Ralph Lauren Reports Second Quarter Fiscal 2021 Results
- Maintained Balance Sheet Strength and Liquidity with
$2.4 Billion in Cash and Investments and Continued Expense Reductions and Inventory Discipline - Second Quarter Revenues Were
$1.2 Billion Reflecting Continued Recovery from COVID-19-Related Impacts, Led by Chinese Mainland Returning to Pre-COVID Growth Rates - Second Quarter Average Unit Retail Increased 26% Driven by Ongoing Brand Elevation and Favorable Geographic and Channel Mix Shifts
- Announced Restructuring Actions to Position the Company for Future Growth, Beginning with Organizational Realignment and Transition of Chaps Brand to a Fully Licensed Business
"The strength of our timeless brand and the values that have always been our touchstone continue to anchor us through this period of change and uncertainty," said
"Looking across the first half of the fiscal year, we continued our elevation journey while fast-tracking Connected Retail and our company-wide digital transformation," said
Key Achievements in Second Quarter Fiscal 2021
As we continued to navigate the evolving global retail environment, we delivered the following highlights across our strategic priorities in the second quarter of Fiscal 2021:
Win Over a New Generation of Consumers- Engaged with new and existing consumers through a continued focus on digital activations and key brand moments across social media, sports, and music. Second quarter highlights included our
Ralph Lauren x Bitmoji Collection, the first-ever customizable branded wardrobe forSnapchat , our sponsorship of the US Open Tennis Championship, outfitting BTS' official music video for "Dynamite," our partnership with popular Netflix show Elite and an exclusive virtual concert experience featuring Chance the Rapper at ourChicago flagship - Continued to drive authentic campaigns that empower our communities and embody our core
Ralph Lauren values, including our Design for Good competition benefiting COVID-19 relief and our 20th Anniversary Pink Pony Collection in the fight against cancer - Early consumer segmentation efforts in our digital commerce and factory channels are contributing to revenues and gross margins through the expanded use of personalized communications and promotional offers
- Engaged with new and existing consumers through a continued focus on digital activations and key brand moments across social media, sports, and music. Second quarter highlights included our
- Energize Core Products and Accelerate Under-Developed Categories
- Continued to evolve our product mix to align with changing consumer preferences by region, including a return to pre-COVID categories in
Asia andEurope and more casual assortments inNorth America . Second quarter AUR increased 26% with strong double-digit growth inNorth America andEurope - Moved effectively through core product and wear-now summer categories during the quarter while prudently building into key seasonal categories such as sweaters, fleece and outerwear in order to position our brands well for the upcoming fall/holiday period
- Partnered with key digital pure play retailers including Zalando, Asos and Urban Outfitters to deliver exclusive capsule collections in the quarter, driving strong engagement with Gen Z consumers
- Continued to evolve our product mix to align with changing consumer preferences by region, including a return to pre-COVID categories in
- Drive Targeted Expansion in Our Regions and Channels
- Performance improved sequentially across all regions in the quarter led by our digital channels, despite further disruptions from COVID-19 and cautious consumer behavior
- Chinese mainland performance continued to improve, with second quarter sales increasing more than 30% to last year in constant currency, recovering to pre-COVID trends
- Lead With Digital
- Global owned digital sales increased mid-teens to last year, with double-digit growth in all regions.
North America digital sales accelerated, with sales to domestic customers up high-teens - Continued to expand our offering of Connected Retailing capabilities to enhance the consumer experience, which now include: virtual clienteling, Buy Online-Ship to Store, Buy Online-Pick Up in Store, curbside pickup, appointment scheduling, and mobile checkout and contactless payments
- Global owned digital sales increased mid-teens to last year, with double-digit growth in all regions.
- Operate With Discipline to Fuel Growth
- Adjusted operating expenses decreased 19% to last year, primarily driven by savings from employee furloughs, lower rent and reductions in corporate expenses
- Inventories declined 12% at the end of the quarter, reflecting continued efforts to ensure healthy inventory positions across geographies and channels
- Continued improving our speed-to-market despite a challenging global supply chain environment, with 25% of our orders completed in lead times of three months or less, compared to a single-digit penetration last year
Second Quarter Fiscal 2021 Income Statement Review
Net Revenue. In the second quarter of Fiscal 2021, revenue decreased by 30% to
Revenue performance for the Company's reportable segments in the second quarter compared to the prior year period was as follows:
- North America Revenue.
North America revenue in the second quarter decreased 38% to$543 million . In retail, comparable store sales inNorth America were down 32%, with a 40% decrease in brick and mortar stores partly offset by a 10% increase in digital commerce.North America wholesale revenue decreased 46%.
- Europe Revenue.
Europe revenue in the second quarter decreased 25% to$359 million on a reported basis and decreased 28% in constant currency. In retail, comparable store sales inEurope were down 29%, with a 35% decrease in brick and mortar stores partly offset by a 26% increase in digital commerce.Europe wholesale revenue decreased 23% on a reported basis and decreased 27% in constant currency.
- Asia Revenue.
Asia revenue in the second quarter decreased 7% to$237 million on a reported basis and decreased 8% in constant currency basis. Comparable store sales inAsia decreased 11%, with a 12% decline in our brick and mortar stores partly offset by a 32% increase in digital commerce.
Gross Profit. Gross profit for the second quarter of Fiscal 2021 was
Operating Expenses. Operating expenses in the second quarter of Fiscal 2021 were
Operating Income (Loss). Operating loss for the second quarter of Fiscal 2021 was
- North America Operating Income.
