Ralph Lauren Reports Third Quarter Fiscal 2021 Results
- Third Quarter Revenues Were
$1.4 Billion Reflecting Continued Recovery from COVID-19-Related Impacts; Asia Exceeded Expectations with Mid-Teens Growth - Global Digital Commerce Sales Increased More than 20%, with Double-Digit Growth Across All Regions with Continued Expansion in Profitability
- Stronger than Expected Gross and Operating Margins Driven by a 19% Increase in Average Unit Retail and Continued Expense Reductions
- Restructuring Actions on Track with Second Stage Focused on Realignment of Real Estate Footprint Across Corporate Offices, Retail Stores, and Distribution Centers
"For more than 50 years we have stayed true to a set of values that define us – among them timelessness, quality, perseverance and optimism," said
"Despite the disruptions and uncertainty we faced throughout our third quarter, our teams continued to elevate our brands and effectively engage with consumers around the world – delivering better than expected gross and operating margins through the holiday period, and continuing to meaningfully improve our digital profitability," said
Key Achievements in Third Quarter Fiscal 2021
As we continued to navigate a volatile global retail environment, we delivered the following highlights across our strategic priorities in the third quarter of Fiscal 2021:
Win Over a New Generation of Consumers- Elevated our brand and connected with consumers through high-impact marketing campaigns, driving accelerated growth in global brand awareness and purchase intent. Third quarter highlights included our 360º ‘Family is Who You Love’ holiday campaign emphasizing our core
Ralph Lauren values, our livestream selling event on Singles Day, and our global Farfetch launch targeting Next Generation consumers - Continued to innovate digital brand experiences in the quarter through our Polo Pony logo scan – our first augmented reality launch on
Snapchat , HolidayBear Run livestream gaming event on Twitch, expanded Virtual Store Experiences and customized gift guides - Increased our marketing expense outlook to approximately 20% growth for the second half of Fiscal 2021, up from 10% previously, to support our brand-building activities
- Elevated our brand and connected with consumers through high-impact marketing campaigns, driving accelerated growth in global brand awareness and purchase intent. Third quarter highlights included our 360º ‘Family is Who You Love’ holiday campaign emphasizing our core
- Energize Core Products and Accelerate Under-Developed Categories
- Third quarter average unit retail increased 19% to last year, with growth across all geographies led by strong double-digit growth in
North America andEurope as we focused on brand elevation initiatives - Drove stronger performance in under-developed categories including outerwear and fleece, along with gifting assortments and core programs such as elevated and novelty sweaters, sports shirts and sport coats
- Third quarter average unit retail increased 19% to last year, with growth across all geographies led by strong double-digit growth in
- Drive Targeted Expansion in Our Regions and Channels
- Continued sequential improvement in
North America andAsia led by our digital channels;Asia outperformed our expectations with Chinese mainland sales increasing more than 40% to last year on a reported basis - Delivered strong acceleration in our
Europe digital business on enhanced Connected Retail capabilities, partly mitigating challenges to our brick and mortar performance in the region due to further widespread disruptions from COVID-19
- Continued sequential improvement in
- Lead With Digital
- Strong momentum in digital performance, with owned digital sales increasing double-digits in all regions including more than 70% growth in
Europe andAsia .North America digital sales grew 10% despite ongoing brand elevation reset, with sales to domestic consumers up high-teens - Operating margins in our owned digital business expanded 900 basis points to last year and were accretive to total company margin rate, with similar improvement across all regions
- Strong momentum in digital performance, with owned digital sales increasing double-digits in all regions including more than 70% growth in
- Operate With Discipline to Fuel Growth
- Adjusted operating expenses decreased 11% to last year, driven by savings across compensation-related expenses, rent and occupancy and other expenses
- Inventories declined 4% at the end of the quarter, reflecting continued efforts to ensure healthy inventory positions across geographies and channels
- Successfully managed peak holiday period logistics despite industry-wide shipping constraints, supported by solid inventory and capacity planning and agility with over 99% on-time delivery rate for Christmas
Third Quarter Fiscal 2021 Income Statement Review
Net Revenue. In the third quarter of Fiscal 2021, revenue decreased by 18% to
Revenue performance for the Company's reportable segments in the third quarter compared to the prior year period was as follows:
- North America Revenue.
North America revenue in the third quarter decreased 21% to$715 million . In retail, comparable store sales inNorth America were down 21%, with a 30% decrease in brick and mortar stores partly offset by a 9% increase in digital commerce.North America wholesale revenue decreased 22%. - Europe Revenue.
Europe revenue in the third quarter decreased 28% to$316 million on a reported basis and decreased 32% in constant currency. In retail, comparable store sales inEurope were down 38%, with a 51% decrease in brick and mortar stores partly offset by a 68% increase in digital commerce.Europe wholesale revenue decreased 17% on a reported basis and decreased 22% in constant currency. - Asia Revenue.
