Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2019 Results
Delivers Better Than Expected Results in First Year of Next Great Chapter Plan; Board of Directors Approves 10% Dividend Increase
For Fiscal 2019, earnings per diluted share was
The Company also announced that its Board of Directors declared a 10% increase in the regular quarterly cash dividend on the Company's Common Stock. The new quarterly cash dividend is
"This year we marked an incredible milestone for our business and our brands – 50 years of inspiration, passion and innovation," said
"Our
We delivered across the following strategic initiatives in the fourth quarter and full year Fiscal 2019:
- Win Over a New Generation of Consumers
- For Fiscal 2019, increased marketing investments by 13% to last year, driven by unique and highly impactful brand building campaigns and fashion shows including our 50th Anniversary Fashion Show, Ralph's Café immersive fashion experience at our
Madison Avenue flagship store and ‘Family is Who You Love' campaign which launched in the fourth quarter - Elevated our brand and connected with new consumers through our collaboration with
UK -based skate brand Palace, Limited Edition launches throughout the year and new distribution in key specialty retail doors - Continued to leverage celebrities, social influencers and cultural events that resonate with different segments of the
Ralph Lauren consumer base, including our most recentRalph Lauren Romance fragrance campaign featuringTaylor Hill
- For Fiscal 2019, increased marketing investments by 13% to last year, driven by unique and highly impactful brand building campaigns and fashion shows including our 50th Anniversary Fashion Show, Ralph's Café immersive fashion experience at our
- Energize Core Products and Accelerate Under-Developed Categories
- Average unit retail across our direct-to-consumer network was up 8% in both the fourth quarter and full year Fiscal 2019 driven by our ongoing initiatives to elevate the product assortment and improve quality of sales
- Renewed our core styles and focused on our icons which continue to be key drivers of improving sales trends
- Continued to build our high-potential under-developed categories, with denim and outerwear sell-out trends accelerating in the Fall/Holiday season, driven by an improved product, merchandising and marketing focus
- Drive Targeted Expansion in Our Regions and Channels
- Momentum in
Asia continued with 13% revenue growth and 5% comp growth in constant currency in Fiscal 2019, led by over 30% growth in Mainland China Europe outperformed our expectations in Fiscal 2019 with 7% revenue growth in constant currency, driven by 10% growth in wholesale and positive retail comps in the second half of the year- Continued to expand our global distribution with 135 new retail stores including over 90 stores in
Asia , and partnered with over 20 new digital pure play retailers globally
- Momentum in
- Lead with Digital
- Global digital revenue grew 11% to last year in constant currency in Fiscal 2019, with strength across every region
- Our directly-operated digital flagships in
North America andEurope returned to positive growth during the year, supported by improvements in functionality, an enhanced consumer experience, and higher quality of sales initiatives - Expanded our partnerships with key digital wholesale players across regions
- Operate with Discipline to Fuel Growth
- Adjusted gross margin was up 90 basis points in Fiscal 2019 driven by quality of sales
- Adjusted operating expenses, excluding our marketing investment, were below revenue growth in Fiscal 2019
- Launched our direct-to-consumer shared inventory initiative in
North America in the fourth quarter, driving increased efficiency in our distribution network and a reduced warehouse footprint - Increased geographic diversification across our sourcing network and delivered strong progress on global lead time reductions
Fourth Quarter Fiscal 2019 Income Statement Review
Net Revenue. In the fourth quarter of Fiscal 2019, revenue declined 1.5% to
Revenue performance for the Company's reportable segments in the fourth quarter compared to the prior year period was as follows:
- North America Revenue.
North America revenue in the fourth quarter decreased 7% to$708 million .North America wholesale revenue was down 10% to last year, including softness in select spring fashion concepts and planned reductions in off-price sales. In retail, comparable store sales inNorth America were down 4%, including a 7% decline in brick and mortar stores and a 6% increase in digital commerce. Excluding the impact of Easter timing, comparable store sales inNorth America were down approximately 1% to last year. - Europe Revenue.
Europe revenue in the fourth quarter increased 4% to$435 million on a reported basis and increased 11% to last year in constant currency. In retail, comparable store sales inEurope were up 5% on a constant currency basis, driven by a 5% increase in brick and mortar stores and a 6% increase in digital commerce.Europe wholesale revenue increased 4% on a reported basis and increased 11% in constant currency. - Asia Revenue.
Asia revenue in the fourth quarter increased 6% to$273 million on a reported basis and increased 10% in constant currency, with strong performance across every market, led by approximately 30% constant currency growth in Mainland China. Comparable store sales inAsia increased 4% in constant currency, reflecting growth in both brick and mortar and digital commerce operations.
Gross Profit. Gross profit for the fourth quarter of Fiscal 2019 was
The increase in adjusted gross margin was driven by initiatives to improve quality of sales through reduced promotional activity and improved pricing as well as favorable product, geographic and channel sales mix. Foreign currency negatively impacted gross margin by 20 basis points in the fourth quarter.
