- Fourth Quarter Revenues Outperformed Outlook with Double-Digit
Growth Across All Regions; Full Year Fiscal 2022 Revenues of $6.22
Billion Exceeded Fiscal 2020 Pre-Pandemic Levels
- North America Post-Reset Turnaround Strongly Underway with Full
Year Revenues Increasing 49% and Significant Operating Margin
Expansion Including Substantial Strategic Investments for Long-Term
Growth
- Delivered Better Than Expected Fourth Quarter and Full Year
Adjusted Operating Margin and Full Year Operating Profit Growth of
More than 30% to Fiscal 2020
- Outlook for Fiscal 2023 Net Revenue Growth of High Single
Digits on a 52-Week Comparable Basis in Constant Currency fueled by
North America
- Continued to Return Value to Shareholders with the Repurchase
of 3.7 Million Shares in Full Year Fiscal 2022; Board of Directors
Approves 9% Dividend Increase
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 $0.34 on a reported
basis and $0.49 on an adjusted basis, excluding
restructuring-related and other net charges, for the fourth quarter
of Fiscal 2022. This compared to earnings per diluted share of
($1.01) on a reported basis and $0.38 on an adjusted basis,
excluding restructuring-related and other net charges for the
fourth quarter of Fiscal 2021.
"From our latest fashion show to the launch of our powerful
Morehouse and Spelman colleges collection, we continue to inspire
people all over the world to dream," said Ralph Lauren, Executive
Chairman and Chief Creative Officer. "Whether it’s our clothes or
how we think about our impact on the planet, we imprint all we do
with a spirit of optimism and timelessness that give people a sense
of possibility."
"Our teams around the world executed exceptionally well to
deliver fourth quarter and full year results that exceeded our
expectations as we continued to progress on our long-term strategic
commitments," said Patrice Louvet, President and Chief Executive
Officer. "We have laid the groundwork for healthy sustainable
growth and value creation in Fiscal 2023. As we continue to
navigate a highly dynamic global macroeconomic environment, our
growth will be supported by the strength of our brand and multiple
engines — from recruiting new high-value consumers to developing
high-potential product categories and geographic and channel
expansion."
Key Achievements in Fiscal 2022
We delivered the following highlights across our strategic
priorities in the fourth quarter and full year Fiscal 2022:
- Win Over a New Generation of Consumers
- Activated strong consumer engagement through diverse content
and accelerated marketing investments, driving strong continued
momentum in global brand consideration and purchase intent
- Leveraged key brand moments to connect consumers to our
powerful lifestyle brand, with fourth quarter investments focused
on a range of bold activations including: our high-impact Fall '22
fashion show at New York's Museum of Modern Art, our sponsorships
of Team USA at the Winter Olympics and the Australian Open and our
'Power of Women' RLX campaigns, along with our continued focus on
new full-price consumer acquisition
- Energize Core Products and Accelerate Under-Developed
Categories
- Drove our iconic core and expanded high-potential categories to
deliver compelling new assortments that resonate with post-pandemic
consumer wardrobing. Special releases in the fourth quarter
included our inspiring limited-edition capsule with Morehouse and
Spelman Colleges, Polo Color Shop, Team USA Olympics and Lunar New
Year gifting collections
- Brand elevation continues with average unit retail ("AUR") up
13% across our direct-to-consumer network in the fourth quarter and
up 15% for full year Fiscal 2022, on top of a 26% increase last
year, driven by a strong product offering and promotional
discipline
- Drive Targeted Expansion in Our Regions and Channels
- Delivered robust double-digit growth across every region in the
fourth quarter and for the full year, with North America up 49%,
Europe up 54% and Asia up 27% to last year in constant currency
despite continued pandemic-related disruptions
- Continued to drive strong momentum in the Chinese mainland with
fourth quarter sales increasing more than 25% to last year in
constant currency, despite ongoing COVID-19 related lockdowns
- All three regions also reported significant operating margin
expansion to last year and pre-pandemic levels in Fiscal 2022 on a
healthier base
- Lead With Digital
- Fourth quarter Ralph Lauren digital ecosystem revenues grew low
double-digits compared to Fiscal 2021 and more than 80% compared to
Fiscal 2020, with balanced momentum across both owned and wholesale
digital channels globally
- Fourth quarter and full year operating margin in our owned
digital business continued to significantly benefit the total
company margin rate, consistent with the prior year and
representing a more than 900 basis point increase to Fiscal 2020
pre-pandemic levels
- Operate With Discipline to Fuel Growth
- Fiscal 2022 adjusted operating margin of 13.4% on a 53-week
basis expanded 860 basis points to last year and 310 basis points
to Fiscal 2020, all while accelerating investments in our key
strategic initiatives. Fourth quarter operating margin of 3.6%
expanded 20 basis points to last year on a reported basis and 140
basis points in constant currency, above our expectations driven by
our continued focus on productivity
- Inventories are healthy and well positioned to support Fiscal
2023 product elevation and growth plans by region and as we
deliberately shift inventory receipts earlier to mitigate global
supply chain disruptions
- Demonstrated strong progress on our citizenship and
sustainability journey including: our ambitious commitments to
achieve net zero greenhouse gas emissions by 2040, 100% sustainably
sourced key materials by 2025, and diversity and inclusion targets
within our leadership and factory partners
Fourth Quarter Fiscal 2022 Income Statement Review
Net Revenue. In the fourth quarter of Fiscal 2022,
revenue increased 18% to $1.5 billion on a reported basis and was
up 22% in constant currency. Foreign currency negatively impacted
revenue growth by approximately 360 basis points in the fourth
quarter.