Asia revenue in the third quarter increased 14% to$330 million on a reported basis and 9% in constant currency. Comparable store sales inAsia increased 3%, with a 1% increase in our brick and mortar stores and a 54% increase in digital commerce.
Gross Profit. Gross profit for the third quarter of Fiscal 2021 was
Operating Expenses. Operating expenses in the third quarter of Fiscal 2021 were
Operating Income. Operating income for the third quarter of Fiscal 2021 was
- North America Operating Income.
North America operating income in the third quarter was$166 million on a reported basis and$180 million on an adjusted basis.Adjusted North America operating margin was 25.2%, up 390 basis points to last year. - Europe Operating Income.
Europe operating income in the third quarter was$54 million on a reported basis and$50 million on an adjusted basis. AdjustedEurope operating margin was 15.7%, down 990 basis points to last year. Foreign currency favorably impacted adjusted operating margin rate by 30 basis points in the third quarter. - Asia Operating Income.
Asia operating income in the third quarter was$69 million on a reported basis and$70 million on an adjusted basis. AdjustedAsia operating margin was 21.1%, up 420 basis points to last year. Foreign currency favorably impacted adjusted operating margin rate by 60 basis points in the third quarter.
Net Income and EPS. Net income in the third quarter of Fiscal 2021 was
In the third quarter of Fiscal 2021, the Company had an effective tax rate of approximately 26% on a reported basis and 31% on an adjusted basis. This compared to an effective tax rate of approximately (45%) on a reported basis and 14% on an adjusted basis in the prior year period. The increase in our adjusted effective tax rate was primarily driven by the absence of favorable settlements of certain international income tax audits in the current fiscal period compared to the prior year and the unfavorable impact associated with changes in our pre-tax income (loss) mix by jurisdiction driven by significant COVID-19 business disruptions.
Balance Sheet and Cash Flow Review
The Company ended the third quarter of Fiscal 2021 with
Inventory at the end of the third 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
Previously announced actions related to the Fiscal 2021 Strategic Realignment Plan included a reduction of the Company's global workforce by the end of Fiscal 2021, transitioning the Chaps brand to a fully licensed business model and closing the Company's Polo store on
As part of this ongoing plan, today
- The Company plans to further right-size and consolidate its global corporate offices to better align with its current organizational profile and new ways of working.
- Following an extensive review of Ralph Lauren’s global retail presence, the Company successfully renegotiated lease terms across its store fleet, resulting in multi-year savings. In addition, the Company has identified up to 10 stores subject to potential closure through Fiscal 2022, pending ongoing negotiations. Combined with the successful lease negotiations completed year-to-date, the Company expects these savings to drive improved profitability in its existing fleet while continuing to expand into more productive new stores globally.
- The Company plans to complete the consolidation of its existing
North America distribution centers in order to drive greater efficiencies, improve sustainability, and deliver a better consumer experience.
In connection with these collective realignment initiatives, including previously announced actions, the Company now expects to incur total estimated pre-tax charges of approximately
In addition to these actions, the Company expects to execute additional restructuring-related actions associated with its aforementioned initiatives in order to further support future growth and profitability.
Full Year Fiscal 2021 and Fourth 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 further resurgences of the pandemic across various markets.
We expect our financial results for both the fourth quarter and full year Fiscal 2021 to continue to be adversely impacted by the pandemic and prolonged demand recovery.
For the fourth quarter, we expect revenues to decline approximately mid-to-high single digits to last year, a sequential improvement from the first three quarters of the fiscal year. This outlook reflects confirmed government-mandated lockdowns and other COVID-related restrictions across several of our key markets, notably in
We anticipate gross margin expansion continuing through the fourth quarter, albeit at a more moderate rate compared to the first three quarters of the year, and operating expenses increasing in the low single-digit range from the prior year period. Excluding marketing investments, we expect operating expenses to decline low single-digits compared to last year.
We expect capital expenditures for Fiscal 2021 to be approximately
Based on our current outlook, we plan to reinstate the Company's quarterly dividend in the first half of Fiscal 2022.
