Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2020 Results
- Strengthened Balance Sheet and Near-Term Liquidity with over
$2 Billion in Cash & Investments and Key Expense Reduction Actions - Solid Underlying Progress on the Company’s Next Great Chapter Plan in the Fourth Quarter and Fiscal 2020, Excluding COVID-19 and Hong Kong-Related Business Disruptions
- Fourth Quarter Average Unit Retail Increased 8% Driven by Ongoing Brand Elevation and Quality of Sales Initiatives
For Fiscal 2020, earnings per diluted share was
“For more than 50 years, we have embraced the idea of timelessness - it defines not only our products but our business and our culture. It has guided us through the best and the worst of times and will carry us through this unprecedented challenge too,” said
“From the onset of COVID-19, our teams moved quickly around the world to protect the safety and well-being of our employees, consumers, and communities, while also taking steps to ensure our long-term financial health and bring relevant digital commerce and experiences to our consumers,” said
COVID-19-Related Business Actions
From the onset of the global COVID-19 pandemic, our priority has been to ensure the safety and well-being of our employees, consumers and the communities in which we operate around the world. Taking into account the guidance of local governments and global health organizations, we previously announced several actions in response to the pandemic, including:
- Employee Support. We took steps from the start of the crisis to protect our teams including freezing all travel, asking employees to work from home, deploying deep cleanings in all work locations and implementing staggered work schedules in our distribution centers. We continue to offer our teams, including those placed on furlough, access to our
Employee Relief Fund , which provides grants toRalph Lauren employees facing special circumstances and financial hardships during this time, including medical, eldercare or childcare needs. - Giving Back.
The Ralph Lauren Corporate Foundation committed$10 million toward emergency COVID-19 relief, with funds allocated to theWorld Health Organization , our longstanding partners in cancer care,Employee Relief Fund for Ralph Lauren employees, and theCouncil of Fashion Designers of America (CFDA) /Vogue Fashion Fund for COVID-19 relief. In addition, the Company announced the production of 250,000 masks and 25,000 isolation gowns for donation to workers on the front lines, in partnership with ourU.S. manufacturing partners. The Company is also donating 1.5 million clothing products to support hundreds of thousands of frontline workers and families in need around the world through charity networks as well as many of the Company’s long-standing Pink Pony partners focused on cancer care. - Executive Compensation. Our Executive Chairman and Chief Creative Officer,
Ralph Lauren , will forego his entire salary for Fiscal Year 2021 in addition to his full Fiscal Year 2020 bonus. Our President & Chief Executive Officer,Patrice Louvet , will reduce his salary by 50% during the crisis. Every other member of the Executive and Global Leadership Team, a group of 140 business leaders across the Company, will reduce their salaries by 20% for the first quarter of Fiscal 2021. Lastly, our Board of Directors will forego their quarterly cash compensation for the first quarter of Fiscal 2021. - Employee Furloughs and Compensation. The majority of our store employees in
North America ,Europe , and other parts of the world were paid at their normal compensation from the time store closures went into effect in mid-March throughApril 11, 2020 . Subsequent to that date, a substantial portion of our store employees and a portion of our corporate employees were placed on unpaid temporary furlough, with benefits including healthcare. International store employees in regions where retail operations remain closed will receive compensation as guided by local governments and authorities. - Temporary Store Closures. Since the start of the pandemic, we closed a substantial number of stores across each of our reportable regions. We are assessing reopenings on a location-by-location basis, as guided by local governments and health authorities. We have also reopened approximately two thirds of our stores in
Europe and nearly half of our stores inNorth America through the last half of May. As we reopen stores, we are implementing new health and safety protocols and required training for all store employees before returning to work, along with new ways of engaging with consumers. - Online Operations. Our digital flagship businesses and fulfillment operations resumed following a brief closure period in late March to enhance health and safety protocols in our distribution centers. We continue to adhere to health protocols in our distribution centers including extensive deep cleanings, social distancing and staggered work shifts and break schedules. As consumers increasingly embrace omni-channel retailing, we are bolstering our connected retailing capabilities including digital clienteling, Buy Online Ship From Store, Buy Online Pick Up From Store, curbside pickup, and other initiatives.
- Balance Sheet and Liquidity Considerations. In addition to a robust balance sheet going into the pandemic, the Company has taken further preemptive actions to preserve cash and strengthen its liquidity while navigating the evolving global pandemic, including: careful management of expenses; reduced or delayed capital expenditures and inventory commitments; drawing down
$475 million from the Company’s Global Credit Facility to bolster cash balances; halting any incremental share repurchases during the COVID-19 crisis; and temporary suspension of the Company’s quarterly cash dividend. - Supplier Payments. Our suppliers around the world are another critical stakeholder for our Company. In accordance with our responsible purchasing practices, we committed to settling payment for all finished goods and goods already in production.
