Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2017 Results
For Fiscal 2017, earnings per diluted share was
The Company announced yesterday that
“The retail landscape today is more dynamic than ever, but within this
environment, our brand continues to be one of the most recognized and
beloved all over the world. Our performance for the year reflects our
work to strengthen our brand and I am confident that the actions we are
taking, combined with our strong heritage, position us well to succeed.
I am very excited to partner with
“Fiscal 2017 was an important year as we strengthened the foundation of
the Company. We created operational efficiencies, increased the
productivity of our assortment and improved quality of our sales,” said
- continued to drive quality of sales up by moderating discount levels;
- lowered our inventory levels by 30% to improve inventory turns;
- reduced the number of SKUs by 20% for both Spring and Fall 2017, increasing SKU productivity and producing a more focused, higher margin assortment;
- shortened our lead times and achieved our goal of having 50% of our business on a 9-month lead time, and remain on track to get to 90% by the end of Fiscal 2018;
- optimized our store fleet by closing another 20 underperforming stores, reaching our goal for the year;
- initiated the move to a more cost-effective, flexible e-commerce platform;
-
strengthened the global organization, adding a Chief Marketing Officer
and Men’s
Brand President , and created a single International organization under a seasoned leader to drive a more efficient organization.”
Nielsen continued: “This work will continue into Fiscal 2018 as we drive toward strengthening the brand, improving return on investment and creating value for shareholders. The team and I are looking forward to welcoming Patrice as we continue this important work and bring demand back to the business.”
Fourth Quarter and Full Year Fiscal 2017 Income Statement Review
Net Revenues – Fourth Quarter Fiscal 2017. In the fourth
quarter, reported revenue decreased 16% to
The fourth quarter revenue decline was in line with the guidance of a mid-teens decline. The decline was driven by our initiatives to improve quality of sales and reduce excess inventory, as well as challenging traffic trends.
International revenue in the fourth quarter (consistent with the change
in our reportable segments), declined 9% while
-
Wholesale Revenue. Wholesale revenue in the fourth quarter
decreased 17% to
$777 million ; on a 13-week to 13-week basis in constant currency, wholesale revenue was down 15% to last year. The decline was primarily driven byNorth America as shipments were strategically reduced to increase quality of sales, better align with demand and reduce excess inventory. -
Retail Revenue. Retail revenue in the fourth quarter decreased
16% to
$745 million ; on a 13-week to 13-week basis in constant currency, retail revenue was down 9% to last year. Lower retail sales were driven by a decline in comparable store sales that was negatively impacted by challenging traffic and average transaction size trends, partially driven by our initiatives to improve quality of sales.
On a 13-week to 13-week constant currency basis, comparable store sales decreased 11% during the fourth quarter. Comps were negatively impacted by calendar shifts related to both Christmas and Easter holidays by about three percentage points; excluding this impact, comparable store sales would have decreased 8%.
-
Licensing Revenue. Licensing revenue in the fourth quarter
increased 7% on a reported basis to
$43 million .
Net Revenues – Full Year Fiscal 2017. For Fiscal 2017,
revenue decreased 10% to
-
Wholesale Revenue. For Fiscal 2017, wholesale revenue decreased
15% to
$2.8 billion compared to the prior year period, primarily due to a decline in sales inNorth America . -
Retail Revenue: For Fiscal 2017, retail revenue for the year
decreased 6% on a reported basis to
$3.7 billion compared to the prior year period. On a 52-week to 52-week constant currency basis, consolidated comparable store sales decreased 7%. -
Licensing Revenue. Licensing revenue of
$173 million in Fiscal 2017 was 1% below Fiscal 2016 on a reported basis.
Gross Profit. Gross profit for the fourth quarter of
Fiscal 2017 was
This increase was primarily driven by improved quality of sales, reduced promotional activity, lower product costs, and favorable geographic and channel mix shifts. Gross margin improvement was partially offset by unfavorable foreign currency effects of 90 basis points in the fourth quarter.
For Fiscal 2017, gross profit was
Operating Expenses. Operating expenses in the fourth
quarter of Fiscal 2017 were
Adjusted operating expense rate was 48.9%, 70 basis points above the prior year period, excluding restructuring and other charges from both periods. This increase was due to fixed expense deleverage and incremental investments in infrastructure and new stores.
