- Third Quarter Revenue Increased 11%, Ahead of Expectations,
with Better Than Expected Holiday Performance in All Geographies
Driving Outperformance
- Global Direct-to-Consumer Comparable Store Sales Grew 12%,
Driven by Positive Retail Comps Across Regions and Channels; Global
Wholesale Sales Increased High-Single Digits Including a Return to
Growth in North America Wholesale
- Adjusted Gross and Operating Margin Expansion Exceeded Our
Outlook, with Strong Full-Price Demand and Expense Discipline More
than Offsetting Investments in Marketing and Key Cities
- Maintained Healthy Balance Sheet with Accelerated Free Cash
Flows and Well-Positioned Inventories at Quarter-End
- Returned Approximately $500 Million to Shareholders Through Our
Dividend and Repurchase of Class A Common Stock This Fiscal
Year-to-Date
- Raised Full Year Fiscal 2025 Revenue and Adjusted Operating
Margin Expansion Outlook Based on Strong Year-to-Date
Performance
Ralph Lauren Corporation (NYSE:RL), a global leader in the
design, marketing, and distribution of luxury lifestyle products,
today reported earnings per diluted share of $4.66, up 11% to prior
year on a reported basis and $4.82, up 16% on an adjusted basis,
excluding restructuring-related and other net charges, for the
third quarter of Fiscal 2025. This compared to earnings per diluted
share of $4.19 on a reported basis and $4.17 on an adjusted basis,
excluding restructuring-related and other net charges for the third
quarter of Fiscal 2024.
"I have always been inspired by the spirit of the holidays — the
sense of optimism, celebrating the warmth of family and
togetherness, and an enduring sense of tradition," said Ralph
Lauren, Executive Chairman and Chief Creative Officer. "We are
proud that a growing number of customers are turning to us for
these key moments and in their everyday lives."
"Our teams around the world executed very well across
geographies, channels, and categories this holiday to deliver on
our long-term, Next Great Chapter: Accelerate strategy," said
Patrice Louvet, President and Chief Executive Officer. "We are
encouraged by this quarter's strong performance, and we continue to
be sharply focused on what's ahead for Ralph Lauren: leveraging the
incredible power of our brand and diverse drivers of growth to stay
on offense into the next year and beyond."
Key Achievements in Third Quarter Fiscal 2025
We delivered the following highlights across our Next Great
Chapter: Accelerate priorities in the third quarter of Fiscal
2025:
- Elevate and Energize Our Lifestyle Brand
- Drove continued momentum in new customer acquisition and
loyalty with 1.9 million new consumers in our direct-to-consumer
businesses, increases in brand consideration, purchase intent and
net promoter scores, and more than 64 million social media
followers, a low double-digit increase to last year
- Invested in powerful, authentic connections with consumers
through key moments, notably: our global "Ralph's New York" Holiday
2024 campaign and Timeless Gifting programs including our Holiday
pop-up and coffee shop at Saks Fifth Avenue in New York City; Very
Ralph documentary event in Shanghai; Singles Day livestream
activations; and Polo Red fragrance campaign featuring Formula 1
driver Lando Norris
- Drive the Core and Expand for More
- Drove continued momentum in our Core business, up low-teens,
along with our high-potential categories (Women's Apparel,
Outerwear, and Handbags), which increased 20% to last year in
constant currency and outpaced total Company growth
- Product highlights this quarter included: our Holiday 2024
collections, an ode to the elegance of New York City's art
deco-inspired glamour; our Double RL x Zefren-M capsule, the second
collaboration in our groundbreaking Artist in Residence program,
focused on empowering and celebrating artisans within the
communities that have historically inspired our designs; and our
annual Pink Pony collection, supporting Ralph Lauren's longstanding
commitment to cancer care and research
- Increased average unit retail ("AUR") by 12% across our
direct-to-consumer network in the third quarter, above expectations
and on top of a 9% increase last year, reflecting our continued
elevation and strong full-price selling trends, with lower than
planned holiday promotions
- Win in Key Cities with Our Consumer Ecosystem
- By geography, revenues were led by low- to mid-teens growth in
Europe and Asia, with China notably up more than 20%. North America
accelerated to 7% growth driven by continued strength in our
direct-to-consumer channels and a return to growth in our wholesale
business
- Continued to expand and scale our key city ecosystems with the
opening of 34 new owned and partnered stores in the third quarter.
Key store openings during the period included: Hong Kong Pacific
Place, Beijing China World Mall, St. James Quarter in Edinburgh,
and our Ralph Lauren Collection women's shop in Harrods London
Our business is supported by our fortress foundation, which we
define through our five key enablers, including: our people and
culture, best-in-class digital technology and analytics, superior
operational capabilities, a powerful balance sheet, and leadership
in citizenship and sustainability.