North America operating income in the second quarter was$123 million on a reported basis and$118 million on an adjusted basis.Adjusted North America operating margin was 21.7%, down 10 basis points to last year.
- Europe Operating Income.
Europe operating income in the second quarter was$84 million on a reported basis and$100 million on an adjusted basis. AdjustedEurope operating margin was 27.8%, down 150 basis points to last year. Foreign currency favorably impacted adjusted operating margin rate by 30 basis points in the second quarter.
- Asia Operating Income.
Asia operating income in the second quarter was$41 million on both a reported and adjusted basis. AdjustedAsia operating margin was 17.4%, up 120 basis points to last year. Foreign currency favorably impacted adjusted operating margin rate by 10 basis points in the second quarter.
Net Income (Loss) and EPS. Net loss in the second quarter of Fiscal 2021 was
In the second quarter of Fiscal 2021, the Company had an effective tax rate of approximately (34%) on a reported basis and 25% on an adjusted basis. This compared to an effective tax rate of approximately 23% on both a reported and adjusted basis in the prior year period.
Balance Sheet and Cash Flow Review
The Company ended the second quarter of Fiscal 2021 with
Inventory at the end of the second quarter of Fiscal 2021 was
Fiscal 2021 Strategic Realignment Plan Update
As previously announced, a strategic review has been underway to support future growth and profitability, and to create a sustainable cost structure. The review process includes the evaluation of
On
As part of
This agreement is expected to create incremental value for the Company by enabling an even greater focus on elevating its core brands in the marketplace, reducing its direct exposure to the
In addition to the updates provided today, the Company anticipates additional actions associated with the aforementioned initiatives as part of the Fiscal 2021 Strategic Realignment Plan.
Full Year Fiscal 2021 and Third Quarter Outlook
We continue to note the ongoing high level of uncertainty and evolving situation surrounding COVID-19 impacting the timing and path of recovery in each market, including the potential for second waves of outbreaks across various markets.
We expect our financial results for both the third quarter and full year Fiscal 2021 to continue to be adversely impacted by the pandemic and prolonged demand recovery.
We anticipate gross margin expansion continuing through the second half of the fiscal year, also at a more moderate pace compared to the first half, and a slight decline in operating expenses.
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 12:00
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 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, earnings, and citizenship and sustainability goals and are indicated by words or phrases such as "anticipate," "outlook," "estimate," "expect," "project," "believe," "envision," "can," "will," "goal," "target," 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 certain 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.
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CONSOLIDATED BALANCE SHEETS |
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Prepared in accordance with |
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(Unaudited) |
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(millions) |
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ASSETS |
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Current assets: |
|
|
|
|
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|
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Cash and cash equivalents |
|
$ |
2,012.0 |
|
|
$ |
1,620.4 |
|
|
$ |
548.1 |
|
Short-term investments |
|
434.1 |
|
|
495.9 |
|
|
1,041.4 |
|
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Accounts receivable, net of allowances |
|
354.0 |
|
|
277.1 |
|
|
483.2 |
|
|||
Inventories |
|
887.0 |
|
|
736.2 |
|
|
1,012.5 |
|
|||
Income tax receivable |
|
61.1 |
|
|
84.8 |
|
|
33.6 |
|
|||
Prepaid expenses and other current assets |
|
158.9 |
|
|
160.8 |
|
|
267.9 |
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Total current assets |
|
3,907.1 |
|
|
3,375.2 |
|
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3,386.7 |
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Property and equipment, net |
|
921.5 |
|
|
979.5 |
|
|
1,011.0 |
|
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Operating lease right-of-use assets |
|
1,406.3 |
|
|
1,511.6 |
|
|
1,567.1 |
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|||
Deferred tax assets |
|
352.9 |
|
|
245.2 |
|
|
97.6 |
|
|||
|
|
935.0 |
|
|
915.5 |
|
|
913.8 |
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Intangible assets, net |
|
131.1 |
|
|
141.0 |
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|
152.3 |
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Other non-current assets(a) |
|
97.7 |
|
|
111.9 |
|
|
100.0 |
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Total assets |
|