For Fiscal 2017, operating expenses were
Operating Income (Loss). Operating loss in the fourth
quarter of Fiscal 2017 was
The higher operating margin year-over-year was attributable to gross margin expansion partially offset by approximately 100 basis points of unfavorable foreign currency impact and fixed expense deleverage.
For Fiscal 2017, operating loss was
-
Wholesale Operating Income. Wholesale operating income in the
fourth quarter was
$201 million and wholesale operating margin was 25.8% on a reported basis, including$10 million in restructuring and other charges. On an adjusted basis, wholesale operating income in the fourth quarter was$211 million and wholesale operating margin was 27.2%, flat to last year.
Wholesale operating income in Fiscal 2017 was$659 million and wholesale operating margin was 23.6% on a reported basis, including$40 million in restructuring and other charges. On an adjusted basis, wholesale operating income in Fiscal 2017 was$699 million and wholesale operating margin was 25.0%, 10 basis points below last year.
-
Retail Operating Income. Retail operating loss in the fourth
quarter was
$103 million and retail operating margin was (13.8%) on a reported basis, including$119 million in restructuring and other charges. On an adjusted basis, retail operating income was$17 million and retail operating margin was 2.2%, 20 basis points lower than last year. Excluding the impact of restructuring charges and the 53rd week, adjusted operating margin expanded 240 basis points compared to last year.
Retail operating income in Fiscal 2017 was$145 million and retail operating margin was 3.9% on a reported basis, including$290 million in restructuring and other charges. On an adjusted basis, retail operating income was$435 million and retail operating margin was 11.8%, 110 basis points above last year. Excluding the impact of restructuring charges and the 53rd week, adjusted operating margin expanded 150 basis points compared to last year.
-
Licensing Operating Income. Licensing operating income of
$41 million in the fourth quarter of Fiscal 2017 increased 16% compared with the prior year period. Licensing operating income of$156 million in Fiscal 2017 was in line with the prior year period.
Net Income (Loss) and EPS. On a reported basis, net loss
in the fourth quarter of Fiscal 2017 was
In Fiscal 2017, on a reported basis, net loss was
The Company had an effective tax rate of approximately 24% in the fourth quarter of Fiscal 2017 on a reported basis. On an adjusted basis, the effective tax rate was approximately 27%, excluding restructuring and other charges, lower than our guidance of 30% due to a geographic shift in expense mix driven by changes in our e-commerce platform development. This compared to an adjusted effective tax rate of 34% in the prior year period.
For Fiscal 2017, the Company had an effective tax rate of approximately 28% on an adjusted basis, excluding restructuring and other charges. This compared to an adjusted effective tax rate of 28% for Fiscal 2016.
Balance Sheet and Cash Flow Review
The Company ended Fiscal 2017 with
Inventory at the end of Fiscal 2017 was
The Company had
During the fourth quarter, the Company repurchased
Full Year Fiscal 2018 and First Quarter Outlook
The full year Fiscal 2018 and first quarter guidance excludes foreign currency impacts, restructuring and other related charges expected to be recorded in connection with the Company’s Way Forward plan, and severance-related payments associated with the CEO departure.
For Fiscal 2018, net revenue is expected to decrease 8-9%, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have approximately 150 basis points of negative impact on revenue growth in Fiscal 2018.
The Company expects operating margin for Fiscal 2018 to be 9.0-10.5%, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to pressure operating margin for Fiscal 2018 by 50-75 basis points.
In the first quarter of Fiscal 2018, the Company expects net revenue to be down low double-digits, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have approximately 225 basis points of negative impact on revenue growth in the first quarter of Fiscal 2018.
Operating margin for the first quarter of Fiscal 2018 is expected to be about 9.5-10.0%, excluding foreign currency impacts. Foreign currency is estimated to pressure operating margin by approximately 75 basis points.
In Fiscal 2018, the Company is adopting Accounting Standard Update (ASU)
2016-09 for the accounting of employee share-based payments, which was
recently issued by the
Excluding the impact of ASU 2016-09, the Fiscal 2018 tax rate is
estimated at 25%. Based on a stock price of
The adoption of ASU 2016-09 is expected to be most impactful in the first and second quarters of the fiscal year due to the timing of vesting and exercise of certain stock compensation. Including the impact of ASU 2016-09, the first quarter of Fiscal 2018 tax rate is estimated at 33%.