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 increased 19% to $674 million. In retail, comparable store
sales in North America were up 21%, with a 27% increase in digital
commerce and a 19% increase in brick and mortar stores. North
America wholesale revenue was up 1% to last year. Wholesale results
included a significantly higher level of negative impact from
strategic distribution resets and the transition of Chaps to a
licensed business in the fourth quarter relative to the first three
quarters of the year, as planned. The Company will lap the majority
of these impacts beginning in Fiscal 2023.
- Europe Revenue. Europe revenue in the fourth quarter increased
26% to $467 million on a reported basis and increased 34% in
constant currency to last year. In retail, comparable store sales
in Europe were up 77%, with a 145% increase in brick and mortar
stores more than offsetting a 2% decrease in digital commerce over
a challenging compare of 79% growth in the prior year period when a
significant portion of our stores were closed due to COVID-19.
Europe wholesale revenue increased 5% on a reported basis and 12%
in constant currency.
- Asia Revenue. Asia revenue in the fourth quarter increased 20%
to $346 million on a reported basis and 26% in constant currency,
including adverse impacts related to COVID-19 business disruptions
across key markets. Comparable store sales in Asia increased 12%,
with a 10% increase in our brick and mortar stores and a 46%
increase in digital commerce.
Gross Profit. Gross profit for the fourth quarter of
Fiscal 2022 was $966 million and gross margin was 63.4%. On an
adjusted basis, gross margin was 63.3% compared to 62.9% in the
prior year period. Foreign currency negatively impacted gross
margin by 80 basis points in the fourth quarter. Gross margin
expansion was primarily driven by AUR growth across all regions as
well as favorable channel and geographic mix shifts more than
offsetting increased input costs from freight, raw materials and
labor. Compared to fourth quarter Fiscal 2020, adjusted gross
margins expanded 420 basis points on a reported basis on strong AUR
growth.
Operating Expenses. Operating expenses in the fourth
quarter of Fiscal 2022 were $929 million on a reported basis,
including $19 million in restructuring-related and other net
charges. On an adjusted basis, excluding such charges, operating
expenses were $910 million, up 19% to prior year, primarily driven
by higher marketing investments, compensation, rent and selling
expenses to fuel both near- and long-term strategic growth.
Adjusted operating expense rate was 59.8%, compared to 59.5% in the
prior year period, excluding restructuring-related and other net
charges.
Operating Income (Loss). Operating income for the fourth
quarter of Fiscal 2022 was $37 million on a reported basis,
including restructuring-related and other net charges of $17
million, and operating margin was 2.4%. Adjusted operating income
was $54 million and operating margin was 3.6%, 20 basis points
above the prior year. Foreign currency negatively impacted
operating margin by 120 basis points in the fourth quarter.
- North America Operating Income. North America operating income
in the fourth quarter was $90 million on both a reported basis and
an adjusted basis. Adjusted North America operating margin was
13.4%, compared to adjusted operating margin of 15.6% for the
fourth quarter of Fiscal 2021 as we shifted a significant portion
of operating expenses including marketing to the second half of the
year to support growth coming out of the pandemic.
- Europe Operating Income. Europe operating income in the fourth
quarter was $91 million on a reported basis and $94 million on an
adjusted basis. Adjusted Europe operating margin was 20.2%,
compared to 18.9% for the fourth quarter of Fiscal 2021. Foreign
currency negatively impacted adjusted operating margin rate by 170
basis points in the fourth quarter.
- Asia Operating Income. Asia operating income in the fourth
quarter was $39 million on both a reported basis and an adjusted
basis. Adjusted Asia operating margin was 11.4%, compared to 9.1%
for the fourth quarter of Fiscal 2021. Foreign currency negatively
impacted adjusted operating margin rate by 100 basis points in the
fourth quarter.
Net Income (Loss) and EPS. On a reported basis, net
income in the fourth quarter of Fiscal 2022 was $24 million or
$0.34 per diluted share. On an adjusted basis, net income was $36
million, or $0.49 per diluted share. This compared to a net loss of
$74 million, or ($1.01) per diluted share on a reported basis, and
net income of $28 million, or $0.38 per diluted share on an
adjusted basis, for the fourth quarter of Fiscal 2021.
In the fourth quarter of Fiscal 2022, the Company had an
effective tax rate of approximately 17% on a reported basis and 23%
on an adjusted basis. This compared to a reported and adjusted
effective tax rate of approximately (110%) and 18%, respectively,
in the prior year period. The increase in our adjusted effective
tax rate was driven by an increase in liabilities for uncertain tax
positions and unfavorable permanent adjustments, partly offset by
favorable stock compensation adjustments.
Full Year Fiscal 2022 Income Statement Review
Net Revenues. For Fiscal 2022, revenue increased 41% to
$6.2 billion on a reported basis and increased 42% in constant
currency. Foreign currency negatively impacted revenue growth by
approximately 60 basis points in the period.
- North America Revenue. For Fiscal 2022, North America revenue
increased 49% to $3.0 billion.
- Europe Revenue. For Fiscal 2022, Europe revenue increased 53%
to $1.8 billion on a reported basis. In constant currency, revenue
increased 54%.
- Asia Revenue. For Fiscal 2022, Asia revenue increased 25% to
$1.3 billion on a reported basis. In constant currency, revenue
increased 27%.