$ |
7,751.6 |
|
|
$ |
7,279.9 |
|
|
$ |
7,228.5 |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Short-term debt |
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$ |
— |
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|
$ |
475.0 |
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$ |
— |
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Current portion of long-term debt |
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— |
|
|
299.6 |
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|
297.3 |
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Accounts payable |
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284.5 |
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|
246.8 |
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350.3 |
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Income tax payable |
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82.4 |
|
|
65.1 |
|
|
60.1 |
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Current operating lease liabilities |
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317.7 |
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|
288.4 |
|
|
273.2 |
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Accrued expenses and other current liabilities |
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869.1 |
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717.1 |
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755.1 |
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Total current liabilities |
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1,553.7 |
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2,092.0 |
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1,736.0 |
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Long-term debt |
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1,631.0 |
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396.4 |
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396.1 |
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Long-term operating lease liabilities |
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1,460.0 |
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1,568.3 |
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1,651.3 |
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Income tax payable |
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118.7 |
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|
132.7 |
|
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132.7 |
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Non-current liability for unrecognized tax benefits |
|
87.6 |
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88.9 |
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79.7 |
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Other non-current liabilities |
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356.5 |
|
|
308.5 |
|
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319.1 |
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Total liabilities |
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5,207.5 |
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4,586.8 |
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|
4,314.9 |
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Equity: |
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Common stock |
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1.3 |
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|
1.3 |
|
|
1.3 |
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Additional paid-in-capital |
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2,629.0 |
|
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2,594.4 |
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|
2,544.6 |
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Retained earnings |
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5,827.2 |
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5,994.0 |
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|
6,009.4 |
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|||
|
|
(5,813.9 |
) |
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(5,778.4 |
) |
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(5,526.3 |
) |
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Accumulated other comprehensive loss |
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(99.5 |
) |
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(118.2 |
) |
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(115.4 |
) |
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Total equity |
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2,544.1 |
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|
2,693.1 |
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|
2,913.6 |
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Total liabilities and equity |
|
$ |
7,751.6 |
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$ |
7,279.9 |
|
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$ |
7,228.5 |
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|