We are planning capital expenditures of
Fiscal Year 2018 Outlook – Non-GAAP Disclosure:
The Company is not able to provide a full reconciliation of the non-GAAP financial measures to GAAP because certain material items that impact these measures, such as the timing and exact amount of charges related to our Way Forward plan, have not yet occurred or are out of the Company’s control. Accordingly, a reconciliation of our non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort. The Company has identified the estimated impact of the items excluded from its Fiscal 2018 guidance.
This Fiscal 2018 non-GAAP guidance excludes estimated pretax charges
related to our Way Forward plan and severance-related payments
associated with the CEO departure, which collectively are anticipated to
result in estimated charges of approximately
Change in Reportable Segments
During the fourth quarter of Fiscal 2017, the Company changed its
reportable segments as a result of significant operational changes
implemented under the Way Forward plan. The Company’s new reportable
segments are as follows:
This new structure is consistent with how the management team
establishes the overall business strategy, allocates resources, and
assesses performance of the Company. In addition to these reportable
segments, the Company also has other non-reportable segments, which
primarily consists of our Club Monaco,
Segment information under the Company’s new reportable segments for the
past eight quarters will be provided in an 8-K filed with the
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
Future announcements regarding the timing of future earnings release dates and conference calls will be posted on the Company’s investor relations website at http://investor.ralphlauren.com and will not be issued through news wire services unless otherwise noted by the Company.
ABOUT
RALPH LAUREN CORPORATION | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||
(in millions) | |||||||||||
(Audited) | |||||||||||
April 1, | April 2, | ||||||||||
2017 | 2016 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 668.3 | $ | 456.3 | |||||||
Short-term investments | 684.7 | 629.4 | |||||||||
Accounts receivable, net of allowances | 450.2 | 516.5 | |||||||||
Inventories | 791.5 | 1,124.6 | |||||||||
Income tax receivable | 79.4 | 57.8 | |||||||||
Prepaid expenses and other current assets | 280.4 | 268.1 | |||||||||
Total current assets | 2,954.5 | 3,052.7 | |||||||||
Property and equipment, net | 1,316.0 | 1,583.2 | |||||||||
Deferred tax assets | 125.9 | 118.7 | |||||||||
Goodwill | 904.6 | 917.9 | |||||||||
Intangible assets, net | 219.8 | 243.9 | |||||||||
Other non-current assets (a) | 131.2 | 296.7 | |||||||||
Total assets | $ | 5,652.0 | $ | 6,213.1 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term debt | $ | - | $ | 116.1 | |||||||
Accounts payable | 147.7 | 151.0 | |||||||||
Income tax payable | 29.5 | 33.0 | |||||||||
Accrued expenses and other current liabilities | 982.7 | 898.2 | |||||||||
Total current liabilities | 1,159.9 | 1,198.3 | |||||||||
Long-term debt | 588.2 | 597.0 | |||||||||
Non-current liability for unrecognized tax benefits | 62.7 | 80.6 | |||||||||
Other non-current liabilities | 541.6 | 593.7 | |||||||||
Total liabilities | 2,352.4 | 2,469.6 | |||||||||
Equity: | |||||||||||
Common stock | 1.2 | 1.2 | |||||||||
Additional paid-in-capital | 2,308.8 | 2,257.5 | |||||||||
Retained earnings | 5,751.9 | 6,015.0 | |||||||||
Treasury stock, Class A, at cost | (4,563.9 | ) | (4,348.7 | ) | |||||||
Accumulated other comprehensive loss | (198.4 | ) | (181.5 | ) | |||||||
Total equity | 3,299.6 | 3,743.5 | |||||||||
Total liabilities and equity | $ | 5,652.0 | $ | 6,213.1 | |||||||
Net Cash (incl. LT Investments) | 786.2 | 559.2 | |||||||||
Cash & Investments (ST & LT) | 1,374.4 | 1,272.3 | |||||||||
Net Cash (excl. LT Investments) | 764.8 | 372.6 | |||||||||