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," "goal," "target," "can," "will," 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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Cash and cash equivalents |
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$ |
2,621.5 |
|
|
$ |
1,620.4 |
|
|
$ |
1,079.9 |
|
Short-term investments |
|
165.7 |
|
|
495.9 |
|
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828.5 |
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Accounts receivable, net of allowances |
|
373.6 |
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277.1 |
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349.4 |
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Inventories |
|
866.0 |
|
|
736.2 |
|
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904.6 |
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Income tax receivable |
|
75.1 |
|
|
84.8 |
|
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32.3 |
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Prepaid expenses and other current assets |
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174.5 |
|
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160.8 |
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254.2 |
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Total current assets |
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4,276.4 |
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3,375.2 |
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3,448.9 |
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Property and equipment, net |
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1,086.4 |
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979.5 |
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1,028.2 |
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Operating lease right-of-use assets |
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1,339.6 |
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1,511.6 |
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1,573.4 |
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Deferred tax assets |
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322.5 |
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245.2 |
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240.6 |
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949.0 |
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915.5 |
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917.1 |
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Intangible assets, net |
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126.0 |
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141.0 |
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146.2 |
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Other non-current assets |
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72.3 |
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111.9 |
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91.5 |
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Total assets |
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$ |
8,172.2 |
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$ |
7,279.9 |
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$ |
7,445.9 |
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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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— |
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299.6 |
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298.1 |
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Accounts payable |
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335.0 |
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246.8 |
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267.6 |
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Income tax payable |
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70.5 |
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65.1 |
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69.1 |
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Current operating lease liabilities |
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296.1 |
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288.4 |
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287.5 |
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Accrued expenses and other current liabilities |
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975.2 |
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717.1 |
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853.1 |
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Total current liabilities |
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1,676.8 |
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2,092.0 |
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1,775.4 |
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Long-term debt |
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1,631.9 |
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396.4 |
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396.3 |
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Long-term operating lease liabilities |