Third Quarter Fiscal 2025 Income Statement Review
Net Revenue. In the third quarter of Fiscal 2025, revenue
increased 11% to $2.1 billion on a reported basis and was also up
11% in constant currency. Foreign currency negatively impacted
revenue growth by approximately 40 basis points in the third
quarter.
Revenue performance for the Company's reportable segments in the
third quarter compared to the prior year period was as follows:
- North America Revenue. North America revenue in the third
quarter increased 7% to $998 million. In retail, comparable store
sales in North America increased 8%, with a 10% increase in brick
and mortar stores and a 3% increase in digital commerce. North
America wholesale revenue increased 6% to the prior year.
- Europe Revenue. Europe revenue in the third quarter increased
16% to $604 million on a reported basis and was also up 16% in
constant currency. In retail, comparable store sales in Europe
increased 17% with an 18% increase in brick and mortar stores and a
14% increase in digital commerce. Europe wholesale revenue
increased 15% to prior year on a reported basis and increased 14%
in constant currency, supported by strong re-order trends and a
previously-discussed timing shift of receipts from the second
quarter.
- Asia Revenue. Asia revenue in the third quarter increased 14%
to $507 million on a reported basis and 15% in constant currency.
Comparable store sales in Asia increased 14%, with a 13% increase
in our brick and mortar stores and a 29% increase in digital
commerce.
Gross Profit. Gross profit for the third quarter of
Fiscal 2025 was $1.5 billion and gross margin was 68.4%. Adjusted
gross margin was also 68.4%, 200 basis points above the prior year.
Gross margin expansion was driven by favorable product, channel and
geographic mix shifts, lower cotton costs and AUR growth, more than
offsetting incremental pressure from freight and other product
costs.
Operating Expenses. Operating expenses in the third
quarter of Fiscal 2025 were $1.1 billion, up 11% to last year on a
reported basis. On an adjusted basis, operating expenses were also
$1.1 billion, up 10% to last year. Adjusted operating expense rate
was 49.7%, compared to 50.0% in the prior year period.
Operating Income. Operating income for the third quarter
of Fiscal 2025 was $390 million and operating margin was 18.2% on a
reported basis. On an adjusted basis, operating income was $402
million and operating margin was 18.7%, 230 basis points above the
prior year. Operating income for the Company's reportable segments
in the third quarter compared to the prior year period was as
follows:
- North America Operating Income. North America operating income
in the third quarter was $264 million on both a reported and
adjusted basis. Adjusted North America operating margin was 26.4%,
up 460 basis points to last year.
- Europe Operating Income. Europe operating income in the third
quarter was $169 million on both a reported and adjusted basis.
Adjusted Europe operating margin was 27.9%, up 420 basis points to
last year. Foreign currency favorably impacted adjusted operating
margin rate by 70 basis points in the third quarter.
- Asia Operating Income. Asia operating income in the third
quarter was $136 million on both a reported and adjusted basis.
Adjusted Asia operating margin was 26.9%, up 270 basis points to
last year. Foreign currency negatively impacted adjusted operating
margin rate by 50 basis points in the third quarter.
Net Income and EPS. Net income in the third quarter of
Fiscal 2025 was $297 million, or $4.66 per diluted share on a
reported basis. On an adjusted basis, net income was $308 million,
or $4.82 per diluted share. This compared to net income of $277
million, or $4.19 per diluted share on a reported basis, and net
income of $275 million, or $4.17 per diluted share on an adjusted
basis, for the third quarter of Fiscal 2024.
In the third quarter of Fiscal 2025, the Company had an
effective tax rate of approximately 23% on a reported basis and 22%
on an adjusted basis, in-line with our outlook. This compared to an
effective tax rate of approximately 16% on a reported basis and 17%
on an adjusted basis in the prior year period. The increase was
driven primarily by the absence of favorable discrete tax benefits
realized in the prior year period.
Balance Sheet and Cash Flow Review
The Company ended the third quarter of Fiscal 2025 with $2.1
billion in cash and short-term investments and $1.1 billion in
total debt, compared to $1.9 billion and $1.1 billion,
respectively, at the end of the third quarter of Fiscal 2024.
Inventory at the end of the third quarter of Fiscal 2025 was $1.0
billion, down 5% compared to the prior year period.
The Company repurchased approximately $74 million of Class A
Common Stock in the third quarter.
