Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2016 Results
-
Fourth Quarter Consolidated Net Revenues were
$1.9 Billion -
Earnings Per Diluted Share Was
$0.88 in the Fourth Quarter, Excluding Restructuring and Other Charges - Better-Than-Expected Operating Margin, Excluding Restructuring and Other Charges, Reflects Disciplined Expense Management
-
The Company's Board of Directors Authorizes an Additional
$200 Million Stock Repurchase Program
Net income for the full year Fiscal 2016 period was
The Company's Board of Directors authorized an additional
“Fiscal 2016 was a year of significant change for our Company as we
established a new organizational structure and appointed a new CEO,”
said
“We have made great progress over the past few months in developing our
long-term growth strategy,” said
Fourth Quarter and Full Year Fiscal 2016 Income Statement Review
Net Revenues. Net revenues for the fourth quarter of
Fiscal 2016 were flat with the prior year period on a constant currency
basis and declined 1% on a reported basis to
The Company’s fourth quarter in Fiscal 2016 included a 53rd
week that contributed approximately
Net revenues for the full year Fiscal 2016 period increased 1% on a
constant currency basis, and declined 3% on a reported basis to
-
Wholesale Sales. In the fourth quarter of Fiscal 2016,
wholesale segment sales decreased 5% on a constant currency basis and
6% on a reported basis to
$942 million , primarily due to a decline in sales inNorth America .
For Fiscal 2016, wholesale sales decreased 3% on a constant currency basis and 6% on a reported basis to$3.3 billion , due to a decline in sales inNorth America .
-
Retail Sales. Retail segment sales increased 7% on a constant
currency basis and 6% on a reported basis to
$889 million in the fourth quarter, driven by the benefit of a 53rd week of sales, new store expansion and e-commerce growth. On a 13-week to 13-week basis, consolidated comparable store sales decreased 5% in constant currency and 6% as reported during the fourth quarter.
Retail sales for Fiscal 2016 increased 4% on a constant currency basis from the prior year period, reflecting new store expansion, e-commerce growth and the benefit of a 53rd week of sales. Reported retail sales decreased 1% to$3.9 billion . On a 52-week to 52-week basis, consolidated comparable store sales decreased 3% in constant currency and 7% as reported in Fiscal 2016.
-
Licensing. Licensing segment revenue of
$40 million in the fourth quarter increased 8% on both a constant currency and reported basis, reflecting higher royalties from increased sales ofRalph Lauren , Polo Ralph Lauren and Lauren products worldwide.
Licensing revenues of$175 million in Fiscal 2016 were 5% above Fiscal 2015’s level in constant currency and increased 4% as reported.
Gross Profit. Gross profit for the fourth quarter of
Fiscal 2016 was
Gross profit for Fiscal 2016 decreased 4% to
Operating Expenses. Operating expenses in the fourth
quarter of Fiscal 2016 were
Operating expenses in Fiscal 2016 were
Operating Income. Operating income in the fourth quarter
of Fiscal 2016 was
Fiscal 2016’s operating income was
-
Wholesale Operating Income. Wholesale operating income in the
fourth quarter of Fiscal 2016 was
$255 million , excluding restructuring and other charges, compared with$309 million in the prior year period. Wholesale operating margin decreased 350 basis points to 27.2% driven by proactive measures taken in the U.S. to clear end-of-season inventories related to the Fall season, and negative foreign currency effects.
Wholesale operating income in Fiscal 2016 was$828 million , excluding restructuring and other charges, compared with$943 million in Fiscal 2015. Wholesale operating margin for Fiscal 2016 was 25.1% compared to 27.0% in Fiscal 2015. The decline in wholesale operating margin was driven by gross margin pressure, fixed expense deleverage and negative foreign currency effects.
-
Retail Operating Income. Retail operating income in the fourth
quarter of Fiscal 2016 was
$22 million , excluding restructuring and other charges, compared with$28 million in the prior year period. Retail operating margin declined 100 basis points to 2.4% due to proactive measures taken to clear end-of-season inventories in addition to negative foreign currency effects.
