As filed with the Securities and Exchange Commission on October 5, 2000
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 5, 2000
POLO RALPH LAUREN CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 001-13057 13-2622036
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
650 MADISON AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 318-7000
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On October 5, 2000, the Registrant announced that it completed
an operational review and would record a $110-$115 million after-tax charge to
enhance its worldwide luxury retail business and operating efficiency
initiatives. A copy of the press release by which this announcement was made is
attached as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
Not applicable.
(b) Pro forma financial information
Not applicable.
(c) Exhibits
Exhibit
Number Description
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99 Press release, dated October 5, 2000, of
the Registrant.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
POLO RALPH LAUREN CORPORATION
By: /s/ Victor Cohen
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Name: Victor Cohen
Title: Executive Vice President,
General Counsel and Secretary
Dated: October 5, 2000
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EXHIBIT INDEX
Page
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99 Press release, dated October 5, 2000, of Polo Ralph Lauren 5
Corporation
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EXHIBIT 99
Investor Contact: Nancy S. Murray 212.813.7862
Media Contact: Jim Abernathy 212.371.5999
POLO RALPH LAUREN COMPLETES OPERATIONAL REVIEW
>COMPANY TO RECORD $110-$115 MILLION AFTER-TAX CHARGE TO ENHANCE WORLDWIDE
LUXURY RETAIL BUSINESS AND OPERATING EFFICIENCY INITIATIVES
>PLAN TO DRIVE SIGNIFICANT OVERALL OPERATING MARGIN IMPROVEMENT
>CURRENT QUARTER EARNINGS PER SHARE TO MEET EXPECTATIONS
New York (October 5, 2000) - Polo Ralph Lauren Corporation (NYSE: RL)
announced today the results of an operational review its management team had
undertaken to enhance the growth of its worldwide luxury retail business and
increase the overall profitability of the premier global luxury company.
"Polo Ralph Lauren Corporation has built the largest luxury design
business in the world including men's and women's apparel collections and home
design. We are presently focused on building an accessories business which is
the fastest growing category in the luxury market," said Ralph Lauren, Chairman
and Chief Executive Officer of Polo Ralph Lauren.
"Because of this strong worldwide demand for our luxury designs, we
will expand our Polo Ralph Lauren stores in important markets such as Dallas and
Beverly Hills and open a new luxury-focused store in Boston. While we open these
new stores, we are closing stores that are not consistent with this philosophy.
I believe this focused retail strategy will provide a solid foundation from
which we can continue to grow the Polo Ralph Lauren brand even more profitably,"
Mr. Lauren added. "In addition, we have developed a series of brands through
excellence in design and creativity, and through innovative marketing and
merchandising, that have now positioned us as the number one resource in our
categories for department stores. Our clear position in the luxury market and
our ability to create new brand names such as Lauren, RALPH and Polo Jeans Co.
for the department store channel has positioned Polo Ralph Lauren as the number
one fashion company in the world."
Commenting on the Club Monaco stores, Mr. Lauren said, "We purchased
Club Monaco because its concept is glamour and style at a price, and we believe
we can build it
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into a profitable vertical retail operation. As the brand becomes more
fashion-forward we are refining the store rollout plan. We are opening Club
Monaco stores in markets such as Los Angeles, New York and South Beach Miami and
will close locations that don't match these fashion merchandising
sensibilities."
"Our outlook for the business and its growth remains strong, and we are
committed to executing these initiatives and continuing to expand our position
as the premier global luxury company," Mr. Lauren concluded.
As a result of the operational review, the Company will record an
after-tax charge ranging from $110 million to $115 million, or $1.13 to $1.18
per share, in its second quarter of fiscal 2001. The after-tax charge will
include approximately $73 to $75 million that relates to the retail focus
including the write-down of the assets of a number of stores to their fair
values, the closure of all 12 Polo Jeans. Co. retail stores and the closure of
11 under-performing Club Monaco stores. Approximately $22 to $24 million of the
charge relates to write-downs associated with the acceleration in the reduction
of aged inventory, and approximately $15 to $16 million relates to operating
efficiency initiatives including the consolidation of overseas sourcing
operations as well as severance and other employee-related costs. The charge is
expected to be cash flow neutral in fiscal 2001.
Excluding these charges, the Company expects to report second quarter
fiscal 2001 earnings on November 8th in line with expectations. Lance Isham,
Vice Chairman of Polo Ralph Lauren, commented, "During the second quarter we
continued to execute on our operating plan, and we expect to achieve our planned
earnings per share goal for the second quarter."
Polo Ralph Lauren President and Chief Operating Officer Roger Farah
said, "The results of the operational review that the entire management team has
undertaken over the past several months are expected to enhance our ability to
continue to grow Polo as a premier global luxury company with greater
efficiencies. Looking forward, we would expect to see improved results in the
second half of fiscal 2001 based on continued strong demand for our brand and by
implementing our new efficiencies."
The benefit of the operational review and the related actions are
anticipated to positively impact the second half of fiscal 2001 as operating
margins are expected to increase more than 200 basis points year over year in
the second half of fiscal 2001. The Company expects earnings per share of $0.50
to $0.52 cents in the third quarter and $0.42 to $0.44 cents in the fourth
quarter of fiscal 2001. As a result of the review, on a longer-term basis, the
Company expects earnings per share to increase from $1.93 to $1.98 for the
fiscal year 2002.
RETAIL FOCUS
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The Company will continue to refine its retail strategy by expanding
the presence of its full-line luxury stores, both in North America and abroad,
and by building a profitable portfolio of Club Monaco stores in key urban
locations that fully emphasize and capitalize on its fashion-forward
merchandising strategy.