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1,381.5 |
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1,568.3 |
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1,637.5 |
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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 |
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91.4 |
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88.9 |
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70.6 |
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Other non-current liabilities |
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579.9 |
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308.5 |
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316.9 |
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Total liabilities |
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5,480.2 |
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4,586.8 |
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4,329.4 |
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Equity: |
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Common stock |
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1.3 |
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1.3 |
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1.3 |
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Additional paid-in-capital |
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2,648.8 |
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2,594.4 |
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2,566.7 |
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Retained earnings |
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5,947.0 |
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5,994.0 |
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6,292.8 |
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|
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(5,814.5 |
) |
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(5,778.4 |
) |
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(5,625.7 |
) |
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Accumulated other comprehensive loss |
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(90.6 |
) |
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(118.2 |
) |
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(118.6 |
) |
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Total equity |
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2,692.0 |
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|
2,693.1 |
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|
3,116.5 |
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Total liabilities and equity |
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$ |
8,172.2 |
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$ |
7,279.9 |
|
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$ |
7,445.9 |
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|
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|
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$ |
1,155.3 |
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$ |
945.3 |
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$ |
1,214.0 |
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Cash & Investments(a) |
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2,787.2 |
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2,116.3 |
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1,908.4 |
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(a) The Company's investments were all classified as short-term for all periods presented. |
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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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$ |
715.4 |
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$ |
910.6 |
|
|
|
315.6 |
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|
437.8 |
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|
|
329.6 |
|
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289.6 |
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Other non-reportable segments |
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72.2 |
|
|
112.7 |
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Net revenues |
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1,432.8 |
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|
1,750.7 |
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Cost of goods sold |
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(502.4 |
) |
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(661.6 |
) |
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Gross profit |
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930.4 |
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|
1,089.1 |
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Selling, general, and administrative expenses |
|
(747.5 |
) |
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(843.3 |
) |
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Impairment of assets |
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(2.6 |
) |
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(14.4 |
) |