Retail operating income was$422 million in Fiscal 2016, excluding restructuring and other charges, compared to$527 million in the prior year period. Retail operating margin declined 260 basis points to 10.7%. The lower operating margin was due to fixed expense deleverage, gross margin pressure and negative foreign currency effects.
-
Licensing Operating Income. Licensing operating income of
$35 million in the fourth quarter of Fiscal 2016 increased 9% compared with the prior year period. Licensing operating income of$155 million in Fiscal 2016 increased 2% above the prior year period.
Net Income and Diluted EPS. Net income for the fourth
quarter of Fiscal 2016 was
Net income for the full year Fiscal 2016 period was
The Company had an effective tax rate of approximately 34%, excluding restructuring and other charges, in the fourth quarter of Fiscal 2016, which compared to an effective tax rate of 28% in the fourth quarter of Fiscal 2015. This was higher than our guidance of 32% due to one-time discrete items. On a reported basis, the effective tax rate was 33% in the fourth quarter of Fiscal 2016.
Fourth Quarter Fiscal 2016 Balance Sheet and Cash Flow Review
The Company ended Fiscal 2016 with
The Company had
Global Retail Store Network
The Company ended Fiscal 2016 with 493 directly operated stores,
comprised of 144
In addition to Company-operated locations, international licensing
partners operated 93
Fiscal 2017 Outlook
We plan to provide our first quarter and full year Fiscal 2017 outlook
at our Investor Day event on
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
ABOUT
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release and oral statements made from time to time by
representatives of the Company contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the statements
under “Fiscal 2016 Outlook” and 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 and earnings and are indicated by words or
phrases such as "anticipate," "estimate," "expect," "project," "we
believe" 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 a number of 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 or other changes in our executive and senior management
team or to our operating structure and our ability to effectively
transfer knowledge during periods of transition; our ability to achieve
anticipated operating enhancements and/or cost reductions from our
restructuring plans, which could include the potential sale,
discontinuance, or consolidation of certain of our brands; our ability
to successfully implement our anticipated growth strategies and to
capitalize on our repositioning initiatives in certain brands, regions
and merchandise categories; our ability to secure the technology
facilities and systems used by the Company and those of third party
service providers from, among other things, cybersecurity breaches, acts
of vandalism, computer viruses or similar events; our exposure to
currency exchange rate fluctuations from both a transactional and
translational perspective, and risks associated with increases in the
costs of raw materials, transportation, and labor; our ability to
continue to maintain our brand image and reputation and protect our
trademarks; the impact of the volatile state of the global economy,
stock markets, and other economic conditions on us, our customers, our
suppliers, and our vendors, and our ability and their ability to access
sources of liquidity; the impact of changes in consumers’ ability or
preferences to purchase premium lifestyle products that we sell and our
ability to forecast consumer demand; changes in the competitive
marketplace, including the introduction of new products or pricing
changes by our competitors, and consolidations, liquidations,
restructurings, and other ownership changes in the retail industry;
risks associated with our international operations, including risks
related to the importation and exportation of products, and risks