Cash & ST Investments | 1,353.0 | 1,085.7 | |||||||||
(a) Includes non-current investments of: |
$ | 21.4 | $ | 186.6 | |||||||
RALPH LAUREN CORPORATION | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||
(in millions, except per share data) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended |
|||||||||||
April 1, | April 2, | ||||||||||
2017 | 2016 | ||||||||||
Net revenues | $ | 1,565.4 | $ | 1,871.1 | |||||||
Cost of goods sold(a) | (746.3 | ) | (857.8 | ) | |||||||
Gross profit | 819.1 | 1,013.3 | |||||||||
Selling, general, and administrative expenses (a) | (759.6 | ) | (895.3 | ) | |||||||
Amortization of intangible assets | (5.9 | ) | (6.3 | ) | |||||||
Impairment of assets | (197.1 | ) | (24.5 | ) | |||||||
Restructuring and other charges | (124.7 | ) | (19.8 | ) | |||||||
Total other operating expenses, net | (1,087.3 | ) | (945.9 | ) | |||||||
Operating income (loss) | (268.2 | ) | 67.4 | ||||||||
Foreign currency gains | 0.3 | 4.3 | |||||||||
Interest expense | (1.4 | ) | (7.5 | ) | |||||||
Interest and other income, net | 0.7 | 1.0 | |||||||||
Equity in losses of equity-method investees | - | (3.9 | ) | ||||||||
Income (loss) before income taxes | (268.6 | ) | 61.3 | ||||||||
Income tax benefit (provision) | 64.6 | (20.0 | ) | ||||||||
Net income (loss) | $ | (204.0 | ) | $ | 41.3 | ||||||
Net income (loss) per share - Basic | $ | (2.48 | ) | $ | 0.49 | ||||||
Net income (loss) per share - Diluted | $ | (2.48 | ) | $ | 0.49 | ||||||
Weighted average shares outstanding - Basic | 82.3 | 83.9 | |||||||||
Weighted average shares outstanding - Diluted | 82.3 | 84.5 | |||||||||
Dividends declared per share | $ | 0.50 | $ | 0.50 | |||||||
(a) Includes total depreciation expense of: | $ | (69.6 | ) | $ | (75.6 | ) | |||||
RALPH LAUREN CORPORATION | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | |||||||||||
(in millions, except per share data) | |||||||||||
(Audited) | |||||||||||
Twelve Months Ended |
|||||||||||
April 1, | April 2, | ||||||||||
2017 | 2016 | ||||||||||
Net revenues | $ | 6,652.8 | $ | 7,405.2 | |||||||
Cost of goods sold(a) | (3,001.7 | ) | (3,218.5 | ) | |||||||
Gross profit | 3,651.1 | 4,186.7 | |||||||||
Selling, general, and administrative expenses (a) | (3,149.4 | ) | (3,389.7 | ) | |||||||
Amortization of intangible assets | (24.1 | ) | (23.7 | ) | |||||||
Impairment of assets | (253.8 | ) | (48.8 | ) | |||||||
Restructuring and other charges | (318.6 | ) | (142.6 | ) | |||||||
Total other operating expenses, net | (3,745.9 | ) | (3,604.8 | ) | |||||||
Operating income (loss) | (94.8 | ) | 581.9 | ||||||||
Foreign currency gains (losses) | 1.1 | (3.8 | ) | ||||||||
Interest expense | (12.4 | ) | (21.0 | ) | |||||||
Interest and other income, net | 6.4 | 5.6 | |||||||||
Equity in losses of equity-method investees | (5.2 | ) | (10.9 | ) | |||||||
Income (loss) before income taxes | (104.9 | ) | 551.8 | ||||||||
Income tax benefit (provision) | 5.6 | (155.4 | ) | ||||||||
Net income (loss) | $ | (99.3 | ) | $ | 396.4 | ||||||
Net income (loss) per share - Basic | $ | (1.20 | ) | $ | 4.65 | ||||||
Net income (loss) per share - Diluted | $ | (1.20 | ) | $ | 4.62 | ||||||
Weighted average shares outstanding - Basic | 82.7 | 85.2 | |||||||||
Weighted average shares outstanding - Diluted | 82.7 | 85.9 | |||||||||
Dividends declared per share | $ | 2.00 | $ | 2.00 | |||||||
(a) Includes total depreciation expense of: | $ | (283.4 | ) | $ | (285.7 | ) | |||||
RALPH LAUREN CORPORATION | |||||||||||||||||||||
OTHER INFORMATION | |||||||||||||||||||||
(in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||||||
Net revenues and operating income (loss) for the periods ended April 1, 2017 and April 2, 2016 for each segment were as follows: | |||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
April 1, | April 2, | April 1, | April 2, | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Net revenues: | |||||||||||||||||||||
