Ralph Lauren Reports First Quarter Fiscal 2019 Results
“I continue to be inspired and energized by the passion our teams have
for our brand and our Company,” said
“We are off to an encouraging start to the new fiscal year on both the
top and the bottom line. Our teams around the world are fully engaged
and focused on executing the
We delivered across the following strategic initiatives in the first quarter of Fiscal 2019:
-
Win Over a New Generation of Consumers
-
Increased marketing investment by about 20% to last year,
primarily through our
Spring Polo campaign featuring our iconic white Polo shirt, which drove strong growth in global polo shirt sales including double-digit growth in men’s - Continued to shift marketing investment towards digital and social media channels, with an emphasis on influencers, increasing our reach with new consumers
- Elevated our brand voice with CP93 Limited Edition launch and amplification of our sponsorship of Wimbledon
-
Increased marketing investment by about 20% to last year,
primarily through our
-
Energize Core Products and Accelerate Under-Developed Categories
- Renewed our core styles and focused on our icons, driving sequential improvement in the sell-out trend for the Spring/Summer season
- Average unit retail across our direct-to-consumer network was up 8% through improved full price selling and lower discounts
- Under-developed categories outpaced overall growth, led by denim and outerwear
-
Drive Targeted Expansion in Our Regions and Channels
-
Strong growth in international markets, including
Asia revenue up 19%, with strength acrossJapan ,South Korea andChina , andEurope up 8% in the first quarter -
Delivered 6% constant currency comp growth and expanded our store
network in
Asia , driven by eight new points of distribution inChina in the first quarter which puts us on track to open more than 50 new points of distribution inChina in Fiscal 2019
-
Strong growth in international markets, including
-
Lead With Digital
- Digital sales outpaced overall growth and on track to achieve our long term goals
-
Upgraded our European digital commerce platform, significantly
improving the consumer experience, and continued to enhance the
functionality of our
North America site including improved product detail pages, 360-degree product videos and automated product recommendations
-
Operate With Discipline to Fuel Growth
- Gross margin was up 120 basis points with lower discount rates
- Adjusted operating expenses, excluding our marketing investment and the impact of foreign currency, were up only modestly to last year
First Quarter Fiscal 2019 Income Statement Review
Net Revenue. In the first quarter of Fiscal 2019, revenue
increased by 3% to
Revenue performance for the Company’s reportable segments in the first quarter compared to the prior year period was as follows:
-
North America Revenue.
North America revenue in the first quarter decreased 2% on both a reported and constant currency basis to$698 million .North America wholesale revenue declined primarily due to deliberate actions to improve quality of sales and exits from lower quality distribution. In retail, comparable store sales inNorth America were down 3% in constant currency, driven by a 3% decline in brick and mortar stores and a 2% decline at ralphlauren.com. Excluding the impact of Easter timing, comparable store sales inNorth America were approximately flat to last year. The comparable store sales decline at ralphlauren.com represents a significant sequential improvement, in line with our expectations. -
Europe Revenue.
Europe revenue in the first quarter increased 8% to$351 million on a reported basis and 2% in constant currency.Europe wholesale revenue grew, partially due to a shift in timing of shipments. In retail, comparable store sales inEurope were down 8% on a constant currency basis, as a 9% decline in brick and mortar stores, related to assortment and inventory challenges, was partly offset by a 2% increase in digital commerce. -
Asia Revenue.
Asia revenue in the first quarter increased 19% to$248 million on a reported basis and increased 16% in constant currency, driven by strength in both retail and wholesale channels. Comparable store sales inAsia increased 6% in constant currency, reflecting growth in both brick and mortar and digital commerce operations.
Gross Profit. Gross profit for the first quarter of Fiscal
2019 was
The gross margin increase was driven by initiatives to improve quality of sales through reduced promotional activity and improved pricing as well as favorable product mix. Foreign currency benefited gross margin by 10 basis points in the first quarter.
Operating Expenses. Operating expenses in the first
quarter of Fiscal 2019 were
Adjusted operating expense rate was 53.3%, 30 basis points above the prior year period, excluding restructuring-related and other charges. This increase was due to the increased marketing investment and an unfavorable geographic and channel mix shift, as a greater portion of our revenue was generated by our international retail businesses, which typically carry a higher operating expense rate.
Operating Income. Operating income for the first quarter
of Fiscal 2019 was
-
North America Operating Income.