Gross Profit. Gross profit for Fiscal 2022 was $4.1
billion on a reported basis and gross margin was 66.7%. On an
adjusted basis, gross margin was 66.5%, 80 basis points higher than
the prior year.
Operating Expenses. For Fiscal 2022, operating expenses
were $3.3 billion on a reported basis, including $46 million in
restructuring-related and other net charges. On an adjusted basis,
operating expenses were also $3.3 billion, up 23% to prior year.
Adjusted operating expense rate was 53.1%, 780 basis points below
Fiscal 2021, excluding restructuring-related and other net charges
from both periods.
Operating Income (Loss). Operating income for Fiscal 2022
was $798 million, including restructuring-related and other net
charges of $33 million. On an adjusted basis, operating income was
$831 million compared to operating income of $211 million for the
prior year period, excluding restructuring-related and other net
charges from both periods.
- North America Operating Income. North America operating income
in Fiscal 2022 was $677 million and operating margin was 22.8% on a
reported basis, including restructuring-related and other net
charges. On an adjusted basis, North America operating income in
Fiscal 2022 was $666 million and operating margin was 22.4%,
compared to 17.4% in Fiscal 2021.
- Europe Operating Income. Europe operating income in Fiscal 2022
was $444 million and operating margin was 24.9% on a reported
basis, including restructuring-related and other net charges. On an
adjusted basis, Europe operating income in Fiscal 2022 was $446
million and operating margin was 25.1%, compared to 17.3% in Fiscal
2021.
- Asia Operating Income. Asia operating income in Fiscal 2022 was
$229 million and operating margin was 17.8% on a reported basis,
including restructuring-related and other net charges. On an
adjusted basis, Asia operating income in Fiscal 2022 was $230
million and operating margin was 17.9%, compared to 14.6% in Fiscal
2021.
Net Income (Loss) and EPS. In Fiscal 2022, net income was
$600 million or $8.07 per diluted share on a reported basis. On an
adjusted basis, net income was $623 million, or $8.38 per diluted
share. This compared to a net loss of $121 million, or ($1.65) per
diluted share on a reported basis, and net income of $127 million,
or $1.70 per diluted share on an adjusted basis for Fiscal
2021.
For Fiscal 2022, the Company had an effective tax rate of
approximately 20% on a reported basis and 21% on an adjusted basis.
This compared to a reported and adjusted effective tax rate of
approximately (62%) and 29%, respectively, in the prior year. The
decline in our adjusted effective tax rate was primarily driven by
favorable stock compensation adjustments in Fiscal 2022, a one-time
foreign-derived intangible income (FDII) deduction and other
adjustments to liabilities for uncertain tax positions and deferred
tax.
Balance Sheet and Cash Flow Review
The Company ended Fiscal 2022 with $2.6 billion in cash and
short-term investments and $1.6 billion in total debt, compared to
$2.8 billion and $1.6 billion, respectively, at the end of Fiscal
2021. Inventory at the end of Fiscal 2022 was $977 million, up 29%
compared to the prior year period reflecting improved sales
performance, higher goods-in-transit to mitigate ongoing global
supply chain delays and continued elevation of our product mix.
The Company repurchased approximately $150 million of Class A
Common Stock in the fourth quarter and approximately $450 million
of Class A Common Stock during the full year Fiscal 2022. At the
end of Fiscal 2022, the Company had approximately $1.6 billion
remaining under its total share repurchase authorization, subject
to overall business and market conditions.
The Company had $167 million in capital expenditures in Fiscal
2022, compared to $108 million in the prior year period. The
increase was primarily due to more normalized levels of investment
as we emerged from the pandemic, following unusually low capital
expenditures in the prior year period.
Dividend Increase
The Company also announced that its Board of Directors declared
a 9% increase in the regular quarterly cash dividend on the
Company's Common Stock. The new quarterly cash dividend is $0.75
per share for a total annual dividend amount of $3.00 per share.
The next quarterly dividend is payable on July 15, 2022 to
shareholders of record at the close of business on July 1,
2022.
Full Year Fiscal 2023 and First Quarter Outlook
The Company's outlook is based on its best assessment of the
current macroeconomic environment, including global supply chain,
inflationary pressures, the war in Ukraine, COVID-19 variants and
other COVID-related disruptions. The Company continues to note the
ongoing uncertainty and evolving situation surrounding COVID-19
impacting the timing and path of recovery in each market, including
the potential for further outbreaks or resurgences of the pandemic
across various markets as well as potential global supply chain
disruptions. The full year Fiscal 2023 and first quarter guidance
excludes restructuring-related and other net charges, as described
in the "Non-U.S. GAAP Financial Measures" section of this press
release.
For Fiscal 2023, the Company expects constant currency revenues
to increase approximately high single digits to last year on a
52-week comparable basis, with our current outlook at around 8%.
Based on current exchange rates, foreign currency is expected to
negatively impact revenue growth by approximately 400 basis points
in Fiscal 2023. On a 53-week comparable basis, Fiscal 2023 revenue
growth is also expected to be negatively impacted by approximately
100 basis points due to the absence of the 53rd week compared to
the prior year.
The Company expects operating margin for Fiscal 2023 in a range
of approximately 14.0% to 14.5% in constant currency. Foreign
currency is expected to negatively impact operating margin by
approximately 130 basis points in Fiscal 2023. This compares to
operating margin of 13.1% on a 52-week comparable basis and 13.4%
on a 53-week basis in the prior year, both on a reported basis.
