(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |
(Zip Code) | |||
(Address of principal executive offices) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered | ||
EXHIBIT NO. | DESCRIPTION | |
99.1 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
RALPH LAUREN CORPORATION | ||
Date: October 29, 2020 | By: | /S/ JANE HAMILTON NIELSEN |
Jane Hamilton Nielsen | ||
Chief Operating Officer and Chief Financial Officer | ||
• | 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 |
• | 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 for Snapchat, 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 our Chicago 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 |
• | 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 and Europe and more casual assortments in North America. Second quarter AUR increased 26% with strong double-digit growth in North America and Europe |
◦ | 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 |
• | 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 |
• | 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 |
• | North America Revenue. North America revenue in the second quarter decreased 38% to $543 million. In retail, comparable store sales in North 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 in Europe 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 in Asia decreased 11%, with a 12% decline in our brick and mortar stores partly offset by a 32% increase in digital commerce. |
• | 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. Adjusted Europe 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. Adjusted Asia 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. |
RALPH LAUREN CORPORATION | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||||||
(Unaudited) | ||||||||||||
September 26, 2020 | March 28, 2020 | September 28, 2019 | ||||||||||
(millions) | ||||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 2,012.0 | $ | 1,620.4 | $ | 548.1 | ||||||
Short-term investments | 434.1 | 495.9 | 1,041.4 | |||||||||
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 | |||||||||
Total current assets | 3,907.1 | 3,375.2 | 3,386.7 | |||||||||
Property and equipment, net | 921.5 | 979.5 | 1,011.0 | |||||||||
Operating lease right-of-use assets | 1,406.3 | 1,511.6 | 1,567.1 | |||||||||
Deferred tax assets | 352.9 | 245.2 | 97.6 | |||||||||
Goodwill | 935.0 | 915.5 | 913.8 | |||||||||
Intangible assets, net | 131.1 | 141.0 | 152.3 | |||||||||
Other non-current assets(a) | 97.7 | 111.9 | 100.0 | |||||||||
Total assets | $ | 7,751.6 | $ | 7,279.9 | $ | 7,228.5 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Short-term debt | $ | — | $ | 475.0 | $ | — | ||||||
Current portion of long-term debt | — | 299.6 | 297.3 | |||||||||
Accounts payable | 284.5 | 246.8 | 350.3 | |||||||||
Income tax payable | 82.4 | 65.1 | 60.1 | |||||||||
Current operating lease liabilities | 317.7 | 288.4 | 273.2 | |||||||||
Accrued expenses and other current liabilities | 869.1 | 717.1 | 755.1 | |||||||||
Total current liabilities | 1,553.7 | 2,092.0 | 1,736.0 | |||||||||
Long-term debt | 1,631.0 | 396.4 | 396.1 | |||||||||
Long-term operating lease liabilities | 1,460.0 | 1,568.3 | 1,651.3 | |||||||||
Income tax payable | 118.7 | 132.7 | 132.7 | |||||||||
Non-current liability for unrecognized tax benefits | 87.6 | 88.9 | 79.7 | |||||||||
Other non-current liabilities | 356.5 | 308.5 | 319.1 | |||||||||
Total liabilities | 5,207.5 | 4,586.8 | 4,314.9 | |||||||||
Equity: | ||||||||||||
Common stock | 1.3 | 1.3 | 1.3 | |||||||||
Additional paid-in-capital | 2,629.0 | 2,594.4 | 2,544.6 | |||||||||
Retained earnings | 5,827.2 | 5,994.0 | 6,009.4 | |||||||||
Treasury stock, Class A, at cost | (5,813.9 | ) | (5,778.4 | ) | (5,526.3 | ) | ||||||
Accumulated other comprehensive loss | (99.5 | ) | (118.2 | ) | (115.4 | ) | ||||||