Key Achievements in Fiscal 2020
We delivered across the following strategic initiatives in the fourth quarter and full year Fiscal 2020:
Win Over a New Generation of Consumers- Marketing investments increased 3% to last year in Fiscal 2020 in constant currency, driven by unique and engaging brand building campaigns and social media activations including Ralph's Club Fashion Show,
Wimbledon and US Open Partnerships, Earth Polo launch, and our Holiday campaigns - As consumer priorities and behavior shifted in the fourth quarter due to the spread of COVID-19 across each of our key regions, we focused our communication on more socially-relevant topics including our philanthropic investments; we also pivoted to highlight relevant categories like loungewear and home, which successfully drove increased consumer engagement
- Marketing investments increased 3% to last year in Fiscal 2020 in constant currency, driven by unique and engaging brand building campaigns and social media activations including Ralph's Club Fashion Show,
- Energize Core Products and Accelerate Under-Developed Categories
- Average unit retail across our direct-to-consumer network grew 8% in the fourth quarter and 3% for full year Fiscal 2020 driven by our ongoing initiatives to elevate our product assortment, improve quality of sales, and drive targeted price increases
- Continued to build our high-potential under-developed categories, with ongoing momentum led by outerwear and denim
- Drive Targeted Expansion in Our Regions and Channels
- Expanded our global distribution with 25 net new stores and concessions globally and partnered with over 40 new digital pure players as part of our ecosystem approach of high productivity, small-format stores and digital commerce
- Strong continued momentum in Chinese mainland, with Fiscal 2020 sales up double-digits to last year in constant currency, despite declines in the fourth quarter due to COVID-19
- Encouraging recent path to recovery in Chinese mainland and
Korea , with strong digital growth in the fourth quarter and a return to positive sales growth in mainlandChina in early May
- Lead with Digital
- Global digital revenue grew high-single digits to last year in constant currency in Fiscal 2020, led by strong double-digit growth in
Asia andEurope - Continued to invest in digital partnerships and capabilities, including: launch of localized digital sites in
Europe , innovative new omni-channel functionality, and expansion into new digital distribution platforms including rental, subscription, resale, and social commerce, with the recent launch of Instagram Checkout
- Global digital revenue grew high-single digits to last year in constant currency in Fiscal 2020, led by strong double-digit growth in
- Operate with Discipline to Fuel Growth
- Maintained balance sheet strength with
$2.1 billion in cash and investments, providing ample near-term liquidity - Inventories declined 10% at the end of Fiscal 2020, reflecting a higher level of inventory reserves to keep inventories current and healthy across our distribution channels
- Successfully completed the consolidation of our corporate real estate footprint in
New York andNew Jersey , driving cost savings and enhanced collaboration among our teams
- Maintained balance sheet strength with
Fourth Quarter Fiscal 2020 Income Statement Review
Net Revenue. In the fourth quarter of Fiscal 2020, revenue declined 15% to
Revenue performance for the Company’s reportable segments in the fourth quarter compared to the prior year period was as follows:
- North America Revenue.
North America revenue in the fourth quarter decreased 11% to$629 million , including adverse impacts related to COVID-19 business disruptions across distribution channels.North America wholesale revenue was down 12% to last year. In retail, comparable store sales inNorth America were down 13%, including a 15% decline in brick and mortar stores and a 7% decrease in digital commerce. - Europe Revenue.
Europe revenue in the fourth quarter decreased 19% to$353 million on a reported basis and decreased 16% to last year in constant currency, reflecting adverse impacts related to COVID-19 business disruptions across channels. In retail, comparable store sales inEurope were down 16% on a constant currency basis, driven by an 18% decrease in brick and mortar stores and a 2% decrease in digital commerce.Europe wholesale revenue decreased 21% on a reported basis and decreased 18% in constant currency. - Asia Revenue.
Asia revenue in the fourth quarter decreased 22% to$214 million on a reported basis and decreased 21% in constant currency, including adverse impacts related to COVID-19 andHong Kong protest business disruptions. Comparable store sales inAsia decreased 23% in constant currency, with a 15% increase in digital commerce operations more than offset by brick and mortar declines during the period due to COVID-19-related store closures.
Gross Profit. Gross profit for the fourth quarter of Fiscal 2020 was
Operating Expenses. Operating expenses in the fourth quarter of Fiscal 2020 were
Adjusted operating expense rate was 62.5%, compared to 53.8% in the prior year period, excluding restructuring-related and other charges, primarily due to fixed expense deleverage.
Operating Income. Operating loss for the fourth quarter of Fiscal 2020 was
- North America Operating Income.
North America operating loss in the fourth quarter was$74 million on a reported basis and$69 million on an adjusted basis.Adjusted North America operating margin was 10.9%, compared to adjusted operating margin of 15.9% for the fourth quarter of Fiscal 2019. - Europe Operating Income.
Europe operating income in the fourth quarter was$4 million on a reported basis and$49 million on an adjusted basis. AdjustedEurope operating margin was 13.8%, compared to 23.6% for the fourth quarter of Fiscal 2019. Foreign currency negatively impacted adjusted operating margin rate by 90 basis points in the fourth quarter. - Asia Operating Income.
Asia operating loss in the fourth quarter was$11 million on a reported basis. On an adjusted basis,Asia operating income was$8 million . AdjustedAsia operating margin was 3.5%, compared to 14.3% for the fourth quarter of Fiscal 2019. Foreign currency negatively impacted adjusted operating margin rate by 10 basis points in the fourth quarter.