Gross margin is expected to increase 30 to 50 basis points in
constant currency on a 52-week comparable basis, with stronger AUR
and favorable product and channel mix more than offsetting higher
freight and product cost inflation. Foreign currency is expected to
negatively impact gross margins by approximately 110 basis points
in Fiscal 2023.
For the first quarter, the Company expects revenue growth will
be in a range centered around 8% in constant currency to last year.
Foreign currency is expected to negatively impact revenue growth by
approximately 480 to 500 basis points. The first quarter outlook
reflects confirmed government-mandated lockdowns and other
COVID-related restrictions, notably in China.
Operating margin for the first quarter is expected to be in a
range centered around 13.5% in constant currency, reflecting
increased headwinds from higher freight and marketing expense,
which are expected to normalize in the second half of the year when
the Company laps cost increases from the prior year. Foreign
currency is expected to negatively impact first quarter operating
margin by approximately 130 basis points in the first quarter.
Gross margin is expected to be down slightly to last year in
constant currency with continued AUR growth offset by industry-wide
increases in freight and product costs. Foreign currency is
expected to negatively impact gross margins by approximately 100
basis points in the first quarter.
The full year Fiscal 2023 tax rate is expected to be in the
range of 25% to 26%, assuming a continuation of current tax laws.
First quarter of Fiscal 2023 tax rate is expected to be about 24%
to 25%.
The Company is planning capital expenditures for Fiscal 2023 of
approximately $290 million to $310 million.
Conference Call
As previously announced, the Company will host a conference call
and live online webcast today, Tuesday, May 24, 2022, 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 2022 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, May 24, 2022
through 6:00 P.M. Eastern, Tuesday, May 31, 2022 by dialing
203-369-3634 or 800-839-1172 and entering passcode 7536.
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
has sought to inspire the dream of a better life through
authenticity and timeless style. Its reputation and distinctive
image have been developed across a wide range of products, brands,
distribution channels 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 and Chaps, among others —
constitute one of the world's most widely recognized families of
consumer brands. For more information, go to
https://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, quarterly cash
dividend and Class A common stock repurchase programs, and
environmental, social, and governance goals and are indicated by
words or phrases such as "anticipate," "outlook," "estimate,"
"expect," "project," "believe," "envision," "goal," "target,"
"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 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, including
those resulting from the recent reduction to our global workforce
in connection with our long-term growth strategy, and our ability
to effectively transfer knowledge and maintain adequate controls
and procedures during periods of transition; the impact to our
business resulting from the COVID-19 pandemic, including periods of
reduced operating hours and capacity limits and/or temporary
closure of our stores, distribution centers, and corporate
facilities, as well as those of our customers, suppliers, and
vendors, and potential changes to consumer behavior, spending
levels, and/or shopping preferences, such as willingness to
congregate in shopping centers or other populated locations; the
impact of economic, political, and other conditions on us, our
customers, suppliers, vendors, and lenders, including potential
business disruptions related to the war between Russia and Ukraine,
civil and political unrest, and diplomatic tensions between the
U.S. and other countries; the potential impact to our business
resulting from supply chain disruptions, including those caused by
capacity constraints, closed factories and/or labor shortages
(stemming from pandemic diseases, labor disputes, strikes, or
otherwise), scarcity of raw materials, and port congestion, which
could result in inventory shortages and lost sales; the potential
impact to our business resulting from inflationary pressures,
including increases in the costs of raw materials, transportation,
wages, healthcare, and other benefit-related costs; our ability to
recruit and retain employees to operate our retail stores,
distribution centers, and various corporate functions; 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 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 competitively price our products and create an
acceptable value proposition for consumers; our ability to continue
to maintain our brand image and reputation and protect our
trademarks; our ability to achieve our goals regarding
environmental, social, and governance practices, including those
related to our human capital and climate change; our ability and
the ability of our third-party service providers to secure our
