RALPH LAUREN CORPORATION |
(Exact Name of Registrant as Specified in Its Charter) |
DELAWARE |
(State or Other Jurisdiction of Incorporation) |
001-13057 | 13-2622036 |
(Commission File Number) | (IRS Employer Identification No.) |
650 MADISON AVENUE, NEW YORK, NEW YORK | 10022 |
(Address of Principal Executive Offices) | (Zip Code) |
(212) 318-7000
|
(Registrant’s Telephone Number, Including Area Code)
|
NOT APPLICABLE
|
(Former Name or Former Address, if Changed Since Last Report)
|
(a) | Financial Statements of Business Acquired. |
(b) | Pro Forma Financial Information. |
(c) | Shell Company Transactions. |
(d) | Exhibits. |
|
EXHIBIT NO.
|
DESCRIPTION
|
|
|
|
|
99.1 |
Press Release, dated February 2, 2017
|
RALPH LAUREN CORPORATION | ||||
Date: February 2, 2017
|
By:
|
/s/ Jane Hamilton Nielsen | ||
Name: | Jane Hamilton Nielsen | |||
Title: | Chief Financial Officer | |||
— | Reported EPS of $0.98 and Adjusted EPS of $1.86 |
— | Maintains Its Fiscal 2017 Outlook |
— | Announces CEO Departure; Jane Nielsen to Lead Execution of the Way Forward Plan |
— | re-focused and evolved our iconic core product offering for Fall 2017; |
— | continued to drive our quality of sales up by moderating discount levels across retail and wholesale; |
— | lowered our inventory levels by 23% to better match demand; |
— | reduced our SKUs for Spring 2017 by over 20%; |
— | significantly improved our ability to match supply to demand by reducing pre-market commitments to 15% of our inventory buys for Fall 2017 from 60% for Fall 2016 |
— | platformed all of our core fabrics, accounting for about 50% of our unit volume; |
— | remain on track to get halfway to our goal of a 9-month lead time by the end of this fiscal year and 90% there by the end of next fiscal year; |
— | optimized our sales fleet by closing another 12 underperforming stores; |
— | hired a new Creative Director for Lauren; and |
— | launched our Ralph Lauren Icons marketing campaign.” |
— | Wholesale Revenue. Wholesale segment revenue decreased 26% on a reported basis to $582 million in the third quarter and was down 25% on a constant currency basis. The decline was primarily driven by North America as shipments were strategically reduced to better align with underlying demand and to reduce excess inventory and increase quality of sales as part of the Way Forward plan. In Europe, a shift in timing of shipments of $18 million into the fourth quarter also pressured the comparison. |
— | Retail Revenue. Retail segment revenue decreased 2% on both a reported and constant currency basis to $1.1 billion in the third quarter, driven by a decline in comparable store sales. Consolidated comparable store sales decreased 5% on a reported basis and were down 4% on a constant currency basis due to challenging traffic and average transaction size trends driven by our initiatives to improve quality of sales, partially offset by a favorable timing shift that drove post-Christmas week sales into the third quarter. |
