UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 2003
POLO RALPH LAUREN CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 001-13057 13-2622036
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
650 MADISON AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 318-7000
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
2
ITEM 7. EXHIBITS
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release of Polo Ralph Lauren Corporation, dated
August 6, 2003.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 6, 2003, the Registrant reported its results of operations
for its fiscal quarter ended June 28, 2003. A copy of the press release issued
by the Registrant concerning the foregoing results is furnished herewith as
Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K, including the accompanying exhibit,
is being furnished under Item 12 and shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities and Exchange Act of 1934 (the "Exchange
Act"), or otherwise subject to the liability of such section, nor shall such
information be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Exchange Act, regardless of the general
incorporation language of such filing, except as shall be expressly set forth by
specific reference in such filing.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POLO RALPH LAUREN CORPORATION
By: /s/ Gerald M. Chaney
-------------------------------------
Name: Gerald M. Chaney
Title: Senior Vice President of
Finance and Chief Financial
Officer
Date: August 6, 2003
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release of Polo Ralph Lauren Corporation, dated
August 6, 2003.
EXHIBIT 99.1
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Investor Contact: Denise Gillen 212-318-7516
Media Contact: Jim Abernathy 212-371-5999
POLO RALPH LAUREN REPORTS FIRST QUARTER FISCAL 2004 RESULTS
Revenue Increase Driven by 8.3% Positive Comps in Retail
European Consolidation Completed on Schedule
Lauren Launch on Track; Spring 2004 Line to be Unveiled in September
New York, NY (August 6, 2003) - Polo Ralph Lauren Corporation (NYSE: RL) today
reported adjusted net income of $3.6 million, or $0.04 per diluted share, for
the first quarter of Fiscal 2004 ended June 28, 2003, compared to adjusted net
income of $8.7 million, or $0.09 per diluted share, for the comparable year-ago
quarter. First quarter Fiscal 2004 net income under Generally Accepted
Accounting Principles ("GAAP") was $5.1 million, or $0.05 per diluted share,
compared to net income of $6.5 million, or $0.07 per diluted share, for the
first quarter of Fiscal 2003.
For the Fiscal 2004 and Fiscal 2003 quarters, the results are adjusted to
exclude a gain on foreign currency translation of $2.3 million and a loss on
foreign currency translation of $3.5 million, respectively. The Company believes
that these adjusted results provide a more meaningful comparison of its ongoing
operational and financial results. For a full analysis of the adjustments,
please refer to the table reconciliation of GAAP results to adjusted results.
"We are pleased with our strong retail performance, especially in our Ralph
Lauren stores. This is testimony to the strength of our brands, the desirability
of our designs and our growing expertise in specialty retailing. We continue to
expand the Polo Ralph Lauren brands into new markets, countries and shopping
environments creating a truly global company that is about product, design,
quality and growth," said Ralph Lauren, Chairman and Chief Executive Officer.
"We're excited about the opportunities that the Lauren women's business brings
to us. This is a major brand we designed and created eight years ago and built
into the most successful better womenswear line introduced in the past decade.
We are on track with the Lauren Spring 2004 line. We have met with many of our
key retail accounts and the initial reaction has been extremely positive. We are
excited about showing the line to buyers in September. Our customers will
benefit from the upgrades in quality and fabrication we are building into the
line, while we are remaining true to the style and fit they have come to expect
from the brand. We believe that Lauren will be a significant long-term growth
driver for our Company," Mr. Lauren added.
"During the quarter, we continued to make significant progress on our multi-year
initiatives. We completed the European consolidation on time and on budget. Our
new Geneva headquarters opened in June and we began shipping from our new
distribution center in Parma, Italy during the quarter. In addition, we are
pleased with the results from our Japanese business since we increased direct
ownership of this business," said Roger Farah, President and Chief Operating
Officer. "Our continuing investment in common systems moves us further along our
strategy of having an infrastructure to support our global growth plans."