|
|
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|
|
$ |
815.1 |
|
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$ |
945.3 |
|
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$ |
896.1 |
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Cash & Investments (ST & LT) |
|
2,446.1 |
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|
2,116.3 |
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|
1,589.5 |
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|||
|
|
815.1 |
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945.3 |
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|
896.1 |
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|||
Cash & ST Investments |
|
2,446.1 |
|
|
2,116.3 |
|
|
1,589.5 |
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(a) Includes non-current investments of: |
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$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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Prepared in accordance with |
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(Unaudited) |
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Three Months Ended |
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(millions, except per share data) |
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|
$ |
542.9 |
|
|
$ |
881.2 |
|
|
|
359.5 |
|
|
480.2 |
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|
|
236.6 |
|
|
255.3 |
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Other non-reportable segments |
|
54.5 |
|
|
89.5 |
|
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Net revenues |
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1,193.5 |
|
|
1,706.2 |
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||
Cost of goods sold |
|
(394.1 |
) |
|
(657.2 |
) |
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Gross profit |
|
799.4 |
|
|
1,049.0 |
|
||
Selling, general, and administrative expenses |
|
(628.2 |
) |
|
(795.3 |
) |
||
Impairment of assets |
|
(31.0 |
) |
|
(6.1 |
) |
||
Restructuring and other charges |
|
(160.5 |
) |
|
(14.5 |
) |
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Total other operating expenses, net |
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(819.7 |
) |
|
(815.9 |
) |
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Operating income (loss) |
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(20.3 |
) |
|
233.1 |
|
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Interest expense |
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(12.8 |
) |
|
(4.4 |
) |
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Interest income |
|
2.2 |
|
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9.6 |
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Other income (expense), net |
|
1.8 |
|
|
(1.7 |
) |
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Income (loss) before income taxes |
|
(29.1 |
) |
|
236.6 |
|
||
Income tax provision |
|
(10.0 |
) |
|
(54.5 |
) |
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Net income (loss) |
|
$ |
(39.1 |
) |
|
$ |
182.1 |
|
Net income (loss) per common share: |
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|
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Basic |
|
$ |
(0.53 |
) |
|
$ |
2.37 |
|
Diluted |
|
$ |
(0.53 |
) |
|
$ |
2.34 |
|
Weighted average common shares outstanding: |
|
|
|
|
||||
Basic |
|
73.5 |
|
|
76.7 |
|
||
Diluted |
|
73.5 |
|
|
77.9 |
|
||
Dividends declared per share |
|
$ |
— |
|
|
$ |
0.6875 |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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Prepared in accordance with |
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(Unaudited) |
||||||||
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Six Months Ended |
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|
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|
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||||
|
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(millions, except per share data) |
||||||
|
|
$ |
708.0 |
|
|
$ |
1,600.6 |
|
|
|
480.2 |
|
|
841.0 |
|
||
|
|
408.5 |
|
|
513.9 |
|
||
Other non-reportable segments |
|
84.3 |
|
|
179.5 |
|
||
Net revenues |
|
1,681.0 |
|
|
3,135.0 |
|
||
Cost of goods sold |
|
(532.9 |
) |
|
(1,165.2 |
) |
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Gross profit |
|
1,148.1 |
|
|
1,969.8 |
|
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Selling, general, and administrative expenses |
|
(1,135.8 |
) |
|
(1,542.0 |
) |
||
Impairment of assets |
|
(33.1 |
) |
|
(7.3 |
) |
||
Restructuring and other charges |
|
(167.5 |
) |
|
(44.1 |
) |
||
Total other operating expenses, net |
|
(1,336.4 |
) |
|
(1,593.4 |
) |
||
Operating income (loss) |
|
(188.3 |
) |
|
376.4 |
|
||
Interest expense |
|
(22.4 |
) |
|
(8.6 |
) |
||
Interest income |
|
5.1 |
|
|
21.2 |
|
||
Other income (expense), net |
|
3.9 |
|
|
(5.8 |
) |
||
Income (loss) before income taxes |
|
(201.7 |
) |
|
383.2 |
|
||
Income tax benefit (provision) |
|
34.9 |