— | Licensing Revenue. Licensing segment revenue of $44 million in the third quarter declined 4% on both a reported and a constant currency basis. |
— | Wholesale Operating Income. Wholesale operating income in the third quarter was $122 million and wholesale operating margin was 20.9% on a reported basis, including $4 million in restructuring and other related charges. On an adjusted basis, wholesale operating income in the third quarter was $126 million and wholesale operating margin was 21.5%, down 200 basis points compared to last year. |
— | Retail Operating Income. Retail operating income in the third quarter was $166 million and retail operating margin was 15.3% on a reported basis, including $16 million in restructuring and other related charges. On an adjusted basis, retail operating income was $182 million and retail operating margin was 16.8%, up 290 basis points compared to last year. |
— | Licensing Operating Income. Licensing operating income of $37 million in the third quarter decreased 11% compared to the prior year period on a reported basis. |
December 31,
|
April 2,
|
December 26,
|
||||||||||
2016
|
2016
|
2015
|
||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$
|
928
|
$
|
456
|
$
|
527
|
||||||
Short-term investments
|
453
|
629
|
688
|
|||||||||
Accounts receivable, net of allowances
|
285
|
517
|
473
|
|||||||||
Inventories
|
984
|
1,125
|
1,271
|
|||||||||
Income tax receivable
|
63
|
58
|
70
|
|||||||||
Deferred tax assets
|
-
|
-
|
154
|
|||||||||
Prepaid expenses and other current assets
|
321
|
268
|
269
|
|||||||||
Total current assets
|
3,034
|
3,053
|
3,452
|
|||||||||
Property and equipment, net
|
1,514
|
1,583
|
1,564
|
|||||||||
Deferred tax assets
|
91
|
119
|
38
|
|||||||||
Goodwill
|
900
|
918
|
901
|
|||||||||
Intangible assets, net
|
225
|
244
|
248
|
|||||||||
Other non-current assets (a)
|
202
|
296
|
138
|
|||||||||
Total assets
|
$
|
5,966
|
$
|
6,213
|
$
|
6,341
|
||||||
LIABILITIES AND EQUITY
|
||||||||||||
Current liabilities:
|
||||||||||||
Short-term debt
|
$
|
-
|
$
|
116
|
$
|
15
|
||||||
Accounts payable
|
158
|
151
|
195
|
|||||||||
Income tax payable
|
38
|
33
|
55
|
|||||||||
Accrued expenses and other current liabilities
|
955
|
898
|
949
|
|||||||||
Total current liabilities
|
1,151
|
1,198
|
1,214
|
|||||||||
Long-term debt
|
589
|
597
|
596
|
|||||||||
Non-current liability for unrecognized tax benefits
|
77
|
81
|
80
|
|||||||||
Other non-current liabilities
|
539
|
593
|
647
|
|||||||||
Total liabilities
|
2,356
|
2,469
|
2,537
|
|||||||||
Equity:
|
||||||||||||
Common stock
|
1
|
1
|
1
|
|||||||||
Additional paid-in-capital
|
2,299
|
2,258
|
2,236
|
|||||||||
Retained earnings
|
5,997
|
6,015
|
6,015
|
|||||||||
Treasury stock, Class A, at cost
|
(4,464
|
)
|
(4,349
|
)
|
(4,248
|
)
|
||||||
Accumulated other comprehensive loss
|
(223
|
)
|
(181
|
)
|
(200
|
)
|
||||||
Total equity
|
3,610
|
3,744
|
3,804
|
|||||||||
Total liabilities and equity
|
$
|
5,966
|
$
|
6,213
|
$
|
6,341
|
||||||
Net Cash (incl. LT Investments)
|
874
|
559
|
612
|
|||||||||
Cash & Investments (ST & LT)