Operating Expenses. Operating expenses in the fourth quarter of Fiscal 2019 were
Adjusted operating expense rate was 53.8%, 40 basis points below the prior year period, excluding restructuring-related and other charges, driven by cost savings initiatives and timing of marketing spend.
Operating Income. Operating income for the fourth quarter of Fiscal 2019 was
- North America Operating Income.
North America operating income in the fourth quarter was$109 million on a reported and$112 million on an adjusted basis.Adjusted North America operating margin was 15.9%, down 150 basis points to last year as gross margin improvements were more than offset by higher SG&A as a percentage of sales. - Europe Operating Income.
Europe operating income in the fourth quarter was$98 million on a reported and$103 million on an adjusted basis. AdjustedEurope operating margin was 23.7%, 360 basis points higher than the prior year period. In constant currency, the adjusted operating margin expanded 340 basis points driven by gross margin expansion and SG&A leverage. - Asia Operating Income.
Asia operating income in the fourth quarter was$38 million on a reported basis and$39 million on an adjusted basis. AdjustedAsia operating margin was 14.3%, down 90 basis points to the prior year and down 80 basis points in constant currency.
Net Income and EPS. On a reported basis, net income in the fourth quarter of Fiscal 2019 was
In the fourth quarter of Fiscal 2019, the Company had an effective tax rate of 10.6% on a reported and 17.5% on an adjusted basis, excluding restructuring-related and other charges. This compared to a reported and adjusted effective tax rate of (66%) and 13%, respectively, in the prior year period.
Full Year Fiscal 2019 Income Statement Review
Net Revenues. For Fiscal 2019, revenue increased 2% to
- North America Revenue. For Fiscal 2019,
North America revenue decreased 1% on both a reported and constant currency basis to$3.2 billion , including our planned reduction in off-price sales, while retail comps were flat to last year. - Europe Revenue. For Fiscal 2019,
Europe revenue increased 5% to$1.7 billion on a reported basis. In constant currency, revenue increased 6% driven by wholesale and retail growth. - Asia Revenue. For Fiscal 2019,
Asia revenue increased 11% to$1.0 billion on a reported basis. In constant currency, revenue increased 13% with double-digit growth in retail and wholesale.
Gross Profit. Gross profit for Fiscal 2019 was
Operating Expenses. For Fiscal 2019, operating expenses were
Operating Income. Operating income for Fiscal 2019 was
- North America Operating Income.
North America operating income in Fiscal 2019 was$683 million and operating margin was 21.3% on a reported basis, including restructuring-related and other charges. On an adjusted basis,North America operating income in Fiscal 2019 was$688 million and operating margin was 21.5%, a 30 basis point improvement over last year. - Europe Operating Income.
Europe operating income in Fiscal 2019 was$390 million and operating margin was 23.5% on a reported basis, including restructuring-related and other charges. On an adjusted basis,Europe operating income in Fiscal 2019 was$397 million and operating margin was 23.9%, 120 basis points above last year. - Asia Operating Income.
Asia operating income in Fiscal 2019 was$161 million and operating margin was 15.5% on a reported basis, including restructuring-related and other charges. On an adjusted basis,Asia operating income in Fiscal 2019 was$166 million and operating margin was 16.0%, 90 basis points above last year.
Net Income and EPS. In Fiscal 2019, on a reported basis, net income was
For Fiscal 2019, on a reported basis, the Company had an effective tax rate of 26% as compared to 67% in the prior year. The adjusted effective tax rate was 21%, excluding restructuring-related and other charges. This compared to an adjusted effective tax rate of 24% for Fiscal 2018.
Balance Sheet and Cash Flow Review
The Company ended Fiscal 2019 with
Inventory at the end of Fiscal 2019 was
The Company had
The Company repurchased approximately
Full Year Fiscal 2020 and First Quarter Outlook
The full year Fiscal 2020 and first 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 2020, the Company expects net revenue to be up 2% to 3% on a constant currency basis. Foreign currency is expected to negatively impact revenue growth by 90 to 100 basis points in Fiscal 2020.
The Company expects operating margin for Fiscal 2020 to increase 40 to 60 basis points in constant currency, driven by modest gross margin expansion and SG&A leverage. Foreign currency is expected to negatively impact operating margin by about 10 to 20 basis points in Fiscal 2020.
In the first quarter of Fiscal 2020, the Company expects net revenue to increase 3% to 5% in constant currency, benefiting from the timing of Easter. Foreign currency is expected to negatively impact revenue growth by about 190 to 200 basis points in the first quarter of Fiscal 2020.
Operating margin for the first quarter of Fiscal 2020 is expected to be up 30 to 50 basis points in constant currency. Foreign currency is expected to negatively impact operating margin by about 10 basis points in the first quarter of Fiscal 2020.
The full year Fiscal 2020 tax rate is expected to be about 22%. First quarter of Fiscal 2020 tax rate is expected to be about 19%.