respective facilities and systems from, among other things,
cybersecurity breaches, acts of vandalism, computer viruses,
ransomware, 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; 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 or temporary closure of our stores
or termination of our long-term, non-cancellable leases; our
ability to maintain adequate levels of liquidity to provide for our
cash needs, including our debt obligations, tax obligations,
capital expenditures, and potential payment of dividends and
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 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 access
capital markets and maintain compliance with covenants associated
with our existing debt instruments; 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 trade developments between the U.S. and China,
and any related impact to global stock markets, as well as our
ability to implement mitigating sourcing strategies; changes in our
tax obligations and effective tax rate due to a variety of 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 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 operating results, 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
make 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
(Unaudited)
April 2, 2022
March 27, 2021
(millions)
ASSETS
Current assets:
Cash and cash equivalents
$
1,863.8
$
2,579.0
Short-term investments
734.6
197.5
Accounts receivable, net of allowances
405.4
451.5
Inventories
977.3
759.0
Income tax receivable
63.7
54.4
Prepaid expenses and other current
assets
172.5
166.6
Total current assets
4,217.3
4,208.0
Property and equipment, net
969.5
1,014.0
Operating lease right-of-use assets
1,111.3
1,239.5
Deferred tax assets
303.8
283.9
Goodwill
908.7
934.6
Intangible assets, net
102.9
121.1
Other non-current assets
111.2
86.4
Total assets
$
7,724.7
$
7,887.5
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
499.8
$
—
Accounts payable
448.7
355.9
Current income tax payable
53.8
50.6
Current operating lease liabilities
262.0
302.9
Accrued expenses and other current
liabilities
991.4
875.4
Total current liabilities
2,255.7
1,584.8
Long-term debt
1,136.5
1,632.9
Long-term finance lease liabilities
341.6
370.5
Long-term operating lease liabilities
1,132.2
1,294.5
Non-current income tax payable
98.9
118.7
Non-current liability for unrecognized tax
benefits
91.9
91.4
Other non-current liabilities
131.9
190.3
Total liabilities
5,188.7
5,283.1
Equity:
Common stock
1.3
1.3
Additional paid-in-capital
2,748.8
2,667.1
Retained earnings
6,274.9
5,872.9
Treasury stock, Class A, at cost
(6,308.7
)
(5,816.1
)
Accumulated other comprehensive loss
(180.3
)
(120.8
)
Total equity
2,536.0
2,604.4
Total liabilities and equity
$
7,724.7
$
7,887.5
Net Cash & Short-term Investments
$
962.1
$
1,143.6
Cash & Short-term Investments
2,598.4
2,776.5
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Three Months Ended
Twelve Months Ended
April 2, 2022
March 27, 2021
April 2, 2022
March 27, 2021
(millions, except per share
data)
Net revenues
$
1,522.7
$
1,287.0
$
6,218.5
$
4,400.8
Cost of goods sold
(556.6
)
(504.1
)
(2,071.0
)
(1,539.4
)
Gross profit
966.1
782.9
4,147.5
2,861.4
Selling, general, and administrative
expenses
(913.7
)
(755.2
)
(3,305.6
)
(2,638.5
)
Impairment of assets
(2.0
)
(60.3
)
(21.3
)
(96.0
)
Restructuring and other charges, net
(13.6
)
6.9
(22.2
)
(170.5
)
Total other operating expenses,
net
(929.3
)
(808.6
)
(3,349.1
)
(2,905.0
)
Operating income (loss)
36.8
(25.7
)
798.4
(43.6
)
Interest expense
(13.7
)
(13.9
)
(54.0
)
(48.5
)
Interest income
1.1
2.2
5.5
9.7
Other income, net
5.1
2.1
4.7
7.6
Income (loss) before income
taxes
29.3
(35.3
)
754.6
(74.8
)
Income tax provision
(4.9
)
(38.8
)
(154.5
)
(46.3
)
Net income (loss)
$
24.4
$
(74.1
)
$
600.1
$
(121.1
)
Net income (loss) per common
share:
Basic
$
0.34
$
(1.01
)
$
8.22
$
(1.65
)
Diluted
$
0.34
$
(1.01
)
$
8.07
$
(1.65
)
Weighted-average common shares
outstanding:
Basic
71.2
73.6
73.0
73.5
Diluted
72.5
73.6
74.3
73.5
Dividends declared per share
$
0.6875
$
—
$
2.75
$
—
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Twelve Months Ended
April 2, 2022
March 27, 2021
(millions)
Cash flows from operating
activities:
Net income (loss)
$
600.1
$
(121.1
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization expense
229.7
247.6
Deferred income tax expense (benefit)
(46.1
)
35.6
Non-cash stock-based compensation
expense
81.7
72.7
Non-cash impairment of assets
21.3
96.0
Bad debt reversals
(2.2
)
(27.6
)
Other non-cash charges
1.0
1.8
Changes in operating assets and
liabilities:
Accounts receivable
32.4
(143.0
)
Inventories
(269.3
)
3.7
Prepaid expenses and other current
assets
(28.3
)
5.2
Accounts payable and accrued
liabilities
194.6
293.6
Income tax receivables and payables
(62.3
)
(37.8
)
Operating lease right-of-use assets and
liabilities, net
(61.6
)
(30.2
)
Other balance sheet changes
24.9
(15.6
)
Net cash provided by operating
activities
715.9
380.9
Cash flows from investing
activities:
Capital expenditures
(166.9
)
(107.8
)
Purchases of investments
(1,510.6
)
(704.6
)
Proceeds from sales and maturities of
investments
964.6
1,007.2
Settlement of net investment hedges
—
3.7
Other investing activities