FIRST QUARTER FISCAL 2004 ACHIEVEMENTS
o Assumed operating responsibility for the Lauren brand as a result of
the termination of the Lauren apparel license. In June the Company
announced the leadership team to execute the Lauren business and is on
track to showcase the Spring 2004 line to the wholesale community in
September 2003.
o Completed the consolidation of its European operations on schedule,
including opening a new headquarters office in Geneva, Switzerland and
consolidating the majority of the distribution activities in one
state-of-the-art facility in Parma, Italy. The European consolidation
was a significant step forward in developing a global operating
platform to support long-term growth.
o Delivered double digit retail sales comps at Ralph Lauren and Club
Monaco stores and mid-single digit sales comps in outlet stores.
o Opened the first domestic Ralph Lauren baby store in New York City
offering an enhanced range of Ralph Lauren classic and vintage apparel
and accessories for layette and infant, girls and boys in a unique
shopping experience. The store also features a selection of fine
giftware as well as quilts and pillows in signature Ralph Lauren Home
fabrics.
o Opened a 14,000 square foot interior designer showroom in the Designers
and Decorators Building in New York City. This is a significant first
step in expanding the reach of the Company's Ralph Lauren Home business
into the professional home decorating and design community and the
Company may open showrooms in other major cities in the United States.
This is part of a tiered strategy in the Company's home business, which
is currently marketed in Ralph Lauren stores in the United States and
Europe under the Ralph Lauren Home brand and in department stores in
the United States under the Lauren brand.
o Reduced short-term bank borrowings by more than $50 million. Subsequent
to the close of the quarter, on June 30, the Company paid down the
remainder of short-term bank borrowings.
o Initiated a regular quarterly cash dividend of $0.05 per share, or
$0.20 per share on an annual basis, on Polo Ralph Lauren common stock.
The first quarterly dividend was paid on July 11, 2003. Based on the
current number of shares outstanding, the dividend will result in an
anticipated annualized payout of approximately $20 million.
FIRST QUARTER FISCAL 2004 INCOME STATEMENT REVIEW
NET REVENUES Net revenues were $477.7 million for the first quarter, an increase
of 2.3%, compared to $467.0 million in the comparable year-ago quarter. Revenues
were driven by double digit increases in total retail sales and strong licensing
royalty growth, partially offset by a decline in the wholesale business. Retail
sales comps rose 8.3%, driven by positive comps in all of the Company's
worldwide retail formats.
GROSS PROFIT For the first quarter, gross profit was 52.1% of net revenues
compared to 49.8% of net revenues in the comparable year-ago quarter. The
improved gross margins were driven by increased licensing royalties from the
Japanese business and a change in business mix resulting in retail sales
representing more than 50% of revenues in the quarter.
SG&A EXPENSES Total SG&A expenses were $243.2 million for the first quarter, or
50.9% of net revenues, compared to $214.9 million, or 46.0% of net revenues, in
the first quarter of Fiscal 2003. The increase was driven primarily by the costs
associated with the consolidation of the European wholesale and retail
businesses, a change in business mix as a result of increased retail sales and
the consolidation of expenses of the Japanese master license.
STORE COUNT
At quarter end, the Company operated 261 stores compared to 237 stores at the
first quarter end last year. For the period ended June 28, 2003, the company's
retail group consisted of 54 Ralph Lauren stores, 62
Club Monaco stores, 93 full line Outlet stores, 22 Polo Jeans Co. Outlet stores,
21 European Outlet stores and nine Club Monaco outlet stores. During the first
quarter the Company added six stores.