The Company is planning capital expenditures of approximately
With the expected repurchase activity in Fiscal 2020, the Company's Board of Directors also approved additional shares to be available for future stock repurchase activity, allowing the Company to purchase up to an additional
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 may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the 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; our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories; our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence; our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers; our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to competitively price our products and create an acceptable value proposition for consumers; the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory; our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; 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; a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products 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; the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments with
RALPH LAUREN CORPORATION | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||||
(in millions) | ||||||||||
(Audited) | ||||||||||
March 30, | March 31, | |||||||||
2019 | 2018 | |||||||||
ASSETS |
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Current assets: | ||||||||||
Cash and cash equivalents | $ | 584.1 | $ | 1,304.6 | ||||||
Short-term investments | 1,403.4 | 699.4 | ||||||||
Accounts receivable, net of allowances | 398.1 | 421.4 | ||||||||
Inventories | 817.8 | 761.3 | ||||||||
Income tax receivable | 32.1 | 38.0 | ||||||||
Prepaid expenses and other current assets | 359.3 | 323.7 | ||||||||
Total current assets | 3,594.8 | 3,548.4 | ||||||||
Property and equipment, net | 1,039.2 | 1,186.3 | ||||||||
Deferred tax assets | 67.0 | 86.6 | ||||||||
Goodwill | 919.6 | 950.5 | ||||||||
Intangible assets, net | 163.7 | 188.0 | ||||||||
Other non-current assets(a) | 158.5 | 183.5 | ||||||||
Total assets | $ | 5,942.8 | $ | 6,143.3 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Short-term debt | $ | - | $ | 10.1 | ||||||
Current portion of long-term debt | - | 298.1 | ||||||||
Accounts payable | 202.3 | 165.6 | ||||||||
Income tax payable | 29.4 | 30.0 | ||||||||
Accrued expenses and other current liabilities | 968.4 | 1,083.4 | ||||||||
Total current liabilities | 1,200.1 | 1,587.2 | ||||||||
Long-term debt | 689.1 | 288.0 | ||||||||
Income tax payable | 146.7 | 124.8 | ||||||||
Non-current liability for unrecognized tax benefits | 78.8 | 79.2 | ||||||||
Other non-current liabilities | 540.9 | 606.7 | ||||||||
Total liabilities | 2,655.6 | 2,685.9 | ||||||||
Equity: | ||||||||||
Common stock | 1.3 | 1.3 | ||||||||
Additional paid-in-capital | 2,493.8 | 2,383.4 | ||||||||
Retained earnings | 5,979.1 | 5,752.2 | ||||||||
Treasury stock, Class A, at cost | (5,083.6 | ) | (4,581.0 | ) | ||||||
Accumulated other comprehensive loss | (103.4 | ) | (98.5 | ) | ||||||
Total equity | 3,287.2 | 3,457.4 | ||||||||
Total liabilities and equity | $ | 5,942.8 | $ | 6,143.3 | ||||||
Net Cash (incl. LT Investments) | 1,343.3 | 1,494.0 | ||||||||
Cash & Investments (ST & LT) | 2,032.4 | 2,090.2 | ||||||||
Net Cash (excl. LT Investments) | 1,298.4 | 1,407.8 | ||||||||
Cash & ST Investments | 1,987.5 | 2,004.0 | ||||||||
(a) Includes non-current investments of: | $ | 44.9 | $ | 86.2 | ||||||
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 | |||||||||||
March 30, | March 31, | ||||||||||
2019 | 2018 | ||||||||||
North America | $ | 708.4 | $ | 759.3 | |||||||
Europe | 434.9 | 420.0 | |||||||||
Asia | 273.5 | 256.8 | |||||||||
Other non-reportable segments | 88.9 | 93.1 | |||||||||
Net revenues | 1,505.7 | 1,529.2 | |||||||||
Cost of goods sold | (604.2 | ) | (620.7 | ) | |||||||
Gross profit | 901.5 | 908.5 | |||||||||
Selling, general, and administrative expenses | (809.4 | ) | (828.6 | ) | |||||||
Impairment of assets | (12.5 | ) | (25.2 | ) | |||||||
Restructuring and other charges | (51.7 | ) | (29.3 | ) | |||||||
Total other operating expenses, net | (873.6 | ) | (883.1 | ) | |||||||
Operating income | 27.9 | 25.4 | |||||||||
Interest expense | (5.1 | ) | (3.8 | ) | |||||||
Interest income | 11.3 | 4.8 | |||||||||