Net Income and EPS. On a reported basis, net loss in the fourth quarter of Fiscal 2020 was
In the fourth quarter of Fiscal 2020, the Company had an effective tax rate of approximately 13% on a reported basis and (28%) on an adjusted basis, excluding restructuring-related and other charges. This compared to a reported and adjusted effective tax rate of approximately 11% and 18%, respectively, in the prior year period.
Full Year Fiscal 2020 Income Statement Review
Net Revenues. For Fiscal 2020, revenue decreased 2% to
- North America Revenue. For Fiscal 2020,
North America revenue decreased 2% on a reported basis to$3.1 billion . - Europe Revenue. For Fiscal 2020,
Europe revenue decreased 3% to$1.6 billion on a reported basis. In constant currency, revenue increased 1%. - Asia Revenue. For Fiscal 2020,
Asia revenue decreased 2% to$1.0 billion on a reported basis. In constant currency, revenue decreased 1%.
Gross Profit. Gross profit for Fiscal 2020 was
Operating Expenses. For Fiscal 2020, operating expenses were
Operating Income. Operating income for Fiscal 2020 was
- North America Operating Income.
North America operating income in Fiscal 2020 was$487 million and operating margin was 15.5% on a reported basis, including restructuring-related and other charges. On an adjusted basis,North America operating income in Fiscal 2020 was$630 million and operating margin was 20.1% compared to adjusted operating margin of 21.5% in Fiscal 2019. - Europe Operating Income.
Europe operating income in Fiscal 2020 was$336 million and operating margin was 20.6% on a reported basis, including restructuring-related and other charges. On an adjusted basis,Europe operating income in Fiscal 2020 was$381 million and operating margin was 23.3%, compared to adjusted operating margin of 23.9% in Fiscal 2019. - Asia Operating Income.
Asia operating income in Fiscal 2020 was$125 million and operating margin was 12.3% on a reported basis, including restructuring-related and other charges. On an adjusted basis,Asia operating income in Fiscal 2020 was$147 million and operating margin was 14.4%, compared to adjusted operating margin of 16.0% in Fiscal 2019.
Net Income and EPS. In Fiscal 2020, on a reported basis, net income was
For Fiscal 2020, the Company had an effective tax rate of approximately (18%) on a reported basis and 22% on an adjusted basis, excluding restructuring-related and other charges. This compared to a reported and adjusted effective tax rate of approximately 26% and 21%, respectively, in the prior year.
Balance Sheet and Cash Flow Review
The Company ended Fiscal 2020 with
Inventory at the end of Fiscal 2020 was
The Company had
Prior to the COVID-19 crisis, the Company repurchased approximately
Full Year Fiscal 2021 and First Quarter Outlook
Due to the high level of uncertainty and evolving situation surrounding COVID-19, we are suspending all future guidance.
We expect our financial results for both periods to be significantly negatively impacted by the pandemic. Though the timing and path of recovery in each market presents many uncertainties, we have developed scenarios through which we plan to safely return our businesses to growth and value creation.
Conference Call
As previously announced, the Company will host a conference call and live online webcast today,
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
ABOUT
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made from time to time by representatives of the Company, may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about the Company’s future results and financial condition, revenues, store openings and closings, employee reductions, margins, expenses, earnings, and citizenship and sustainability goals and are indicated by words or phrases such as “anticipate,” “outlook,” “estimate,” “expect,” “project,” “believe,” “envision,” “can,” “will,” “goal,” “target,” and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements. Forward-looking statements are based largely on the Company’s expectations and judgments and are subject to certain risks and uncertainties, many of which are unforeseeable and beyond our control. The factors that could cause actual results to materially differ include, among others: the loss of key personnel, including Mr.
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CONSOLIDATED BALANCE SHEETS |
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Prepared in accordance with |
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(Audited) |
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(millions) |
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ASSETS |
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Current assets: |
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|
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Cash and cash equivalents |
|
$ |
1,620.4 |
|
|
$ |
584.1 |
|
Short-term investments |
|
495.9 |
|
|
1,403.4 |
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Accounts receivable, net of allowances |
|
277.1 |
|
|
398.1 |
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Inventories |
|
736.2 |
|
|
817.8 |
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Income tax receivable |
|
84.8 |
|
|
32.1 |
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Prepaid expenses and other current assets |
|
160.8 |
|
|
359.3 |
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Total current assets |
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3,375.2 |