|
|
(84.0 |
) |
||
Net income (loss) |
|
$ |
(166.8 |
) |
|
$ |
299.2 |
|
Net income (loss) per common share: |
|
|
|
|
||||
Basic |
|
$ |
(2.27 |
) |
|
$ |
3.86 |
|
Diluted |
|
$ |
(2.27 |
) |
|
$ |
3.79 |
|
Weighted average common shares outstanding: |
|
|
|
|
||||
Basic |
|
73.3 |
|
|
77.4 |
|
||
Diluted |
|
73.3 |
|
|
78.9 |
|
||
Dividends declared per share |
|
$ |
— |
|
|
$ |
1.375 |
|
|
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Prepared in accordance with |
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(Unaudited) |
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|
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|
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|
|
Six Months Ended |
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|
|
|
|
|
||||
|
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(millions) |
||||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
(166.8 |
) |
|
$ |
299.2 |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
||||
Depreciation and amortization expense |
|
125.2 |
|
|
132.8 |
|
||
Deferred income tax benefit |
|
(86.9 |
) |
|
(15.4 |
) |
||
Non-cash stock-based compensation expense |
|
34.6 |
|
|
50.8 |
|
||
Non-cash impairment of assets |
|
33.1 |
|
|
7.3 |
|
||
Bad debt expense (benefit) |
|
(25.4 |
) |
|
1.5 |
|
||
Other non-cash charges (benefits) |
|
(2.1 |
) |
|
1.6 |
|
||
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
(49.7 |
) |
|
(91.0 |
) |
||
Inventories |
|
(129.3 |
) |
|
(202.3 |
) |
||
Prepaid expenses and other current assets |
|
11.1 |
|
|
(47.1 |
) |
||
Accounts payable and accrued liabilities |
|
221.6 |
|
|
47.3 |
|
||
Income tax receivables and payables |
|
12.8 |
|
|
17.1 |
|
||
Deferred income |
|
(2.0 |
) |
|
0.9 |
|
||
Other balance sheet changes |
|
11.1 |
|
|
1.4 |
|
||
Net cash provided by (used in) operating activities |
|
(12.7 |
) |
|
204.1 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Capital expenditures |
|
(53.9 |
) |
|
(130.6 |
) |
||
Purchases of investments |
|
(407.0 |
) |
|
(571.6 |
) |
||
Proceeds from sales and maturities of investments |
|
471.5 |
|
|
976.1 |
|
||
Acquisitions and ventures |
|
(0.5 |
) |
|
0.9 |
|
||
Proceeds from sale of property |
|
— |
|
|
20.8 |
|
||
Settlement of net investment hedges |
|
3.7 |
|
|
— |
|
||
Net cash provided by investing activities |
|
13.8 |
|
|
295.6 |
|
||
Cash flows from financing activities: |
|
|
|
|
||||
Repayments of borrowings on credit facilities |
|
(475.0 |
) |
|
— |
|
||
Proceeds from the issuance of long-term debt |
|
1,241.9 |
|
|
— |
|
||
Repayments of long-term debt |
|
(300.0 |
) |
|
— |
|
||
Payments of finance lease obligations |
|
(5.7 |
) |
|
(7.7 |
) |
||
Payments of dividends |
|
(49.8 |
) |
|
(101.9 |
) |
||
Repurchases of common stock, including shares surrendered for tax withholdings |
|
(35.5 |
) |
|
(442.7 |
) |
||
Other financing activities |
|
(8.6 |
) |
|
(0.7 |
) |
||
Net cash provided by (used in) financing activities |
|
367.3 |
|
|
(553.0 |
) |
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
23.6 |
|
|
(9.9 |
) |
||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
392.0 |
|
|
(63.2 |
) |
||
Cash, cash equivalents, and restricted cash at beginning of period |
|
1,629.8 |
|
|
626.5 |
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
2,021.8 |
|
|
$ |
563.3 |
|
|
||||||||||||||||
SEGMENT INFORMATION |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(millions) |
||||||||||||||
Net revenues: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
542.9 |
|
|
$ |
881.2 |
|
|
$ |
708.0 |
|
|
$ |
1,600.6 |
|
|
|
359.5 |
|
|
480.2 |
|
|
480.2 |
|
|
841.0 |
|
||||
|
|
236.6 |
|
|
255.3 |
|
|
408.5 |
|
|
513.9 |
|
||||
Other non-reportable segments |
|
54.5 |
|
|
89.5 |
|
|
84.3 |
|
|
179.5 |
|
||||
Total net revenues |
|
$ |
1,193.5 |
|
|
$ |
1,706.2 |
|
|
$ |
1,681.0 |
|
|
$ |
3,135.0 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss): |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
123.3 |
|
|
$ |
192.4 |
|
|
$ |
98.5 |
|
|
$ |
342.5 |
|
|
|
83.6 |
|
|
140.6 |
|
|
66.7 |
|
|
220.0 |
|
||||
|
|
41.1 |
|
|
40.9 |
|
|
51.2 |
|
|
89.0 |
|
||||
Other non-reportable segments |
|
15.2 |
|
|
22.8 |
|
|
16.1 |
|
|
55.7 |
|
||||
|
|
263.2 |
|
|
396.7 |
|
|
232.5 |
|
|
707.2 |
|
||||
Unallocated corporate expenses |
|
(123.0 |
) |
|
(149.1 |
) |
|
(253.3 |
) |
|
(286.7 |
) |
||||
Unallocated restructuring and other charges |
|
(160.5 |
) |
|
(14.5 |
) |
|
(167.5 |
) |
|
(44.1 |
) |
||||
Total operating income (loss) |
|
$ |
(20.3 |
) |
|
$ |
233.1 |
|
|
$ |
(188.3 |
) |
|
$ |
376.4 |
|
|
||||||||||||||
CONSTANT CURRENCY FINANCIAL MEASURES |
||||||||||||||
(Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
Comparable Store Sales Data |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
||||||
|
|
% Change |
|
% Change |
|
|
|
|
||||||
|
|
Constant Currency |
|
Constant Currency |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
10 |
% |
|
7 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(40 |
%) |
|
(57 |
%) |
|
|
|
|
||||
|
|
(32 |
%) |
|