Wholesale | $ | 777.3 | $ | 941.9 | $ | 2,797.6 | $ | 3,297.2 | |||||||||||||
Retail | 745.3 | 889.2 | 3,682.0 | 3,933.2 | |||||||||||||||||
Licensing | 42.8 | 40.0 | 173.2 | 174.8 | |||||||||||||||||
Total net revenues | $ | 1,565.4 | $ | 1,871.1 | $ | 6,652.8 | $ | 7,405.2 | |||||||||||||
Operating income (loss): | |||||||||||||||||||||
Wholesale | $ | 200.8 | $ | 254.2 | $ | 659.2 | $ | 821.2 | |||||||||||||
Retail | (102.6 | ) | (9.6 | ) | 145.4 | 359.2 | |||||||||||||||
Licensing | 40.6 | 34.9 | 155.6 | 155.1 | |||||||||||||||||
138.8 | 279.5 | 960.2 | 1,335.5 | ||||||||||||||||||
Unallocated corporate expenses | (282.3 | ) | (192.3 | ) | (736.4 | ) | (611.0 | ) | |||||||||||||
Unallocated restructuring and other charges | (124.7 | ) | (19.8 | ) | (318.6 | ) | (142.6 | ) | |||||||||||||
Total operating income (loss) | $ | (268.2 | ) | $ | 67.4 | $ | (94.8 | ) | $ | 581.9 | |||||||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||
Constant Currency Financial Measures | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Comparable Store Sales Data (a) | |||||||||||||||||||
Three Months Ended
April 1, 2017 % Change |
Twelve Months Ended
April 1, 2017 % Change |
||||||||||||||||||
As Reported | Constant Currency | As Reported | Constant Currency | ||||||||||||||||
Total Ralph Lauren | (12 | %) | (11 | %) | (7 | %) | (7 | %) | |||||||||||
Operating Segment Data | |||||||||||||||||||
Three Months Ended | % Change | ||||||||||||||||||
April 1, 2017 | April 2, 2016 | As Reported | Constant Currency | ||||||||||||||||
Wholesale net sales | $ | 777.3 | $ | 941.9 | (17.5 | %) | (16.4 | %) | |||||||||||
Retail net sales | 745.3 | 889.2 | (16.2 | %) | (15.2 | %) | |||||||||||||
Net sales | 1,522.6 | 1,831.1 | (16.8 | %) | (15.8 | %) | |||||||||||||
Licensing revenue | 42.8 | 40.0 | 7.0 | % | 7.0 | % | |||||||||||||
Net revenues | $ | 1,565.4 | $ | 1,871.1 | (16.3 | %) | (15.3 | %) | |||||||||||
Twelve Months Ended | % Change | ||||||||||||||||||
April 1, 2017 | April 2, 2016 | As Reported | Constant Currency | ||||||||||||||||
Wholesale net sales | $ | 2,797.6 | $ | 3,297.2 | (15.2 | %) | (14.5 | %) | |||||||||||
Retail net sales | 3,682.0 | 3,933.2 | (6.4 | %) | (6.3 | %) | |||||||||||||
Net sales | 6,479.6 | 7,230.4 | (10.4 | %) | (10.1 | %) | |||||||||||||
Licensing revenue | 173.2 | 174.8 | (0.9 | %) | (1.4 | %) | |||||||||||||
Net revenues | $ | 6,652.8 | $ | 7,405.2 | (10.2 | %) | (9.9 | %) |
(a)All comparable store sales metrics were calculated on a 13-week basis for the quarter and a 52-week basis for the year. |
RALPH LAUREN CORPORATION | |||||||
Global Retail Store Network | |||||||
April 1, | April 2, | ||||||
2017 | 2016 | ||||||
Global Directly Operated Stores and Concessions |
|||||||
Ralph Lauren Stores | 109 | 144 | |||||
Polo Factory Stores | 278 | 272 | |||||
Club Monaco Stores |
79 | 77 | |||||
Total Directly Operated Stores | 466 | 493 | |||||
Concessions | 619 | 583 | |||||
Global Licensed Stores and Concessions |
|||||||
Ralph Lauren Licensed Stores | 105 | 93 | |||||
Club Monaco Licensed Stores |
59 | 58 | |||||
Total Licensed Stores | 164 | 151 | |||||
Licensed Concessions | 99 | 117 | |||||
RALPH LAUREN CORPORATION | ||||||||||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
April 1, 2017 | ||||||||||||||||
As
Reported |
Total Adjustments (a) |
As
Adjusted |
||||||||||||||
Net revenues | $ | 1,565.4 | $ | - | $ | 1,565.4 | ||||||||||
Gross profit | 819.1 | 48.5 | 867.6 | |||||||||||||
Gross profit margin | 52.3 | % | 55.4 | % | ||||||||||||
Total other operating expenses, net | (1,087.3 | ) | 321.8 | (765.5 | ) | |||||||||||
Operating expense margin | 69.5 | % | 48.9 | % | ||||||||||||
Operating income (loss) | (268.2 | ) | 370.3 | 102.1 | ||||||||||||
Operating margin | -17.1 | % | 6.5 | % | ||||||||||||
Income (loss) before income taxes | (268.6 | ) | 370.3 | 101.7 | ||||||||||||