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|
3,594.8 |
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Property and equipment, net |
|
979.5 |
|
|
1,039.2 |
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Operating lease right-of-use assets |
|
1,511.6 |
|
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— |
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Deferred tax assets |
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245.2 |
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67.0 |
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|
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915.5 |
|
|
919.6 |
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Intangible assets, net |
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141.0 |
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|
163.7 |
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Other non-current assets(a) |
|
111.9 |
|
|
158.5 |
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Total assets |
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$ |
7,279.9 |
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$ |
5,942.8 |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Short-term debt |
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$ |
475.0 |
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$ |
— |
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Current portion of long-term debt |
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299.6 |
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— |
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Accounts payable |
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246.8 |
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|
202.3 |
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Income tax payable |
|
65.1 |
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|
29.4 |
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Current operating lease liabilities |
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288.4 |
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— |
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Accrued expenses and other current liabilities |
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717.1 |
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|
968.4 |
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Total current liabilities |
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2,092.0 |
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1,200.1 |
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Long-term debt |
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396.4 |
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689.1 |
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Long-term operating lease liabilities |
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1,568.3 |
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— |
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Income tax payable |
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132.7 |
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|
146.7 |
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Non-current liability for unrecognized tax benefits |
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88.9 |
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|
78.8 |
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Other non-current liabilities |
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308.5 |
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540.9 |
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Total liabilities |
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4,586.8 |
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|
2,655.6 |
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Equity: |
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Common stock |
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1.3 |
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1.3 |
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Additional paid-in-capital |
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2,594.4 |
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2,493.8 |
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Retained earnings |
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5,994.0 |
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|
5,979.1 |
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|
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(5,778.4 |
) |
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(5,083.6 |
) |
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Accumulated other comprehensive loss |
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(118.2 |
) |
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(103.4 |
) |
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Total equity |
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2,693.1 |
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3,287.2 |
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Total liabilities and equity |
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$ |
7,279.9 |
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$ |
5,942.8 |
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|
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$ |
945.3 |
|
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$ |
1,343.3 |
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Cash & Investments (ST & LT) |