(5.0
)
(3.5
)
Net cash provided by (used in)
investing activities
(717.9
)
195.0
Cash flows from financing
activities:
Repayments of credit facility
borrowings
—
(475.0
)
Proceeds from the issuance of long-term
debt
—
1,241.9
Repayments of long-term debt
—
(300.0
)
Payments of finance lease obligations
(23.1
)
(13.9
)
Payments of dividends
(150.0
)
(49.8
)
Repurchases of common stock, including
shares surrendered for tax withholdings
(492.6
)
(37.7
)
Other financing activities
—
(8.7
)
Net cash provided by (used in)
financing activities
(665.7
)
356.8
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(48.3
)
25.5
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(716.0
)
958.2
Cash, cash equivalents, and restricted
cash at beginning of period
2,588.0
1,629.8
Cash, cash equivalents, and restricted
cash at end of period
$
1,872.0
$
2,588.0
RALPH LAUREN
CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
Twelve Months Ended
April 2, 2022
March 27, 2021
April 2, 2022
March 27, 2021
(millions)
Net revenues:
North America
$
674.3
$
569.0
$
2,968.2
$
1,992.4
Europe
467.4
370.1
1,780.7
1,165.9
Asia
346.1
289.4
1,286.8
1,027.5
Other non-reportable segments
34.9
58.5
182.8
215.0
Total net revenues
$
1,522.7
$
1,287.0
$
6,218.5
$
4,400.8
Operating income (loss):
North America
$
90.2
$
69.4
$
676.7
$
334.0
Europe
90.6
68.5
444.0
189.3
Asia
39.4
27.6
228.8
148.2
Other non-reportable segments
32.2
(5.2
)
138.4
32.4
252.4
160.3
1,487.9
703.9
Unallocated corporate expenses
(202.0
)
(192.9
)
(667.3
)
(577.0
)
Unallocated restructuring and other
charges, net
(13.6
)
6.9
(22.2
)
(170.5
)
Total operating income (loss)
$
36.8
$
(25.7
)
$
798.4
$
(43.6
)
RALPH LAUREN
CORPORATION
CONSTANT CURRENCY FINANCIAL
MEASURES
(Unaudited)
Comparable Store Sales Data
April 2, 2022
Three Months
Ended
Twelve Months
Ended
% Change
% Change
Constant Currency
Constant Currency
North America:
Digital commerce
27
%
35
%
Brick and mortar
19
%
55
%
Total North America
21
%
49
%
Europe:
Digital commerce
(2
%)
18
%
Brick and mortar
145
%
75
%
Total Europe
77
%
57
%
Asia:
Digital commerce
46
%
54
%
Brick and mortar
10
%
15
%
Total Asia
12
%
17
%
Total Ralph Lauren Corporation
26
%
40
%
Operating Segment Net Revenues
Data
Three Months Ended
% Change
April 2, 2022
March 27, 2021
As Reported
Constant
Currency
(millions)
North America
$
674.3
$
569.0
18.5
%
18.4
%
Europe
467.4
370.1
26.3
%
34.1
%
Asia
346.1
289.4
19.6
%
25.9
%
Other non-reportable segments
34.9
58.5
(40.3
%)
(40.2
%)
Net revenues
$
1,522.7
$
1,287.0
18.3
%
21.9
%
Twelve Months Ended
% Change
April 2, 2022
March 27, 2021
As Reported
Constant
Currency
(millions)
North America
$
2,968.2
$
1,992.4
49.0
%
48.8
%
Europe
1,780.7
1,165.9
52.7
%
53.8
%
Asia
1,286.8
1,027.5
25.2
%
26.8
%
Other non-reportable segments
182.8
215.0
(15.0
%)
(15.0
%)
Net revenues
$
6,218.5
$
4,400.8
41.3
%
41.9
%
RALPH LAUREN
CORPORATION
NET REVENUES BY SALES
CHANNEL
(Unaudited)
Three Months Ended
April 2, 2022
March 27, 2021
North America
Europe
Asia
Other
Total
North America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
406.1
$
181.6
$
322.0
$
—
$
909.7
$
303.8
$
97.8
$
268.9
$
22.6
$
693.1
Wholesale
268.2
285.8
24.1
0.4
578.5
265.2
272.3
20.5
4.2
562.2
Licensing
—
—
—
34.5
34.5
—
—
—
31.7
31.7
Net revenues
$
674.3
$
467.4
$
346.1
$
34.9
$
1,522.7
$
569.0
$
370.1
$
289.4
$
58.5
$
1,287.0
Twelve Months Ended
April 2, 2022
March 27, 2021
North America
Europe
Asia
Other
Total
North America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
1,878.6
$
828.3
$
1,207.4
$
27.2
$
3,941.5
$
1,214.1
$
517.1
$
968.4
$
80.2
$
2,779.8
Wholesale
1,089.6
952.4
79.4
5.9
2,127.3
778.3
648.8
59.1
12.4
1,498.6
Licensing
—
—
—
149.7
149.7
—
—
—
122.4
122.4
Net revenues
$
2,968.2
$
1,780.7
$
1,286.8
$
182.8
$
6,218.5
$
1,992.4
$
1,165.9
$
1,027.5
$
215.0
$
4,400.8
RALPH LAUREN
CORPORATION
GLOBAL RETAIL STORE
NETWORK
(Unaudited)
April 2, 2022
March 27, 2021
North
America
Ralph Lauren Stores
46
40
Polo Factory Stores
193
193
Total Directly Operated Stores
239
233
Concessions
1
1
Europe
Ralph Lauren Stores
36
32
Polo Factory Stores
59
60
Total Directly Operated Stores
95
92
Concessions
29
29
Asia
Ralph Lauren Stores
93
79
Polo Factory Stores
77
72
Total Directly Operated Stores
170
151
Concessions
654
616
Other
Club Monaco Stores
—
72
Club Monaco Concessions
—
4
Global Directly
Operated Stores and Concessions
Ralph Lauren Stores
175
151
Polo Factory Stores
329
325
Club Monaco Stores
—
72
Total Directly Operated Stores
504
548
Concessions
684
650
Global Licensed
Stores
Total Licensed Stores
148
282
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
April 2, 2022
As Reported
Total
Adjustments(a)(b)
As Adjusted
(millions, except per share
data)
Net revenues
$
1,522.7
$
—
$
1,522.7
Gross profit
966.1
(1.8
)
964.3
Gross profit margin
63.4
%
63.3
%
Total other operating expenses, net
(929.3
)
19.2
(910.1
)
Operating expense margin
61.0
%
59.8
%
Operating income
36.8
17.4
54.2
Operating margin
2.4
%
3.6
%
Other non-operating expense, net
(7.5
)
—
(7.5
)
Income before income taxes
29.3
17.4
46.7
Income tax provision
(4.9
)
(6.0
)
(10.9
)
Effective tax rate
16.8
%
23.4
%
Net income
$
24.4
$
11.4
$
35.8
Net income per diluted common share
$
0.34
$