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Restructuring and other charges |
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(9.9 |
) |
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(7.0 |
) |
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Total other operating expenses, net |
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(760.0 |
) |
|
(864.7 |
) |
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Operating income |
|
170.4 |
|
|
224.4 |
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||
Interest expense |
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(12.2 |
) |
|
(4.2 |
) |
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Interest income |
|
2.4 |
|
|
7.3 |
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Other income, net |
|
1.6 |
|
|
2.9 |
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Income before income taxes |
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162.2 |
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230.4 |
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Income tax benefit (provision) |
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(42.4 |
) |
|
103.7 |
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Net income |
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$ |
119.8 |
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$ |
334.1 |
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Net income per common share: |
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Basic |
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$ |
1.63 |
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$ |
4.47 |
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Diluted |
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$ |
1.61 |
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$ |
4.41 |
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Weighted average common shares outstanding: |
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|
|
|
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Basic |
|
73.6 |
|
|
74.7 |
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Diluted |
|
74.6 |
|
|
75.8 |
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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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Nine Months Ended |
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(millions, except per share data) |
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|
|
$ |
1,423.4 |
|
|
$ |
2,511.2 |
|
|
|
795.8 |
|
|
1,278.8 |
|
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|
|
738.1 |
|
|
803.5 |
|
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Other non-reportable segments |
|
156.5 |
|
|
292.2 |
|
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Net revenues |
|
3,113.8 |
|
|
4,885.7 |
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Cost of goods sold |
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(1,035.3 |
) |
|
(1,826.8 |
) |
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Gross profit |
|
2,078.5 |
|
|
3,058.9 |
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Selling, general, and administrative expenses |
|
(1,883.3 |
) |
|
(2,385.3 |
) |
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Impairment of assets |
|
(35.7 |
) |
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(21.7 |
) |
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Restructuring and other charges |
|
(177.4 |
) |
|
(51.1 |
) |
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Total other operating expenses, net |
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(2,096.4 |
) |
|
(2,458.1 |
) |
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Operating income (loss) |
|
(17.9 |
) |
|
600.8 |
|
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Interest expense |
|
(34.6 |
) |
|
(12.8 |
) |
||
Interest income |
|
7.5 |
|
|
28.5 |
|
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Other income (expense), net |
|
5.5 |
|
|
(2.9 |
) |
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Income (loss) before income taxes |
|
(39.5 |
) |
|
613.6 |
|
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Income tax benefit (provision) |
|
(7.5 |
) |
|
19.7 |
|
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Net income (loss) |
|
$ |
(47.0 |
) |
|
$ |
633.3 |
|
Net income (loss) per common share: |
|
|
|
|
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Basic |
|
$ |
(0.64 |
) |
|
$ |
8.28 |
|
Diluted |
|
$ |
(0.64 |
) |
|
$ |
8.13 |
|
Weighted average common shares outstanding: |
|
|
|
|
||||
Basic |
|
73.4 |
|
|
76.5 |
|
||
Diluted |
|
73.4 |
|
|
77.9 |
|
||
Dividends declared per share |
|
$ |
— |
|
|
$ |
2.0625 |
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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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Nine Months Ended |
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|
|
|
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|
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|
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(millions) |
||||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
(47.0 |
) |
|
$ |
633.3 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization expense |