"We have enjoyed strong customer response to our strategy of increasing
the penetration of luxury products in our Polo Ralph Lauren stores such as New
York and Palm Beach, and we will continue to develop new stores that capture
this demand, both here and abroad, " Mr. Farah said. "To ensure a consistent
implementation of our global retail luxury strategy, our Paris and London
stores' merchandising and buying will be more closely integrated into our U.S.
retail group."
"Based on our luxury retail emphasis, we also believe that
discontinuing the free-standing Polo Jeans Co. retail business is the right
strategy. Polo Jeans Co. is a modern, youthful brand that continues to be a
strong and successful line that performs very well in department stores. The
current economics of the full price free-standing store format did not produce
the level of profitability we expect in our retail group," Mr. Farah added.
"We are committed to building and operating a strong, profitable
full-line retail operation and believe the steps we announced today will enhance
our ability to build this business into a strong bottom-line contributor," Mr.
Farah stated.
INVENTORY MANAGEMENT
"Supply chain management is one of the most important areas targeted
for operational improvement ," Mr. Farah stated. The Company recently hired Russ
LoCurto, a 21-year retail supply chain veteran, to head Polo's worldwide
logistics efforts and develop efficiencies in Polo's supply chain that will
better support the Company's growing and increasingly global retail operations.
"While we are below our planned second quarter inventory, there is
still significant opportunity to accelerate our inventory turnover. With more
demanding standards on our inventory turnover we can decrease our working
capital needs," Mr. Farah said.
EFFICIENCY INITIATIVES
During the past several months the Company has identified key areas of
cost reduction across the entire Company. Specifically, the Company has targeted
opportunities in its product sourcing, corporate procurement, logistics and
distribution, and the elimination of redundancies in information systems and
back office support.
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"As a senior management team we believe there is a great deal of
opportunity to improve our existing expense structure and this review has
identified the key areas where we are taking immediate action," Mr. Farah added.
CONFERENCE CALL THIS MORNING TO DISCUSS THE
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OPERATIONAL REVIEW
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The Company will host a conference call Thursday, October 5, 2000 at
9:00 A.M. Eastern Standard Time to discuss the results of the operational
review. To participate in the call, please call 1-888-343-1299. For
international participants, please call 1-212-271-4803. A replay of the call
with be available through 5 P.M. Saturday, October 7, 2000 by dialing
1-800-633-8284 and entering reservation number 16452209.
The Company expects to release its Second Quarter Fiscal Year 2001
results on Wednesday, November 8, 2000.
Polo Ralph Lauren Corporation (NYSE: RL) is a leader in the design,
marketing and distribution of premium lifestyle products in four categories:
apparel, home, accessories and fragrances. For more than 30 years, Polo's
reputation and distinctive image have been consistently developed across an
expanding number of products, brands and international markets. The Company's
brand names, which include, "Polo by Ralph Lauren", "Polo Sport Ralph Lauren",
"Ralph Lauren Collection", "Ralph Lauren Purple Label", "RALPH by Ralph Lauren",
"Lauren by Ralph Lauren", "Polo Jeans Co. Ralph Lauren", and "Chaps Ralph
Lauren", among others, constitute one of the world's most widely recognized
families of consumer brands. In May 1999, Polo Ralph Lauren acquired Club
Monaco, a vertical lifestyle retailer based in Toronto. In February 2000, Ralph
Lauren Media LLC was formed as a joint venture between Polo Ralph Lauren, NBC
and three of NBC's affiliated companies - ValueVision International, Inc.
(Nasdaq: VVTV), NBC Internet, Inc. (Nasdaq: NBCI) and CNBC.com, LLC - to bring
the Polo Ralph Lauren American lifestyle experience to consumers via multiple
media platforms, including the Internet, broadcast, cable and print.
Certain statements including, without limitations, the statements by
Ralph Lauren, Lance Isham and Roger Farah and the statements relating to benefit
of the operational review and its impact on the second half of fiscal 2001 and
full year 2002 financial results contained herein constitute "forward-looking
statements" within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. Such forward-looking statements are based on current expectations
and involve certain risks and uncertainties. Actual results might differ
materially from those projected in the forward-looking statements. Among the
factors that could cause actual results to materially differ are the following:
risks associated with implementing the Company's plans to enhance its worldwide
luxury retail business, inventory management program and operating efficiency
initiatives; risks associated with
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changes in the competitive marketplace, including the introduction of new
products or pricing changes by the Company's competitors; changes in global
economic conditions; risks associated with the Company's dependence on sales to
a limited number of large department store customers, including risks related to
extending credit to customers; risks associated with the Company's dependence on
its licensing partners for a substantial portion of its net income and risks
associated with a lack of operational and financial control over licensed
businesses; risks associated with consolidations, restructurings and other
ownership changes in the retail industry; risks associated with competition in
the segments of the fashion and consumer product industries in which the Company
operates, including the Company's ability to shape, stimulate and respond to
changing consumer tastes and demands by producing attractive products, brands
and marketing, and its ability to remain competitive in the areas of quality and
price; risks associated with uncertainty relating to the Company's ability to
implement its growth strategies; risks associated with the Company's entry into
new markets either through internal development activities or through
acquisitions; risks associated with the possible adverse impact of the Company's
unaffiliated manufacturers' inability to manufacture in a timely manner, to meet
quality standards or to us acceptable labor practices and other factors detailed
in the filings made by the Company with the Company with the Securities and
Exchange Commission. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
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