended
% Change
March 28, 2020
March 30, 2019
As Reported
Constant Currency
(millions)
North America
$
3,140.5
$
3,202.9
(2.0
%)
(1.9
%)
Europe
1,632.2
1,683.0
(3.0
%)
0.8
%
Asia
1,017.2
1,041.0
(2.3
%)
(1.2
%)
Other non-reportable segments
369.9
386.1
(4.2
%)
(4.1
%)
Net revenues
$
6,159.8
$
6,313.0
(2.4
%)
(1.2
%)
RALPH LAUREN
CORPORATION
NET REVENUES BY SALES
CHANNEL
(Unaudited)
Three Months Ended
March 28, 2020
March 30, 2019
North
America
Europe
Asia
Other
Total
North
America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
291.3
$
160.3
$
194.1
$
32.2
$
677.9
$
322.4
$
192.2
$
250.6
$
42.7
$
807.9
Wholesale
338.0
193.1
19.6
4.2
554.9
386.0
245.8
22.9
1.5
656.2
Licensing
—
—
—
41.3
41.3
—
—
—
41.6
41.6
Net revenues
$
629.3
$
353.4
$
213.7
$
77.7
$
1,274.1
$
708.4
$
438.0
$
273.5
$
85.8
$
1,505.7
Twelve Months Ended
March 28, 2020
March 30, 2019
North
America
Europe
Asia
Other
Total
North
America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
1,727.3
$
874.6
$
948.0
$
191.0
$
3,740.9
$
1,688.5
$
881.1
$
969.9
$
208.3
$
3,747.8
Wholesale
1,413.2
757.6
69.2
10.8
2,250.8
1,514.4
801.9
71.1
5.1
2,392.5
Licensing
—
—
—
168.1
168.1
—
—
—
172.7
172.7
Net revenues
$
3,140.5
$
1,632.2
$
1,017.2
$
369.9
$
6,159.8
$
3,202.9
$
1,683.0
$
1,041.0
$
386.1
$
6,313.0
RALPH LAUREN
CORPORATION
GLOBAL RETAIL STORE
NETWORK
(Unaudited)
March 28, 2020
March 30, 2019
North
America
Ralph Lauren Stores
41
41
Polo Factory Stores
189
183
Total Directly Operated Stores
230
224
Concessions
2
2
Europe
Ralph Lauren Stores
30
23
Polo Factory Stores
64
64
Total Directly Operated Stores
94
87
Concessions
29
29
Asia
Ralph Lauren Stores
67
57
Polo Factory Stores
65
58
Total Directly Operated Stores
132
115
Concessions
619
622
Other
Club Monaco Stores
74
75
Club Monaco Concessions
4
5
Global Directly
Operated Stores and Concessions
Ralph Lauren Stores
138
121
Polo Factory Stores
318
305
Club Monaco Stores
74
75
Total Directly Operated Stores
530
501
Concessions
654
658
Global Licensed
Stores and Concessions
Total Licensed Stores and Concessions
250
261
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
March 28, 2020
As Reported
Total
Adjustments(a)(b)
As Adjusted
(millions, except per share
data)
Net revenues
$
1,274.1
$
—
$
1,274.1
Gross profit
594.4
158.5
752.9
Gross profit margin
46.7
%
59.1
%
Total other operating expenses, net
(878.2
)
82.4
(795.8
)
Operating expense margin
68.9
%
62.5
%
Operating loss
(283.8
)
240.9
(42.9
)
Operating margin
(22.3
%)
(3.4
)%
Other non-operating income (expense),
net
(3.4
)
7.1
3.7
Loss before income taxes
(287.2
)
248.0
(39.2
)
Income tax benefit (provision)
38.2
(49.5
)
(11.3
)
Effective tax rate
13.3
%
(28.3
)%
Net loss
$
(249.0
)
$
198.5
$
(50.5
)
Net loss per diluted common share
$
(3.38
)
$
(0.68
)
Weighted average common shares outstanding
- Diluted
73.7
73.7
SEGMENT INFORMATION - OPERATING INCOME
(LOSS):
North America
$
(73.9
)
$
142.8
$
68.9
Operating margin
(11.7
%)
10.9
%
Europe
4.4
44.6
49.0
Operating margin
1.2
%
13.8
%
Asia
(10.8
)
18.4
7.6
Operating margin
(5.1
%)
3.5
%
Other non-reportable segments
—
18.8
18.8
Operating margin
—
%
24.2
%
Unallocated corporate expenses and
restructuring & other charges
(203.5
)
16.3
(187.2
)
Total operating loss
$
(283.8
)
$
240.9
$
(42.9
)
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL (Continued)
(Unaudited)
Twelve Months Ended
March 28, 2020
As Reported
Total
Adjustments(a)(c)
As Adjusted
(millions, except per share
data)
Net revenues
$
6,159.8
$
—
$
6,159.8
Gross profit
3,653.3
159.5
3,812.8
Gross profit margin