|
1,463
|
1,272
|
1,223
|
|||||||||
Net Cash (excl. LT Investments)
|
792
|
372
|
604
|
|||||||||
Cash & ST Investments
|
1,381
|
1,085
|
1,215
|
|||||||||
(a) Includes non-current investments of:
|
$
|
82
|
$
|
187
|
$
|
8
|
Three Months Ended
|
||||||||
December 31,
|
December 26,
|
|||||||
2016
|
2015
|
|||||||
Wholesale net sales
|
$
|
582
|
$
|
786
|
||||
Retail net sales
|
1,088
|
1,113
|
||||||
Net sales
|
1,670
|
1,899
|
||||||
Licensing revenue
|
44
|
47
|
||||||
Net revenues
|
1,714
|
1,946
|
||||||
Cost of goods sold(a)
|
(731
|
)
|
(852
|
)
|
||||
Gross profit
|
983
|
1,094
|
||||||
Selling, general, and administrative expenses (a)
|
(772
|
)
|
(833
|
)
|
||||
Amortization of intangible assets
|
(6
|
)
|
(5
|
)
|
||||
Impairment of assets
|
(11
|
)
|
(9
|
)
|
||||
Restructuring and other charges
|
(66
|
)
|
(58
|
)
|
||||
Total other operating expenses, net
|
(855
|
)
|
(905
|
)
|
||||
Operating income
|
128
|
189
|
||||||
Foreign currency losses
|
(2
|
)
|
(3
|
)
|
||||
Interest expense
|
(4
|
)
|
(6
|
)
|
||||
Interest and other income, net
|
3
|
2
|
||||||
Equity in losses of equity-method investees
|
(1
|
)
|
(1
|
)
|
||||
Income before income taxes
|
124
|
181
|
||||||
Provision for income taxes
|
(42
|
)
|
(50
|
)
|
||||
Net income
|
$
|
82
|
$
|
131
|
||||
Net income per share - Basic
|
$
|
0.98
|
$
|
1.55
|
||||
Net income per share - Diluted
|
$
|
0.98
|
$
|
1.54
|
||||
Weighted average shares outstanding - Basic
|
82.6
|
84.9
|
||||||
Weighted average shares outstanding - Diluted
|
83.3
|
85.5
|
||||||
Dividends declared per share
|
$
|
0.50
|
$
|
0.50
|
||||
(a) Includes total depreciation expense of:
|
$
|
(72
|
)
|
$
|
(71
|
)
|
Nine Months Ended
|
||||||||
December 31,
|
December 26,
|
|||||||
2016
|
2015
|
|||||||
Wholesale net sales
|
$
|
2,020
|
$
|
2,355
|
||||
Retail net sales
|
2,937
|
3,044
|
||||||
Net sales
|
4,957
|
5,399
|
||||||
Licensing revenue
|
130
|
135
|
||||||
Net revenues
|
5,087
|
5,534
|
||||||
Cost of goods sold(a)
|
(2,255
|
)
|
(2,361
|
)
|
||||
Gross profit
|
2,832
|
3,173
|
||||||
Selling, general, and administrative expenses (a)
|
(2,390
|
)
|
(2,494
|
)
|
||||
Amortization of intangible assets
|
(18
|
)
|
(17
|
)
|
||||
Impairment of assets
|
(57
|
)
|
(24
|
)
|
||||
Restructuring and other charges
|
(194
|
)
|
(123
|
)
|
||||
Total other operating expenses, net
|
(2,659
|
)
|
(2,658
|
)
|
||||
Operating income
|
173
|
515
|
||||||
Foreign currency gains (losses)
|
1
|
(9
|
)
|
|||||
Interest expense
|
(11
|
)
|
(14
|
)
|
||||
Interest and other income, net
|
6
|
5
|
||||||
Equity in losses of equity-method investees
|
(5
|
)
|
(7
|
)
|
||||
Income before income taxes
|
164
|
490
|
||||||
Provision for income taxes
|
(59
|
)
|
(135
|
)
|
||||
Net income
|
$
|
105
|
$
|
355
|
||||
Net income per share - Basic
|
$
|
1.26
|
$
|
4.15
|
||||
Net income per share - Diluted
|
$
|
1.25
|
$
|
4.11
|
||||
Weighted average shares outstanding - Basic
|
82.9
|
85.7
|
||||||
Weighted average shares outstanding - Diluted
|
83.6
|
86.3
|