Other income (expense), net | 1.2 | (1.5 | ) | ||||||||
Income before income taxes | 35.3 | 24.9 | |||||||||
Income tax benefit (provision) | (3.7 | ) | 16.4 | ||||||||
Net income | $ | 31.6 | $ | 41.3 | |||||||
Net income per common share - Basic | $ | 0.40 | $ | 0.51 | |||||||
Net income per common share - Diluted | $ | 0.39 | $ | 0.50 | |||||||
Weighted average common shares outstanding - Basic | 79.0 | 81.7 | |||||||||
Weighted average common shares outstanding - Diluted | 80.1 | 82.8 | |||||||||
Dividends declared per share | $ | 0.625 | $ | 0.50 | |||||||
RALPH LAUREN CORPORATION | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||
(in millions, except per share data) | |||||||||||
(Audited) | |||||||||||
Twelve Months Ended | |||||||||||
March 30, | March 31, | ||||||||||
2019 | 2018 | ||||||||||
North America | $ | 3,202.9 | $ | 3,231.0 | |||||||
Europe | 1,659.9 | 1,585.0 | |||||||||
Asia | 1,041.0 | 933.7 | |||||||||
Other non-reportable segments | 409.2 | 432.6 | |||||||||
Net revenues | 6,313.0 | 6,182.3 | |||||||||
Cost of goods sold | (2,427.0 | ) | (2,430.6 | ) | |||||||
Gross profit | 3,886.0 | 3,751.7 | |||||||||
Selling, general, and administrative expenses | (3,168.3 | ) | (3,095.5 | ) | |||||||
Impairment of assets | (25.8 | ) | (50.0 | ) | |||||||
Restructuring and other charges | (130.1 | ) | (108.0 | ) | |||||||
Total other operating expenses, net | (3,324.2 | ) | (3,253.5 | ) | |||||||
Operating income | 561.8 | 498.2 | |||||||||
Interest expense | (20.7 | ) | (18.2 | ) | |||||||
Interest income | 40.8 | 12.3 | |||||||||
Other income (expense), net | 0.6 | (3.1 | ) | ||||||||
Income before income taxes | 582.5 | 489.2 | |||||||||
Income tax provision | (151.6 | ) | (326.4 | ) | |||||||
Net income | $ | 430.9 | $ | 162.8 | |||||||
Net income per common share - Basic | $ | 5.35 | $ | 1.99 | |||||||
Net income per common share - Diluted | $ | 5.27 | $ | 1.97 | |||||||
Weighted average common shares outstanding - Basic | 80.6 | 81.7 | |||||||||
Weighted average common shares outstanding - Diluted | 81.7 | 82.5 | |||||||||
Dividends declared per share | $ | 2.50 | $ | 2.00 | |||||||
RALPH LAUREN CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||||
(in millions) | ||||||||||
(Audited) | ||||||||||
Twelve Months Ended | ||||||||||
March 30, | March 31, | |||||||||
2019 | 2018 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 430.9 | $ | 162.8 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization expense | 281.3 | 295.2 | ||||||||
Deferred income tax expense | 8.5 | 84.1 | ||||||||
Loss on sale of property | 11.6 | - | ||||||||
Non-cash stock-based compensation expense | 88.6 | 74.5 | ||||||||
Non-cash impairment of assets | 25.8 | 50.0 | ||||||||
Non-cash restructuring-related inventory charges | 7.2 | 7.6 | ||||||||
Other non-cash charges | 6.9 | 11.9 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | 10.1 | 34.5 | ||||||||
Inventories | (90.8 | ) | 57.8 | |||||||
Prepaid expenses and other current assets | (40.5 | ) | (15.1 | ) | ||||||
Accounts payable and accrued liabilities | (4.7 | ) | 64.6 | |||||||
Income tax receivables and payables | 29.7 | 165.1 | ||||||||
Deferred income | (16.5 | ) | 1.4 | |||||||
Other balance sheet changes | 35.7 | (19.3 | ) | |||||||
Net cash provided by operating activities | 783.8 | 975.1 | ||||||||
Cash flows from investing activities: | ||||||||||
Capital expenditures | (197.7 | ) | (161.6 | ) | ||||||
Purchases of investments | (3,030.8 | ) | (1,605.6 | ) | ||||||
Proceeds from sales and maturities of investments | 2,357.5 | 1,582.7 | ||||||||
Acquisitions and ventures | (4.5 | ) | (4.6 | ) | ||||||
Proceeds from sale of property | 20.0 | - | ||||||||
Settlement of net investment hedges | (23.8 | ) | - | |||||||
Net cash used in investing activities | (879.3 | ) | (189.1 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from issuance of short-term debt | - | 10.1 | ||||||||
Repayments of short-term debt | (9.9 | ) | - | |||||||
Proceeds from the issuance of long-term debt | 398.1 | - | ||||||||
Repayments of long-term debt | (300.0 | ) | - | |||||||
Payments of capital lease obligations | (19.6 | ) | (28.2 | ) | ||||||
Payments of dividends | (190.7 | ) | (162.4 | ) | ||||||
Repurchases of common stock, including shares surrendered for tax withholdings | (502.6 | ) | (17.1 | ) | ||||||