Full Year Fiscal 2025 and Fourth Quarter Outlook
The Company's outlook is based on its best assessment of the
current geopolitical and macroeconomic environment, including
inflationary pressures, tariffs and other consumer spending-related
headwinds, global supply chain disruptions and foreign currency
volatility, among other factors. The full year Fiscal 2025 and
fourth quarter guidance excludes any potential
restructuring-related and other net charges that may be incurred in
future periods, as described in the "Non-U.S. GAAP Financial
Measures" section of this press release.
For Fiscal 2025, the Company now expects constant currency
revenues to increase in a range of approximately 6% to 7%. Based on
current exchange rates, foreign currency is expected to negatively
impact revenues by approximately 100 to 150 basis points in Fiscal
2025.
The Company now expects operating margin for Fiscal 2025 to
expand approximately 120 to 160 basis points in constant currency,
up slightly from its prior outlook, driven by gross margin
expansion of approximately 130 to 170 basis points. Foreign
currency is now expected to negatively impact both gross and
operating margins by approximately 30 to 50 basis points.
For the fourth quarter, the Company expects constant currency
revenues to grow in a range of approximately 6% to 7%. Foreign
currency is expected to negatively impact revenue growth by
approximately 300 basis points.
Operating margin for the fourth quarter is expected to expand
approximately 120 to 140 basis points in constant currency, driven
by approximately 80 to 120 basis points of gross margin expansion
and modest operating expense leverage. Foreign currency is expected
to negatively impact both gross and operating margins by
approximately 60 to 80 basis points in the fourth quarter.
The Company's full year Fiscal 2025 tax rate is still expected
to be in the range of approximately 22% to 23%, increasing from 19%
in the prior year, following discrete tax benefits recognized in
the prior year period. The fourth quarter tax rate is expected to
be approximately 24% to 25%.
The Company now expects capital expenditures for Fiscal 2025 of
approximately $200 million to $250 million.
Conference Call
As previously announced, the Company will host a conference call
and live online webcast today, Thursday, February 6, 2025, at 9:00
A.M. Eastern. Listeners may access a live broadcast of the
conference call on the Company investor relations website at
http://investor.ralphlauren.com or by dialing 517-623-4963 or
800-857-5209. To access the conference call, listeners should dial
in by 8:45 A.M. Eastern and request to be connected to the Ralph
Lauren Third Quarter 2025 conference call.
An online archive of the broadcast will be available by
accessing the Company's investor relations website at
http://investor.ralphlauren.com. A telephone replay of the call
will be available from 12:00 P.M. Eastern, Thursday, February 6,
2025 through 6:00 P.M. Eastern, Thursday, February 13, 2025 by
dialing 203-369-0183 or 866-361-4757 and entering passcode
6735.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the
design, marketing and distribution of luxury 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, Double RL, Polo Ralph Lauren, 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, without limitation, statements regarding our
current expectations about the Company's future operating results
and financial condition, the implementation and results of our
strategic plans and initiatives, store openings and closings,
capital expenses, our plans regarding our quarterly cash dividend
and Class A common stock repurchase programs, and our ability to
meet citizenship and sustainability goals. Forward-looking
statements are based on current expectations and are indicated by
words or phrases such as "aim," "anticipate," "outlook,"
"estimate," "ensure," "commit," "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. 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 any potential changes resulting from
the execution of our long-term growth strategy, and our ability to
effectively transfer knowledge and maintain adequate controls and
procedures during periods of transition; 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; the impact of