associated with 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; the impact to our business of
events of unrest and instability that are currently taking place in
certain parts of the world; our ability to continue to expand our
business internationally; changes in our effective tax rates or credit
profile and ratings within the financial community; changes in the
business of, and our relationships with, major department store
customers and licensing partners; our efforts to improve the efficiency
of our distribution system and enhance our information technology
systems and global e-commerce platform; our intention to introduce new
products or enter into or renew alliances and exclusive relationships;
our ability to access sources of liquidity to provide for our cash
needs, including our debt obligations, payment of dividends, capital
expenditures, and potential repurchases of our Class A common stock; our
ability to open new retail stores, concession shops, and e-commerce
sites in an effort to expand our direct-to-consumer presence; our
ability to make certain strategic acquisitions and successfully
integrate the acquired businesses into our existing operations; the
impact to our business resulting from potential costs and obligations
related to the early termination of our long term, non-cancellable
leases; the potential impact to the trading prices of our securities if
our Class A Common Stock share repurchase activity and/or cash dividend
rate differs from investors' expectations; our ability to maintain our
credit profile and ratings within the financial community; the potential
impact on our operations and on our customers resulting from natural or
man-made disasters; 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
RALPH LAUREN CORPORATION | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||
(in millions) | |||||||||
(Audited) | |||||||||
April 2, | March 28, | ||||||||
2016 | 2015 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 456 | $ | 500 | |||||
Short-term investments | 629 | 644 | |||||||
Accounts receivable, net of allowances | 517 | 655 | |||||||
Inventories | 1,125 | 1,042 | |||||||
Income tax receivable | 58 | 57 | |||||||
Deferred tax assets | - | 145 | |||||||
Prepaid expenses and other current assets | 268 | 281 | |||||||
Total current assets | 3,053 | 3,324 | |||||||
Property and equipment, net | 1,583 | 1,436 | |||||||
Deferred tax assets | 119 | 45 | |||||||
Goodwill | 918 | 903 | |||||||
Intangible assets, net | 244 | 267 | |||||||
Other non-current assets (a) | 296 | 131 | |||||||
Total assets | $ | 6,213 | $ | 6,106 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term debt | $ | 116 | $ | 234 | |||||
Accounts payable | 151 | 210 | |||||||
Income tax payable | 33 | 27 | |||||||
Accrued expenses and other current liabilities | 898 | 715 | |||||||
Total current liabilities | 1,198 | 1,186 | |||||||
Long-term debt | 597 | 298 | |||||||
Non-current liability for unrecognized tax benefits | 81 | 116 | |||||||
Other non-current liabilities | 593 | 615 | |||||||
Total liabilities | 2,469 | 2,215 | |||||||
Equity: | |||||||||
Common stock | 1 | 1 | |||||||
Additional paid-in-capital | 2,258 | 2,117 | |||||||
Retained earnings | 6,015 | 5,787 | |||||||
Treasury stock, Class A, at cost | (4,349 | ) | (3,849 | ) | |||||
Accumulated other comprehensive loss | (181 | ) | (165 | ) | |||||
Total equity | 3,744 | 3,891 | |||||||
Total liabilities and equity | $ | 6,213 | $ | 6,106 | |||||
Net Cash (incl. LT Investments) | 559 | 620 | |||||||
Cash & Investments (ST & LT) | 1,272 | 1,152 | |||||||
Net Cash (excl. LT Investments) | 372 | 612 | |||||||
Cash & ST Investments | 1,085 | 1,144 | |||||||
(a) Includes non-current investments of: | $ | 187 | $ | 8 | |||||
RALPH LAUREN CORPORATION | |||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||
(in millions, except per share data) | |||||||||