Proceeds from exercise of stock options | 21.8 | 0.1 | ||||||||
Other financing activities | (2.8 | ) | - | |||||||
Net cash used in financing activities | (605.7 | ) | (197.5 | ) | ||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (27.8 | ) | 55.2 | |||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (729.0 | ) | 643.7 | |||||||
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 | $ | 626.5 | $ | 1,355.5 | ||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||
OTHER INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||||
Net revenues and operating income for the periods ended March 30, 2019 and March 31, 2018 for each segment were as follows: | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
March 30, | March 31, | March 30, | March 31, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||
Net revenues: | |||||||||||||||||||
North America | $ | 708.4 | $ | 759.3 | $ | 3,202.9 | $ | 3,231.0 | |||||||||||
Europe | 434.9 | 420.0 | 1,659.9 | 1,585.0 | |||||||||||||||
Asia | 273.5 | 256.8 | 1,041.0 | 933.7 | |||||||||||||||
Other non-reportable segments | 88.9 | 93.1 | 409.2 | 432.6 | |||||||||||||||
Total net revenues | $ | 1,505.7 | $ | 1,529.2 | $ | 6,313.0 | $ | 6,182.3 | |||||||||||
Operating income: | |||||||||||||||||||
North America | $ | 108.8 | $ | 128.3 | $ | 682.8 | $ | 677.6 | |||||||||||
Europe | 98.0 | 83.1 | 389.9 | 356.7 | |||||||||||||||
Asia | 37.7 | 36.2 | 161.0 | 137.2 | |||||||||||||||
Other non-reportable segments | 23.7 | 10.6 | 121.6 | 107.5 | |||||||||||||||
268.2 | 258.2 | 1,355.3 | 1,279.0 | ||||||||||||||||
Unallocated corporate expenses | (188.6 | ) | (203.5 | ) | (663.4 | ) | (672.8 | ) | |||||||||||
Unallocated restructuring and other charges | (51.7 | ) | (29.3 | ) | (130.1 | ) | (108.0 | ) | |||||||||||
Total operating income | $ | 27.9 | $ | 25.4 | $ | 561.8 | $ | 498.2 | |||||||||||
RALPH LAUREN CORPORATION | ||||||||||||||||
Constant Currency Financial Measures | ||||||||||||||||
(in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Comparable Store Sales Data | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
March 30, 2019
% Change |
March 30, 2018
% Change |
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Constant Currency | Constant Currency | |||||||||||||||
North America | ||||||||||||||||
Digital commerce | 6 | % | 10 | % | ||||||||||||
Excluding Digital commerce | (7 | %) | (2 | %) | ||||||||||||
Total North America | (4 | %) | - | % | ||||||||||||
Europe | ||||||||||||||||
Digital commerce | 6 | % | 6 | % | ||||||||||||
Excluding Digital commerce | 5 | % | (1 | %) | ||||||||||||
Total Europe | 5 | % | (1 | %) | ||||||||||||
Asia | ||||||||||||||||
Digital commerce | 36 | % | 51 | % | ||||||||||||
Excluding Digital commerce | 4 | % | 4 | % | ||||||||||||
Total Asia | 4 | % | 5 | % | ||||||||||||
Total Ralph Lauren | 1 | % | 1 | % | ||||||||||||
Operating Segment Net Revenue Data | ||||||||||||||||
Three Months Ended | % Change | |||||||||||||||
March 30, 2019 | March 31, 2018 | As Reported | Constant Currency | |||||||||||||
North America | $ | 708.4 | $ | 759.3 | (6.7 | %) | (6.5 | %) | ||||||||
Europe | 434.9 | 420.0 | 3.5 | % | 11.1 | % | ||||||||||
Asia | 273.5 | 256.8 | 6.5 | % | 9.9 | % | ||||||||||
Other non-reportable segments | 88.9 | 93.1 | (4.6 | %) | (4.3 | %) | ||||||||||
Net revenues | $ | 1,505.7 | $ | 1,529.2 | (1.5 | %) | 1.2 | % | ||||||||
Twelve Months Ended | % Change | |||||||||||||||
March 30, 2019 | March 31, 2018 | As Reported | Constant Currency | |||||||||||||
North America | $ | 3,202.9 | $ | 3,231.0 | (0.9 | %) | (0.8 | %) | ||||||||
Europe | 1,659.9 | 1,585.0 | 4.7 | % | 6.5 | % | ||||||||||
Asia | 1,041.0 | 933.7 | 11.5 | % | 12.7 | % | ||||||||||
Other non-reportable segments | 409.2 | 432.6 | (5.4 | %) | (5.4 | %) | ||||||||||
Net revenues | $ | 6,313.0 | $ | 6,182.3 | 2.1 | % | 2.8 | % | ||||||||
RALPH LAUREN CORPORATION | ||||||||||||||||||||||||||||||||
Revenue by Sales Channel | ||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
March 30, 2019 | March 31, 2018 | |||||||||||||||||||||||||||||||
North
America |
Europe | Asia | Other | Total | North
America |
Europe | Asia | Other | Total | |||||||||||||||||||||||
Sales Channel: | ||||||||||||||||||||||||||||||||
Wholesale | $ | 386.0 | $ | 242.7 | $ | 22.9 | $ | 4.6 | $ | 656.2 | $ | 429.7 | $ | 234.3 | $ | 20.2 | $ | 9.4 | $ | 693.6 | ||||||||||||