|
185.5 |
|
|
201.0 |
|
||
Deferred income tax benefit |
|
(101.8 |
) |
|
(155.7 |
) |
||
Non-cash stock-based compensation expense |
|
54.4 |
|
|
72.9 |
|
||
Non-cash impairment of assets |
|
35.7 |
|
|
21.7 |
|
||
Bad debt expense (benefit) |
|
(20.3 |
) |
|
1.9 |
|
||
Other non-cash benefits |
|
(2.7 |
) |
|
(0.3 |
) |
||
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
(67.3 |
) |
|
46.9 |
|
||
Inventories |
|
(92.0 |
) |
|
(89.0 |
) |
||
Prepaid expenses and other current assets |
|
(0.2 |
) |
|
(30.4 |
) |
||
Accounts payable and accrued liabilities |
|
346.9 |
|
|
56.3 |
|
||
Income tax receivables and payables |
|
39.8 |
|
|
16.1 |
|
||
Deferred income |
|
4.8 |
|
|
0.6 |
|
||
Other balance sheet changes |
|
(1.2 |
) |
|
(27.3 |
) |
||
Net cash provided by operating activities |
|
334.6 |
|
|
748.0 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Capital expenditures |
|
(80.8 |
) |
|
(216.0 |
) |
||
Purchases of investments |
|
(512.3 |
) |
|
(890.1 |
) |
||
Proceeds from sales and maturities of investments |
|
848.0 |
|
|
1,510.3 |
|
||
Acquisitions and ventures |
|
(2.0 |
) |
|
0.9 |
|
||
Proceeds from sale of property |
|
— |
|
|
20.8 |
|
||
Settlement of net investment hedges |
|
3.7 |
|
|
— |
|
||
Net cash provided by investing activities |
|
256.6 |
|
|
425.9 |
|
||
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 |
|
(8.6 |
) |
|
(10.6 |
) |
||
Payments of dividends |
|
(49.8 |
) |
|
(153.2 |
) |
||
Repurchases of common stock, including shares surrendered for tax withholdings |
|
(36.1 |
) |
|
(542.1 |
) |
||
Other financing activities |
|
(8.7 |
) |
|
(0.9 |
) |
||
Net cash provided by (used in) financing activities |
|
363.7 |
|
|
(706.8 |
) |
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
46.8 |
|
|
(4.2 |
) |
||
Net increase in cash, cash equivalents, and restricted cash |
|
1,001.7 |
|
|
462.9 |
|
||
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 |
|
$ |
2,631.5 |
|
|
$ |
1,089.4 |
|
|
||||||||||||||||
SEGMENT INFORMATION |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(millions) |
||||||||||||||
Net revenues: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
715.4 |
|
|
$ |
910.6 |
|
|
$ |
1,423.4 |
|
|
$ |
2,511.2 |
|
|
|
315.6 |
|
|
437.8 |
|
|
795.8 |
|
|
1,278.8 |
|
||||
|
|
329.6 |
|
|
289.6 |
|
|
738.1 |
|
|
803.5 |
|
||||
Other non-reportable segments |
|
72.2 |
|
|
112.7 |
|
|
156.5 |
|
|
292.2 |
|
||||
Total net revenues |
|
$ |
1,432.8 |
|
|
$ |
1,750.7 |
|
|
$ |
3,113.8 |
|
|
$ |
4,885.7 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss): |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
166.1 |
|
|
$ |
193.1 |
|
|
$ |
264.6 |
|
|
$ |
535.6 |
|
|
|
54.1 |
|
|
111.9 |
|
|
120.8 |
|
|
331.9 |
|
||||
|
|
69.4 |
|
|
46.6 |
|
|
120.6 |
|
|
135.6 |
|
||||
Other non-reportable segments |
|
21.5 |
|
|
29.5 |
|
|
37.6 |
|
|
85.2 |
|
||||
|
|
311.1 |
|
|
381.1 |
|
|
543.6 |
|
|
1,088.3 |
|
||||
Unallocated corporate expenses |
|
(130.8 |
) |
|
(149.7 |
) |
|
(384.1 |
) |
|
(436.4 |
) |
||||
Unallocated restructuring and other charges |
|
(9.9 |
) |
|
(7.0 |
) |
|
(177.4 |
) |
|
(51.1 |
) |
||||
Total operating income (loss) |
|
$ |
170.4 |
|
|
$ |
224.4 |
|
|
$ |
(17.9 |
) |
|
$ |
600.8 |
|
|
||||||||||||||
CONSTANT CURRENCY FINANCIAL MEASURES |
||||||||||||||
(Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
Comparable Store Sales Data |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
||||||
|
|
% Change |
|
% Change |
|
|
|
|
||||||
|
|
Constant Currency |
|
Constant Currency |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
9 |
% |
|
8 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(30 |
%) |
|
(47 |
%) |
|
|
|
|
||||
|
|
(21 |
%) |
|
(37 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
68 |
% |
|
49 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
(51 |
%) |
|
(53 |
%) |
|
|
|
|
||||
Total |
|
(38 |
%) |
|
(43 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Digital commerce |
|
54 |
% |
|
52 |
% |
|
|
|
|
||||
Excluding digital commerce |
|
1 |
% |
|
(15 |
%) |
|
|
|
|
||||
Total |
|
3 |
% |
|
(13 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
(21 |
%) |
|
(34 |
%) |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Operating Segment Net Revenues Data |
||||||||||||||
|
|
|
|
|
||||||||||
|
|
Three Months Ended |
|
% Change |
||||||||||
|
|
|
|
|
|
As |
|
Constant |
||||||
|
|
(millions) |
|
|
|
|
||||||||
|
|
$ |
715.4 |
|
|
$ |
910.6 |
|
|
(21.4 |
%) |
|
(21.5 |
%) |
|
|
315.6 |
|
|
437.8 |
|
|
(27.9 |
%) |
|
(31.6 |
%) |
||
|
|
329.6 |
|
|
289.6 |
|
|
13.8 |
% |
|
8.8 |
% |
||
Other non-reportable segments |
|
72.2 |
|
|
112.7 |
|
|
(36.0 |
%) |
|
(36.0 |
%) |
||
Net revenues |
|
$ |
1,432.8 |
|
|
$ |
1,750.7 |
|
|
(18.2 |
%) |
|
(19.9 |
%) |
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended |
|
% Change |
||||||||||
|
|
|
|
|
|
As |
|
Constant |
||||||
|
|
(millions) |
|
|
|
|
||||||||
|
|
$ |
1,423.4 |
|
|
$ |
2,511.2 |
|
|
(43.3 |
%) |
|
(43.3 |
%) |
|
|
795.8 |
|
|
1,278.8 |
|
|
(37.8 |
%) |
|
(39.5 |
%) |
||
|
|
738.1 |
|
|
803.5 |
|
|
(8.1 |
%) |
|
(9.7 |
%) |
||
Other non-reportable segments |
|
156.5 |
|
|
292.2 |
|
|
(46.4 |
%) |
|
(46.5 |
%) |
||
Net revenues |
|
$ |
3,113.8 |
|
|
$ |
4,885.7 |
|
|
(36.3 |
%) |
|
(36.9 |