EARNINGS OUTLOOK
The Company reiterated that for Fiscal 2004, adjusted earnings per share are
expected to be in the range of $1.95 to $2.05, which anticipates modest revenue
increases and ongoing improvements in operating margins. Full-year adjusted
earnings per share exclude foreign currency gains and losses, Lauren start-up
costs and the loss of licensing royalty associated with the Lauren and Ralph
lines in the fourth quarter of Fiscal 2004. The Company expects the Lauren
start-up costs and the loss of licensing royalty associated with the Lauren and
Ralph lines in the fourth quarter of Fiscal 2004 to be approximately $0.20 per
share in Fiscal 2004. Including expenses associated with the start-up of the
Lauren line and lost licensing royalty, the Company expects adjusted earnings
per share in Fiscal 2004 to be in the range of $1.75 to $1.85.
The Company also reiterated that for the second quarter of Fiscal 2004, adjusted
earnings per share are expected to be in the range of $0.57 to $0.63. This
compares to adjusted earnings per share of $0.52 for the second quarter of
Fiscal 2003. Second quarter adjusted earnings per share exclude foreign currency
gains and losses and start-up costs associated with the Lauren line. The Company
expects the Lauren line start-up costs to be approximately $0.08 per share in
the second quarter of Fiscal 2004. Including expenses associated with the
start-up of the Lauren line, the Company expects adjusted earnings per share in
the second quarter of Fiscal 2004 to be in the range of $0.49 to $0.55.
After preliminary discussions with key retailers, the Company is building plans
to sell the Lauren line in approximately 850 doors for Missy and approximately
450 doors for special sizes and expects the Lauren line in its first full year
of operations to generate revenues of approximately $400 million in Fiscal 2005.
CONFERENCE CALL
As previously announced, the Company will host a conference call today, August
6, 2003 at 9:00 A.M. Eastern to discuss the quarter results. To access the
conference call, listeners should dial in by 8:45 A.M. Eastern today and request
to be connected to the Polo Ralph Lauren First Quarter 2004 conference call. The
dial-in number is 1-973-317-5319. Alternatively, individuals are invited to
listen to a live online broadcast of the conference call by accessing Polo's
website at HTTP://INVESTOR.POLO.COM.
An online archive of the broadcast will be available through November 4, 2003 by
accessing Polo's website at HTTP://INVESTOR.POLO.COM. A telephone replay of the
call will be available from 11:00 A.M. Eastern, Wednesday, August 6, 2003
through 5:00 P.M. Eastern, Friday, August 8, 2003 by dialing 1-973-709-2089 and
entering passcode 301411.
Polo Ralph Lauren Corporation is a leader in the design, marketing and
distribution of premium lifestyle products in four categories: apparel, home,
accessories and fragrances. For 35 years, Polo's reputation and distinctive
image have been consistently developed across an expanding number of products,
brands and international markets. The Company's brand names, which include
"Polo", "Polo by Ralph Lauren", "Ralph Lauren Purple Label", "Polo Sport",
"Ralph Lauren", "RALPH", "Blue Label", "Lauren", "Polo Jeans Co.", "RL",
"Chaps", and "Club Monaco" among others, constitute one of the world's most
widely recognized families of consumer brands. For more information, go to
HTTP://INVESTOR.POLO.COM.