Retail | 322.4 | 192.2 | 250.6 | 42.7 | 807.9 | 329.6 | 185.7 | 236.6 | 40.0 | 791.9 | ||||||||||||||||||||||
Licensing | - | - | - | 41.6 | 41.6 | - | - | - | 43.7 | 43.7 | ||||||||||||||||||||||
Total net revenues | $ | 708.4 | $ | 434.9 | $ | 273.5 | $ | 88.9 | $ | 1,505.7 | $ | 759.3 | $ | 420.0 | $ | 256.8 | $ | 93.1 | $ | 1,529.2 | ||||||||||||
Twelve Months Ended | ||||||||||||||||||||||||||||||||
March 30, 2019 | March 31, 2018 | |||||||||||||||||||||||||||||||
North
America |
Europe | Asia | Other | Total | North
America |
Europe | Asia | Other | Total | |||||||||||||||||||||||
Sales Channel: | ||||||||||||||||||||||||||||||||
Wholesale | $ | 1,514.4 | $ | 778.8 | $ | 71.1 | $ | 28.2 | $ | 2,392.5 | $ | 1,571.4 | $ | 727.1 | $ | 59.6 | $ | 31.1 | $ | 2,389.2 | ||||||||||||
Retail | 1,688.5 | 881.1 | 969.9 | 208.3 | 3,747.8 | 1,659.6 | 857.9 | 874.1 | 224.8 | 3,616.4 | ||||||||||||||||||||||
Licensing | - | - | - | 172.7 | 172.7 | - | - | - | 176.7 | 176.7 | ||||||||||||||||||||||
Total net revenues | $ | 3,202.9 | $ | 1,659.9 | $ | 1,041.0 | $ | 409.2 | $ | 6,313.0 | $ | 3,231.0 | $ | 1,585.0 | $ | 933.7 | $ | 432.6 | $ | 6,182.3 | ||||||||||||
RALPH LAUREN CORPORATION | ||||||
Global Retail Store Network | ||||||
March 30, | March 31, | |||||
2019 | 2018 | |||||
North America |
||||||
Ralph Lauren Stores | 41 | 41 | ||||
Polo Factory Stores | 183 | 174 | ||||
Total Directly Operated Stores | 224 | 215 | ||||
Concessions | 2 | 2 | ||||
Europe |
||||||
Ralph Lauren Stores | 23 | 19 | ||||
Polo Factory Stores | 64 | 62 | ||||
Total Directly Operated Stores | 87 | 81 | ||||
Concessions | 24 | 25 | ||||
Asia |
||||||
Ralph Lauren Stores | 57 | 51 | ||||
Polo Factory Stores | 58 | 54 | ||||
Total Directly Operated Stores | 115 | 105 | ||||
Concessions | 622 | 603 | ||||
Other |
||||||
Club Monaco Stores | 75 | 71 | ||||
Club Monaco Concessions | 5 | 2 | ||||
Global Directly Operated Stores and Concessions |
||||||
Ralph Lauren Stores | 121 | 111 | ||||
Polo Factory Stores | 305 | 290 | ||||
Club Monaco Stores | 75 | 71 | ||||
Total Directly Operated Stores | 501 | 472 | ||||
Concessions | 653 | 632 | ||||
Global Licensed Stores and Concessions |
||||||
Ralph Lauren Licensed Stores | 108 | 88 | ||||
Club Monaco Licensed Stores | 58 | 59 | ||||
Total Licensed Stores | 166 | 147 | ||||
Licensed Concessions | 119 | 131 | ||||
RALPH LAUREN CORPORATION | |||||||||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | |||||||||||||||
March 30, 2019 | |||||||||||||||
As
Reported |
Total
Adjustments(a)(b) |
As
Adjusted |
|||||||||||||
Net revenues | $ | 1,505.7 | $ | - | $ | 1,505.7 | |||||||||
Gross profit | 901.5 | 4.1 | 905.6 | ||||||||||||
Gross profit margin | 59.9 | % | 60.1 | % | |||||||||||
Total other operating expenses, net | (873.6 | ) | 64.2 | (809.4 | ) | ||||||||||
Operating expense margin | 58.0 | % | 53.8 | % | |||||||||||
Operating income | 27.9 | 68.3 | 96.2 | ||||||||||||
Operating margin | 1.9 | % | 6.4 | % | |||||||||||
Income before income taxes | 35.3 | 68.3 | 103.6 | ||||||||||||
Income tax provision | (3.7 | ) | (14.5 | ) | (18.2 | ) | |||||||||
Effective tax rate | 10.6 | % | 17.5 | % | |||||||||||
Net income | $ | 31.6 | $ | 53.8 | $ | 85.4 | |||||||||
Net income per diluted common share | $ | 0.39 | $ | 1.07 | |||||||||||
Weighted average common shares outstanding - Diluted | 80.1 | 80.1 | |||||||||||||
SEGMENT INFORMATION - | |||||||||||||||
OPERATING INCOME: | |||||||||||||||
North America | $ | 108.8 | $ | 3.6 | $ | 112.4 | |||||||||
Operating margin | 15.4 | % | 15.9 | % | |||||||||||
Europe | 98.0 | 5.0 | 103.0 | ||||||||||||
Operating margin | 22.5 | % | 23.7 | % | |||||||||||
Asia | 37.7 | 1.5 | 39.2 | ||||||||||||
Operating margin | 13.8 | % | 14.3 | % | |||||||||||
Other non-reportable segments | 23.7 | 1.2 | 24.9 | ||||||||||||
Operating margin | 26.6 | % | 27.9 | % | |||||||||||
Unallocated corporate expenses and restructuring and other charges | (240.3 | ) | 57.0 | (183.3 | ) | ||||||||||
Total operating income | $ | 27.9 | $ | 68.3 | $ | 96.2 | |||||||||
Twelve Months Ended | |||||||||||||||
March 30, 2019 | |||||||||||||||
As
Reported |
Total
Adjustments(a)(c) |
As
Adjusted |
|||||||||||||
Net revenues | $ | 6,313.0 | $ | - | $ | 6,313.0 | |||||||||