|
2,116.3 |
|
|
2,032.4 |
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|
|
945.3 |
|
|
1,298.4 |
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Cash & ST Investments |
|
2,116.3 |
|
|
1,987.5 |
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|
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(a) Includes non-current investments of: |
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$ |
— |
|
|
$ |
44.9 |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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Prepared in accordance with |
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(Unaudited) |
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Three Months Ended |
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(millions, except per share data) |
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$ |
629.3 |
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$ |
708.4 |
|
|
|
353.4 |
|
|
438.0 |
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|
|
213.7 |
|
|
273.5 |
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Other non-reportable segments |
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77.7 |
|
|
85.8 |
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Net revenues |
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1,274.1 |
|
|
1,505.7 |
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Cost of goods sold |
|
(679.7 |
) |
|
(604.2 |
) |
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Gross profit |
|
594.4 |
|
|
901.5 |
|
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Selling, general, and administrative expenses |
|
(852.2 |
) |
|
(809.4 |
) |
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Impairment of assets |
|
(9.9 |
) |
|
(12.5 |
) |
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Restructuring and other charges |
|
(16.1 |
) |
|
(51.7 |
) |
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Total other operating expenses, net |
|
(878.2 |
) |
|
(873.6 |
) |
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Operating income (loss) |
|
(283.8 |
) |
|
27.9 |
|
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Interest expense |
|
(4.8 |
) |
|
(5.1 |
) |
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Interest income |
|
5.9 |
|
|
11.3 |
|
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Other income (expense), net |
|
(4.5 |
) |
|
1.2 |
|
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Income (loss) before income taxes |
|
(287.2 |
) |
|
35.3 |
|
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Income tax benefit (provision) |
|
38.2 |
|
|
(3.7 |
) |
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Net income (loss) |
|
$ |
(249.0 |
) |
|
$ |
31.6 |
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Net income (loss) per common share: |
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Basic |
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$ |
(3.38 |
) |
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$ |
0.40 |
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Diluted |
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$ |
(3.38 |
) |
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$ |
0.39 |
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Weighted average common shares outstanding: |
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Basic |
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73.7 |
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|
79.0 |
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Diluted |
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73.7 |
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|
80.1 |
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Dividends declared per share |
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$ |
0.6875 |
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$ |
0.625 |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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Prepared in accordance with |
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(Audited) |
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Twelve Months Ended |
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(millions, except per share data) |
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$ |
3,140.5 |
|
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$ |
3,202.9 |
|
|
|
1,632.2 |
|
|
1,683.0 |
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|
|
1,017.2 |
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|
1,041.0 |
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Other non-reportable segments |
|
369.9 |
|
|
386.1 |
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Net revenues |
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6,159.8 |
|
|
6,313.0 |
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Cost of goods sold |
|
(2,506.5 |
) |
|
(2,427.0 |
) |
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Gross profit |
|
3,653.3 |
|
|
3,886.0 |
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Selling, general, and administrative expenses |
|
(3,237.5 |
) |
|
(3,168.3 |
) |
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Impairment of assets |
|
(31.6 |
) |
|
(25.8 |
) |
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Restructuring and other charges |
|
(67.2 |
) |
|
(130.1 |
) |
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Total other operating expenses, net |
|
(3,336.3 |
) |
|
(3,324.2 |