North America operating income in the first quarter was$160 million on both a reported and adjusted basis.Adjusted North America operating margin was 22.9%, up 150 basis points from last year. -
Europe Operating Income.
Europe operating income in the first quarter was$74 million on both a reported and adjusted basis. AdjustedEurope operating margin was 21.1%, flat to the prior year period. In constant currency, the adjusted operating margin declined by 10 basis points. -
Asia Operating Income.
Asia operating income in the first quarter was$43 million on both a reported and adjusted basis. AdjustedAsia operating margin was 17.3%, up 280 basis points to the prior year and 290 basis points higher in constant currency.
Net Income and EPS. On a reported basis, net income in the
first quarter of Fiscal 2019 was
In the first quarter of Fiscal 2019, the Company had an effective tax rate of 18% on both a reported and adjusted basis, excluding restructuring and related other charges. This compared to a reported and an adjusted effective tax rate of 31% and 32%, respectively, in the prior year period. The year-over-year decline is primarily driven by the effects of stock-based compensation and the lower U.S. federal income tax rate as a result of tax reform.
Balance Sheet and Cash Flow Review
The Company ended the first quarter of Fiscal 2019 with
Inventory at the end of the first quarter of Fiscal 2019 was
The Company repurchased approximately
Full Year Fiscal 2019 and Second Quarter Outlook
The full year Fiscal 2019 and second quarter guidance excludes restructuring-related and other charges, as described in the “Non-U.S. GAAP Financial Measures” section of this press release.
For Fiscal 2019, the Company now expects net revenue to be down slightly in constant currency. Foreign currency is expected to have minimal impact on revenue growth in Fiscal 2019.
The Company now expects operating margin for Fiscal 2019 to be up 40 to 60 basis points in constant currency driven by gross margin expansion. Foreign currency is expected to have minimal impact on operating margin in Fiscal 2019.
In the second quarter of Fiscal 2019, the Company expects net revenue to be flat to down slightly in constant currency. Foreign currency is expected to pressure revenue growth by approximately 30 to 50 basis points in the second quarter of Fiscal 2019.
Operating margin for the second quarter of Fiscal 2019 is expected to be up about 30 basis points in constant currency. Foreign currency is estimated to be a slight benefit to operating margin in the second quarter.
We expect the full year Fiscal 2019 tax rate to be approximately 21%. Second quarter of Fiscal 2019 tax rate is estimated at approximately 22%.
The Company continues to plan capital expenditures of approximately
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 “Full Year Fiscal 2019 and Second Quarter 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,” “can” 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, including Mr.
Ralph Lauren, 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
successfully implement our long-term growth strategy and achieve
anticipated operating enhancements and cost reductions from our
restructuring plans; the impact to our business resulting from
investments and other costs incurred in connection with the execution of
our long-term growth strategy, including restructuring-related charges,
which may be dilutive to our earnings in the short term; our ability to
continue to expand or grow our business internationally and the impact
of related changes in our customer, channel, and geographic sales mix as
a result; our ability to open new retail stores, concession shops, and
digital commerce sites in an effort to expand our direct-to-consumer
presence; the impact to our business resulting from changes in
consumers' ability, willingness, or preferences to purchase premium
lifestyle products that we offer for sale and our ability to forecast