Gross profit | 3,886.0 | 7.2 | 3,893.2 | ||||||||||||
Gross profit margin | 61.6 | % | 61.7 | % | |||||||||||
Total other operating expenses, net | (3,324.2 | ) | 155.9 | (3,168.3 | ) | ||||||||||
Operating expense margin | 52.7 | % | 50.2 | % | |||||||||||
Operating income | 561.8 | 163.1 | 724.9 | ||||||||||||
Operating margin | 8.9 | % | 11.5 | % | |||||||||||
Income before income taxes | 582.5 | 163.1 | 745.6 | ||||||||||||
Income tax provision | (151.6 | ) | (6.5 | ) | (158.1 | ) | |||||||||
Effective tax rate | 26.0 | % | 21.2 | % | |||||||||||
Net income | $ | 430.9 | $ | 156.6 | $ | 587.5 | |||||||||
Net income per diluted common share | $ | 5.27 | $ | 7.19 | |||||||||||
Weighted average common shares outstanding - Diluted | 81.7 | 81.7 | |||||||||||||
SEGMENT INFORMATION - | |||||||||||||||
OPERATING INCOME: | |||||||||||||||
North America | $ | 682.8 | $ | 5.0 | $ | 687.8 | |||||||||
Operating margin | 21.3 | % | 21.5 | % | |||||||||||
Europe | 389.9 | 6.8 | 396.7 | ||||||||||||
Operating margin | 23.5 | % | 23.9 | % | |||||||||||
Asia | 161.0 | 5.2 | 166.2 | ||||||||||||
Operating margin | 15.5 | % | 16.0 | % | |||||||||||
Other non-reportable segments | 121.6 | 10.1 | 131.7 | ||||||||||||
Operating margin | 29.7 | % | 32.2 | % | |||||||||||
Unallocated corporate expenses and restructuring and other charges | (793.5 | ) | 136.0 | (657.5 | ) | ||||||||||
Total operating income | $ | 561.8 | $ | 163.1 | $ | 724.9 | |||||||||
RALPH LAUREN CORPORATION | |||||||||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | |||||||||||||||
March 31, 2018 | |||||||||||||||
As
Reported |
Total
Adjustments(a)(d) |
As
Adjusted |
|||||||||||||
Net revenues | $ | 1,529.2 | $ | - | $ | 1,529.2 | |||||||||
Gross profit | 908.5 | 6.3 | 914.8 | ||||||||||||
Gross profit margin | 59.4 | % | 59.8 | % | |||||||||||
Total other operating expenses, net | (883.1 | ) | 54.5 | (828.6 | ) | ||||||||||
Operating expense margin | 57.8 | % | 54.2 | % | |||||||||||
Operating income | 25.4 | 60.8 | 86.2 | ||||||||||||
Operating margin | 1.7 | % | 5.6 | % | |||||||||||
Income before income taxes | 24.9 | 60.8 | 85.7 | ||||||||||||
Income tax benefit (provision) | 16.4 | (27.2 | ) | (10.8 | ) | ||||||||||
Effective tax rate | (66.0 | %) | 12.6 | % | |||||||||||
Net income | $ | 41.3 | $ | 33.6 | $ | 74.9 | |||||||||
Net income per diluted common share | $ | 0.50 | $ | 0.90 | |||||||||||
Weighted average common shares outstanding - Diluted | 82.8 | 82.8 | |||||||||||||
SEGMENT INFORMATION - | |||||||||||||||
OPERATING INCOME: | |||||||||||||||
North America | $ | 128.3 | $ | 4.1 | $ | 132.4 | |||||||||
Operating margin | 16.9 | % | 17.4 | % | |||||||||||
Europe | 83.1 | 1.4 | 84.5 | ||||||||||||
Operating margin | 19.8 | % | 20.1 | % | |||||||||||
Asia | 36.2 | 2.8 | 39.0 | ||||||||||||
Operating margin | 14.1 | % | 15.2 | % | |||||||||||
Other non-reportable segments | 10.6 | 13.7 | 24.3 | ||||||||||||
Operating margin | 11.3 | % | 26.1 | % | |||||||||||
Unallocated corporate expenses and restructuring and other charges | (232.8 | ) | 38.8 | (194.0 | ) | ||||||||||
Total operating income | $ | 25.4 | $ | 60.8 | $ | 86.2 | |||||||||
Twelve Months Ended | |||||||||||||||
March 31, 2018 | |||||||||||||||
As
Reported |
Total
Adjustments(a)(e) |
As
Adjusted |
|||||||||||||
Net revenues | $ | 6,182.3 | $ | - | $ | 6,182.3 | |||||||||
Gross profit | 3,751.7 | 7.6 | 3,759.3 | ||||||||||||
Gross profit margin | 60.7 | % | 60.8 | % | |||||||||||
Total other operating expenses, net | (3,253.5 | ) | 158.0 | (3,095.5 | ) | ||||||||||
Operating expense margin | 52.6 | % | 50.1 | % | |||||||||||
Operating income | 498.2 | 165.6 | 663.8 | ||||||||||||
Operating margin | 8.1 | % | 10.7 | % | |||||||||||
Income before income taxes | 489.2 | 165.6 | 654.8 | ||||||||||||
Income tax provision | (326.4 | ) | 169.1 | (157.3 | ) | ||||||||||
Effective tax rate | 66.7 | % | 24.0 | % | |||||||||||
Net income | $ | 162.8 | $ | 334.7 | $ | 497.5 | |||||||||
Net income per diluted common share | $ | 1.97 | $ | 6.03 | |||||||||||
Weighted average common shares outstanding - Diluted | 82.5 | 82.5 | |||||||||||||
SEGMENT INFORMATION - | |||||||||||||||
OPERATING INCOME: | |||||||||||||||
North America | $ | 677.6 | $ | 7.5 | $ | 685.1 | |||||||||
Operating margin | 21.0 | % | 21.2 | % | |||||||||||
Europe | 356.7 | 2.7 | 359.4 | ||||||||||||