59.3
%
61.9
%
Total other operating expenses, net
(3,336.3
)
155.2
(3,181.1
)
Operating expense margin
54.2
%
51.6
%
Operating income
317.0
314.7
631.7
Operating margin
5.1
%
10.3
%
Other non-operating income, net
9.4
7.1
16.5
Income before income taxes
326.4
321.8
648.2
Income tax benefit (provision)
57.9
(199.9
)
(142.0
)
Effective tax rate
(17.7
%)
21.9
%
Net income
$
384.3
$
121.9
$
506.2
Net income per diluted common share
$
4.98
$
6.56
Weighted average common shares outstanding
- Diluted
77.2
77.2
SEGMENT INFORMATION - OPERATING
INCOME:
North America
$
486.6
$
143.2
$
629.8
Operating margin
15.5
%
20.1
%
Europe
336.3
44.7
381.0
Operating margin
20.6
%
23.3
%
Asia
124.8
21.7
146.5
Operating margin
12.3
%
14.4
%
Other non-reportable segments
85.2
31.2
116.4
Operating margin
23.0
%
31.4
%
Unallocated corporate expenses and
restructuring & other charges
(715.9
)
73.9
(642.0
)
Total operating income
$
317.0
$
314.7
$
631.7
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Three Months Ended
March 30, 2019
As Reported
Total
Adjustments(a)(d)
As Adjusted
(millions, except per share
data)
Net revenues
$
1,505.7
$
—
$
1,505.7
Gross profit
901.5
4.1
905.6
Gross profit margin
59.9
%
60.1
%
Total other operating expenses, net
(873.6
)
64.2
(809.4
)
Operating expense margin
58.0
%
53.8
%
Operating income
27.9
68.3
96.2
Operating margin
1.9
%
6.4
%
Other non-operating income, net
7.4
—
7.4
Income before income taxes
35.3
68.3
103.6
Income tax provision
(3.7
)
(14.5
)
(18.2
)
Effective tax rate
10.6
%
17.5
%
Net income
$
31.6
$
53.8
$
85.4
Net income per diluted common share
$
0.39
$
1.07
Weighted average common shares outstanding
- Diluted
80.1
80.1
SEGMENT INFORMATION - OPERATING
INCOME:
North America
$
108.8
$
3.6
$
112.4
Operating margin
15.4
%
15.9
%
Europe
98.6
5.0
103.6
Operating margin
22.5
%
23.6
%
Asia
37.7
1.5
39.2
Operating margin
13.8
%
14.3
%
Other non-reportable segments
23.1
1.2
24.3
Operating margin
26.8
%
28.2
%
Unallocated corporate expenses and
restructuring & other charges
(240.3
)
57.0
(183.3
)
Total operating income
$
27.9
$
68.3
$
96.2
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Twelve Months Ended
March 30, 2019
As Reported
Total
Adjustments(a)(e)
As
Adjusted
(millions, except per share
data)
Net revenues
$
6,313.0
$
—
$
6,313.0
Gross profit
3,886.0
7.2
3,893.2
Gross profit margin
61.6
%
61.7
%
Total other operating expenses, net
(3,324.2
)
155.9
(3,168.3
)
Operating expense margin
52.7
%
50.2
%
Operating income
561.8
163.1
724.9
Operating margin
8.9
%
11.5
%
Other non-operating income, net
20.7
—
20.7
Income before income taxes
582.5
163.1
745.6
Income tax provision
(151.6
)
(6.5
)
(158.1
)
Effective tax rate
26.0
%
21.2
%
Net income
$
430.9
$
156.6
$
587.5
Net income per diluted common share
$
5.27
$
7.19
Weighted average common shares outstanding
- Diluted
81.7
81.7
SEGMENT INFORMATION - OPERATING
INCOME:
North America
$
682.8
$
5.0
$
687.8
Operating margin
21.3
%
21.5
%
Europe
392.8
9.9
402.7
Operating margin
23.3
%
23.9
%
Asia
161.0
5.2
166.2
Operating margin
15.5
%
16.0
%
Other non-reportable segments
118.7
7.0
125.7
Operating margin
30.7
%
32.5
%
Unallocated corporate expenses and
restructuring & other charges
(793.5
)
136.0
(657.5
)
Total operating income
$
561.8
$
163.1
$
724.9
RALPH LAUREN CORPORATION FOOTNOTES TO
RECONCILIATION OF 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 COVID-19-related bad debt
expense is recorded within selling, general, and administrative
("SG&A") expenses in the consolidated statements of operations.