%) |
|
||||||||||||||||||||||||||||||||||||||||
NET REVENUES BY SALES CHANNEL |
||||||||||||||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
|
North |
|
|
|
|
|
Other |
|
Total |
|
North |
|
|
|
|
|
Other |
|
Total |
||||||||||||||||||||
|
|
(millions) |
||||||||||||||||||||||||||||||||||||||
Sales Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail |
|
$ |
453.0 |
|
|
$ |
165.9 |
|
|
$ |
313.7 |
|
|
$ |
30.0 |
|
|
$ |
962.6 |
|
|
$ |
575.0 |
|
|
$ |
257.2 |
|
|
$ |
274.1 |
|
|
$ |
63.9 |
|
|
$ |
1,170.2 |
|
Wholesale |
|
262.4 |
|
|
149.7 |
|
|
15.9 |
|
|
5.4 |
|
|
433.4 |
|
|
335.6 |
|
|
180.6 |
|
|
15.5 |
|
|
2.9 |
|
|
534.6 |
|
||||||||||
Licensing |
|
— |
|
|
— |
|
|
— |
|
|
36.8 |
|
|
36.8 |
|
|
— |
|
|
— |
|
|
— |
|
|
45.9 |
|
|
45.9 |
|
||||||||||
Net revenues |
|
$ |
715.4 |
|
|
$ |
315.6 |
|
|
$ |
329.6 |
|
|
$ |
72.2 |
|
|
$ |
1,432.8 |
|
|
$ |
910.6 |
|
|
$ |
437.8 |
|
|
$ |
289.6 |
|
|
$ |
112.7 |
|
|
$ |
1,750.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Nine Months Ended |
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
|
North |
|
|
|
|
|
Other |
|
Total |
|
North |
|
|
|
|
|
Other |
|
Total |
||||||||||||||||||||
|
|
(millions) |
||||||||||||||||||||||||||||||||||||||
Sales Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail |
|
$ |
910.3 |
|
|
$ |
419.3 |
|
|
$ |
699.5 |
|
|
$ |
57.6 |
|
|
$ |
2,086.7 |
|
|
$ |
1,436.0 |
|
|
$ |
714.3 |
|
|
$ |
753.9 |
|
|
$ |
158.8 |
|
|
$ |
3,063.0 |
|
Wholesale |
|
513.1 |
|
|
376.5 |
|
|
38.6 |
|
|
8.2 |
|
|
936.4 |
|
|
1,075.2 |
|
|
564.5 |
|
|
49.6 |
|
|
6.6 |
|
|
1,695.9 |
|
||||||||||
Licensing |
|
— |
|
|
— |
|
|
— |
|
|
90.7 |
|
|
90.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
126.8 |
|
|
126.8 |
|
||||||||||
Net revenues |
|
$ |
1,423.4 |
|
|
$ |
795.8 |
|
|
$ |
738.1 |
|
|
$ |
156.5 |
|
|
$ |
3,113.8 |
|
|
$ |
2,511.2 |
|
|
$ |
1,278.8 |
|
|
$ |
803.5 |
|
|
$ |
292.2 |
|
|
$ |
4,885.7 |
|
|
||||||
GLOBAL RETAIL STORE NETWORK |
||||||
(Unaudited) |
||||||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
39 |
|
|
41 |
|
Polo Factory Stores |
|
193 |
|
|
191 |
|
Total Directly Operated Stores |
|
232 |
|
|
232 |
|
Concessions |
|
2 |
|
|
2 |
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
32 |
|
|
30 |
|
Polo Factory Stores |
|
64 |
|
|
64 |
|
Total Directly Operated Stores |
|
96 |
|
|
94 |
|
Concessions |
|
29 |
|
|
29 |
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
75 |
|
|
67 |
|
Polo Factory Stores |
|
72 |
|
|
63 |
|
Total Directly Operated Stores |
|
147 |
|
|
130 |
|
Concessions |
|
625 |
|
|
620 |
|
|
|
|
|
|
||
Other |
|
|
|
|
||
Club Monaco Stores |
|
73 |
|
|
76 |
|
Club Monaco Concessions |
|
4 |
|
|
4 |
|
|
|
|
|
|
||
Global Directly Operated Stores and Concessions |
|
|
|
|
||
|
|
146 |
|
|
138 |
|
Polo Factory Stores |
|
329 |
|
|
318 |
|
Club Monaco Stores |
|
73 |
|
|
76 |
|
Total Directly Operated Stores |
|
548 |
|
|
532 |
|
Concessions |
|
660 |
|
|
655 |
|
|
|
|
|
|
||
Global Licensed Stores |
|
|
|
|
||
Total Licensed Stores |
|
286 |
|
|
257 |
|
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Three Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total Adjustments(a)(b) |
|
As |
||||||
|
|
(millions, except per share data) |
||||||||||
Net revenues |
|
$ |
1,432.8 |
|
|
$ |
— |
|
|
$ |
1,432.8 |
|
Gross profit |
|
930.4 |
|
|
7.0 |
|
|
937.4 |
|
|||
Gross profit margin |
|
64.9 |
% |
|
|
|
65.4 |
% |
||||
Total other operating expenses, net |
|
(760.0 |
) |
|
12.5 |
|
|
(747.5 |
) |
|||
Operating expense margin |
|
53.0 |
% |
|
|
|
52.2 |
% |
||||
Operating income |
|
170.4 |
|
|
19.5 |
|
|
189.9 |
|
|||
Operating margin |
|
11.9 |
% |
|
|
|
13.3 |
% |
||||
Income before income taxes |
|
162.2 |
|
|
19.5 |
|
|
181.7 |
|
|||
Income tax provision |
|
(42.4 |
) |
|
(14.6 |
) |
|
(57.0 |
) |
|||
Effective tax rate |
|
26.2 |
% |
|
|
|
31.3 |
% |
||||
Net income |
|
$ |
119.8 |
|
|
$ |
4.9 |
|
|
$ |
124.7 |
|
Net income per diluted common share |
|
$ |
1.61 |
|
|
|
|
$ |
1.67 |
|
||
Weighted average common shares outstanding - Diluted |
|
74.6 |
|
|
|
|
74.6 |
|
||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||
|
|
$ |
166.1 |
|
|
$ |
14.0 |
|
|
$ |
180.1 |
|
Operating margin |
|
23.2 |
% |
|
|
|
25.2 |
% |
||||
|
|
54.1 |
|
|
(4.6 |
) |
|
49.5 |
|
|||
Operating margin |
|
17.1 |
% |
|
|
|
15.7 |
% |
||||
|
|
69.4 |
|
|
0.1 |
|
|
69.5 |
|
|||
Operating margin |
|
21.1 |
% |
|
|
|
21.1 |
% |
||||
Other non-reportable segments |
|
21.5 |
|
|
(0.3 |
) |
|
21.2 |
|
|||
Operating margin |
|
29.8 |
% |
|
|
|
29.3 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(140.7 |
) |
|
10.3 |
|
|
(130.4 |
) |
|||
Total operating income |
|
$ |
170.4 |
|
|
$ |
19.5 |
|
|
$ |
189.9 |
|
|
|
|
|
|
|
|
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Nine Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total Adjustments(a)(c) |
|
As |
||||||
|
|
(millions, except per share data) |
||||||||||
Net revenues |
|
$ |
3,113.8 |
|
|
$ |
— |
|
|
$ |
3,113.8 |
|
Gross profit |
|
2,078.5 |
|
|
2.9 |
|
|
2,081.4 |
|
|||
Gross profit margin |
|
66.7 |
% |
|
|
|
66.8 |
% |
||||
Total other operating expenses, net |
|
(2,096.4 |
) |
|
181.7 |
|
|
(1,914.7 |
) |
|||
Operating expense margin |
|
67.3 |
% |
|
|
|
61.5 |
% |
||||
Operating income (loss) |