CERTAIN STATEMENTS INCLUDING, WITHOUT LIMITATION, THE STATEMENTS MADE BY RALPH
LAUREN AND ROGER FARAH AND THE STATEMENTS RELATING TO THE EARNINGS OUTLOOK FOR
FISCAL 2004 CONTAINED HEREIN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND INVOLVE CERTAIN
RISKS AND UNCERTAINTIES. ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO MATERIALLY DIFFER ARE THE FOLLOWING: RISKS ASSOCIATED WITH
IMPLEMENTING THE COMPANY'S PLANS TO ENHANCE ITS WORLDWIDE LUXURY RETAIL
BUSINESS, INVENTORY MANAGEMENT PROGRAM AND OPERATING EFFICIENCY INITIATIVES;
RISKS ASSOCIATED WITH THE START-UP OF THE LAUREN LINE; RISKS ASSOCIATED WITH
CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW
PRODUCTS OR PRICING CHANGES BY THE COMPANY'S COMPETITORS; CHANGES IN GLOBAL
ECONOMIC AND POLITICAL CONDITIONS; RISKS ASSOCIATED WITH THE COMPANY'S
DEPENDENCE ON SALES TO A LIMITED NUMBER OF LARGE DEPARTMENT STORE CUSTOMERS,
INCLUDING RISKS RELATED TO EXTENDING CREDIT TO CUSTOMERS; RISKS
ASSOCIATED WITH THE COMPANY'S DEPENDENCE ON ITS LICENSING PARTNERS FOR A
SUBSTANTIAL PORTION OF ITS NET INCOME AND RISKS ASSOCIATED WITH A LACK OF
OPERATIONAL AND FINANCIAL CONTROL OVER LICENSED BUSINESSES; RISKS ASSOCIATED
WITH A GENERAL ECONOMIC DOWNTURN AND OTHER EVENTS LEADING TO A REDUCTION IN
DISCRETIONARY CONSUMER SPENDING; RISKS ASSOCIATED WITH FINANCIAL DISTRESS OF
LICENSEES, INCLUDING THE IMPACT OF OUR NET INCOME AND BUSINESS OF ONE OR MORE
LICENSEES REORGANIZATION; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL,
ECONOMIC AND OTHER CONDITIONS AFFECTING FOREIGN OPERATIONS OR SOURCING AND THE
POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS RELATED TO
FLUCTUATIONS IN FOREIGN CURRENCY AFFECTING OUR FOREIGN SUBSIDIARIES; FOREIGN
LICENSEES' RESULTS OF OPERATIONS AND THE RELATIVE PRICES AT WHICH WE AND OUR
FOREIGN COMPETITORS SELL PRODUCTS IN THE SAME MARKET AND OUR OPERATING AND
MANUFACTURING COSTS OUTSIDE OF THE UNITED STATES; RISKS ASSOCIATED WITH OUR
CONTROL BY LAUREN FAMILY MEMBERS AND THE ANTI-TAKEOVER EFFECT OF MULTIPLE
CLASSES OF STOCK; RISKS ASSOCIATED WITH CONSOLIDATIONS, RESTRUCTURINGS AND OTHER
OWNERSHIP CHANGES IN THE RETAIL INDUSTRY; RISKS ASSOCIATED WITH COMPETITION IN
THE SEGMENTS OF THE FASHION AND CONSUMER PRODUCT INDUSTRIES IN WHICH THE COMPANY
OPERATES, INCLUDING THE COMPANY'S ABILITY TO SHAPE, STIMULATE AND RESPOND TO
CHANGING CONSUMER TASTES AND DEMANDS BY PRODUCING ATTRACTIVE PRODUCTS, BRANDS
AND MARKETING, AND ITS ABILITY TO REMAIN COMPETITIVE IN THE AREAS OF QUALITY AND
PRICE; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO
IMPLEMENT ITS GROWTH STRATEGIES; RISKS ASSOCIATED WITH THE COMPANY'S ENTRY INTO
NEW MARKETS EITHER THROUGH INTERNAL DEVELOPMENT ACTIVITIES OR THROUGH
ACQUISITION; RISKS ASSOCIATED WITH THE POSSIBLE ADVERSE IMPACT OF THE COMPANY'S
UNAFFILIATED MANUFACTURERS INABILITY TO MANUFACTURE IN A TIMELY MANNER, TO MEET
QUALITY STANDARDS OR TO USE ACCEPTABLE LABOR PRACTICES AND OTHER FACTORS
DETAILED IN THE FILINGS MADE BY THE COMPANY 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.
Attached are the Consolidated Statements of Income for the quarter ended June
28, 2003 and June 29, 2002 and the Consolidated Balance Sheets as of June 28,
2003 and June 29, 2002.