Income tax benefit (provision) | 64.6 | (92.0 | ) | (27.4 | ) | |||||||||||
Effective tax rate | 24.0 | % | 27.0 | % | ||||||||||||
Net income (loss) | $ | (204.0 | ) | $ | 278.3 | $ | 74.3 | |||||||||
Net income (loss) per diluted share | $ | (2.48 | ) | $ | 0.89 | |||||||||||
Weighted average shares outstanding - Basic | 82.3 | 82.3 | ||||||||||||||
Weighted average shares outstanding - Diluted | 82.3 | 83.1 | ||||||||||||||
SEGMENT INFORMATION - | ||||||||||||||||
OPERATING INCOME (LOSS): | ||||||||||||||||
Wholesale | $ | 200.8 | $ | 10.2 | $ | 211.0 | ||||||||||
Operating margin | 25.8 | % | 27.2 | % | ||||||||||||
Retail | (102.6 | ) | 119.2 | 16.6 | ||||||||||||
Operating margin | -13.8 | % | 2.2 | % | ||||||||||||
Licensing | 40.6 | - | 40.6 | |||||||||||||
Operating margin | 94.6 | % | 94.6 | % | ||||||||||||
Unallocated corporate expenses and restructuring and other charges, net | (407.0 | ) | 240.9 | (166.1 | ) | |||||||||||
Total operating income (loss) | $ | (268.2 | ) | $ | 370.3 | $ | 102.1 | |||||||||
Twelve Months Ended | ||||||||||||||||
April 1, 2017 | ||||||||||||||||
As
Reported |
Total
Adjustments (a) |
As
Adjusted |
||||||||||||||
Net revenues | $ | 6,652.8 | $ | - | $ | 6,652.8 | ||||||||||
Gross profit | 3,651.1 | 197.9 | 3,849.0 | |||||||||||||
Gross profit margin | 54.9 | % | 57.9 | % | ||||||||||||
Total other operating expenses, net | (3,745.9 | ) | 572.4 | (3,173.5 | ) | |||||||||||
Operating expense margin | 56.3 | % | 47.7 | % | ||||||||||||
Operating income (loss) | (94.8 | ) | 770.3 | 675.5 | ||||||||||||
Operating margin | -1.4 | % | 10.2 | % | ||||||||||||
Income (loss) before income taxes | (104.9 | ) | 770.3 | 665.4 | ||||||||||||
Income tax benefit (provision) | 5.6 | (194.1 | ) | (188.5 | ) | |||||||||||
Effective tax rate | 5.3 | % | 28.3 | % | ||||||||||||
Net income (loss) | $ | (99.3 | ) | $ | 576.2 | $ | 476.9 | |||||||||
Net income (loss) per diluted share | $ | (1.20 | ) | $ | 5.71 | |||||||||||
Weighted average shares outstanding - Basic | 82.7 | 82.7 | ||||||||||||||
Weighted average shares outstanding - Diluted | 82.7 | 83.5 | ||||||||||||||
SEGMENT INFORMATION - | ||||||||||||||||
OPERATING INCOME (LOSS): | ||||||||||||||||
Wholesale | $ | 659.2 | $ | 39.9 | $ | 699.1 | ||||||||||
Operating margin | 23.6 | % | 25.0 | % | ||||||||||||
Retail | 145.4 | 289.9 | 435.3 | |||||||||||||
Operating margin | 3.9 | % | 11.8 | % | ||||||||||||
Licensing | 155.6 | 4.9 | 160.5 | |||||||||||||
Operating margin | 89.7 | % | 92.6 | % | ||||||||||||
Unallocated corporate expenses and restructuring and other charges, net | (1,055.0 | ) | 435.6 | (619.4 | ) | |||||||||||
Total operating income (loss) | $ | (94.8 | ) | $ | 770.3 | $ | 675.5 |
(a) | Adjustments include charges of $326.5 million and $726.5 million for the three and twelve months ended April 1, 2017, respectively, incurred in connection with our restructuring plans, consisting of restructuring charges, impairment of assets, and inventory-related charges. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations. Adjustments also include other charges of $24.6 million recorded in connection with the anticipated settlement of certain non-income tax issues and the departure of Mr. Larsson, additional impairment of assets of $14.0 million related to underperforming stores subject to potential future closure, and a goodwill impairment charge of $5.2 million. Income tax benefit (provision) includes the reversal of a $15.9 million income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior year withholding tax. |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release and oral statements made from time to time by
representatives of the Company contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the statements
under “First Quarter and Full Year Fiscal 2018 Outlook,” and statements
regarding, among other things, our current expectations about the
