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Strategic Growth Plan, “Writing Our Next Great Chapter,” To Deliver
Sustainable, Long-Term Growth And Value Creation
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Five-Year Financial Outlook Includes Low to Mid-Single Digit
Revenue Compounded Annual Growth Rate and Mid-Teen Operating Margin by
Fiscal 2023 in Constant Currency, Excluding Restructuring Charges
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Additional $1 Billion Stock Repurchase Program and a 25% Dividend
Increase Authorized by the Board of Directors
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Linda Kozlowski, COO of Etsy, To Be Added To the Board of Directors
NEW YORK--(BUSINESS WIRE)--Jun. 7, 2018--
Ralph Lauren Corporation (NYSE:RL), a global leader in the design,
marketing, and distribution of premium lifestyle products, will be
hosting a meeting for investors and analysts today to present its
strategic growth plan, “Writing Our Next Great Chapter,” to deliver
sustainable long-term growth and value creation, and to discuss the
Company’s long term financial outlook.
As part of its strategic plan, the Company intends to execute on the
following five strategic priorities:
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Win over a new generation of consumers
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Energize core products and accelerate under-developed categories
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Drive targeted expansion in its regions and channels
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Lead with digital across all activities
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Operate with discipline to fuel growth
“As we reflect on 50 years, I am so energized by the work we are doing
to build the future for our Company and iconic brand,” said Ralph
Lauren, Executive Chairman and Chief Creative Officer. “With a clear
plan, Patrice’s leadership and our dedicated, passionate teams all over
the world, we are reigniting the entrepreneurial spirit that is at the
heart of our heritage and culture.”
“We are confident that with our clear strategic plan in place, we can
return Ralph Lauren to sustainable long-term growth and value creation,”
said Patrice Louvet, President and Chief Executive Officer. “We are
building on a solid foundation, starting with our iconic Ralph Lauren
brand, our engaged global organization and a strong balance sheet. By
putting the consumer back at the center of our business, elevating and
energizing our brands and balancing productivity with growth, we’ll be
well-positioned to deliver our next great chapter.”
Long-Term Financial Outlook
The Company is reiterating its Fiscal 2019 guidance that was recently
provided on its earnings call on May 23rd and introducing its
five-year financial outlook. This outlook is in constant currency and
excludes restructuring charges.
Over the next five years, from Fiscal 2018 to Fiscal 2023, the Company
expects revenue to grow at a compounded annual growth rate of low to
mid-single digits in constant currency. In addition, the Company is
targeting a return to revenue growth in Fiscal 2020 in constant currency.
Operating margin is expected to expand to mid-teens by Fiscal 2023, in
constant currency. In addition, marketing spend is expected to grow to
approximately 5% of revenue by Fiscal 2023.
In addition, capital expenditures are expected to represent 4-5%
of revenue by Fiscal 2023.
Dividend Increase and Share Repurchase Authorization
The Company’s Board of Directors declared a 25% increase in the regular
quarterly cash dividend on the Company's Common Stock. The new quarterly
cash dividend is $0.625 per share. This represents a new annual dividend
of $2.50 per share. The next quarterly dividend is payable on July 13,
2018 to shareholders of record at the close of business on June 29, 2018.
In addition, the Company's Board of Directors authorized an additional
$1 billion stock repurchase program permitting the Company to purchase
shares of Class A Common Stock, subject to overall business and market
conditions. This amount is in addition to the $100 million available at
the end of the fourth quarter of Fiscal 2018 as part of a previously
authorized stock repurchase program, bringing the Company's total
current authorization to $1.1 billion.
The Company plans to return 100% of free cash flow to shareholders over
the next five years, returning over $2.5 billion on a cumulative basis
through Fiscal 2023 through dividends and repurchases.
Fiscal 2019 Restructuring Activities
The Company’s Board of Directors approved a restructuring plan
associated with the Company’s strategic objective of operating with
discipline to drive sustainable long-term growth (the “Fiscal 2019
Restructuring Plan”). The Company expects to incur restructuring charges
of $100-$150 million in connection with its Fiscal 2019 Restructuring
Plan, associated with activities primarily related to the rightsizing
and consolidation of its global distribution network and corporate
offices, and through severance actions.
These charges are expected to be substantially recognized by the end of
Fiscal 2019 and are in addition to the $100 million of Way Forward Plan
charges that are expected to be recognized in Fiscal 2019.
The Company expects its Fiscal 2019 Restructuring Plan activities to
result in approximately $60-$80 million of gross annualized expense
savings. This is in addition to the cost savings realized associated
with the Company’s Way Forward Plan.
New Addition to the Board of Directors
In addition to the recent announcement that Michael George joined the
Company’s Board of Directors and Angela Ahrendts agreed to be nominated
to join in August, the Company today announced that Linda Findley
Kozlowski, COO at Etsy, agreed to be nominated to join the Company’s
Board in August. A separate release provides more detail on this
announcement.
Change in Definition of Comparable Store Sales
Effective beginning the first quarter of Fiscal 2019, the Company
changed its definition of comparable store sales to reflect the change
in sales of the Company’s stores that have been open for at least 13
full fiscal months. This aligns with general retail industry practice
and provides a more relevant measure of performance.