consumer demand, which could result in either a build-up or shortage of
inventory; our ability to continue to maintain our brand image and
reputation and protect our trademarks; our ability to effectively manage
inventory levels and the increasing pressure on our margins in a highly
promotional retail environment; the impact to our business resulting
from potential costs and obligations related to the early closure of our
stores or termination of our long-term, non-cancellable leases; the
impact of economic, political, and other conditions on us, our
customers, suppliers, vendors, and lenders; our ability to secure our
facilities and systems and those of our third-party service providers
from, among other things, cybersecurity breaches, acts of vandalism,
computer viruses, or similar Internet or email events; our efforts to
successfully enhance, upgrade, and/or transition our global information
technology systems and digital commerce platform; a variety of legal,
regulatory, tax, political, and economic risks, including risks related
to the importation and exportation of products, tariffs, and other trade
barriers which our operations are currently subject to, or may become
subject to as a result of potential changes in legislation, and other
risks associated with our international operations, such as compliance
with the Foreign Corrupt Practices Act or violations of other
anti-bribery and corruption laws prohibiting improper payments, and the
burdens of complying with a variety of foreign laws and regulations,
including tax laws, trade and labor restrictions, and related laws that
may reduce the flexibility of our business; changes in our tax
obligations and effective tax rate due to a variety of other factors,
including potential additional changes in U.S. or foreign tax laws and
regulations, accounting rules, or the mix and level of earnings by
jurisdiction in future periods that are not currently known or
anticipated; the impact to our business resulting from the recently
enacted U.S. tax legislation commonly referred to as the Tax Cuts and
Jobs Act, including related changes to our tax obligations and effective
tax rate in future periods, as well as the enactment-related charges
that were recorded during Fiscal 2018 on a provisional basis based on a
reasonable estimate and are subject to change, all of which could differ
materially from our current expectations and/or investors' expectations;
the impact to our business resulting from the
RALPH LAUREN CORPORATION | |||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||||
(in millions) | |||||||||||||
(Unaudited) | |||||||||||||
June 30, | March 31, | July 1, | |||||||||||
2018 | 2018 | 2017 | |||||||||||
ASSETS | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 532.3 | $ | 1,304.6 | $ | 830.4 | |||||||
Short-term investments | 1,487.7 | 699.4 | 740.5 | ||||||||||
Accounts receivable, net of allowances | 260.0 | 421.4 | 279.2 | ||||||||||
Inventories | 890.0 | 761.3 | 859.9 | ||||||||||
Income tax receivable | 37.3 | 38.0 | 77.5 | ||||||||||
Prepaid expenses and other current assets | 342.8 | 323.7 | 299.2 | ||||||||||
Total current assets | 3,550.1 | 3,548.4 | 3,086.7 | ||||||||||
Property and equipment, net | 1,141.7 | 1,186.3 | 1,273.3 | ||||||||||
Deferred tax assets | 70.7 | 86.6 | 141.4 | ||||||||||
Goodwill | 928.7 | 950.5 | 924.2 | ||||||||||
Intangible assets, net | 181.4 | 188.0 | 213.7 | ||||||||||
Other non-current assets(a) | 162.7 | 183.5 | 174.7 | ||||||||||
Total assets | $ | 6,035.3 | $ | 6,143.3 | $ | 5,814.0 | |||||||
LIABILITIES AND EQUITY | |||||||||||||
Current liabilities: | |||||||||||||
Short-term debt | $ | - | $ | 10.1 | $ | - | |||||||
Current portion of long-term debt | 299.0 | 298.1 | - | ||||||||||
Accounts payable | 202.7 | 165.6 | 160.9 | ||||||||||
Income tax payable | 45.4 | 30.0 | 36.6 | ||||||||||
Accrued expenses and other current liabilities | 1,016.6 | 1,083.4 | 1,019.4 | ||||||||||