economic, political, and other conditions on us, our customers,
suppliers, vendors, and lenders, including potential business
disruptions related to ongoing military conflicts taking place in
various parts of the world, most notably the Russia-Ukraine and
Israel-Hamas wars, other recent hostilities in the Middle East, and
militant attacks on cargo vessels in the Red Sea, civil and
political unrest, diplomatic tensions between the U.S. and other
countries, high interest rates, and bank failures, among other
factors described herein; the impact to our business resulting from
the potential 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 or other countries,
and any related impact to global stock markets, as well as our
ability to implement mitigating sourcing strategies; 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), man-made or natural disasters,
scarcity of raw materials, port congestion, and scrutiny or
detention of goods produced in certain territories resulting from
laws, regulations, or trade restrictions, such as those imposed by
the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering
America's Adversaries Through Sanctions Act ("CAATSA"), which could
result in shipment approval delays leading to inventory shortages
and lost sales, as well as potential shipping delays, inventory
shortages, and/or higher freight costs resulting from port strikes,
the recent Red Sea crisis, and/or disruptions to major waterways
such as the Suez and Panama canals; 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
ability to effectively manage inventory levels and the increasing
pressure on our margins in a highly promotional retail environment;
our exposure to currency exchange rate fluctuations from both a
transactional and translational perspective; our ability to recruit
and retain qualified employees to operate our retail stores,
distribution centers, and various corporate functions; the impact
to our business resulting from a recession or 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 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 citizenship and sustainability practices, including
those related to climate change, our human capital, and our supply
chain; 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 to our business resulting from pandemic diseases
such as COVID-19, 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 potential impact on our operations and on
our suppliers and customers resulting from man-made or natural
disasters, including pandemic diseases, severe weather, geological
events, and other catastrophic events, such as terrorist attacks,
military conflicts, and other hostilities; 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 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)
December 28,
2024
March 30, 2024
December 30,
2023
(millions)
ASSETS
Current assets:
Cash and cash equivalents
$
1,940.2
$
1,662.2
$
1,803.6
Short-term investments
203.0
121.0
113.8
Accounts receivable, net of allowances
435.2
446.5
403.9
Inventories
998.6
902.2
1,055.1
Income tax receivable
48.8
56.0
43.8
Prepaid expenses and other current
assets
274.5
171.9
219.2
Total current assets
3,900.3
3,359.8
3,639.4
Property and equipment, net
825.2
850.4
874.3
Operating lease right-of-use assets
1,024.1
1,014.6
1,076.7
Deferred tax assets
298.4
288.3
305.1
Goodwill
876.2
888.1
899.9
Intangible assets, net
66.0
75.7
79.0
Other non-current assets
90.7
125.7
130.1
Total assets
$
7,080.9
$
6,602.6
$
7,004.5
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
399.5
$
—
$
—
Accounts payable
489.5
332.2
411.8
Current income tax payable
110.3
79.8
102.3
Current operating lease liabilities
226.4
245.5
259.0
Accrued expenses and other current
liabilities
996.1
809.7
905.1
Total current liabilities
2,221.8
1,467.2
1,678.2
Long-term debt
742.6
1,140.5
1,140.0
Long-term finance lease liabilities
239.1
256.1
263.5
Long-term operating lease liabilities
1,057.0
1,014.0
1,075.1
Non-current income tax payable
—
42.2
42.2
Non-current liability for unrecognized tax
benefits
170.6
118.7
112.6
Other non-current liabilities
110.6
113.6
121.0
Total liabilities
4,541.7
4,152.3
4,432.6
Equity:
Common stock
1.3
1.3
1.3
Additional paid-in-capital
3,008.5
2,923.8
2,899.6
Retained earnings
7,511.8
7,051.6
7,008.4
Treasury stock, Class A, at cost
(7,657.6
)
(7,250.3
)
(7,128.1
)