More details regarding the matters set forth in this press release can
be found in our Form 8-K filed this morning with the Securities &
Exchange Commission.
Investor Day Webcast
Today’s investor meeting will be webcast live on the Company’s investor
relations website at http://investor.ralphlauren.com
from approximately 9 A.M. to 3 P.M. Eastern, and will be archived on the
website for approximately one year after the event.
The Company will present its strategic growth plan, and several members
of management will speak including: Ralph Lauren, Executive Chairman and
Chief Creative Officer; Patrice Louvet, President and Chief Executive
Officer; Jonathan Bottomley, Chief Marketing Officer; Valerie Hermann,
President of Global Brands; David Lauren, Chief Innovation Officer; Jeff
Kuster, President of North America; Howard Smith; President of
International; and Jane Nielsen, Chief Financial Officer.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the design,
marketing and distribution of premium lifestyle products in four
categories: apparel, home, accessories and fragrances. For 50 years,
Ralph Lauren's reputation and distinctive image have been consistently
developed across an expanding number of products, brands and
international markets. The Company's brand names, which include Ralph
Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph
Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children,
Chaps, and Club Monaco, among others, constitute one of the world's most
widely recognized families of consumer brands. For more information, go
to http://investor.ralphlauren.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release and oral statements made from time to time by
representatives of the Company (including without limitation, as part of
the Investor Day presentation) contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the statements
under “Long-Term Financial Outlook,” statements describing our “Writing
Our Next Great Chapter” plan, 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, expense savings, earnings, dividends,
share repurchases and total shareholder return, 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 United Kingdom's decision to exit the European Union
and the uncertainty surrounding the terms and conditions of such a
withdrawal, as well as the related impact to global stock markets and
currency exchange rates; the impact to our business resulting from
increases in the costs of raw materials, transportation, and labor; our
exposure to currency exchange rate fluctuations from both a
transactional and translational perspective; the potential impact to our
business resulting from the financial difficulties of certain of our
large wholesale customers, which may result in consolidations,
liquidations, restructurings, and other ownership changes in the retail
industry, as well as other changes in the competitive marketplace,
including the introduction of new products or pricing changes by our
competitors; the potential impact on our operations and on our suppliers
and customers resulting from natural or man-made disasters; the impact
to our business of events of unrest and instability that are currently
taking place in certain parts of the world, as well as from any
terrorist action, retaliation, and the threat of further action or
retaliation; our ability to maintain our credit profile and ratings
within the financial community; our ability to access sources of
liquidity to provide for our cash needs, including our debt obligations,
tax obligations, payment of dividends, capital expenditures, and
potential repurchases of our Class A common stock, as well as the
ability of our customers, suppliers, vendors, and lenders to access
sources of liquidity to provide for their own cash needs; the potential
impact to the trading prices of our securities if our Class A common
stock share repurchase activity and/or cash dividend payments differ
from investors' expectations; our intention to introduce new products or
enter into or renew alliances; changes in the business of, and our
relationships with, major department store customers and licensing
partners; our ability to make certain strategic acquisitions and
successfully integrate the acquired businesses into our existing
operations; 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
Securities and Exchange Commission. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
SUPPLEMENTAL FINANCIAL INFORMATION
Since Ralph Lauren Corporation is a global company, the comparability of
its operating results reported in U.S. Dollars is also affected by
foreign currency exchange rate fluctuations because the underlying
currencies in which it transacts change in value over time compared to
the U.S. Dollar. These rate fluctuations can have a significant effect
on the Company’s reported results. As such, in addition to financial
measures prepared in accordance with generally accepted accounting
principles ("U.S. GAAP"), the Company’s discussions often contain
references to constant currency measures, which are calculated by
translating the current-year and prior-year reported amounts into
comparable amounts using a single foreign exchange rate for each
currency. The Company presents constant currency financial information,
which is a non-U.S. GAAP financial measure, as a supplement to its
reported operating results. The Company uses constant currency
information to provide a framework to assess how its businesses
performed excluding the effects of foreign currency exchange rate
fluctuations. Management believes this information is useful to
investors to facilitate comparisons of operating results and better
identify trends in the Company’s businesses. The constant currency
performance measures should be viewed in addition to, and not in lieu of
or superior to, the Company’s operating performance measures calculated
in accordance with U.S. GAAP.
In addition, the Company’s long-term financial outlook excludes
restructuring-related and other one-time charges. 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.
The Company is not able to provide a full reconciliation of the non-GAAP
financial measures to 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-GAAP
financial measure guidance to the corresponding GAAP measures is not
available without unreasonable effort. The Company has identified the
estimated impact of the items excluded from its long-term financial
outlook. Specifically, the Company’s long-term financial outlook
excludes estimated pretax charges of approximately $100 million related
to its Way Forward Plan and approximately $100-150 million related to
its Fiscal 2019 Restructuring Plan.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180607005247/en/
Source: Ralph Lauren Corporation
Ralph Lauren Corporation
Investor Relations:
Evren Kopelman,
212-813-7862
or
Corporate Communications:
Katie Ioanilli,
212-205-5947
rl-press@ralphlauren.com