Company's future results and financial condition, revenues, store
openings and closings, employee reductions, margins, expenses and
earnings and are indicated by words or phrases such as "anticipate,"
"estimate," "expect," "project," "we believe" and similar words or
phrases. These forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from the future
results, performance or achievements expressed in or implied by such
forward-looking statements. Forward-looking statements are based largely
on the Company's expectations and judgments and are subject to a number
of risks and uncertainties, many of which are unforeseeable and beyond
our control. The factors that could cause actual results to materially
differ include, among others: the loss of key personnel, including Mr.
Ralph Lauren, or other changes in our executive and senior management
team or to our operating structure, and our ability to effectively
transfer knowledge during periods of transition; the potential impact to
our business and future strategic direction resulting from our
transition to a new Chief Executive Officer; our ability to successfully
implement our long-term growth strategy, which entails evolving our
product, marketing, and shopping experience to increase desirability and
relevance, and evolving our operating model to enable sustainable,
profitable sales growth by significantly reducing supply chain lead
times, improving our sourcing, and executing a disciplined multi-channel
distribution and expansion strategy; the impact to our business
resulting from investments and other costs incurred in connection with
the execution of our long-term growth strategy, including
restructuring-related charges, which may be dilutive to our earnings in
the short term; our ability to achieve anticipated operating
enhancements, sales growth, and/or cost reductions from our
restructuring; the impact to our business resulting from potential costs
and obligations related to the early closure of our stores or
termination of our long-term, non-cancellable leases; our ability to
effectively manage inventory levels and the increasing pressure on our
margins in a highly promotional retail environment; our efforts to
successfully enhance, upgrade, and/or transition our global information
technology systems and ecommerce platform; our ability to secure our
facilities and systems and those of our third-party service providers
from, among other things, cybersecurity breaches, acts of vandalism,
computer viruses, or similar Internet or email events; a variety of
legal, regulatory, tax, political, and economic risks, including risks
related to the importation and exportation of products, tariffs, and
other trade barriers which our operations are currently subject to, or
may become subject to as a result of potential changes in legislation,
and other risks associated with our international operations, such as
compliance with the Foreign Corrupt Practices Act or violations of other
anti-bribery and corruption laws prohibiting improper payments, and the
burdens of complying with a variety of foreign laws and regulations,
including tax laws, trade and labor restrictions, and related laws that
may reduce the flexibility of our business; the impact to our business
resulting from the
SUPPLEMENTAL FINANCIAL INFORMATION
Since
Additionally, this earnings release includes certain non-U.S. GAAP
financial measures relating to charges recorded in connection with the
Company’s restructuring plans. Adjustments also include other charges
recorded in connection with the anticipated settlement of certain
non-income tax issues and the departure of Mr.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170518005593/en/
Source:
Ralph Lauren Corporation
Investor Relations:
Evren Kopelman,
212-813-7862
or
Corporate Communications:
Katie Ioanilli,
212-205-5947
rl-press@ralphlauren.com