||||||
Dividends declared per share
|
$
|
1.50
|
$
|
1.50
|
||||
(a) Includes total depreciation expense of:
|
$
|
(214
|
)
|
$
|
(210
|
)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
December 31,
|
December 26,
|
December 31,
|
December 26,
|
|||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net revenues:
|
||||||||||||||||
Wholesale
|
$
|
582
|
$
|
786
|
$
|
2,020
|
$
|
2,355
|
||||||||
Retail
|
1,088
|
1,113
|
2,937
|
3,044
|
||||||||||||
Licensing
|
44
|
47
|
130
|
135
|
||||||||||||
Total net revenues
|
$
|
1,714
|
$
|
1,946
|
$
|
5,087
|
$
|
5,534
|
||||||||
Operating income:
|
||||||||||||||||
Wholesale
|
$
|
122
|
$
|
183
|
$
|
458
|
$
|
567
|
||||||||
Retail
|
166
|
136
|
248
|
369
|
||||||||||||
Licensing
|
37
|
42
|
115
|
120
|
||||||||||||
325
|
361
|
821
|
1,056
|
|||||||||||||
Unallocated corporate expenses
|
(131
|
)
|
(114
|
)
|
(454
|
)
|
(418
|
)
|
||||||||
Unallocated restructuring and other charges
|
(66
|
)
|
(58
|
)
|
(194
|
)
|
(123
|
)
|
||||||||
Total operating income
|
$
|
128
|
$
|
189
|
$
|
173
|
$
|
515
|
Three Months Ended
December 31, 2016 % Change |
Nine Months Ended
December 31, 2016 % Change |
|||||||||||||||
As Reported
|
Constant Currency
|
As Reported
|
Constant Currency
|
|||||||||||||
Total Ralph Lauren
|
(5
|
%)
|
(4
|
%)
|
(6
|
%)
|
(6
|
%)
|
||||||||
Operating Segment Data
|
||||||||||||||||
Three Months Ended
|
% Change
|
|||||||||||||||
December 31, 2016
|
December 26, 2015
|
As Reported
|
Constant Currency
|
|||||||||||||
Wholesale net sales
|
$
|
582
|
$
|
786
|
(25.9
|
%)
|
(25.3
|
%)
|
||||||||
Retail net sales
|
1,088
|
1,113
|
(2.3
|
%)
|
(1.7
|
%)
|
||||||||||
Net sales
|
1,670
|
1,899
|
(12.1
|
%)
|
(11.5
|
%)
|
||||||||||
Licensing revenue
|
44
|
47
|
(3.7
|
%)
|
(3.7
|
%)
|
||||||||||
Net revenues
|
$
|
1,714
|
$
|
1,946
|
(11.9
|
%)
|
(11.3
|
%)
|
||||||||
Nine Months Ended
|
% Change
|
|||||||||||||||
December 31, 2016
|
December 26, 2015
|
As Reported
|
Constant Currency
|
|||||||||||||
Wholesale net sales
|
$
|
2,020
|
$
|
2,355
|
(14.2
|
%)
|
(13.8
|
%)
|
||||||||
Retail net sales
|
2,937
|
3,044
|
(3.5
|
%)
|
(3.7
|
%)
|
||||||||||
Net sales
|
4,957
|
5,399
|
(8.2
|
%)
|
(8.1
|
%)
|
||||||||||
Licensing revenue
|
130
|
135
|
(3.3
|
%)
|
(3.9
|
%)
|
||||||||||
Net revenues
|
$
|
5,087
|
$
|
5,534
|
(8.1
|
%)
|
(8.0
|
%)
|
As of
|
As of
|
|||||||
December 31,
|
December 26,
|
|||||||
2016
|
2015
|
|||||||
Global Directly Operated Stores and Concessions
|
||||||||
Ralph Lauren Stores
|
121
|
151
|
||||||
Polo Factory Stores
|
281
|
274
|
||||||
Club Monaco Stores
|
83
|
76
|
||||||
Total Directly Operated Stores
|
485
|
501
|
||||||
Concessions
|
634
|
589
|
||||||
Global Licensed Stores and Concessions
|
||||||||
Ralph Lauren Licensed Stores
|
102
|
89
|
||||||
Club Monaco Licensed Stores
|
59
|
57
|
||||||
Total Licensed Stores
|
161
|
146
|
||||||
Licensed Concessions
|
102
|
104
|
Three Months Ended
|
||||||||||||
December 31, 2016
|
||||||||||||
As
Reported |
Total
Adjustments (a) |
As
Adjusted |
||||||||||
Net revenues