# # # #
Tables Follow
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
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JUNE 28, JUNE 29,
2003 2002
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Wholesale Net Sales $ 161,625 $ 186,728
Retail Net Sales 254,464 227,138
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NET SALES 416,089 413,866
Licensing Revenue 61,642 53,134
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NET REVENUES 477,731 467,000
Cost of Goods Sold 228,979 234,396
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GROSS PROFIT 248,752 232,604
Depreciation and Amortization 21,442 18,462
Other SG&A Expenses 221,784 196,454
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TOTAL SG&A EXPENSES 243,226 214,916
Income From Operations 5,526 17,688
Foreign Currency (Gains) Losses (2,299) 3,531
Interest Expense, net 2,918 3,984
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Income Before Income Taxes and Other (Income) Expense 4,907 10,173
Provision for Income Taxes 1,791 3,713
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Income after Tax 3,116 6,460
Other (Income) Expense, net (A) (1,939) --
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NET INCOME $ 5,055 $ 6,460
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NET INCOME PER SHARE - BASIC $ 0.05 $ 0.07
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NET INCOME PER SHARE - DILUTED $ 0.05 $ 0.07
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Weighted Average Shares Outstanding - Basic 98,377,000 98,161,000
============ ============
Weighted Average Shares & Share Equivalents Outstanding - Diluted 99,544,000 99,333,000
============ ============
DIVIDENDS DECLARED PER SHARE $ 0.05 --
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(A) Includes Equity Investment Income net of Minority Interest Expense.
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
The following is a reconciliation of Net Income to Net Income Before Foreign
Currency (Gains) Losses:
THREE MONTHS ENDED
----------------------------
JUNE 28, JUNE 29,
2003 2002
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Net Income $ 5,055 $ 6,460
Other (Income) Expense, net (1,939) --
Provision for Income Taxes 1,791 3,713
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Income before Income Taxes and Other (Income) Expense 4,907 10,173
Foreign Currency (Gains) Losses (2,299) 3,531
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Income Before Income Taxes, Other (Income) Expense and Foreign
Currency (Gains) Losses 2,608 13,704
Provision for Income Taxes 952 5,002
Other (Income) Expense, net (1,939) --
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Net Income Before Foreign Currency (Gains) Losses $ 3,595 $ 8,702
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NET INCOME PER SHARE BEFORE FOREIGN CURRENCY (GAINS) LOSSES - BASIC $ 0.04 $ 0.09
============ ============
NET INCOME PER SHARE BEFORE FOREIGN CURRENCY (GAINS) LOSSES - DILUTED $ 0.04 $ 0.09
============ ============
POLO RALPH LAUREN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
JUNE 28, JUNE 29,
2003 2002
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ASSETS
Current assets
Cash and cash equivalents $ 287,473 $ 371,623
Accounts receivable, net of allowances 249,997 208,363
Inventories 430,101 384,865
Deferred tax assets 20,493 21,091
Prepaid expenses and other 84,174 52,859
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1,072,238 1,038,801
Property and equipment, net 352,233 341,519
Deferred tax assets 54,386 64,076
Goodwill, net 330,540 289,430
Intangibles, net 11,070 --
Other assets 152,957 68,797
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$ 1,973,424 $ 1,802,623
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term bank borrowings $ 50,093 $ 124,887
Accounts payable 188,222 159,952
Income taxes payable 38,015 58,608
Accrued expenses and other 147,491 148,393
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423,821 491,840
Long-term debt 265,069 225,475
Other noncurrent liabilities 65,627 79,090
Stockholders' equity
Common Stock 1,035 1,023
Additional paid-in-capital 521,502 494,402
Retained earnings 776,468 608,584
Treasury Stock, Class A, at cost (4,116,520 and 3,887,094 shares) (78,169) (73,555)
Accumulated other comprehensive income (loss) 16,444 (22,194)
Unearned compensation (18,373) (2,042)
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TOTAL STOCKHOLDERS' EQUITY 1,218,907 1,006,218
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$ 1,973,424 $ 1,802,623
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