Total equity | 2,544.1 | 2,693.1 | 2,913.6 | |||||||||
Total liabilities and equity | $ | 7,751.6 | $ | 7,279.9 | $ | 7,228.5 | ||||||
Net Cash (incl. LT Investments) | $ | 815.1 | $ | 945.3 | $ | 896.1 | ||||||
Cash & Investments (ST & LT) | 2,446.1 | 2,116.3 | 1,589.5 | |||||||||
Net Cash (excl. LT Investments) | 815.1 | 945.3 | 896.1 | |||||||||
Cash & ST Investments | 2,446.1 | 2,116.3 | 1,589.5 | |||||||||
(a) Includes non-current investments of: | $ | — | $ | — | $ | — |
RALPH LAUREN CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
September 26, 2020 | September 28, 2019 | |||||||
(millions, except per share data) | ||||||||
North America | $ | 542.9 | $ | 881.2 | ||||
Europe | 359.5 | 480.2 | ||||||
Asia | 236.6 | 255.3 | ||||||
Other non-reportable segments | 54.5 | 89.5 | ||||||
Net revenues | 1,193.5 | 1,706.2 | ||||||
Cost of goods sold | (394.1 | ) | (657.2 | ) | ||||
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 | ) | ||||
Total other operating expenses, net | (819.7 | ) | (815.9 | ) | ||||
Operating income (loss) | (20.3 | ) | 233.1 | |||||
Interest expense | (12.8 | ) | (4.4 | ) | ||||
Interest income | 2.2 | 9.6 | ||||||
Other income (expense), net | 1.8 | (1.7 | ) | |||||
Income (loss) before income taxes | (29.1 | ) | 236.6 | |||||
Income tax provision | (10.0 | ) | (54.5 | ) | ||||
Net income (loss) | $ | (39.1 | ) | $ | 182.1 | |||
Net income (loss) per common share: | ||||||||
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 |
RALPH LAUREN CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||
(Unaudited) | ||||||||
Six Months Ended | ||||||||
September 26, 2020 | September 28, 2019 | |||||||
(millions, except per share data) | ||||||||
North America | $ | 708.0 | $ | 1,600.6 | ||||
Europe | 480.2 | 841.0 | ||||||
Asia | 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 | ) | ||||
Gross profit | 1,148.1 | 1,969.8 | ||||||
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 |
RALPH LAUREN CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||
(Unaudited) | ||||||||
Six Months Ended | ||||||||
September 26, 2020 | September 28, 2019 | |||||||
(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 |
RALPH LAUREN CORPORATION | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | |||||||||||||
(millions) | ||||||||||||||||
Net revenues: | ||||||||||||||||
North America | $ | 542.9 | $ | 881.2 | $ | 708.0 | $ | 1,600.6 | ||||||||
Europe | 359.5 | 480.2 | 480.2 | 841.0 | ||||||||||||
Asia | 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): | ||||||||||||||||
North America | $ | 123.3 | $ | 192.4 | $ | 98.5 | $ | 342.5 | ||||||||
Europe | 83.6 | 140.6 | 66.7 | 220.0 | ||||||||||||
Asia | 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 |
RALPH LAUREN CORPORATION | ||||||||||||||
CONSTANT CURRENCY FINANCIAL MEASURES | ||||||||||||||
(Unaudited) | ||||||||||||||
Comparable Store Sales Data | ||||||||||||||
September 26, 2020 | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
% Change | % Change | |||||||||||||
Constant Currency | Constant Currency | |||||||||||||
North America: | ||||||||||||||
Digital commerce | 10 | % | 7 | % | ||||||||||
Excluding digital commerce | (40 | %) | (57 | %) | ||||||||||
Total North America | (32 | %) | (47 | %) | ||||||||||
Europe: | ||||||||||||||
Digital commerce | 26 | % | 35 | % | ||||||||||
Excluding digital commerce | (35 | %) | (54 | %) | ||||||||||
Total Europe | (29 | %) | (45 | %) | ||||||||||
Asia: | ||||||||||||||
Digital commerce | 32 | % | 51 | % | ||||||||||
Excluding digital commerce | (12 | %) | (24 | %) | ||||||||||
Total Asia | (11 | %) | (22 | %) | ||||||||||
Total Ralph Lauren Corporation | (28 | %) | (42 | %) | ||||||||||
Operating Segment Net Revenues Data | ||||||||||||||
Three Months Ended | % Change | |||||||||||||
September 26, 2020 | September 28, 2019 | As Reported | Constant Currency | |||||||||||
(millions) | ||||||||||||||