(Unaudited) | |||||||||
Three Months Ended |
|||||||||
April 2, | March 28, | ||||||||
2016 | 2015 | ||||||||
Wholesale net sales | $ | 942 | $ | 1,007 | |||||
Retail net sales | 889 | 841 | |||||||
Net sales | 1,831 | 1,848 | |||||||
Licensing revenue | 40 | 37 | |||||||
Net revenues | 1,871 | 1,885 | |||||||
Cost of goods sold(a) | (857 | ) | (841 | ) | |||||
Gross profit | 1,014 | 1,044 | |||||||
Selling, general, and administrative expenses(a) | (895 | ) | (840 | ) | |||||
Amortization of intangible assets | (7 | ) | (6 | ) | |||||
Impairment of assets | (25 | ) | (5 | ) | |||||
Restructuring and other charges | (20 | ) | (3 | ) | |||||
Total other operating expenses, net | (947 | ) | (854 | ) | |||||
Operating income | 67 | 190 | |||||||
Foreign currency gains (losses) | 5 | (12 | ) | ||||||
Interest expense | (7 | ) | (5 | ) | |||||
Interest and other income, net | 1 | 2 | |||||||
Equity in losses of equity-method investees | (4 | ) | (2 | ) | |||||
Income before provision for income taxes | 62 | 173 | |||||||
Provision for income taxes | (21 | ) | (49 | ) | |||||
Net income | $ | 41 | $ | 124 | |||||
Net income per share - Basic | $ | 0.49 | $ | 1.43 | |||||
Net income per share - Diluted | $ | 0.49 | $ | 1.41 | |||||
Weighted average shares outstanding - Basic | 83.9 | 87.3 | |||||||
Weighted average shares outstanding - Diluted | 84.5 | 88.2 | |||||||
Dividends declared per share | $ | 0.50 | $ | 0.50 | |||||
(a) Includes total depreciation expense of: | $ | (76 | ) | $ | (69 | ) | |||
RALPH LAUREN CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||||
(in millions, except per share data) | ||||||||||
(Audited) | ||||||||||
Twelve Months Ended |
||||||||||
April 2, | March 28, | |||||||||
2016 | 2015 | |||||||||
Wholesale net sales | $ | 3,297 | $ | 3,495 | ||||||
Retail net sales | 3,933 | 3,956 | ||||||||
Net sales | 7,230 | 7,451 | ||||||||
Licensing revenue | 175 | 169 | ||||||||
Net revenues | 7,405 | 7,620 | ||||||||
Cost of goods sold(a) | (3,218 | ) | (3,242 | ) | ||||||
Gross profit | 4,187 | 4,378 | ||||||||
Selling, general, and administrative expenses(a) | (3,389 | ) | (3,301 | ) | ||||||
Amortization of intangible assets | (24 | ) | (25 | ) | ||||||
Impairment of assets | (49 | ) | (7 | ) | ||||||
Restructuring and other charges | (143 | ) | (10 | ) | ||||||
Total other operating expenses, net | (3,605 | ) | (3,343 | ) | ||||||
Operating income | 582 | 1,035 | ||||||||
Foreign currency losses | (4 | ) | (26 | ) | ||||||
Interest expense | (21 | ) | (17 | ) | ||||||
Interest and other income, net | 6 | 6 | ||||||||
Equity in losses of equity-method investees | (11 | ) | (11 | ) | ||||||
Income before provision for income taxes | 552 | 987 | ||||||||
Provision for income taxes | (156 | ) | (285 | ) | ||||||
Net income | $ | 396 | $ | 702 | ||||||
Net income per share - Basic | $ | 4.65 | $ | 7.96 | ||||||
Net income per share - Diluted | $ | 4.62 | $ | 7.88 | ||||||
Weighted average shares outstanding - Basic | 85.2 | 88.2 | ||||||||
Weighted average shares outstanding - Diluted | 85.9 | 89.1 | ||||||||
Dividends declared per share | $ | 2.00 | $ | 1.85 | ||||||
(a) Includes total depreciation expense of: | $ | (286 | ) | $ | (269 | ) | ||||
RALPH LAUREN CORPORATION | |||||||||||||||||
OTHER INFORMATION | |||||||||||||||||
(in millions) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||
Net revenues and operating income for the periods ended April 2, 2016 and March 28, 2015 for each segment were as follows: | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
April 2, | March 28, | April 2, | March 28, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net revenues: | |||||||||||||||||
Wholesale | $ | 942 | $ | 1,007 | $ | 3,297 | $ | 3,495 | |||||||||
Retail | 889 | 841 | 3,933 | 3,956 | |||||||||||||
Licensing | 40 | 37 | 175 | 169 | |||||||||||||
Total net revenues | $ | 1,871 | $ | 1,885 | $ | 7,405 | $ | 7,620 | |||||||||