Accumulated other comprehensive loss
(324.8
)
(276.1
)
(209.3
)
Total equity
2,539.2
2,450.3
2,571.9
Total liabilities and equity
$
7,080.9
$
6,602.6
$
7,004.5
Net Cash & Short-term
Investments(a)
$
1,001.1
$
642.7
$
777.4
Cash & Short-term Investments
2,143.2
1,783.2
1,917.4
___________________________
(a)
Calculated as cash and cash equivalents, plus short-term
investments, less total debt.
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Three Months Ended
Nine Months Ended
December 28,
2024
December 30,
2023
December 28,
2024
December 30,
2023
(millions, except per share
data)
Net revenues
$
2,143.5
$
1,934.0
$
5,381.7
$
5,063.5
Cost of goods sold
(677.4
)
(648.0
)
(1,694.1
)
(1,675.4
)
Gross profit
1,466.1
1,286.0
3,687.6
3,388.1
Selling, general, and administrative
expenses
(1,064.2
)
(967.6
)
(2,872.5
)
(2,693.9
)
Restructuring and other charges, net
(12.2
)
(0.7
)
(38.0
)
(45.6
)
Total other operating expenses,
net
(1,076.4
)
(968.3
)
(2,910.5
)
(2,739.5
)
Operating income
389.7
317.7
777.1
648.6
Interest expense
(11.6
)
(10.6
)
(33.9
)
(30.6
)
Interest income
17.8
20.7
55.8
52.2
Other income (expense), net
(12.2
)
2.0
(10.6
)
(4.3
)
Income before income taxes
383.7
329.8
788.4
665.9
Income tax provision
(86.3
)
(53.2
)
(174.5
)
(110.3
)
Net income
$
297.4
$
276.6
$
613.9
$
555.6
Net income per common share:
Basic
$
4.76
$
4.25
$
9.78
$
8.48
Diluted
$
4.66
$
4.19
$
9.57
$
8.31
Weighted-average common shares
outstanding:
Basic
62.5
65.0
62.8
65.5
Diluted
63.8
66.0
64.1
66.9
Dividends declared per share
$
0.825
$
0.75
$
2.475
$
2.25
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Nine Months Ended
December 28,
2024
December 30,
2023
(millions)
Cash flows from operating
activities:
Net income
$
613.9
$
555.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
164.6
173.0
Deferred income tax expense (benefit)
27.2
(11.6
)
Stock-based compensation expense
84.7
75.3
Bad debt expense
2.7
1.8
Other non-cash charges
14.8
6.2
Changes in operating assets and
liabilities:
Accounts receivable
(5.1
)
41.8
Inventories
(116.7
)
14.6
Prepaid expenses and other current
assets
(108.7
)
(28.6
)
Accounts payable and accrued
liabilities
368.6
169.0
Income tax receivables and payables
12.2
(0.8
)
Operating lease right-of-use assets and
liabilities, net
15.5
(25.6
)
Other balance sheet changes
39.2
(22.0
)
Net cash provided by operating
activities
1,112.9
948.7
Cash flows from investing
activities:
Capital expenditures
(136.3
)
(124.9
)
Purchases of investments
(628.2
)
(272.1
)
Proceeds from sales and maturities of
investments
538.9
193.8
Other investing activities
1.2
(1.0
)
Net cash used in investing
activities
(224.4
)
(204.2
)
Cash flows from financing
activities:
Payments of finance lease obligations
(16.5
)
(16.3
)
Payments of dividends
(150.1
)
(146.7
)
Repurchases of common stock, including
shares surrendered for tax withholdings
(404.6
)
(328.8
)
Net cash used in financing
activities
(571.2
)
(491.8
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(40.9
)
22.5
Net increase in cash, cash equivalents,
and restricted cash
276.4
275.2
Cash, cash equivalents, and restricted
cash at beginning of period
1,670.6
1,536.9
Cash, cash equivalents, and restricted
cash at end of period
$
1,947.0
$
1,812.1
RALPH LAUREN
CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
Nine Months Ended
December 28,
2024
December 30,
2023
December 28,
2024
December 30,
2023
(millions)
Net revenues:
North America
$
997.7
$
933.3
$
2,345.4
$
2,282.8
Europe
604.4
521.5
1,649.4
1,498.8
Asia
506.7
446.4
1,277.8
1,172.3
Other non-reportable segments
34.7
32.8
109.1
109.6
Total net revenues
$
2,143.5
$
1,934.0
$
5,381.7
$
5,063.5
Operating income:
North America
$
263.7
$
204.6
$
505.4
$
440.1
Europe
168.8
123.4
435.3
353.0
Asia
136.2
108.2
329.7
269.9
Other non-reportable segments
30.1
29.4
93.2
97.3
598.8
465.6
1,363.6
1,160.3
Unallocated corporate expenses
(196.9
)
(147.2
)
(548.5
)
(466.1
)
Unallocated restructuring and other
charges, net
(12.2
)
(0.7
)
(38.0
)
(45.6
)
Total operating income
$
389.7
$
317.7
$
777.1
$
648.6
RALPH LAUREN
CORPORATION
CONSTANT CURRENCY FINANCIAL
MEASURES
(Unaudited)
Comparable Store Sales Data
December 28, 2024
Three Months Ended
Nine Months Ended
% Change
% Change
Constant Currency
Constant Currency
North America:
Digital commerce
3
%
—
%