Total current liabilities | 1,563.7 | 1,587.2 | 1,216.9 | ||||||||||
Long-term debt | 288.0 | 288.0 | 590.4 | ||||||||||
Income tax payable | 124.8 | 124.8 | - | ||||||||||
Non-current liability for unrecognized tax benefits | 77.8 | 79.2 | 64.7 | ||||||||||
Other non-current liabilities | 560.0 | 606.7 | 581.9 | ||||||||||
Total liabilities | 2,614.3 | 2,685.9 | 2,453.9 | ||||||||||
Equity: | |||||||||||||
Common stock | 1.3 | 1.3 | 1.3 | ||||||||||
Additional paid-in-capital | 2,426.7 | 2,383.4 | 2,330.4 | ||||||||||
Retained earnings | 5,805.4 | 5,752.2 | 5,770.8 | ||||||||||
Treasury stock, Class A, at cost | (4,711.0 | ) | (4,581.0 | ) | (4,578.3 | ) | |||||||
Accumulated other comprehensive loss | (101.4 | ) | (98.5 | ) | (164.1 | ) | |||||||
Total equity | 3,421.0 | 3,457.4 | 3,360.1 | ||||||||||
Total liabilities and equity | $ | 6,035.3 | $ | 6,143.3 | $ | 5,814.0 | |||||||
Net Cash (incl. LT Investments) | 1,502.5 | 1,494.0 | 1,060.6 | ||||||||||
Cash & Investments (ST & LT) | 2,089.5 | 2,090.2 | 1,651.0 | ||||||||||
Net Cash (excl. LT Investments) | 1,433.0 | 1,407.8 | 980.5 | ||||||||||
Cash & ST Investments | 2,020.0 | 2,004.0 | 1,570.9 | ||||||||||
(a) Includes non-current investments of: | $ | 69.5 | $ | 86.2 | $ | 80.1 | |||||||
RALPH LAUREN CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||
(in millions, except per share data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
June 30, | July 1, | |||||||
2018 | 2017 | |||||||
North America | $ | 697.6 | $ | 709.7 | ||||
Europe | 350.6 | 323.5 | ||||||
Asia | 248.0 | 209.1 | ||||||
Other non-reportable segments | 94.4 | 104.8 | ||||||
Net revenues | 1,390.6 | 1,347.1 | ||||||
Cost of goods sold | (494.9 | ) | (495.9 | ) | ||||
Gross profit | 895.7 | 851.2 | ||||||
Selling, general, and administrative expenses | (741.9 | ) | (714.4 | ) | ||||
Impairment of assets | (1.3 | ) | (9.7 | ) | ||||
Restructuring and other charges | (22.4 | ) | (36.8 | ) | ||||
Total other operating expenses, net | (765.6 | ) | (760.9 | ) | ||||
Operating income | 130.1 | 90.3 | ||||||
Interest expense | (4.4 | ) | (5.0 | ) | ||||
Interest income | 9.2 | 2.0 | ||||||
Other expense, net | (2.0 | ) | (0.5 | ) | ||||
Income before income taxes | 132.9 | 86.8 | ||||||
Income tax provision | (23.9 | ) | (27.3 | ) | ||||
Net income | $ | 109.0 | $ | 59.5 | ||||
Net income per share - Basic | $ | 1.33 | $ | 0.73 | ||||
Net income per share - Diluted | $ | 1.31 | $ | 0.72 | ||||
Weighted average shares outstanding - Basic | 81.9 | 81.6 | ||||||
Weighted average shares outstanding - Diluted | 83.3 | 82.5 | ||||||
Dividends declared per share | $ | 0.625 | $ | 0.50 | ||||
RALPH LAUREN CORPORATION | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||
(in millions) | |||||||||
(Unaudited) | |||||||||
Three Months Ended | |||||||||
June 30, | July 1, | ||||||||
2018 | 2017 | ||||||||
Cash flows from operating activities: | |||||||||
Net income | $ | 109.0 | $ | 59.5 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization expense | 70.3 | 72.9 | |||||||
Deferred income tax expense (benefit) | 7.3 | (14.7 | ) | ||||||
Non-cash stock-based compensation expense | 21.5 | 21.6 | |||||||
Non-cash impairment of assets | 1.3 | 9.7 | |||||||
Non-cash restructuring-related inventory charges | - | 0.7 | |||||||
Other non-cash charges | 5.8 | 2.0 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 153.8 | 174.0 | |||||||
Inventories | (147.1 | ) | (55.4 | ) | |||||
Prepaid expenses and other current assets | (35.9 | ) | (4.6 | ) | |||||
Accounts payable and accrued liabilities | (0.1 | ) | 42.4 | ||||||
Income tax receivables and payables | 19.4 | 8.7 | |||||||
Deferred income | (4.8 | ) | 0.6 | ||||||
Other balance sheet changes | 30.1 | 16.8 | |||||||
Net cash provided by operating activities | 230.6 | 334.2 | |||||||
Cash flows from investing activities: | |||||||||
Capital expenditures | (42.3 | ) | (41.9 | ) | |||||