North America | $ | 542.9 | $ | 881.2 | (38.4 | %) | (38.3 | %) | ||||||
Europe | 359.5 | 480.2 | (25.1 | %) | (28.2 | %) | ||||||||
Asia | 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 | |||||||||||||
September 26, 2020 | September 28, 2019 | As Reported | Constant Currency | |||||||||||
(millions) | ||||||||||||||
North America | $ | 708.0 | $ | 1,600.6 | (55.8 | %) | (55.7 | %) | ||||||
Europe | 480.2 | 841.0 | (42.9 | %) | (43.6 | %) | ||||||||
Asia | 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 | %) |
RALPH LAUREN CORPORATION | ||||||||||||||||||||||||||||||||||||||||
NET REVENUES BY SALES CHANNEL | ||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
September 26, 2020 | September 28, 2019 | |||||||||||||||||||||||||||||||||||||||
North America | Europe | Asia | Other | Total | North America | Europe | Asia | 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 | ||||||||||||||||||||||||||||||||||||||||
September 26, 2020 | September 28, 2019 | |||||||||||||||||||||||||||||||||||||||
North America | Europe | Asia | Other | Total | North America | Europe | Asia | 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 |
RALPH LAUREN CORPORATION | ||||||
GLOBAL RETAIL STORE NETWORK | ||||||
(Unaudited) | ||||||
September 26, 2020 | September 28, 2019 | |||||
North America | ||||||
Ralph Lauren Stores | 40 | 41 | ||||
Polo Factory Stores | 190 | 184 | ||||
Total Directly Operated Stores | 230 | 225 | ||||
Concessions | 2 | 3 | ||||
Europe | ||||||
Ralph Lauren Stores | 31 | 28 | ||||
Polo Factory Stores | 64 | 66 | ||||
Total Directly Operated Stores | 95 | 94 | ||||
Concessions | 29 | 29 | ||||
Asia | ||||||
Ralph Lauren Stores | 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 | ||||||
Ralph Lauren Stores | 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 |
RALPH LAUREN CORPORATION | ||||||||||||
RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 26, 2020 | ||||||||||||
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): | ||||||||||||
North America | $ | 123.3 | $ | (5.3 | ) | $ | 118.0 | |||||
Operating margin | 22.7 | % | 21.7 | % | ||||||||
Europe | 83.6 | 16.5 | 100.1 | |||||||||
Operating margin | 23.3 | % | 27.8 | % | ||||||||
Asia | 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 | ||||||||||||
September 26, 2020 | ||||||||||||
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): | ||||||||||||
North America | $ | 98.5 | $ | (20.6 | ) | $ | 77.9 | |||||
Operating margin | 13.9 | % | 11.0 | % | ||||||||
Europe | 66.7 | 15.5 | 82.2 | |||||||||
Operating margin | 13.9 | % | 17.1 | % | ||||||||
Asia | 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 | ) |
RALPH LAUREN CORPORATION | ||||||||||||
RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (Continued) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 28, 2019 | ||||||||||||
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: | ||||||||||||
North America | $ | 192.4 | $ | — | $ | 192.4 | ||||||
Operating margin | 21.8 | % | 21.8 | % | ||||||||
Europe | 140.6 | — | 140.6 | |||||||||
Operating margin | 29.3 | % | 29.3 | % | ||||||||
Asia | 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 | ||||||||||||
September 28, 2019 | ||||||||||||
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: | ||||||||||||
North America | $ | 342.5 | $ | — | $ | 342.5 | ||||||
Operating margin | 21.4 | % | 21.4 | % | ||||||||
Europe | 220.0 | 0.1 | 220.1 | |||||||||
Operating margin | 26.2 | % | 26.2 | % | ||||||||
Asia | 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 |
(a) | 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. |
(b) | 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. |
(c) | 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. |
(d) | 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. |
(e) | 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. |