(47 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
26 |
% |
|
35 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(35 |
%) |
|
(54 |
%) |
|
|
|
|
||||
Total |
|
(29 |
%) |
|
(45 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
32 |
% |
|
51 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(12 |
%) |
|
(24 |
%) |
|
|
|
|
||||
Total |
|
(11 |
%) |
|
(22 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
(28 |
%) |
|
(42 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Operating Segment Net Revenues Data |
||||||||||||||
|
|
|
|
|
||||||||||
|
|
Three Months Ended |
|
% Change |
||||||||||
|
|
|
|
|
|
As Reported |
|
Constant Currency |
||||||
|
|
(millions) |
|
|
|
|
||||||||
|
|
$ |
542.9 |
|
|
$ |
881.2 |
|
|
(38.4 |
%) |
|
(38.3 |
%) |
|
|
359.5 |
|
|
480.2 |
|
|
(25.1 |
%) |
|
(28.2 |
%) |
||
|
|
236.6 |
|
|
255.3 |
|
|
(7.3 |
%) |
|
(8.1 |
%) |
||
Other non-reportable segments |
|
54.5 |
|
|
89.5 |
|
|
(39.1 |
%) |
|
(39.2 |
%) |
||
Net revenues |
|
$ |
1,193.5 |
|
|
$ |
1,706.2 |
|
|
(30.0 |
%) |
|
(31.0 |
%) |
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
Six Months Ended |
|
% Change |
||||||||||
|
|
|
|
|
|
As Reported |
|
Constant Currency |
||||||
|
|
(millions) |
|
|
|
|
||||||||
|
|
$ |
708.0 |
|
|
$ |
1,600.6 |
|
|
(55.8 |
%) |
|
(55.7 |
%) |
|
|
480.2 |
|
|
841.0 |
|
|
(42.9 |
%) |
|
(43.6 |
%) |
||
|
|
408.5 |
|
|
513.9 |
|
|
(20.5 |
%) |
|
(20.1 |
%) |
||
Other non-reportable segments |
|
84.3 |
|
|
179.5 |
|
|
(53.0 |
%) |
|
(53.0 |
%) |
||
Net revenues |
|
$ |
1,681.0 |
|
|
$ |
3,135.0 |
|
|
(46.4 |
%) |
|
(46.5 |
%) |
|
||||||||||||||||||||||||||||||||||||||||
NET REVENUES BY SALES CHANNEL |
||||||||||||||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
|
North America |
|
|
|
|
|
Other |
|
Total |
|
North America |
|
|
|
|
|
Other |
|
Total |
||||||||||||||||||||
|
|
(millions) |
||||||||||||||||||||||||||||||||||||||
Sales Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail |
|
$ |
314.7 |
|
|
$ |
174.2 |
|
|
$ |
219.3 |
|
|
$ |
21.1 |
|
|
$ |
729.3 |
|
|
$ |
457.9 |
|
|
$ |
238.6 |
|
|
$ |
233.3 |
|
|
$ |
45.4 |
|
|
$ |
975.2 |
|
Wholesale |
|
228.2 |
|
|
185.3 |
|
|
17.3 |
|
|
2.3 |
|
|
433.1 |
|
|
423.3 |
|
|
241.6 |
|
|
22.0 |
|
|
1.9 |
|
|
688.8 |
|
||||||||||
Licensing |
|
— |
|
|
— |
|
|
— |
|
|
31.1 |
|
|
31.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
42.2 |
|
|
42.2 |
|
||||||||||
Net revenues |
|
$ |
542.9 |
|
|
$ |
359.5 |
|
|
$ |
236.6 |
|
|
$ |
54.5 |
|
|
$ |
1,193.5 |
|
|
$ |
881.2 |
|
|
$ |
480.2 |
|
|
$ |
255.3 |
|
|
$ |
89.5 |
|
|
$ |
1,706.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Six Months Ended |
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
|
North America |
|
|
|
|
|
Other |
|
Total |
|
North America |
|
|
|
|
|
Other |
|
Total |
||||||||||||||||||||
|
|
(millions) |
||||||||||||||||||||||||||||||||||||||
Sales Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail |
|
$ |
457.3 |
|
|
$ |
253.4 |
|
|
$ |
385.8 |
|
|
$ |
27.6 |
|
|
$ |
1,124.1 |
|
|
$ |
861.0 |
|
|
$ |
457.1 |
|
|
$ |
479.8 |
|
|
$ |
94.9 |
|
|
$ |
1,892.8 |
|
Wholesale |
|
250.7 |
|
|
226.8 |
|
|
22.7 |
|
|
2.8 |
|
|
503.0 |
|
|
739.6 |
|
|
383.9 |
|
|
34.1 |
|
|
3.7 |
|
|
1,161.3 |
|
||||||||||
Licensing |
|
— |
|
|
— |
|
|
— |
|
|
53.9 |
|
|
53.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
80.9 |
|
|
80.9 |
|
||||||||||
Net revenues |
|
$ |
708.0 |
|
|
$ |
480.2 |
|
|
$ |
408.5 |
|
|
$ |
84.3 |
|
|
$ |
1,681.0 |
|
|
$ |
1,600.6 |
|
|
$ |
841.0 |
|
|
$ |
513.9 |
|
|
$ |
179.5 |
|
|
$ |
3,135.0 |
|
|
||||||
GLOBAL RETAIL STORE NETWORK |
||||||
(Unaudited) |
||||||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
40 |
|
|
41 |
|
Polo Factory Stores |
|
190 |
|
|
184 |
|
Total Directly Operated Stores |
|
230 |
|
|
225 |
|
Concessions |
|
2 |
|
|
3 |
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
31 |
|
|
28 |
|
Polo Factory Stores |
|
64 |
|
|
66 |
|
Total Directly Operated Stores |
|
95 |
|
|
94 |
|
Concessions |
|
29 |
|
|
29 |
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
74 |
|
|
63 |
|
Polo Factory Stores |
|
71 |
|
|
60 |
|
Total Directly Operated Stores |
|
145 |
|
|
123 |
|
Concessions |
|
619 |
|
|
616 |
|
|
|
|
|
|
||
Other |
|
|
|
|
||
Club Monaco Stores |
|
72 |
|
|
75 |
|
Club Monaco Concessions |
|
4 |
|
|
5 |
|
|
|
|
|
|
||
Global Directly Operated Stores and Concessions |
|
|
|
|
||
|
|
145 |
|
|
132 |
|
Polo Factory Stores |
|
325 |
|
|
310 |
|
Club Monaco Stores |
|
72 |
|
|
75 |
|
Total Directly Operated Stores |
|
542 |
|
|
517 |
|
Concessions |
|
654 |
|
|
653 |
|
|
|
|
|
|
||
Global Licensed Stores |
|
|
|
|
||
Total Licensed Stores |
|
273 |
|
|
254 |
|
|
||||||||||||||
RECONCILIATION OF NON- |
||||||||||||||
(Unaudited) |
||||||||||||||
|
|
|
||||||||||||
|
|
Three Months Ended |
||||||||||||
|
|
|
||||||||||||
|
|
As Reported |
|
Total Adjustments(a)(b) |
|
As Adjusted |
||||||||
|
|
(millions, except per share data) |
||||||||||||
Net revenues |
|
$ |
1,193.5 |
|
|
$ |
— |
|
|
$ |
1,193.5 |
|
||
Gross profit |
|
799.4 |
|
|
(5.4 |
) |
|
794.0 |
|
|||||