0.49
Weighted average common shares outstanding
- Diluted
72.5
—
SEGMENT INFORMATION - OPERATING
INCOME:
North America
$
90.2
$
0.2
$
90.4
Operating margin
13.4
%
13.4
%
Europe
90.6
3.6
94.2
Operating margin
19.4
%
20.2
%
Asia
39.4
—
39.4
Operating margin
11.4
%
11.4
%
Other non-reportable segments
32.2
—
32.2
Operating margin
92.2
%
92.2
%
Unallocated corporate expenses and
restructuring & other charges, net
(215.6
)
13.6
(202.0
)
Total operating income
$
36.8
$
17.4
$
54.2
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Twelve Months Ended
April 2, 2022
As Reported
Total
Adjustments(a)(c)
As Adjusted
(millions, except per share
data)
Net revenues
$
6,218.5
$
—
$
6,218.5
Gross profit
4,147.5
(13.3
)
4,134.2
Gross profit margin
66.7
%
66.5
%
Total other operating expenses, net
(3,349.1
)
45.9
(3,303.2
)
Operating expense margin
53.9
%
53.1
%
Operating income
798.4
32.6
831.0
Operating margin
12.8
%
13.4
%
Other non-operating expense, net
(43.8
)
—
(43.8
)
Income before income taxes
754.6
32.6
787.2
Income tax provision
(154.5
)
(9.4
)
(163.9
)
Effective tax rate
20.5
%
20.8
%
Net income
$
600.1
$
23.2
$
623.3
Net income per diluted common share
$
8.07
$
8.38
Weighted average common shares outstanding
- Diluted
74.3
—
SEGMENT INFORMATION - OPERATING
INCOME:
North America
$
676.7
$
(10.9
)
$
665.8
Operating margin
22.8
%
22.4
%
Europe
444.0
2.4
446.4
Operating margin
24.9
%
25.1
%
Asia
228.8
1.1
229.9
Operating margin
17.8
%
17.9
%
Other non-reportable segments
138.4
0.3
138.7
Operating margin
75.7
%
75.9
%
Unallocated corporate expenses and
restructuring & other charges, net
(689.5
)
39.7
(649.8
)
Total operating income
$
798.4
$
32.6
$
831.0
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Three Months Ended
March 27, 2021
As Reported
Total
Adjustments(a)(d)
As Adjusted
(millions, except per share
data)
Net revenues
$
1,287.0
$
—
$
1,287.0
Gross profit
782.9
26.4
809.3
Gross profit margin
60.8
%
62.9
%
Total other operating expenses, net
(808.6
)
43.4
(765.2
)
Operating expense margin
62.8
%
59.5
%
Operating income (loss)
(25.7
)
69.8
44.1
Operating margin
(2.0
%)
3.4
%
Other non-operating expense, net
(9.6
)
—
(9.6
)
Income (loss) before income taxes
(35.3
)
69.8
34.5
Income tax benefit (provision)
(38.8
)
32.7
(6.1
)
Effective tax rate
(110.1
%)
17.8
%
Net income (loss)
$
(74.1
)
$
102.5
$
28.4
Net income (loss) per diluted common
share
$
(1.01
)
$
0.38
Weighted average common shares outstanding
- Diluted
73.6
75.1
SEGMENT INFORMATION - OPERATING INCOME
(LOSS):
North America
$
69.4
$
19.4
$
88.8
Operating margin
12.2
%
15.6
%
Europe
68.5
1.5
70.0
Operating margin
18.5
%
18.9
%
Asia
27.6
(1.1
)
26.5
Operating margin
9.5
%
9.1
%
Other non-reportable segments
(5.2
)
17.4
12.2
Operating margin
(8.8
%)
21.1
%
Unallocated corporate expenses and
restructuring & other charges, net
(186.0
)
32.6
(153.4
)
Total operating income (loss)
$
(25.7
)
$
69.8
$
44.1
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Twelve Months Ended
March 27, 2021
As Reported
Total
Adjustments(a)(e)
As Adjusted
(millions, except per share
data)
Net revenues
$
4,400.8
$
—
$
4,400.8
Gross profit
2,861.4
29.3
2,890.7
Gross profit margin
65.0
%
65.7
%
Total other operating expenses, net
(2,905.0
)
225.1
(2,679.9
)
Operating expense margin
66.0
%
60.9
%
Operating income (loss)
(43.6
)
254.4
210.8
Operating margin
(1.0
%)
4.8
%
Other non-operating expense, net
(31.2
)
—
(31.2
)
Income (loss) before income taxes
(74.8
)
254.4
179.6
Income tax provision
(46.3
)
(6.3
)
(52.6
)
Effective tax rate
(61.9
%)
29.3
%
Net income (loss)
$
(121.1
)
$
248.1
$
127.0
Net income (loss) per diluted common
share
$
(1.65
)
$
1.70
Weighted average common shares outstanding
- Diluted
73.5
74.7
SEGMENT INFORMATION - OPERATING INCOME
(LOSS):
North America
$
334.0
$
12.8
$
346.8
Operating margin
16.8
%
17.4
%
Europe
189.3
12.4
201.7
Operating margin
16.2
%
17.3
%
Asia
148.2
1.6
149.8
Operating margin
14.4
%
14.6
%
Other non-reportable segments
32.4
17.2
49.6
Operating margin
15.1
%
23.1
%
Unallocated corporate expenses and
restructuring & other charges, net
(747.5
)
210.4
(537.1
)
Total operating income (loss)
$
(43.6
)
$
254.4
$
210.8
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Three Months Ended
March 28, 2020
As Reported
Total
Adjustments(a)(f)
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
$
(79.6
)
$
142.8
$
63.2
Operating margin
(12.6
%)
10.1
%
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, net
(197.8
)
16.3
(181.5
)
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)(g)
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
$
456.0
$
143.2
$
599.2
Operating margin
14.5
%
19.1
%
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, net
(685.3
)
73.9
(611.4
)
Total operating income
$
317.0
$
314.7
$
631.7
RALPH LAUREN CORPORATION
FOOTNOTES TO RECONCILIATION OF NON-U.S. GAAP
FINANCIAL MEASURES
(a)
Adjustments for non-routine inventory-related charges (benefits)
are recorded within cost of goods sold in the consolidated
statements of operations. Adjustments for non-routine bad debt
expense (benefits) 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 during the fourth quarter of Fiscal
2020, which is recorded within other income (expense), net.