Purchases of investments | (1,250.1 | ) | (270.4 | ) | |||||
Proceeds from sales and maturities of investments | 469.8 | 187.4 | |||||||
Acquisitions and ventures | (4.5 | ) | (3.6 | ) | |||||
Net cash used in investing activities | (827.1 | ) | (128.5 | ) | |||||
Cash flows from financing activities: | |||||||||
Repayments of short-term debt | (9.9 | ) | - | ||||||
Payments of capital lease obligations | (5.7 | ) | (6.2 | ) | |||||
Payments of dividends | (40.6 | ) | (40.5 | ) | |||||
Repurchases of common stock, including shares surrendered for tax withholdings | (130.0 | ) | (14.4 | ) | |||||
Proceeds from exercise of stock options | 21.8 | 0.1 | |||||||
Net cash used in financing activities | (164.4 | ) | (61.0 | ) | |||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (18.8 | ) | 19.9 | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (779.7 | ) | 164.6 | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 1,355.5 | 711.8 | |||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 575.8 | $ | 876.4 | |||||
RALPH LAUREN CORPORATION | |||||||||
OTHER INFORMATION | |||||||||
(in millions) | |||||||||
(Unaudited) | |||||||||
SEGMENT INFORMATION | |||||||||
Net revenues and operating income for the periods ended June 30, 2018 and July 1, 2017 for each segment were as follows: | |||||||||
Three Months Ended | |||||||||
June 30, | July 1, | ||||||||
2018 | 2017 | ||||||||
Net revenues: | |||||||||
North America | $ | 697.6 | $ | 709.7 | |||||
Europe | 350.6 | 323.5 | |||||||
Asia | 248.0 | 209.1 | |||||||
Other non-reportable segments | 94.4 | 104.8 | |||||||
Total net revenues | $ | 1,390.6 | $ | 1,347.1 | |||||
Operating income: | |||||||||
North America | $ | 159.9 | $ | 150.5 | |||||
Europe | 73.9 | 67.1 | |||||||
Asia | 42.7 | 30.2 | |||||||
Other non-reportable segments | 30.8 | 33.0 | |||||||
307.3 | 280.8 | ||||||||
Unallocated corporate expenses | (154.8 | ) | (153.7 | ) | |||||
Unallocated restructuring and other charges | (22.4 | ) | (36.8 | ) | |||||
Total operating income | $ | 130.1 | $ | 90.3 | |||||
RALPH LAUREN CORPORATION | ||||||||||||||
Constant Currency Financial Measures | ||||||||||||||
(in millions) | ||||||||||||||
(Unaudited) | ||||||||||||||
Comparable Store Sales Data | ||||||||||||||
Three Months Ended | ||||||||||||||
June 30, 2018 | ||||||||||||||
% Change | ||||||||||||||
Constant Currency | ||||||||||||||
North America | ||||||||||||||
Digital commerce | (2 | %) | ||||||||||||
Excluding Digital commerce | (3 | %) | ||||||||||||
Total North America | (3 | %) | ||||||||||||
Europe | ||||||||||||||
Digital commerce | 2 | % | ||||||||||||
Excluding Digital commerce | (9 | %) | ||||||||||||
Total Europe | (8 | %) | ||||||||||||
Asia | ||||||||||||||
Digital commerce | 46 | % | ||||||||||||
Excluding Digital commerce | 6 | % | ||||||||||||
Total Asia | 6 | % | ||||||||||||
Total Ralph Lauren | (3 | %) | ||||||||||||
Operating Segment Net Revenue Data | ||||||||||||||
Three Months Ended | % Change | |||||||||||||
June 30, 2018 | July 1, 2017 | As Reported | Constant Currency | |||||||||||
North America | $ | 697.6 | $ | 709.7 | (1.7 | %) | (1.8 | %) | ||||||
Europe | 350.6 | 323.5 | 8.4 | % | 1.5 | % | ||||||||
Asia | 248.0 | 209.1 | 18.6 | % | 16.0 | % | ||||||||
Other non-reportable segments | 94.4 | 104.8 | (10.0 | %) | (10.1 | %) | ||||||||
Net revenues | $ | 1,390.6 | $ | 1,347.1 | 3.2 | % | 1.1 | % | ||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||||||||||||||
Revenue by Sales Channel | |||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||
June 30, 2018 | July 1, 2017 | ||||||||||||||||||||||||||||||
North |
Europe |
Asia |
Other | Total |
North |
Europe | Asia | Other | Total | ||||||||||||||||||||||
Sales Channel: | |||||||||||||||||||||||||||||||
Wholesale | $ | 310.1 | $ | 138.0 | $ | 12.6 | $ | 5.5 | $ | 466.2 | $ | 313.3 | $ | 115.6 | $ | 7.9 | $ | 6.0 | $ | 442.8 | |||||||||||
Retail | 387.5 | 212.6 | 235.4 | 49.9 | 885.4 | 396.4 | 207.9 | 201.2 | 57.0 | 862.5 | |||||||||||||||||||||