|
(17.9 |
) |
|
184.6 |
|
|
166.7 |
|
|||
Operating margin |
|
(0.6 |
%) |
|
|
|
5.4 |
% |
||||
Income (loss) before income taxes |
|
(39.5 |
) |
|
184.6 |
|
|
145.1 |
|
|||
Income tax provision |
|
(7.5 |
) |
|
(39.0 |
) |
|
(46.5 |
) |
|||
Effective tax rate |
|
(18.9 |
%) |
|
|
|
32.0 |
% |
||||
Net income (loss) |
|
$ |
(47.0 |
) |
|
$ |
145.6 |
|
|
$ |
98.6 |
|
Net income (loss) per diluted common share |
|
$ |
(0.64 |
) |
|
|
|
$ |
1.32 |
|
||
Weighted average common shares outstanding - Diluted |
|
73.4 |
|
|
|
|
74.6 |
|
||||
SEGMENT INFORMATION - OPERATING INCOME (LOSS): |
|
|
|
|
|
|
||||||
|
|
$ |
264.6 |
|
|
$ |
(6.6 |
) |
|
$ |
258.0 |
|
Operating margin |
|
18.6 |
% |
|
|
|
18.1 |
% |
||||
|
|
120.8 |
|
|
10.9 |
|
|
131.7 |
|
|||
Operating margin |
|
15.2 |
% |
|
|
|
16.5 |
% |
||||
|
|
120.6 |
|
|
2.7 |
|
|
123.3 |
|
|||
Operating margin |
|
16.3 |
% |
|
|
|
16.7 |
% |
||||
Other non-reportable segments |
|
37.6 |
|
|
(0.2 |
) |
|
37.4 |
|
|||
Operating margin |
|
24.0 |
% |
|
|
|
23.9 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(561.5 |
) |
|
177.8 |
|
|
(383.7 |
) |
|||
Total operating income (loss) |
|
$ |
(17.9 |
) |
|
$ |
184.6 |
|
|
$ |
166.7 |
|
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Three Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total Adjustments(a)(d) |
|
As |
||||||
|
|
(millions, except per share data) |
||||||||||
Net revenues |
|
$ |
1,750.7 |
|
|
$ |
— |
|
|
$ |
1,750.7 |
|
Gross profit |
|
1,089.1 |
|
|
— |
|
|
1,089.1 |
|
|||
Gross profit margin |
|
62.2 |
% |
|
|
|
62.2 |
% |
||||
Total other operating expenses, net |
|
(864.7 |
) |
|
21.4 |
|
|
(843.3 |
) |
|||
Operating expense margin |
|
49.4 |
% |
|
|
|
48.2 |
% |
||||
Operating income |
|
224.4 |
|
|
21.4 |
|
|
245.8 |
|
|||
Operating margin |
|
12.8 |
% |
|
|
|
14.0 |
% |
||||
Income before income taxes |
|
230.4 |
|
|
21.4 |
|
|
251.8 |
|
|||
Income tax benefit (provision) |
|
103.7 |
|
|
(138.7 |
) |
|
(35.0 |
) |
|||
Effective tax rate |
|
(45.1 |
)% |
|
|
|
13.9 |
% |
||||
Net income |
|
$ |
334.1 |
|
|
$ |
(117.3 |
) |
|
$ |
216.8 |
|
Net income per diluted common share |
|
$ |
4.41 |
|
|
|
|
$ |
2.86 |
|
||
Weighted average common shares outstanding - Diluted |
|
75.8 |
|
|
|
|
75.8 |
|
||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||
|
|
$ |
193.1 |
|
|
$ |
0.4 |
|
|
$ |
193.5 |
|
Operating margin |
|
21.2 |
% |
|
|
|
21.3 |
% |
||||
|
|
111.9 |
|
|
— |
|
|
111.9 |
|
|||
Operating margin |
|
25.6 |
% |
|
|
|
25.6 |
% |
||||
|
|
46.6 |
|
|
2.4 |
|
|
49.0 |
|
|||
Operating margin |
|
16.1 |
% |
|
|
|
16.9 |
% |
||||
Other non-reportable segments |
|
29.5 |
|
|
8.6 |
|
|
38.1 |
|
|||
Operating margin |
|
26.2 |
% |
|
|
|
33.8 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(156.7 |
) |
|
10.0 |
|
|
(146.7 |
) |
|||
Total operating income |
|
$ |
224.4 |
|
|
$ |
21.4 |
|
|
$ |
245.8 |
|
|
||||||||||||
RECONCILIATION OF NON- |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
|
Nine Months Ended |
||||||||||
|
|
|
||||||||||
|
|
As |
|
Total Adjustments(a)(e) |
|
As |
||||||
|
|
(millions, except per share data) |
||||||||||
Net revenues |
|
$ |
4,885.7 |
|
|
$ |
— |
|
|
$ |
4,885.7 |
|
Gross profit |
|
3,058.9 |
|
|
1.0 |
|
|
3,059.9 |
|
|||
Gross profit margin |
|
62.6 |
% |
|
|
|
62.6 |
% |
||||
Total other operating expenses, net |
|
(2,458.1 |
) |
|
72.8 |
|
|
(2,385.3 |
) |
|||
Operating expense margin |
|
50.3 |
% |
|
|
|
48.8 |
% |
||||
Operating income |
|
600.8 |
|
|
73.8 |
|
|
674.6 |
|
|||
Operating margin |
|
12.3 |
% |
|
|
|
13.8 |
% |
||||
Income before income taxes |
|
613.6 |
|
|
73.8 |
|
|
687.4 |
|
|||
Income tax benefit (provision) |
|
19.7 |
|
|
(150.4 |
) |
|
(130.7 |
) |
|||
Effective tax rate |
|
(3.2 |
%) |
|
|
|
19.0 |
% |
||||
Net income |
|
$ |
633.3 |
|
|
$ |
(76.6 |
) |
|
$ |
556.7 |
|
Net income per diluted common share |
|
$ |
8.13 |
|
|
|
|
$ |
7.15 |
|
||
Weighted average common shares outstanding - Diluted |
|
77.9 |
|
|
|
|
77.9 |
|
||||
SEGMENT INFORMATION - OPERATING INCOME: |
|
|
|
|
|
|
||||||
|
|
$ |
535.6 |
|
|
$ |
0.4 |
|
|
$ |
536.0 |
|
Operating margin |
|
21.3 |
% |
|
|
|
21.3 |
% |
||||
|
|
331.9 |
|
|
0.1 |
|
|
332.0 |
|
|||
Operating margin |
|
26.0 |
% |
|
|
|
26.0 |
% |
||||
|
|
135.6 |
|
|
3.3 |
|
|
138.9 |
|
|||
Operating margin |
|
16.9 |
% |
|
|
|
17.3 |
% |
||||
Other non-reportable segments |
|
85.2 |
|
|
12.4 |
|
|
97.6 |
|
|||
Operating margin |
|
29.2 |
% |
|
|
|
33.4 |
% |
||||
Unallocated corporate expenses and restructuring & other charges |
|
(487.5 |
) |
|
57.6 |
|
|
(429.9 |
) |
|||
Total operating income |
|
$ |
600.8 |
|
|
$ |
73.8 |
|
|
$ |
674.6 |
|
FOOTNOTES TO RECONCILIATION OF NON- |
|
(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 one-time income tax events are recorded within the income tax benefit (provision). 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 |
|
|
|
Our income tax provision for the three months ended |
|
|
(c) |
Adjustments for the nine months ended |
|
|
|
Our income tax provision for the nine months ended |
|
|
(d) |
Adjustments for the three months ended |
|
|
(e) |
Adjustments for the nine months ended |
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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