Brick and mortar
10
%
8
%
Total North America
8
%
6
%
Europe:
Digital commerce
14
%
14
%
Brick and mortar
18
%
14
%
Total Europe
17
%
14
%
Asia:
Digital commerce
29
%
24
%
Brick and mortar
13
%
10
%
Total Asia
14
%
11
%
Total Ralph Lauren Corporation
12
%
9
%
Operating Segment Net Revenues
Data
Three Months Ended
% Change
December 28,
2024
December 30,
2023
As
Reported
Constant
Currency
(millions)
North America
$
997.7
$
933.3
6.9
%
7.1
%
Europe
604.4
521.5
15.9
%
15.6
%
Asia
506.7
446.4
13.5
%
15.0
%
Other non-reportable segments
34.7
32.8
5.9
%
6.0
%
Net revenues
$
2,143.5
$
1,934.0
10.8
%
11.2
%
Nine Months Ended
% Change
December 28,
2024
December 30,
2023
As
Reported
Constant
Currency
(millions)
North America
$
2,345.4
$
2,282.8
2.7
%
2.8
%
Europe
1,649.4
1,498.8
10.0
%
9.8
%
Asia
1,277.8
1,172.3
9.0
%
11.8
%
Other non-reportable segments
109.1
109.6
(0.4
%)
(0.4
%)
Net revenues
$
5,381.7
$
5,063.5
6.3
%
6.9
%
RALPH LAUREN
CORPORATION
NET REVENUES BY SALES
CHANNEL
(Unaudited)
Three Months Ended
December 28, 2024
December 30, 2023
North
America
Europe
Asia
Other
Total
North
America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
743.6
$
347.7
$
490.5
$
—
$
1,581.8
$
693.1
$
297.3
$
425.4
$
—
$
1,415.8
Wholesale
254.1
256.7
16.2
—
527.0
240.2
224.2
21.0
—
485.4
Licensing
—
—
—
34.7
34.7
—
—
—
32.8
32.8
Net revenues
$
997.7
$
604.4
$
506.7
$
34.7
$
2,143.5
$
933.3
$
521.5
$
446.4
$
32.8
$
1,934.0
Nine Months Ended
December 28, 2024
December 30, 2023
North
America
Europe
Asia
Other
Total
North
America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
1,627.6
$
865.7
$
1,217.5
$
—
$
3,710.8
$
1,541.9
$
762.4
$
1,095.6
$
—
$
3,399.9
Wholesale
717.8
783.7
60.3
—
1,561.8
740.9
736.4
76.7
—
1,554.0
Licensing
—
—
—
109.1
109.1
—
—
—
109.6
109.6
Net revenues
$
2,345.4
$
1,649.4
$
1,277.8
$
109.1
$
5,381.7
$
2,282.8
$
1,498.8
$
1,172.3
$
109.6
$
5,063.5
RALPH LAUREN
CORPORATION
GLOBAL RETAIL STORE
NETWORK
(Unaudited)
December 28,
2024
December 30,
2023
North
America
Ralph Lauren Stores
50
50
Outlet Stores
178
187
Total Directly Operated Stores
228
237
Concessions
1
1
Europe
Ralph Lauren Stores
45
45
Outlet Stores
58
60
Total Directly Operated Stores
103
105
Concessions
29
27
Asia
Ralph Lauren Stores
153
132
Outlet Stores
95
96
Total Directly Operated Stores
248
228
Concessions
649
679
Global Directly
Operated Stores and Concessions
Ralph Lauren Stores
248
227
Outlet Stores
331
343
Total Directly Operated Stores
579
570
Concessions
679
707
Global Licensed
Partner Stores
Total Licensed Partner Stores
115
99
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
December 28, 2024
As
Reported
Total
Adjustments(a)(b)
As
Adjusted
(Reported $)
Foreign
Currency
Impact
As
Adjusted
(Constant $)
(millions, except per share
data)
Net revenues
$
2,143.5
$
—
$
2,143.5
$
6.9
$
2,150.4
Gross profit
1,466.1
—
1,466.1
3.4
1,469.5
Gross profit margin
68.4
%
68.4
%
68.3
%
Total other operating expenses, net
(1,076.4
)
12.2
(1,064.2
)
(3.4
)
(1,067.6
)
(f)
Operating expense margin
50.2
%
49.7
%
49.7
%
Operating income
389.7
12.2
401.9
—
401.9
Operating margin
18.2
%
18.7
%
18.7
%
Income before income taxes
383.7
12.2
395.9
Income tax provision
(86.3
)
(1.7
)
(88.0
)
Effective tax rate
22.5
%
22.2
%
Net income
$
297.4
$
10.5
$
307.9
Net income per diluted common share
$
4.66
$
4.82
SEGMENT
INFORMATION
REVENUE:
North America
$
997.7
$
—
$
997.7
$
1.5
$
999.2
Europe
604.4
—
604.4
(1.5
)
602.9
Asia
506.7
—
506.7
6.8
513.5
Other non-reportable segments
34.7
—
34.7
0.1
34.8
Total revenue
$
2,143.5
$
—
$
2,143.5
$
6.9
$
2,150.4
OPERATING INCOME:
North America
$
263.7
$
—
$
263.7
Operating margin
26.4
%
26.4
%
Europe
168.8
—
168.8
Operating margin
27.9
%
27.9
%
Asia
136.2
—
136.2
Operating margin
26.9
%
26.9
%
Other non-reportable segments
30.1
—
30.1
Operating margin
86.8
%
86.8
%
Unallocated corporate expenses and
restructuring & other charges, net
(209.1
)
12.2
(196.9
)
Total operating income
$
389.7
$
12.2
$
401.9
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Nine Months Ended
December 28, 2024
As
Reported
Total
Adjustments(a)(c)
As
Adjusted
(Reported $)
Foreign
Currency
Impact
As
Adjusted
(Constant $)
(millions, except per share
data)
Net revenues
$
5,381.7
$
—
$
5,381.7
$
32.2
$
5,413.9
Gross profit
3,687.6
—
3,687.6
30.5
3,718.1
Gross profit margin
68.5
%
68.5