Licensing | - | - | - | 39.0 | 39.0 | - | - | - | 41.8 | 41.8 | |||||||||||||||||||||
Total net revenues | $ | 697.6 | $ | 350.6 | $ | 248.0 | $ | 94.4 | $ | 1,390.6 | $ | 709.7 | $ | 323.5 | $ | 209.1 | $ | 104.8 | $ | 1,347.1 | |||||||||||
RALPH LAUREN CORPORATION | ||||
Global Retail Store Network | ||||
June 30, | July 1, | |||
2018 | 2017 | |||
North America |
||||
Ralph Lauren Stores | 42 | 44 | ||
Polo Factory Stores | 178 | 172 | ||
Total Directly Operated Stores | 220 | 216 | ||
Concessions | 2 | 1 | ||
Europe |
||||
Ralph Lauren Stores | 20 | 20 | ||
Polo Factory Stores | 63 | 62 | ||
Total Directly Operated Stores | 83 | 82 | ||
Concessions | 25 | 31 | ||
Asia |
||||
Ralph Lauren Stores | 53 | 42 | ||
Polo Factory Stores | 54 | 48 | ||
Total Directly Operated Stores | 107 | 90 | ||
Concessions | 604 | 591 | ||
Other |
||||
Club Monaco Stores | 74 | 79 | ||
Club Monaco Concessions | 2 | 2 | ||
Global Directly Operated Stores and Concessions |
||||
Ralph Lauren Stores | 115 | 106 | ||
Polo Factory Stores | 295 | 282 | ||
Club Monaco Stores | 74 | 79 | ||
Total Directly Operated Stores | 484 | 467 | ||
Concessions | 633 | 625 | ||
Global Licensed Stores and Concessions |
||||
Ralph Lauren Licensed Stores | 88 | 105 | ||
Club Monaco Licensed Stores | 59 | 59 | ||
Total Licensed Stores | 147 | 164 | ||
Licensed Concessions | 132 | 99 | ||
RALPH LAUREN CORPORATION | |||||||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | |||||||||||||
(in millions, except per share data) | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2018 | |||||||||||||
As
Reported |
Total |
As
Adjusted |
|||||||||||
Net revenues | $ | 1,390.6 | $ | - | $ | 1,390.6 | |||||||
Gross profit | 895.7 | - | 895.7 | ||||||||||
Gross profit margin | 64.4 | % | 64.4 | % | |||||||||
Total other operating expenses, net | (765.6 | ) | 23.7 | (741.9 | ) | ||||||||
Operating expense margin | 55.1 | % | 53.3 | % | |||||||||
Operating income | 130.1 | 23.7 | 153.8 | ||||||||||
Operating margin | 9.4 | % | 11.1 | % | |||||||||
Income before income taxes | 132.9 | 23.7 | 156.6 | ||||||||||
Income tax provision | (23.9 | ) | (4.8 | ) | (28.7 | ) | |||||||
Effective tax rate | 18.0 | % | 18.3 | % | |||||||||
Net income | $ | 109.0 | $ | 18.9 | $ | 127.9 | |||||||
Net income per diluted share | $ | 1.31 | $ | 1.54 | |||||||||
Weighted average shares outstanding - Diluted | 83.3 | 83.3 | |||||||||||
SEGMENT INFORMATION - | |||||||||||||
OPERATING INCOME: | |||||||||||||
North America | $ | 159.9 | $ | - | $ | 159.9 | |||||||
Operating margin | 22.9 | % | 22.9 | % | |||||||||
Europe | 73.9 | 0.2 | 74.1 | ||||||||||
Operating margin | 21.1 | % | 21.1 | % | |||||||||
Asia | 42.7 | 0.2 | 42.9 | ||||||||||
Operating margin | 17.2 | % | 17.3 | % | |||||||||
Other non-reportable segments | 30.8 | 0.8 | 31.6 | ||||||||||
Operating margin | 32.7 | % | 33.5 | % | |||||||||
Unallocated corporate expenses and restructuring and other charges, net | (177.2 | ) | 22.5 | (154.7 | ) | ||||||||
Total operating income | $ | 130.1 | $ | 23.7 | $ | 153.8 | |||||||
Three Months Ended | |||||||||||||
July 1, 2017 | |||||||||||||
As
Reported |
Total |
As
Adjusted |
|||||||||||
Net revenues | $ | 1,347.1 | $ | - | $ | 1,347.1 | |||||||
Gross profit | 851.2 | 0.7 | 851.9 | ||||||||||
Gross profit margin | 63.2 | % | 63.2 | % | |||||||||
Total other operating expenses, net | (760.9 | ) | 46.5 | (714.4 | ) | ||||||||
Operating expense margin | (56.5 | %) | 53.0 | % | |||||||||
Operating income | 90.3 | 47.2 | 137.5 | ||||||||||
Operating margin | 6.7 | % | 10.2 | % | |||||||||
Income before income taxes | 86.8 | 47.2 | 134.0 | ||||||||||
Income tax provision | (27.3 | ) | (15.6 | ) | (42.9 | ) | |||||||
Effective tax rate | 31.4 | % | 32.0 | % | |||||||||
Net income | $ | 59.5 | $ | 31.6 | $ | 91.1 | |||||||
Net income per diluted share | $ | 0.72 | $ | 1.11 | |||||||||
Weighted average shares outstanding - Basic | 81.6 | 81.6 | |||||||||||