) |
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Operating income |
|
317.0 |
|
|
561.8 |
|
||
Interest expense |
|
(17.6 |
) |
|
(20.7 |
) |
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Interest income |
|
34.4 |
|
|
40.8 |
|
||
Other income (expense), net |
|
(7.4 |
) |
|
0.6 |
|
||
Income before income taxes |
|
326.4 |
|
|
582.5 |
|
||
Income tax benefit (provision) |
|
57.9 |
|
|
(151.6 |
) |
||
Net income |
|
$ |
384.3 |
|
|
$ |
430.9 |
|
Net income per common share: |
|
|
|
|
||||
Basic |
|
$ |
5.07 |
|
|
$ |
5.35 |
|
Diluted |
|
$ |
4.98 |
|
|
$ |
5.27 |
|
Weighted average common shares outstanding: |
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|
|
|
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Basic |
|
75.8 |
|
|
80.6 |
|
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Diluted |
|
77.2 |
|
|
81.7 |
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Dividends declared per share |
|
$ |
2.75 |
|
|
$ |
2.50 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Prepared in accordance with |
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(Audited) |
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|
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Twelve Months Ended |
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(millions) |
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Cash flows from operating activities: |
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|
|
|
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Net income |
|
$ |
384.3 |
|
|
$ |
430.9 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization expense |
|
269.5 |
|
|
281.3 |
|
||
Deferred income tax expense (benefit) |
|
(168.8 |
) |
|
8.5 |
|
||
Loss on sale of property |
|
— |
|
|
11.6 |
|
||
Non-cash stock-based compensation expense |
|
100.6 |
|
|
88.6 |
|
||
Non-cash impairment of assets, including equity method investment |
|
38.7 |
|
|
25.8 |
|
||
Bad debt expense |
|
58.7 |
|
|
0.4 |
|
||
Other non-cash charges |
|
(2.3 |
) |
|
6.5 |
|
||
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
57.6 |
|
|
10.1 |
|
||
Inventories |
|
72.3 |
|
|
(83.6 |
) |
||
Prepaid expenses and other current assets |
|
58.2 |
|
|
(40.5 |
) |
||
Accounts payable and accrued liabilities |
|
(64.3 |
) |
|
(4.7 |
) |
||
Income tax receivables and payables |
|
(42.5 |
) |
|
29.7 |
|
||
Deferred income |
|
— |
|
|
(16.5 |
) |
||
Other balance sheet changes |
|
(7.4 |
) |
|
35.7 |
|
||
Net cash provided by operating activities |
|
754.6 |
|
|
783.8 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Capital expenditures |
|
(270.3 |
) |
|
(197.7 |
) |
||
Purchases of investments |
|
(1,289.7 |
) |
|
(3,030.8 |
) |
||
Proceeds from sales and maturities of investments |
|
2,240.4 |
|
|
2,357.5 |
|
||
Acquisitions and ventures |
|
0.9 |
|
|
(4.5 |
) |
||
Proceeds from sale of property |
|
20.8 |
|
|
20.0 |
|
||
Settlement of net investment hedges |
|
— |
|
|
(23.8 |
) |
||
Net cash provided by (used in) investing activities |
|
702.1 |
|
|
(879.3 |
) |
||
Cash flows from financing activities: |
|
|
|
|
||||
Proceeds from credit facilities |
|
475.0 |
|
|
— |
|
||
Repayments of borrowings on credit facilities |
|
— |
|
|
(9.9 |
) |
||
Proceeds from the issuance of long-term debt |
|
— |
|
|
398.1 |
|
||
Repayments of long-term debt |
|
— |
|
|
(300.0 |
) |
||
Payments of finance lease obligations |
|
(13.6 |
) |
|
(19.6 |
) |
||
Payments of dividends |
|
(203.9 |
) |
|
(190.7 |
) |
||
Repurchases of common stock, including shares surrendered for tax withholdings |
|
(694.8 |
) |
|
(502.6 |
) |
||
Proceeds from exercise of stock options |
|
— |
|
|
21.8 |
|
||
Other financing activities |
|
(0.9 |
) |
|
(2.8 |
) |
||
Net cash used in financing activities |
|
(438.2 |
) |
|
(605.7 |
) |
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(15.2 |
) |
|
(27.8 |
) |
||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
1,003.3 |
|
|
(729.0 |
) |
||
Cash, cash equivalents, and restricted cash at beginning of period |
|
626.5 |
|
|
1,355.5 |
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
1,629.8 |
|
|
$ |
626.5 |
|
|
||||||||||||||||
SEGMENT INFORMATION |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Effective beginning in the first quarter of Fiscal 2020, operating results related to the Company's business in |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(millions) |
||||||||||||||
Net revenues: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
629.3 |
|
|
$ |
708.4 |
|
|
$ |
3,140.5 |
|
|
$ |
3,202.9 |
|
|
|
353.4 |
|
|
438.0 |
|
|
1,632.2 |
|
|
1,683.0 |
|
||||
|
|
213.7 |
|
|
273.5 |
|
|
1,017.2 |
|
|
1,041.0 |
|
||||
Other non-reportable segments |
|
77.7 |
|
|
85.8 |
|
|
369.9 |
|
|
386.1 |
|
||||
Total net revenues |
|
$ |
1,274.1 |
|
|
$ |
1,505.7 |
|
|
$ |
6,159.8 |
|
|
$ |
6,313.0 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
(73.9 |
) |
|
$ |
108.8 |
|
|
$ |
486.6 |
|
|
$ |
682.8 |
|
|
|
4.4 |
|
|
98.6 |
|
|
336.3 |
|
|
392.8 |
|
||||
|
|
(10.8 |
) |
|
37.7 |
|
|
124.8 |
|
|
161.0 |
|
||||
Other non-reportable segments |
|
— |
|
|
23.1 |
|
|
85.2 |
|
|
118.7 |
|
||||
|
|
(80.3 |
) |
|
268.2 |
|
|
1,032.9 |
|
|
1,355.3 |
|
||||
Unallocated corporate expenses |
|
(187.4 |
) |
|
(188.6 |
) |
|
(648.7 |
) |
|
(663.4 |
) |
||||
Unallocated restructuring and other charges |
|
(16.1 |
) |
|
(51.7 |
) |
|
(67.2 |
) |
|
(130.1 |
) |
||||
Total operating income |
|
$ |
(283.8 |
) |
|
$ |
27.9 |
|
|
$ |
317.0 |
|
|
$ |
561.8 |
|
|
||||||||||||||