|
$
|
1,714
|
$
|
-
|
$
|
1,714
|
||||||
Gross profit
|
983
|
14
|
997
|
|||||||||
Gross profit margin
|
57.3
|
%
|
58.2
|
%
|
||||||||
Total other operating expenses, net
|
(855
|
)
|
77
|
(778
|
)
|
|||||||
Operating expense margin
|
49.9
|
%
|
45.4
|
%
|
||||||||
Operating income
|
128
|
91
|
219
|
|||||||||
Operating margin
|
7.5
|
%
|
12.8
|
%
|
||||||||
Income before income taxes
|
124
|
91
|
215
|
|||||||||
Provision for income taxes
|
(42
|
)
|
(18
|
)
|
(60
|
)
|
||||||
Effective tax rate
|
34.0
|
%
|
27.8
|
%
|
||||||||
Net income
|
$
|
82
|
$
|
73
|
$
|
155
|
||||||
Net income per diluted share
|
$
|
0.98
|
$
|
1.86
|
||||||||
Weighted average shares outstanding - Basic
|
82.6
|
82.6
|
||||||||||
Weighted average shares outstanding - Diluted
|
83.3
|
83.3
|
||||||||||
SEGMENT INFORMATION -
|
||||||||||||
OPERATING INCOME:
|
||||||||||||
Wholesale
|
$
|
122
|
$
|
4
|
$
|
126
|
||||||
Operating margin
|
20.9
|
%
|
21.5
|
%
|
||||||||
Retail
|
166
|
16
|
182
|
|||||||||
Operating margin
|
15.3
|
%
|
16.8
|
%
|
||||||||
Licensing
|
37
|
5
|
42
|
|||||||||
Operating margin
|
82.5
|
%
|
93.4
|
%
|
||||||||
Unallocated corporate expenses and restructuring and other charges, net
|
(197
|
)
|
66
|
(131
|
)
|
|||||||
Total operating income
|
$
|
128
|
$
|
91
|
$
|
219
|
||||||
Nine Months Ended
|
||||||||||||
December 31, 2016
|
||||||||||||
As
Reported |
Total
Adjustments (a) |
As
Adjusted |
||||||||||
Net revenues
|
$
|
5,087
|
$
|
-
|
$
|
5,087
|
||||||
Gross profit
|
2,832
|
149
|
2,981
|
|||||||||
Gross profit margin
|
55.7
|
%
|
58.6
|
%
|
||||||||
Total other operating expenses, net
|
(2,659
|
)
|
251
|
(2,408
|
)
|
|||||||
Operating expense margin
|
52.3
|
%
|
47.3
|
%
|
||||||||
Operating income
|
173
|
400
|
573
|
|||||||||
Operating margin
|
3.4
|
%
|
11.3
|
%
|
||||||||
Income before income taxes
|
164
|
400
|
564
|
|||||||||
Provision for income taxes
|
(59
|
)
|
(102
|
)
|
(161
|
)
|
||||||
Effective tax rate
|
36.0
|
%
|
28.6
|
%
|
||||||||
Net income
|
$
|
105
|
$
|
298
|
$
|
403
|
||||||
Net income per diluted share
|
$
|
1.25
|
$
|
4.82
|
||||||||
Weighted average shares outstanding - Basic
|
82.9
|
82.9
|
||||||||||
Weighted average shares outstanding - Diluted
|
83.6
|
83.6
|
||||||||||
SEGMENT INFORMATION -
|
||||||||||||
OPERATING INCOME:
|
||||||||||||
Wholesale
|
$
|
458
|
$
|
30
|
$
|
488
|
||||||
Operating margin
|
22.7
|
%
|
24.2
|
%
|
||||||||
Retail
|
248
|
171
|
419
|
|||||||||
Operating margin
|
8.4
|
%
|
14.3
|
%
|
||||||||
Licensing
|
115
|
5
|
120
|
|||||||||
Operating margin
|
88.1
|
%
|
91.9
|
%
|
||||||||
Unallocated corporate expenses and restructuring and other charges, net
|
(648
|
)
|
194
|
(454
|
)
|
|||||||
Total operating income
|
$
|
173
|
$
|
400
|
$
|
573
|
(a)
|
Adjustments include restructuring charges, asset impairment charges, and inventory-related charges recorded in connection with our restructuring plans. Inventory-related charges are recorded within cost of goods sold in the unaudited interim consolidated statements of operations.
|