Adjustments for one-time income tax events 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, net in the consolidated statements
of operations.
(b)
Adjustments for the three months ended April 2, 2022 include (i)
other charges of $10.9 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 and non-income-related capital taxes resulting from
Swiss tax reform; (ii) a $4.0 million charitable donation expense
related to income received from Regent, L.P. ("Regent") during
Fiscal 2022 in connection the Company's sale of its Club Monaco
business; (iii) charge of $3.6 million related to non-routine bad
debt expense recorded in connection with the Russia-Ukraine war;
(iv) benefit of $1.8 million related to COVID-19-related inventory
adjustments; (v) charges of $1.6 million recorded in connection
with the Company's restructuring activities, consisting of
restructuring charges and impairment of assets; and (vi) benefit of
$0.9 million related to income received from Regent.
(c)
Adjustments for the twelve months ended April 2, 2022 include
(i) charges of $25.3 million recorded in connection with the
Company's restructuring activities, consisting of restructuring
charges, impairment of assets, and accelerated stock-based
compensation expense; (ii) other charges of $18.2 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 and non-income-related capital
taxes resulting from Swiss tax reform; (iii) benefit of $13.3
million related to COVID-19-related inventory adjustments; (iv)
income of $4.0 million primarily related to a certain revenue share
clause in the Company's agreement with Regent that entitled it to
receive a portion of the sales generated by the Club Monaco
business during a four-month business transition period; (v) a $4.0
million charitable donation expense related to the beforementioned
income received from Regent; and (vi) net non-routine bad debt
expense of $2.4 million recorded in connection with the
Russia-Ukraine war, partially offset by favorable COVID-19-related
bad debt reserve adjustments.
(d)
Adjustments for the three months ended March 27, 2021 include
(i) charges of $32.5 million recorded in connection with the
Company's restructuring plans, consisting of restructuring charges,
impairment of assets, and inventory-related charges; (ii)
additional impairment of assets of $17.5 million primarily related
to underperforming stores as a result of on-going store portfolio
evaluation and $0.3 million related to certain previously exited
real estate locations for which the related lease agreement has not
yet expired; (iii) inventory-related charges of $26.4 million
related to adverse impacts associated with COVID-19 business
disruptions; (iv) benefit of $10.0 million related to
COVID-19-related bad debt reserve adjustments; and (v) other
charges of $3.1 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. Our income tax provision for the three months ended March
27, 2021 reflected tax effects for the pre-tax charges described
above, as well as incremental tax expense of $52.6 million
primarily related to a decrease in net operating loss carryback
under the CARES Act and an increase for valuation allowance
provided against domestic losses attributable to significant
COVID-19 business disruptions.
(e)
Adjustments for the twelve months ended March 27, 2021 include
(i) charges of $236.8 million recorded in connection with the
Company's restructuring plans, consisting of restructuring charges,
impairment of assets, and inventory-related charges; (ii) benefit
of $41.4 million related to COVID-19-related bad debt reserve
adjustments; (iii) additional impairment of assets of $17.5 million
related to underperforming stores identified through its on-going
store portfolio evaluation and adverse impacts associated with
COVID-19 business disruptions, and $9.1 million related to certain
previously exited real estate locations for which the related lease
agreement has not yet expired; (iv) inventory-related charges of
$21.0 million related to adverse impacts associated with COVID-19
business disruptions; and (v) other charges of $11.4 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. Our income tax
provision for the twelve months ended March 27, 2021 reflected tax
effects for the pre-tax charges described above, as well as
incremental tax expense of $33.7 million primarily related to a
valuation allowance provided against domestic losses attributable
to significant COVID-19 business disruptions and $13.8 million
related to international tax legislation enacted in connection with
the European Union's anti-tax avoidance directive, partially offset
by an income tax benefit of $0.9 million primarily due to a net
operating loss carryback under the CARES Act.
(f)
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.
(g)
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.
NON-U.S. GAAP FINANCIAL MEASURES
Because 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
activities, as well as certain other charges (benefits) associated
with other non-recurring events, as described in the footnotes to
the non-U.S. GAAP financial measures above. The income tax benefit
(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 benefit
(provision) has also been adjusted for certain other one-time
income tax events and other adjustments, as described in the
footnotes to the non-U.S. GAAP financial measures above. 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 2023 and first
quarter 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 its
restructuring plans, have not yet occurred or are out of the
Company's control. Accordingly, a reconciliation of the Company's
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 up to approximately $40 million related to its Fiscal 2021
Strategic Realignment Plan that have not yet been incurred.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220523005869/en/
Investor Relations: Corinna Van der Ghinst ir@ralphlauren.com Or
Corporate Communications rl-press@ralphlauren.com
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