Gross profit margin |
|
67.0 |
% |
|
|
|
66.5 |
% |
||||||
Total other operating expenses, net |
|
(819.7 |
) |
|
176.6 |
|
|
(643.1 |
) |
|||||
Operating expense margin |
|
68.7 |
% |
|
|
|
53.9 |
% |
||||||
Operating income (loss) |
|
(20.3 |
) |
|
171.2 |
|
|
150.9 |
|
|||||
Operating margin |
|
(1.7 |
%) |
|
|
|
12.6 |
% |
||||||
Income (loss) before income taxes |
|
(29.1 |
) |
|
171.2 |
|
|
142.1 |
|
|||||
Income tax provision |
|
(10.0 |
) |
|
(25.0 |
) |
|
(35.0 |
) |
|||||
Effective tax rate |
|
(34.4 |
%) |
|
|
|
24.6 |
% |
||||||
Net income (loss) |
|
$ |
(39.1 |
) |
|
$ |
146.2 |
|
|
$ |
107.1 |
|
||
Net income (loss) per diluted common share |
|
$ |
(0.53 |
) |
|
|
|
$ |
1.44 |
|
||||
Weighted average common shares outstanding - Diluted |
|
73.5 |
|
|
|
|
74.4 |
|
||||||
SEGMENT INFORMATION - OPERATING INCOME (LOSS): |
|
|
|
|
|
|
||||||||
|
|
$ |
123.3 |
|
|
$ |
(5.3 |
) |
|
$ |
118.0 |
|
||
Operating margin |
|
22.7 |
% |
|
|
|
21.7 |
% |
||||||
|
|
83.6 |
|
|
16.5 |
|
|
100.1 |
|
|||||
Operating margin |
|
23.3 |
% |
|
|
|
27.8 |
% |
||||||
|
|
41.1 |
|
|
— |
|
|
41.1 |
|
|||||
Operating margin |
|
17.3 |
% |
|
|
|
17.4 |
% |
||||||
Other non-reportable segments |
|
15.2 |
|
|
(0.5 |
) |
|
14.7 |
|
|||||
Operating margin |
|
27.9 |
% |
|
|
|
27.0 |
% |
||||||
Unallocated corporate expenses and restructuring & other charges |
|
(283.5 |
) |
|
160.5 |
|
|
(123.0 |
) |
|||||
Total operating income (loss) |
|
$ |
(20.3 |
) |
|
$ |
171.2 |
|
|
$ |
150.9 |
|
||
|
|
|
|
|
|
|
||||||||
|
|
Six Months Ended |
||||||||||||
|
|
|
||||||||||||
|
|
As Reported |
|
Total Adjustments(a)(c) |
|
As Adjusted |
||||||||
|
|
(millions, except per share data) |
||||||||||||
Net revenues |
|
$ |
1,681.0 |
|
|
$ |
— |
|
|
$ |
1,681.0 |
|
||
Gross profit |
|
1,148.1 |
|
|
(4.1 |
) |
|
1,144.0 |
|
|||||
Gross profit margin |
|
68.3 |
% |
|
|
|
68.1 |
% |
||||||
Total other operating expenses, net |
|
(1,336.4 |
) |
|
169.2 |
|
|
(1,167.2 |
) |
|||||
Operating expense margin |
|
79.5 |
% |
|
|
|
69.4 |
% |
||||||
Operating loss |
|
(188.3 |
) |
|
165.1 |
|
|
(23.2 |
) |
|||||
Operating margin |
|
(11.2 |
%) |
|
|
|
(1.4 |
%) |
||||||
Loss before income taxes |
|
(201.7 |
) |
|
165.1 |
|
|
(36.6 |
) |
|||||
Income tax benefit |
|
34.9 |
|
|
(24.4 |
) |
|
10.5 |
|
|||||
Effective tax rate |
|
17.3 |
% |
|
|
|
28.7 |
% |
||||||
Net loss |
|
$ |
(166.8 |
) |
|
$ |
140.7 |
|
|
$ |
(26.1 |
) |
||
Net loss per diluted common share |
|
$ |
(2.27 |
) |
|
|
|
$ |
(0.36 |
) |
||||
Weighted average common shares outstanding - Diluted |
|
73.3 |
|
|
|
|
73.3 |
|
||||||
SEGMENT INFORMATION - OPERATING INCOME (LOSS): |
|
|
|
|
|
|
||||||||
|
|
$ |
98.5 |
|
|
$ |
(20.6 |
) |
|
$ |
77.9 |
|
||
Operating margin |
|
13.9 |
% |
|
|
|
11.0 |
% |
||||||
|
|
66.7 |
|
|
15.5 |
|
|
82.2 |
|
|||||
Operating margin |
|
13.9 |
% |
|
|
|
17.1 |
% |
||||||
|
|
51.2 |
|
|
2.6 |
|
|
53.8 |
|
|||||
Operating margin |
|
12.5 |
% |
|
|
|
13.2 |
% |
||||||
Other non-reportable segments |
|
16.1 |
|
|
0.1 |
|
|
16.2 |
|
|||||
Operating margin |
|
19.1 |
% |
|
|
|
19.2 |
% |
||||||
Unallocated corporate expenses and restructuring & other charges |
|
(420.8 |
) |
|
167.5 |
|
|
(253.3 |
) |
|||||
Total operating loss |
|
$ |
(188.3 |
) |
|
$ |
165.1 |
|
|
$ |
(23.2 |
) |
||
|
||||||||||||||
RECONCILIATION OF NON- |
||||||||||||||
(Unaudited) |
||||||||||||||
|
|
|
||||||||||||
|
|
Three Months Ended |
||||||||||||
|
|
|
||||||||||||
|
|
As Reported |
|
Total Adjustments(a)(d) |
|
As Adjusted |
||||||||
|
|
(millions, except per share data) |
||||||||||||
Net revenues |
|
$ |
1,706.2 |
|
|
$ |
— |
|
|
$ |
1,706.2 |
|
||
Gross profit |
|
1,049.0 |
|
|
0.4 |
|
|
1,049.4 |
|
|||||
Gross profit margin |
|
61.5 |
% |
|
|
|
61.5 |
% |
||||||
Total other operating expenses, net |
|
(815.9 |
) |
|
20.6 |
|
|
(795.3 |
) |
|||||
Operating expense margin |
|
47.8 |
% |
|
|
|
46.6 |
% |
||||||
Operating income |
|
233.1 |
|
|
21.0 |
|
|
254.1 |
|
|||||
Operating margin |
|
13.7 |
% |
|
|
|
14.9 |
% |
||||||
Income before income taxes |
|
236.6 |
|
|
21.0 |
|
|
257.6 |
|
|||||
Income tax provision |
|
(54.5 |
) |
|
(4.7 |
) |
|
(59.2 |
) |
|||||
Effective tax rate |
|
23.1 |
% |
|
|
|
23.0 |
% |
||||||
Net income |
|
$ |
182.1 |
|
|
$ |
16.3 |
|
|
$ |
198.4 |
|
||
Net income per diluted common share |
|
$ |
2.34 |
|
|
|
|
$ |
2.55 |
|
||||
Weighted average common shares outstanding - Diluted |
|
77.9 |
|
|
|
|
77.9 |
|
||||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||||
|
|
$ |
192.4 |
|
|
$ |
— |
|
|
$ |
192.4 |
|
||
Operating margin |
|
21.8 |
% |
|
|
|
21.8 |
% |
||||||
|
|
140.6 |
|
|
— |
|
|
140.6 |
|
|||||
Operating margin |
|
29.3 |
% |
|
|
|
29.3 |
% |
||||||
|
|
40.9 |
|
|
0.4 |
|
|
41.3 |
|
|||||
Operating margin |
|
16.0 |
% |
|
|
|
16.2 |
% |
||||||
Other non-reportable segments |
|
22.8 |
|
|
3.8 |
|
|
26.6 |
|
|||||
Operating margin |
|
25.5 |
% |
|
|
|
29.7 |
% |
||||||
Unallocated corporate expenses and restructuring & other charges |
|
(163.6 |
) |
|
16.8 |
|
|
(146.8 |
) |
|||||
Total operating income |
|
$ |
233.1 |
|
|
$ |