CONSTANT CURRENCY FINANCIAL MEASURES |
||||||||||||||
(Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
Comparable Store Sales Data |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
||||||
|
|
% Change |
|
% Change |
|
|
|
|
||||||
|
|
Constant Currency |
|
Constant Currency |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
(7 |
%) |
|
1 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(15 |
%) |
|
(1 |
%) |
|
|
|
|
||||
|
|
(13 |
%) |
|
— |
% |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
(2 |
%) |
|
11 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(18 |
%) |
|
(2 |
%) |
|
|
|
|
||||
Total |
|
(16 |
%) |
|
(1 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
15 |
% |
|
22 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(24 |
%) |
|
(5 |
%) |
|
|
|
|
||||
Total |
|
(23 |
%) |
|
(4 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
(17 |
%) |
|
(2 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
Operating Segment Net Revenues Data |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
|
% Change |
||||||||||
|
|
|
|
|
|
As |
|
Constant |
||||||
|
|
(millions) |
|
|
|
|
||||||||
|
|
$ |
629.3 |
|
|
$ |
708.4 |
|
|
(11.2 |
%) |
|
(11.2 |
%) |
|
|
353.4 |
|
|
438.0 |
|
|
(19.3 |
%) |
|
(16.5 |
%) |
||
|
|
213.7 |
|
|
273.5 |
|
|
(21.9 |
%) |
|
(20.8 |
%) |
||
Other non-reportable segments |
|
77.7 |
|
|
85.8 |
|
|
(9.5 |
%) |
|
(9.3 |
%) |
||
Net revenues |
|
$ |
1,274.1 |
|
|
$ |
1,505.7 |
|
|
(15.4 |
%) |
|
(14.3 |
%) |
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
Twelve Months Ended |
|
% Change |
||||||||||
|
|
|
|
|
|
As |
|
Constant |
||||||
|
|
(millions) |
|
|
|
|
||||||||
|
|
$ |
3,140.5 |
|
|
$ |
3,202.9 |
|
|
(2.0 |
%) |
|
(1.9 |
%) |
|
|
1,632.2 |
|
|
1,683.0 |
|
|
(3.0 |
%) |
|
0.8 |
% |
||
|
|
1,017.2 |
|
|
1,041.0 |
|
|
(2.3 |
%) |
|
(1.2 |
%) |
||
Other non-reportable segments |
|
369.9 |
|
|
386.1 |
|
|
(4.2 |
%) |
|
(4.1 |
%) |
||
Net revenues |
|
$ |
6,159.8 |
|
|
$ |
6,313.0 |
|
|
(2.4 |
%) |
|
(1.2 |
%) |
|
||||||||||||||||||||||||||||||||||||||||
NET REVENUES BY SALES CHANNEL |
||||||||||||||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
|
North America |
|
|
|
|
|
Other |
|
Total |
|
North America |
|
|
|
|
|
Other |
|
Total |
||||||||||||||||||||
|
|
(millions) |
||||||||||||||||||||||||||||||||||||||
Sales Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail |
|
$ |
291.3 |
|
|
$ |
160.3 |
|
|
$ |
194.1 |
|
|
$ |
32.2 |
|
|
$ |
677.9 |
|
|
$ |
322.4 |
|
|
$ |
192.2 |
|
|
$ |
250.6 |
|
|
$ |
42.7 |
|
|
$ |
807.9 |
|
Wholesale |
|
338.0 |
|
|
193.1 |
|
|
19.6 |
|
|
4.2 |
|
|
554.9 |
|
|
386.0 |
|
|
245.8 |
|
|
22.9 |
|
|
1.5 |
|
|
656.2 |
|
||||||||||
Licensing |
|
— |
|
|
— |
|
|
— |
|
|
41.3 |
|
|
41.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
41.6 |
|
|
41.6 |
|
||||||||||
Net revenues |
|
$ |
629.3 |
|
|
$ |
353.4 |
|
|
$ |
213.7 |
|
|
$ |
77.7 |
|
|
$ |
1,274.1 |
|
|
$ |
708.4 |
|
|
$ |
438.0 |
|
|
$ |
273.5 |
|
|
$ |
85.8 |
|
|
$ |
1,505.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Twelve Months Ended |
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
|
North America |
|
|
|
|
|
Other |
|
Total |
|
North America |
|
|
|
|
|
Other |
|
Total |
||||||||||||||||||||
|
|
(millions) |
||||||||||||||||||||||||||||||||||||||
Sales Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail |
|
$ |
1,727.3 |
|
|
$ |
874.6 |
|
|
$ |
948.0 |
|
|
$ |
191.0 |
|
|
$ |
3,740.9 |
|
|
$ |
1,688.5 |
|
|
$ |
881.1 |
|
|
$ |
969.9 |
|
|
$ |
208.3 |
|
|
$ |
3,747.8 |
|
Wholesale |
|
1,413.2 |
|
|
757.6 |
|
|
69.2 |
|
|
10.8 |
|
|
2,250.8 |
|
|
1,514.4 |
|
|
801.9 |
|
|
71.1 |
|
|
5.1 |
|
|
2,392.5 |
|
||||||||||
Licensing |
|
— |
|
|
— |
|
|
— |
|
|
168.1 |
|
|
168.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
172.7 |
|
|
172.7 |
|
||||||||||
Net revenues |
|
$ |
3,140.5 |
|
|
$ |
1,632.2 |
|
|
$ |
1,017.2 |
|
|
$ |
369.9 |
|
|
$ |
6,159.8 |
|
|
$ |
3,202.9 |
|
|
$ |
1,683.0 |
|
|
$ |
1,041.0 |
|
|
$ |
386.1 |
|
|
$ |
6,313.0 |
|
|
||||
GLOBAL RETAIL STORE NETWORK |
||||
(Unaudited) |
||||
|
|
|
||
|
|
|
||
|
|
|
||
|
41 |
41 |
||
Polo Factory Stores |
189 |
183 |
||
Total Directly Operated Stores |
230 |
224 |
||
Concessions |
2 |
2 |
||
|
|
|
||
|
|
|
||
|
30 |
23 |
||
Polo Factory Stores |
64 |
64 |
||
Total Directly Operated Stores |
94 |
87 |
||
Concessions |
29 |
29 |
||
|
|
|
||
|
|
|
||
|
67 |
57 |
||
Polo Factory Stores |
65 |
58 |
||
Total Directly Operated Stores |
132 |
115 |
||
Concessions |
619 |
622 |
||
|
|
|
||
Other |
|
|
||
Club Monaco Stores |
74 |
75 |
||
Club Monaco Concessions |
4 |
5 |
||
|
|
|
||
Global Directly Operated Stores and Concessions |
|
|
||
|
138 |
121 |
||
Polo Factory Stores |
318 |
305 |
||
Club Monaco Stores |
74 |
75 |
||
Total Directly Operated Stores |
530 |
501 |
||
Concessions |
654 |
658 |
||
|
|
|
||
Global Licensed Stores and Concessions |
|
|
||
Total Licensed Stores and Concessions |
250 |
261 |
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Three Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total |
|
As |
||||||
|
|
(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): |
|
|
|
|
|
|
||||||
|
|
$ |
(73.9 |
) |
|
$ |
142.8 |
|
|
$ |
68.9 |
|
Operating margin |
|
(11.7 |
%) |
|
|
|
10.9 |
% |
||||
|
|
4.4 |
|
|
44.6 |
|
|
49.0 |
|
|||
Operating margin |
|
1.2 |
% |
|
|
|
13.8 |
% |
||||
|
|
(10.8 |
) |
|
18.4 |
|
|
7.6 |
|
|||
Operating margin |
|
(5.1 |
%) |
|
|
|
3.5 |
% |
||||
Other non-reportable segments |
|
— |
|
|
18.8 |
|
|
18.8 |
|
|||