Adjustments for impairment-related charges are recorded within
impairment of assets in the consolidated statements of operations,
with the exception of a $7.1 million impairment of an equity method
investment, which is recorded within other income (expense), net.
Adjustments for Swiss tax reform and the Tax Cuts and Jobs Act (the
"TCJA") are recorded within the income tax benefit (provision) in
the consolidated statement of operations. Adjustments for all other
charges are recorded within restructuring and other charges in the
consolidated statements of operations.
(b)
Adjustments for the three months ended
March 28, 2020 include (i) inventory-related charges of $157.3
million and bad debt expense of $56.4 million, both related to
adverse impacts associated with COVID-19 business disruptions; (ii)
charges of $16.9 million recorded in connection with the Company's
restructuring plans, consisting of restructuring charges,
impairment of assets, and inventory-related charges; (iii)
additional impairment of assets of $7.7 million related to
underperforming stores as a result of on-going store portfolio
evaluation and $7.1 million related to an equity method investment;
and (iv) other charges of $2.6 million primarily related to rent
and occupancy costs associated with certain previously exited real
estate locations for which the related lease agreements have not
yet expired. Additionally, the income tax benefit (provision)
reflects a charge of $11.2 million recorded in connection with
Swiss tax reform.
(c)
Adjustments for the twelve months ended
March 28, 2020 include (i) inventory-related charges of $157.3
million and bad debt expense of $56.4 million, both related to
adverse impacts associated with COVID-19 business disruptions; (ii)
charges of $48.5 million recorded in connection with the Company's
restructuring plans, consisting of restructuring charges,
impairment of assets, inventory-related charges, and accelerated
stock-based compensation expense; (iii) additional impairment of
assets of $22.9 million related to underperforming stores as a
result of on-going store portfolio evaluation and $7.1 million
related to an equity method investment; and (iv) other charges of
$29.6 million primarily related to the charitable donation of the
net cash proceeds received from the sale of the Company's corporate
jet and rent and occupancy costs associated with certain previously
exited real estate locations for which the related lease agreements
have not yet expired. Additionally, the income tax benefit
(provision) reflects a one-time benefit of $122.9 million recorded
in connection with Swiss tax reform.
(d)
Adjustments for the three months ended
March 30, 2019 include (i) charges of $37.2 million recorded in
connection with the Company's restructuring plans, consisting of
restructuring charges, impairment of assets, inventory-related
charges; (ii) additional impairment of assets of $9.3 million
related to underperforming stores as a result of on-going store
portfolio evaluation and the planned sale of a corporate asset; and
(iii) other charges of $21.8 million primarily related to the
Company's new sabbatical leave program and depreciation expense
associated with its former Polo store at 711 Fifth Avenue in New
York City.
(e)
Adjustments for the twelve months ended
March 30, 2019 include (i) charges of $111.5 million recorded in
connection with the Company's restructuring plans, consisting of
restructuring charges, impairment of assets, inventory-related
charges, and a loss on sale of property; (ii) additional impairment
of assets of $15.1 million related to underperforming stores as a
result of on-going store portfolio evaluation and the planned sale
of a corporate asset; and (iii) other charges of $36.5 million
primarily related to the Company's new sabbatical leave program,
depreciation expense associated with its former Polo store at 711
Fifth Avenue in New York City and its customs audit. The income tax
provision reflects enactment-related charges of $27.6 million
recorded in connection with U.S. tax reform.
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. Such 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 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, as well as enactment-related charges
recorded in connection with domestic and international tax reform.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200527005203/en/
Investor Relations: Corinna Van der Ghinst ir@ralphlauren.com Or
Corporate Communications rl-press@ralphlauren.com
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