21.0 |
|
|
$ |
254.1 |
|
||
|
|
|
|
|
|
|
||||||||
|
|
Six Months Ended |
||||||||||||
|
|
|
||||||||||||
|
|
As Reported |
|
Total Adjustments(a)(e) |
|
As Adjusted |
||||||||
|
|
(millions, except per share data) |
||||||||||||
Net revenues |
|
$ |
3,135.0 |
|
|
$ |
— |
|
|
$ |
3,135.0 |
|
||
Gross profit |
|
1,969.8 |
|
|
1.0 |
|
|
1,970.8 |
|
|||||
Gross profit margin |
|
62.8 |
% |
|
|
|
62.9 |
% |
||||||
Total other operating expenses, net |
|
(1,593.4 |
) |
|
51.4 |
|
|
(1,542.0 |
) |
|||||
Operating expense margin |
|
50.8 |
% |
|
|
|
49.2 |
% |
||||||
Operating income |
|
376.4 |
|
|
52.4 |
|
|
428.8 |
|
|||||
Operating margin |
|
12.0 |
% |
|
|
|
13.7 |
% |
||||||
Income before income taxes |
|
383.2 |
|
|
52.4 |
|
|
435.6 |
|
|||||
Income tax provision |
|
(84.0 |
) |
|
(11.7 |
) |
|
(95.7 |
) |
|||||
Effective tax rate |
|
21.9 |
% |
|
|
|
22.0 |
% |
||||||
Net income |
|
$ |
299.2 |
|
|
$ |
40.7 |
|
|
$ |
339.9 |
|
||
Net income per diluted common share |
|
$ |
3.79 |
|
|
|
|
$ |
4.31 |
|
||||
Weighted average common shares outstanding - Diluted |
|
78.9 |
|
|
|
|
78.9 |
|
||||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||||
|
|
$ |
342.5 |
|
|
$ |
— |
|
|
$ |
342.5 |
|
||
Operating margin |
|
21.4 |
% |
|
|
|
21.4 |
% |
||||||
|
|
220.0 |
|
|
0.1 |
|
|
220.1 |
|
|||||
Operating margin |
|
26.2 |
% |
|
|
|
26.2 |
% |
||||||
|
|
89.0 |
|
|
0.9 |
|
|
89.9 |
|
|||||
Operating margin |
|
17.3 |
% |
|
|
|
17.5 |
% |
||||||
Other non-reportable segments |
|
55.7 |
|
|
3.8 |
|
|
59.5 |
|
|||||
Operating margin |
|
31.0 |
% |
|
|
|
33.1 |
% |
||||||
Unallocated corporate expenses and restructuring & other charges |
|
(330.8 |
) |
|
47.6 |
|
|
(283.2 |
) |
|||||
Total operating income |
|
$ |
376.4 |
|
|
$ |
52.4 |
|
|
$ |
428.8 |
|
||
FOOTNOTES TO RECONCILIATION OF NON-
- Adjustments for inventory-related charges (benefits) are recorded within cost of goods sold in the consolidated statements of operations. Adjustments for COVID-19-related bad debt expense (benefit) is recorded within selling, general, and administrative ("SG&A") expenses 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.
- Adjustments for the three months ended
September 26, 2020 include (i) charges of$179.8 million recorded in connection with the Company's restructuring activities, consisting of restructuring charges and impairment of assets; (ii) benefit of$14.9 million related to COVID-19-related bad debt reserve adjustments; (iii) additional impairment of assets of$8.8 million primarily related to a certain previously exited real estate location for which the related lease agreement has not yet expired; (iv) benefit of$5.4 million related to COVID-19-related inventory adjustments; and (v) other charges of$2.9 million primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. - Adjustments for the six months ended
September 26, 2020 include (i) charges of$185.8 million recorded in connection with the Company's restructuring activities, primarily consisting of restructuring charges, impairment of assets, and inventory-related charges; (ii) benefit of$31.4 related to COVID-19-related bad debt reserve adjustments; (iii) additional impairment of assets of$8.8 million primarily related to a certain previously exited real estate location for which the related lease agreement has not yet expired; (iv) other charges of$7.3 million primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired; and (v) benefit of$5.4 million related to COVID-19-related inventory adjustments. - Adjustments for the three months ended
September 28, 2019 include (i) charges of$15.8 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges, accelerated stock-based compensation expense, impairment of assets, and inventory-related charges; (ii) additional impairment of assets of$3.8 million related to underperforming stores as a result of on-going store portfolio evaluation; and (iii) other charges of$1.4 million primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. - Adjustments for the six months ended
September 28, 2019 include (i) charges of$24.6 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges, impairment of assets, accelerated stock-based compensation expense, and inventory-related charges; (ii) other charges of$24.0 million primarily related to the charitable donation of the net cash proceeds received from the sale of the Company's corporate jet, and rent and occupancy costs associated with previously exited real estate locations for which the related lease agreements have not yet expired; and (iii) additional impairment of assets of$3.8 million related to underperforming stores as a result of on-going store portfolio evaluation.
NON-
Since
This earnings release also includes certain other non-
Adjustments made during the fiscal periods presented include charges recorded in connection with the Company's restructuring activities, as well as certain other charges (benefits) associated with other non-recurring events, as described in the footnotes to the non-
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