Operating margin |
|
— |
% |
|
|
|
24.2 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(203.5 |
) |
|
16.3 |
|
|
(187.2 |
) |
|||
Total operating loss |
|
$ |
(283.8 |
) |
|
$ |
240.9 |
|
|
$ |
(42.9 |
) |
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Twelve Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total |
|
As |
||||||
|
|
(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: |
|
|
|
|
|
|
||||||
|
|
$ |
486.6 |
|
|
$ |
143.2 |
|
|
$ |
629.8 |
|
Operating margin |
|
15.5 |
% |
|
|
|
20.1 |
% |
||||
|
|
336.3 |
|
|
44.7 |
|
|
381.0 |
|
|||
Operating margin |
|
20.6 |
% |
|
|
|
23.3 |
% |
||||
|
|
124.8 |
|
|
21.7 |
|
|
146.5 |
|
|||
Operating margin |
|
12.3 |
% |
|
|
|
14.4 |
% |
||||
Other non-reportable segments |
|
85.2 |
|
|
31.2 |
|
|
116.4 |
|
|||
Operating margin |
|
23.0 |
% |
|
|
|
31.4 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(715.9 |
) |
|
73.9 |
|
|
(642.0 |
) |
|||
Total operating income |
|
$ |
317.0 |
|
|
$ |
314.7 |
|
|
$ |
631.7 |
|
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Three Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total |
|
As |
||||||
|
|
(millions, except per share data) |
||||||||||
Net revenues |
|
$ |
1,505.7 |
|
|
$ |
— |
|
|
$ |
1,505.7 |
|
Gross profit |
|
901.5 |
|
|
4.1 |
|
|
905.6 |
|
|||
Gross profit margin |
|
59.9 |
% |
|
|
|
60.1 |
% |
||||
Total other operating expenses, net |
|
(873.6 |
) |
|
64.2 |
|
|
(809.4 |
) |
|||
Operating expense margin |
|
58.0 |
% |
|
|
|
53.8 |
% |
||||
Operating income |
|
27.9 |
|
|
68.3 |
|
|
96.2 |
|
|||
Operating margin |
|
1.9 |
% |
|
|
|
6.4 |
% |
||||
Other non-operating income, net |
|
7.4 |
|
|
— |
|
|
7.4 |
|
|||
Income before income taxes |
|
35.3 |
|
|
68.3 |
|
|
103.6 |
|
|||
Income tax provision |
|
(3.7 |
) |
|
(14.5 |
) |
|
(18.2 |
) |
|||
Effective tax rate |
|
10.6 |
% |
|
|
|
17.5 |
% |
||||
Net income |
|
$ |
31.6 |
|
|
$ |
53.8 |
|
|
$ |
85.4 |
|
Net income per diluted common share |
|
$ |
0.39 |
|
|
|
|
$ |
1.07 |
|
||
Weighted average common shares outstanding - Diluted |
|
80.1 |
|
|
|
|
80.1 |
|
||||
|
|
|
|
|
|
|
||||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||
|
|
$ |
108.8 |
|
|
$ |
3.6 |
|
|
$ |
112.4 |
|
Operating margin |
|
15.4 |
% |
|
|
|
15.9 |
% |
||||
|
|
98.6 |
|
|
5.0 |
|
|
103.6 |
|
|||
Operating margin |
|
22.5 |
% |
|
|
|
23.6 |
% |
||||
|
|
37.7 |
|
|
1.5 |
|
|
39.2 |
|
|||
Operating margin |
|
13.8 |
% |
|
|
|
14.3 |
% |
||||
Other non-reportable segments |
|
23.1 |
|
|
1.2 |
|
|
24.3 |
|
|||
Operating margin |
|
26.8 |
% |
|
|
|
28.2 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(240.3 |
) |
|
57.0 |
|
|
(183.3 |
) |
|||
Total operating income |
|
$ |
27.9 |
|
|
$ |
68.3 |
|
|
$ |
96.2 |
|
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Twelve Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total Adjustments(a)(e) |
|
As Adjusted |
||||||
|
|
(millions, except per share data) |
||||||||||
Net revenues |
|
$ |
6,313.0 |
|
|
$ |
— |
|
|
$ |
6,313.0 |
|
Gross profit |
|
3,886.0 |
|
|
7.2 |
|
|
3,893.2 |
|
|||
Gross profit margin |
|
61.6 |
% |
|
|
|
61.7 |
% |
||||
Total other operating expenses, net |
|
(3,324.2 |
) |
|
155.9 |
|
|
(3,168.3 |
) |
|||
Operating expense margin |
|
52.7 |
% |
|
|
|
50.2 |
% |
||||
Operating income |
|
561.8 |
|
|
163.1 |
|
|
724.9 |
|
|||
Operating margin |
|
8.9 |
% |
|
|
|
11.5 |
% |
||||
Other non-operating income, net |
|
20.7 |
|
|
— |
|
|
20.7 |
|
|||
Income before income taxes |
|
582.5 |
|
|
163.1 |
|
|
745.6 |
|
|||
Income tax provision |
|
(151.6 |
) |
|
(6.5 |
) |
|
(158.1 |
) |
|||
Effective tax rate |
|
26.0 |
% |
|
|
|
21.2 |
% |
||||
Net income |
|
$ |
430.9 |
|
|
$ |
156.6 |
|
|
$ |
587.5 |
|
Net income per diluted common share |
|
$ |
5.27 |
|
|
|
|
$ |
7.19 |
|
||
Weighted average common shares outstanding - Diluted |
|
81.7 |
|
|
|
|
81.7 |
|
||||
|
|
|
|
|
|
|
||||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||
|
|
$ |
682.8 |
|
|
$ |
5.0 |
|
|
$ |
687.8 |
|
Operating margin |
|
21.3 |
% |
|
|
|
21.5 |
% |
||||
|
|
392.8 |
|
|
9.9 |
|
|
402.7 |
|
|||
Operating margin |
|
23.3 |
% |
|
|
|
23.9 |
% |
||||
|
|
161.0 |
|
|
5.2 |
|
|
166.2 |
|
|||
Operating margin |
|
15.5 |
% |
|
|
|
16.0 |
% |
||||
Other non-reportable segments |
|
118.7 |
|
|
7.0 |
|
|
125.7 |
|
|||
Operating margin |
|
30.7 |
% |
|
|
|
32.5 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(793.5 |
) |
|
136.0 |
|
|
(657.5 |
) |
|||
Total operating income |
|
$ |
561.8 |
|
|
$ |
163.1 |
|
|
$ |
724.9 |
|
FOOTNOTES TO RECONCILIATION OF NON-
(a) |
Adjustments for inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations. Adjustments for COVID-19-related bad debt expense is recorded within selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations. Adjustments for impairment-related charges are recorded within impairment of assets in the consolidated statements of operations, with the exception of a |
|
|
|
|
(b) |
Adjustments for the three months ended |
|
|
|
|
(c) |
Adjustments for the twelve months ended |
|
|
|
|
(d) |
Adjustments for the three months ended |
|
|
|
|
(e) |
Adjustments for the twelve months ended |
NON-
Since
This earnings release also includes certain other non-
Adjustments made during the fiscal periods presented include charges recorded in connection with the Company’s restructuring plans, as well as certain other charges associated with other non-recurring events, as described in the footnotes to the non-
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