Operating margin | 22.5 | % | 22.7 | % | |||||||||||
Asia | 137.2 | 3.9 | 141.1 | ||||||||||||
Operating margin | 14.7 | % | 15.1 | % | |||||||||||
Other non-reportable segments | 107.5 | 22.8 | 130.3 | ||||||||||||
Operating margin | 24.9 | % | 30.1 | % | |||||||||||
Unallocated corporate expenses and restructuring and other charges | (780.8 | ) | 128.7 | (652.1 | ) | ||||||||||
Total operating income | $ | 498.2 | $ | 165.6 | $ | 663.8 | |||||||||
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 enactment-related charges recorded in connection with U.S. tax reform and other income tax-related adjustments are recorded within the income tax provision 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 March 30, 2019 include (i) charges of $37.2 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges, impairment of assets, and inventory-related charges; (ii) additional impairment of assets of $9.3 million related to underperforming stores as a result of on-going store portfolio evaluation and the planned sale of a corporate asset; and (iii) other charges of $21.8 million primarily related to the Company's new sabbatical leave program and depreciation expense associated with its former Polo store at 711 Fifth Avenue in New York City. | |
(c) | Adjustments for the twelve months ended March 30, 2019 include (i) charges of $111.5 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges, impairment of assets, inventory-related charges, and a loss on sale of property; (ii) additional impairment of assets of $15.1 million related to underperforming stores as a result of on-going store portfolio evaluation and the planned sale of a corporate asset; and (iii) other charges of $36.5 million primarily related to the Company's new sabbatical leave program, depreciation expense associated with its former Polo store at 711 Fifth Avenue in New York City, and its customs audit. The income tax provision reflects enactment-related charges of $27.6 million recorded in connection with U.S. tax reform. | |
(d) | Adjustments for the three months ended March 31, 2018 include (i) charges of $23.8 million recorded in connection with the Way Forward plan, consisting of restructuring charges, impairment of assets, and inventory-related charges; (ii) additional impairment of assets of $14.4 million related to underperforming stores as a result of on-going store portfolio evaluation; (iii) an intangible asset impairment charge of $8.8 million; and (iv) net other charges of $13.8 million related to depreciation expense associated with the Company's former Polo store at 711 Fifth Avenue in New York City and its customs audit. The income tax benefit (provision) reflects the reversal of enactment-related charges of $9.9 million recorded in connection with U.S. tax reform. | |
(e) | Adjustments for the twelve months ended March 31, 2018 include (i) charges of $102.8 million recorded in connection with the Way Forward plan, consisting of restructuring charges, impairment of assets, inventory-related charges, and accelerated stock-based compensation expense; (ii) additional impairment of assets of $25.2 million related to underperforming stores as a result of on-going store portfolio evaluation; (iii) an intangible asset impairment charge of $8.8 million; and (iv) net other charges of $28.8 million primarily related to depreciation expense associated with the Company's former Polo store at 711 Fifth Avenue in New York City, its customs audit, the departure of Mr. Stefan Larsson, and the reversal of reserves associated with the settlement of certain non-income tax issues. The income tax provision reflects enactment-related charges of $221.4 million recorded in connection with U.S. tax reform. | |
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 2020 and first quarter Fiscal 2020 guidance excludes certain anticipated restructuring-related and other 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 financial outlook. Specifically, the Company's financial outlook excludes estimated remaining pretax charges of approximately
View source version on businesswire.com: https://www.businesswire.com/news/home/20190514005258/en/
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Corinna Van der Ghinst, 212-813-7868
IR@ralphlauren.com
Or
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