Operating income: | |||||||||||||||||
Wholesale | $ | 255 | $ | 309 | $ | 822 | $ | 943 | |||||||||
Retail | (10 | ) | 28 | 359 | 527 | ||||||||||||
Licensing | 35 | 32 | 155 | 152 | |||||||||||||
280 | 369 | 1,336 | 1,622 | ||||||||||||||
Unallocated corporate expenses | (193 | ) | (176 | ) | (611 | ) | (577 | ) | |||||||||
Unallocated restructuring and other charges | (20 | ) | (3 | ) | (143 | ) | (10 | ) | |||||||||
Total operating income | $ | 67 | $ | 190 | $ | 582 | $ | 1,035 |
RALPH LAUREN CORPORATION | ||||||||||||||||
Constant Currency Financial Measures | ||||||||||||||||
(in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Same - Store Sales Data (a) | ||||||||||||||||
Three Months Ended
April 2, 2016 % Change |
Twelve Months Ended
April 2, 2016 % Change |
|||||||||||||||
As Reported | Constant Currency | As Reported | Constant Currency | |||||||||||||
Total Ralph Lauren | (6 | %) | (5 | %) | (7 | %) | (3 | %) | ||||||||
Operating Segment Data | ||||||||||||||||
Three Months Ended | % Change | |||||||||||||||
April 2, 2016 | March 28, 2015 | As Reported | Constant Currency | |||||||||||||
Wholesale net sales | $ | 942 | $ | 1,007 | (6.4 | %) | (5.1 | %) | ||||||||
Retail net sales | 889 | 841 | 5.6 | % | 6.7 | % | ||||||||||
Net sales | 1,831 | 1,848 | (0.9 | %) | 0.2 | % | ||||||||||
Licensing revenue | 40 | 37 | 8.5 | % | 7.8 | % | ||||||||||
Net revenues | $ | 1,871 | $ | 1,885 | (0.8 | %) | 0.4 | % | ||||||||
Twelve Months Ended | % Change | |||||||||||||||
April 2, 2016 | March 28, 2015 | As Reported | Constant Currency | |||||||||||||
Wholesale net sales | $ | 3,297 | $ | 3,495 | (5.7 | %) | (2.7 | %) | ||||||||
Retail net sales | 3,933 | 3,956 | (0.6 | %) | 3.7 | % | ||||||||||
Net sales | 7,230 | 7,451 | (3.0 | %) | 0.7 | % | ||||||||||
Licensing revenue | 175 | 169 | 3.7 | % | 5.0 | % | ||||||||||
Net revenues | $ | 7,405 | $ | 7,620 | (2.8 | %) | 0.8 | % | ||||||||
(a) Same-store sales are on a 13-week to 13-week basis for the quarter and 52-week to 52-week basis for the year. | ||||||||||||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | |||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||||
April 2, 2016 | March 28, 2015 | ||||||||||||||||||||||
As
Reported |
Adjustments (a) |
As Adjusted
(Including FX) |
Foreign
Exchange Impact |
As Adjusted
(Excluding FX) |
As
Reported |
||||||||||||||||||
Net revenues | $ | 1,871 | $ | - | $ | 1,871 | $ | 22 | $ | 1,893 | $ | 1,885 | |||||||||||
Gross profit | 1,014 | 7 | 1,021 | 1,044 | |||||||||||||||||||
Gross profit margin | 54.2 | % | 54.5 | % | 55.4 | % | |||||||||||||||||
Total other operating expenses | (947 | ) | 45 | (902 | ) | (854 | ) | ||||||||||||||||
Operating expense margin | 50.5 | % | 48.2 | % | 45.3 | % | |||||||||||||||||
Operating income | 67 | 52 | 119 | 190 | |||||||||||||||||||
Operating margin | 3.6 | % | 6.4 | % | 10.1 | % | |||||||||||||||||
Income before provision for income taxes | 62 | 52 | 114 | 173 | |||||||||||||||||||
Provision for income taxes | (21 | ) | (19 | ) | (40 | ) | (49 | ) | |||||||||||||||
Effective tax rate | 32.7 | % | 34.0 | % | 28.2 | % | |||||||||||||||||
Net income | $ | 41 | $ | 33 | $ | 74 | $ | 124 | |||||||||||||||
Net income per diluted share | $ | 0.49 | $ | 0.39 | $ | 0.88 | $ | 1.41 | |||||||||||||||
SEGMENT INFORMATION - | |||||||||||||||||||||||
OPERATING INCOME/(LOSS): | |||||||||||||||||||||||
Wholesale | $ | 255 | $ | - | $ | 255 | $ | 309 | |||||||||||||||
Operating margin | 27.1 | % | 27.2 | % | 30.7 | % | |||||||||||||||||
Retail | (10 | ) | 32 | $ | 22 | 28 | |||||||||||||||||
Operating margin | -1.1 | % | 2.4 | % | 3.4 | % | |||||||||||||||||
Licensing | 35 | - | $ | 35 | 32 | ||||||||||||||||||
Operating margin | 87.2 | % | 87.2 | % | 87.2 | % | |||||||||||||||||
Unallocated corporate expenses and restructuring and other charges, net | (213 | ) | 20 | $ | (193 | ) | (179 | ) | |||||||||||||||
Total operating income | $ | 67 | $ | 52 | $ | 119 | $ | 190 | |||||||||||||||
Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||
April 2, 2016 | March 28, 2015 | ||||||||||||||||||||||
As
Reported |
Adjustments (a) |
As Adjusted
(Including FX) |
Foreign
Exchange Impact |
As Adjusted
(Excluding FX) |
As
Reported |
||||||||||||||||||
Net revenues | $ | 7,405 | $ | - | $ | 7,405 | $ | 275 | $ | 7,680 | $ | 7,620 | |||||||||||
Gross profit | 4,187 | 20 | 4,207 | 4,378 | |||||||||||||||||||
Gross profit margin | 56.5 | % | 56.8 | % | 57.5 | % | |||||||||||||||||
Total other operating expenses | (3,605 | ) | 192 | (3,413 | ) | (3,343 | ) | ||||||||||||||||
Operating expense margin | 48.7 | % | 46.1 | % | 43.9 | % | |||||||||||||||||
Operating income | 582 | 212 | 794 | 1,035 | |||||||||||||||||||
Operating margin | 7.9 | % | 10.7 | % | 13.6 | % | |||||||||||||||||
Income before provision for income taxes | 552 | 212 | 764 | 987 | |||||||||||||||||||
Provision for income taxes | (156 | ) | (62 | ) | (218 | ) | (285 | ) | |||||||||||||||
Effective tax rate | 28.2 | % | 28.4 | % | 28.9 | % | |||||||||||||||||
Net income | $ | 396 | $ | 150 | $ | 546 | $ | 702 | |||||||||||||||
Net income per diluted share | $ | 4.62 | $ | 1.74 | $ | 6.36 | $ | 7.88 | |||||||||||||||
SEGMENT INFORMATION - | |||||||||||||||||||||||
OPERATING INCOME/(LOSS): | |||||||||||||||||||||||
Wholesale | $ | 822 | $ | 6 | $ | 828 | $ | 943 | |||||||||||||||
Operating margin | 24.9 | % | 25.1 | % | 27.0 | % | |||||||||||||||||
Retail | 359 | 63 | 422 | 527 | |||||||||||||||||||
Operating margin | 9.1 | % | 10.7 | % | 13.3 | % | |||||||||||||||||
Licensing | 155 | - | 155 | 152 | |||||||||||||||||||
Operating margin | 88.7 | % | 88.7 | % | 90.4 | % | |||||||||||||||||
Unallocated corporate expenses and restructuring and other charges, net | (754 | ) | 143 | (611 | ) | (587 | ) | ||||||||||||||||
Total operating income | $ | 582 | $ | 212 | $ | 794 | $ | 1,035 | |||||||||||||||
|
(a) |
Adjustments include Restructuring and Other Charges, Asset Impairment Charges, and Inventory-related Charges. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of income. Total charges incurred in connection with the Global Reorganization Plan were $29 million and $142 million during the three months and twelve months ended April 2, 2016, respectively. Additionally, during the three months and twelve months ended April 2, 2016, $22 million of Asset Impairment Charges were recorded in connection with underperforming stores subject to potential future closure. |
Note: The above non-GAAP financial measures exclude restructuring and other charges that are primarily related to activities associated with the Company’s global brand reorganization, a pending customs audit and the settlement of certain litigation claims.
SUPPLEMENTAL FINANCIAL INFORMATION
Since
Additionally, this earnings release includes certain non-U.S. GAAP financial measures relating to restructuring and non-cash charges recorded in connection with the Company’s global brand reorganization, other charges primarily related to a pending customs audit and the settlement of certain litigation claims, and other non-cash impairment charges associated with underperforming stores subject to potential future closure. Included in this earnings release is a reconciliation between the non-U.S. GAAP financial measures and the most directly comparable U.S. GAAP measures before and after these charges. The related tax effects were calculated using the respective statutory tax rates for each applicable jurisdiction. The Company uses non-U.S. GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company 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 the 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160512005647/en/
Source:
Ralph Lauren Corporation
Investor Relations:
Evren Kopelman,
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or
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212-318-7116