%
68.7
%
Total other operating expenses, net
(2,910.5
)
38.0
(2,872.5
)
(15.7
)
(2,888.2
)
Operating expense margin
54.1
%
53.4
%
53.3
%
Operating income
777.1
38.0
815.1
14.8
829.9
Operating margin
14.4
%
15.1
%
15.3
%
Income before income taxes
788.4
38.0
826.4
Income tax provision
(174.5
)
(7.3
)
(181.8
)
Effective tax rate
22.1
%
22.0
%
Net income
$
613.9
$
30.7
$
644.6
Net income per diluted common share
$
9.57
$
10.05
SEGMENT
INFORMATION
REVENUE:
North America
$
2,345.4
$
—
$
2,345.4
$
2.4
$
2,347.8
Europe
1,649.4
—
1,649.4
(3.5
)
1,645.9
Asia
1,277.8
—
1,277.8
33.2
1,311.0
Other non-reportable segments
109.1
—
109.1
0.1
109.2
Total revenue
$
5,381.7
$
—
$
5,381.7
$
32.2
$
5,413.9
OPERATING INCOME:
North America
$
505.4
$
—
$
505.4
Operating margin
21.6
%
21.6
%
Europe
435.3
—
435.3
Operating margin
26.4
%
26.4
%
Asia
329.7
—
329.7
Operating margin
25.8
%
25.8
%
Other non-reportable segments
93.2
—
93.2
Operating margin
85.5
%
85.5
%
Unallocated corporate expenses and
restructuring & other charges, net
(586.5
)
38.0
(548.5
)
Total operating income
$
777.1
$
38.0
$
815.1
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Three Months Ended
December 30, 2023
As
Reported
Total
Adjustments(a)(d)
As
Adjusted
(millions, except per share
data)
Net revenues
$
1,934.0
$
—
$
1,934.0
Gross profit
1,286.0
(0.9
)
1,285.1
Gross profit margin
66.5
%
66.4
%
Total other operating expenses, net
(968.3
)
0.7
(967.6
)
(g)
Operating expense margin
50.1
%
50.0
%
Operating income
317.7
(0.2
)
317.5
Operating margin
16.4
%
16.4
%
Income before income taxes
329.8
(0.2
)
329.6
Income tax provision
(53.2
)
(1.3
)
(54.5
)
Effective tax rate
16.1
%
16.5
%
Net income
$
276.6
$
(1.5
)
$
275.1
Net income per diluted common share
$
4.19
$
4.17
SEGMENT
INFORMATION
OPERATING INCOME:
North America
$
204.6
$
(0.9
)
$
203.7
Operating margin
21.9
%
21.8
%
Europe
123.4
—
123.4
Operating margin
23.7
%
23.7
%
Asia
108.2
—
108.2
Operating margin
24.2
%
24.2
%
Other non-reportable segments
29.4
—
29.4
Operating margin
89.9
%
89.9
%
Unallocated corporate expenses and
restructuring & other charges, net
(147.9
)
0.7
(147.2
)
Total operating income
$
317.7
$
(0.2
)
$
317.5
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Nine Months Ended
December 30, 2023
As
Reported
Total
Adjustments(a)(e)
As
Adjusted
(millions, except per share
data)
Net revenues
$
5,063.5
$
—
$
5,063.5
Gross profit
3,388.1
(4.5
)
3,383.6
Gross profit margin
66.9
%
66.8
%
Total other operating expenses, net
(2,739.5
)
45.2
(2,694.3
)
Operating expense margin
54.1
%
53.2
%
Operating income
648.6
40.7
689.3
Operating margin
12.8
%
13.6
%
Income before income taxes
665.9
40.7
706.6
Income tax provision
(110.3
)
(22.3
)
(132.6
)
Effective tax rate
16.6
%
18.8
%
Net income
$
555.6
$
18.4
$
574.0
Net income per diluted common share
$
8.31
$
8.58
SEGMENT
INFORMATION
OPERATING INCOME:
North America
$
440.1
$
(4.7
)
$
435.4
Operating margin
19.3
%
19.1
%
Europe
353.0
(0.2
)
352.8
Operating margin
23.6
%
23.5
%
Asia
269.9
—
269.9
Operating margin
23.0
%
23.0
%
Other non-reportable segments
97.3
—
97.3
Operating margin
88.9
%
88.9
%
Unallocated corporate expenses and
restructuring & other charges, net
(511.7
)
45.6
(466.1
)
Total operating income
$
648.6
$
40.7
$
689.3
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 (benefit) are recorded
within selling, general, and administrative ("SG&A") expenses
in the consolidated statements of operations. Adjustments for
one-time income tax events are recorded within the income tax
benefit (provision) in the consolidated statements 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 December 28, 2024 include (i) other charges of $9.1 million
in connection with the Company's Next Generation Transformation
project; (ii) other charges of $2.2 million primarily related to
rent and occupancy costs associated with certain previously exited
real estate locations in connection with the Company's
restructuring activities for which the related lease agreements
have not yet expired; (iii) charges of $1.6 million recorded in
connection with the Company's restructuring activities, primarily
associated with severance and benefit costs; and (iv) income of
$0.7 million related to consideration received from Regent, L.P. in
connection with the Company's previously sold Club Monaco
business.