Weighted average shares outstanding - Diluted | 82.5 | 82.5 | |||||||||||
SEGMENT INFORMATION - | |||||||||||||
OPERATING INCOME: | |||||||||||||
North America | $ | 150.5 | $ | 1.3 | $ | 151.8 | |||||||
Operating margin | 21.2 | % | 21.4 | % | |||||||||
Europe | 67.1 | 1.2 | 68.3 | ||||||||||
Operating margin | 20.7 | % | 21.1 | % | |||||||||
Asia | 30.2 | 0.1 | 30.3 | ||||||||||
Operating margin | 14.4 | % | 14.5 | % | |||||||||
Other non-reportable segments | 33.0 | 0.1 | 33.1 | ||||||||||
Operating margin | 31.5 | % | 31.5 | % | |||||||||
Unallocated corporate expenses and restructuring and other charges, net | (190.5 | ) | 44.5 | (146.0 | ) | ||||||||
Total operating income | $ | 90.3 | $ | 47.2 | $ | 137.5 | |||||||
RALPH LAUREN CORPORATION | ||
Footnotes to Non-U.S. GAAP Financial Measures | ||
(a) |
Adjustments for inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations. |
|
Adjustments for impairment-related charges are recorded within impairment of assets in the consolidated statements of operations. |
||
Adjustments for all other charges are recorded within restructuring and other charges in the consolidated statements of operations. |
||
(b) | Adjustments for the three months ended June 30, 2018 include (i) charges of $16.0 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges and impairment of assets; and (ii) other charges of $7.7 million primarily related to its customs audit and depreciation expense associated with the Company's former Polo store at 711 Fifth Avenue in New York City. | |
(c) | Adjustments for the three months ended July 1, 2017 include (i) charges of $37.0 million recorded in connection with the Way Forward Plan, consisting of restructuring charges, impairment of assets, and inventory-related charges; and (ii) other charges of $10.2 million primarily related to the departure of Mr. Stefan Larsson and depreciation expense associated with the Company's former Polo store at 711 Fifth Avenue in New York City. | |
NON-U.S. GAAP FINANCIAL MEASURES
Since
This earnings release also includes certain other non-U.S. GAAP financial measures relating to the impact of charges and other items as described herein. The Company uses non-U.S. GAAP financial measures, among other things, to evaluate its operating performance and to better represent the manner in which it conducts and views its business. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers non-U.S. GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP, and may be different from non-U.S. GAAP measures reported by other companies.
Adjustments made during the fiscal periods presented include charges
recorded in connection with the Company’s restructuring plans, as well
as depreciation expense associated with the Company’s former Polo store
at
Additionally, the Company’s full year Fiscal 2019 and second quarter
Fiscal 2019 guidance excludes certain anticipated restructuring-related
and other one-time charges. The Company is not able to provide a full
reconciliation of these non-U.S. GAAP financial measures to U.S. GAAP
because certain material items that impact these measures, such as the
timing and exact amount of charges related to our restructuring plans,
have not yet occurred or are out of the Company’s control. Accordingly,
a reconciliation of our non-U.S. GAAP based financial measure guidance
to the most directly comparable U.S. GAAP measures is not available
without unreasonable effort. However, the Company has identified the
estimated impact of certain items excluded from its long-term financial
outlook. Specifically, the Company’s long-term financial outlook
excludes estimated pretax charges of approximately
View source version on businesswire.com: https://www.businesswire.com/news/home/20180731005179/en/
Source:
Ralph Lauren Corporation
Investor Relations:
Evren Kopelman,
212-813-7862
Or
Corporate Communications:
Lindsay Knoll,
212-650-4401
rl-press@ralphlauren.com