(c)
Adjustments for the nine months
ended December 28, 2024 include (i) other charges of $17.1 million
in connection with the Company's Next Generation Transformation
project; (ii) charges of $13.9 million recorded in connection with
the Company's restructuring activities, primarily associated with
severance and benefit costs; (iii) other charges of $9.1 million
primarily related to rent and occupancy costs associated with
certain previously exited real estate locations in connection with
the Company's restructuring activities for which the related lease
agreements have not yet expired; and (iv) income of $2.1 million
related to consideration received from Regent, L.P. in connection
with the Company's previously sold Club Monaco business.
(d)
Adjustments for the three months
ended December 30, 2023 include (i) income of $5.0 million related
to consideration received from Regent, L.P. in connection with the
Company's previously sold Club Monaco business; (ii) other charges
of $4.7 million primarily related to rent and occupancy costs
associated with certain previously exited real estate locations in
connection with the Company's restructuring activities for which
the related lease agreements have not yet expired; (iii) charges of
$1.0 million recorded in connection with the Company's
restructuring activities, primarily associated with severance and
benefit costs; and (iv) non-routine inventory benefits of $0.9
million primarily related to reversals of amounts previously
recognized in connection with delays in U.S. customs shipment
reviews and approvals.
(e)
Adjustments for the nine months
ended December 30, 2023 include (i) charges of $38.3 million
recorded in connection with the Company's restructuring activities,
primarily associated with severance and benefit costs; (ii) other
charges of $14.3 million primarily related to rent and occupancy
costs associated with certain previously exited real estate
locations in connection with the Company's restructuring activities
for which the related lease agreements have not yet expired; (iii)
income of $7.0 million related to consideration received from
Regent, L.P. in connection with the Company's previously sold Club
Monaco business; (iv) non-routine inventory benefits of $4.5
million primarily related to reversals of amounts previously
recognized in connection with delays in U.S. customs shipment
reviews and approvals and the COVID-19 pandemic; and (v) benefit of
$0.4 million primarily related to Russia-related bad debt reserve
adjustments. Additionally, the income tax provision reflects a
benefit of $11.8 million recorded in connection with Swiss tax
reform and the European Union's anti-tax avoidance directive.
(f)
Total adjusted other operating
expenses, net excluding marketing and advertising ("Marketing")
expenses for the three months ended December 28, 2024 were as
follows:
Three Months Ended
December 28, 2024
As Adjusted
in Constant $
(incl. Marketing)
Marketing Expenses
As Adjusted
in Constant $
(excl. Marketing)
(millions)
Total other operating expenses, net
$
(1,067.6
)
$
153.3
$
(914.3
)
Operating expense margin
49.7
%
42.5
%
(g)
Total adjusted other operating
expenses, net excluding Marketing expenses for the three months
ended December 30, 2023 were as follows:
Three Months Ended
December 30, 2023
As
Adjusted
(incl. Marketing)
Marketing Expenses
As
Adjusted
(excl. Marketing)
(millions)
Total other operating expenses, net
$
(967.6
)
$
145.3
$
(822.3
)
Operating expense margin
50.0
%
42.5
%
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 2025 and fourth
quarter guidance excludes any potential restructuring-related and
other charges that may be incurred in future periods. The Company
is not able to provide a full reconciliation of these non-U.S. GAAP
financial measures to U.S. GAAP as it is not known at this time if
and when any such charges may be incurred in the future.
Accordingly, a reconciliation of the Company's non-U.S. GAAP based
financial measure guidance to the most directly comparable U.S.
GAAP measures cannot be provided at this time given the uncertain
nature of any such potential charges that may be incurred in future
periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250205605866/en/
Investor Relations: Corinna Van der Ghinst ir@ralphlauren.com Or
Corporate Communications rl-press@ralphlauren.com
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