- First Quarter Revenue Increased 1% on a Reported Basis and 3%
in Constant Currency, Ahead of Expectations Led by Growth in Europe
and Asia
- Global Direct-to-Consumer Comparable Store Sales Grew 5%,
Driven by Positive Retail Comps Across All Regions
- Adjusted Gross and Operating Margin Expansion Exceeded Our
Outlook, with Brand Elevation and Expense Discipline More than
Offsetting Investments in Marketing and Ecosystem Expansion
- Maintained Healthy Balance Sheet Including $1.8 Billion in Cash
and Short-Term Investments and Well Positioned Inventories, Down
13% to Last Year
- Returned Approximately $225 Million to Shareholders Through Our
Dividend and Repurchase of Class A Common Stock
- Reaffirmed Full Year Fiscal 2025 Outlook of Low-Single Digit
Revenue Growth and Adjusted Operating Margin Expansion of 100 to
120 Basis Points, Both in Constant Currency Compared to Prior
Year
Ralph Lauren Corporation (NYSE:RL), a global leader in the
design, marketing, and distribution of luxury lifestyle products,
today reported earnings per diluted share of $2.61, up 33% to prior
year on a reported basis and $2.70, up 15% on an adjusted basis,
excluding restructuring-related and other net charges, for the
first quarter of Fiscal 2025. This compared to earnings per diluted
share of $1.96 on a reported basis and $2.34 on an adjusted basis,
excluding restructuring-related and other net charges for the first
quarter of Fiscal 2024.
"Our brand has always been about inspiring a better life and
celebrating the moments that bring us together," said Ralph Lauren,
Executive Chairman and Chief Creative Officer. "From our intimate
runway show at our New York studio this spring to our elegant
Salone del Mobile presentation in Milan and this summer's Olympics,
we are inviting people around the world to step into their dreams
through authentic, timeless style."
"We delivered a solid start to the year, with first quarter
performance exceeding our expectations on the top- and bottom-line
led by our direct-to-consumer and international businesses," said
Patrice Louvet, President and Chief Executive Officer. "The
powerful combination of our brand strength and diverse growth
drivers – together with our culture of agility and operating
discipline – gives us confidence that our long-term strategy will
continue to deliver even through these dynamic times."
Key Achievements in First Quarter Fiscal 2025
We delivered the following highlights across our Next Great
Chapter: Accelerate priorities in the first quarter of Fiscal
2025:
- Elevate and Energize Our Lifestyle Brand
- Drove continued momentum in new customer acquisition and
loyalty with 1.3 million new consumers in our direct-to-consumer
businesses, growth in net promoter scores, and more than 60 million
social media followers, a low-teens increase to last year
- Invested in key brand moments to drive authentic connections
with consumers around the world, notably: our women's Collection
fashion show in New York City in April; Only Polo campaign
celebrating our summer icons; our annual Salone del Mobile and
men's Purple Label presentation in Milan; another successful 6/18
holiday event in China; and kick-off of our 2024 Paris Olympics
campaign as official outfitter of Team USA
- Drive the Core and Expand for More
- Drove continued momentum in our Core business, up low-single
digits, along with our high-potential categories (Women's Apparel,
Outerwear, and Handbags), which increased mid-single-digits to last
year in constant currency and outpaced total company growth
- Product highlights this quarter included: our Wimbledon
capsule, featuring tennis-inspired spectator styles; and our 2024
Paris Summer Olympics collections as official outfitter of Team
USA
- Increased average unit retail ("AUR") by 6% across our
direct-to-consumer network in the first quarter, in-line with
expectations and on top of a 15% increase last year, reflecting the
durability of our multi-pronged elevation approach
- Win in Key Cities with Our Consumer Ecosystem
- By geography, revenue growth was led by Europe, up 6% on a
reported basis and 7% in constant currency, exceeding our
expectations. Asia sales grew 4% on a reported basis and 9% in
constant currency, with China up high-single digits on a reported
basis and up low-double digits in constant currency to last year.
North America declined 4% as stronger direct-to-consumer
performance was more than offset by planned declines in
wholesale
- Continued to expand and scale our key city ecosystems with the
opening of 8 new owned and partnered stores in the first quarter.
We also recently unveiled our newly-renovated World of Ralph Lauren
store on Chicago's Michigan Avenue, including our iconic RL
restaurant and our first Ralph's Coffee shop in the Midwest
Our business is supported by our fortress foundation, which we
define through our five key enablers, including: our people and
culture, best-in-class digital technology and analytics, superior
operational capabilities, a powerful balance sheet, and leadership
in citizenship and sustainability.
First Quarter Fiscal 2025 Income Statement Review
Net Revenue. In the first quarter of Fiscal 2025, revenue
increased 1% to $1.5 billion on a reported basis and was up 3% in
constant currency. Foreign currency negatively impacted revenue
growth by approximately 170 basis points in the first quarter.
Revenue performance for the Company's reportable segments in the
first quarter compared to the prior year period was as follows:
- North America Revenue. North America revenue in the first
quarter decreased 4% to $608 million. In retail, comparable store
sales in North America increased 1%, with a 3% increase in brick
and mortar stores more than offsetting a 4% decrease in digital
commerce. A shift in the timing of Easter negatively impacted first
quarter comps by approximately 120 basis points. North America
wholesale revenue decreased 13%, in-line with our outlook, driven
by receipt timing shifts and a reduction in excess product sales to
the off-price wholesale channel, as planned.
- Europe Revenue. Europe revenue in the first quarter increased
6% to $479 million on a reported basis and 7% in constant currency.
In retail, comparable store sales in Europe increased 8%, ahead of
our expectations, with a 7% increase in brick and mortar stores and
a 14% increase in digital commerce. Europe wholesale revenue
increased 5% to prior year on both a reported and constant currency
basis, with stronger re-order trends more than offsetting negative
impacts from previously disclosed timing receipt shifts.
- Asia Revenue. Asia revenue in the first quarter increased 4% to
$391 million on a reported basis and 9% in constant currency,
slightly ahead of our expectations. Comparable store sales in Asia
increased 9%, with a 7% increase in our brick and mortar stores and
a 21% increase in digital commerce.
Gross Profit. Gross profit for the first quarter of
Fiscal 2025 was $1.1 billion and gross margin was 70.5%. Adjusted
gross margin was also 70.5%, 170 basis points above the prior year.
Gross margin expansion was driven by favorable product, channel and
geographic mix shifts, lower cotton costs and AUR growth across all
regions.
Operating Expenses. Operating expenses in the first
quarter of Fiscal 2025 were $857 million on a reported basis. On an
adjusted basis, operating expenses were $850 million, up 2% to last
year. Adjusted operating expense rate was 56.2%, compared to 55.5%
in the prior year period, driven by higher marketing investments
due to the planned timing of key campaigns. Excluding marketing
expenses, adjusted operating expense rate declined approximately 30
basis points from the prior year period.
Operating Income. Operating income for the first quarter
of Fiscal 2025 was $209 million and operating margin was 13.8% on a
reported basis. On an adjusted basis, operating income was $216
million and operating margin was 14.3%, 90 basis points above the
prior year. Operating income for the Company's reportable segments
in the first quarter compared to the prior year period was as
follows:
- North America Operating Income. North America operating income
in the first quarter was $120 million on both a reported and
adjusted basis. Adjusted North America operating margin was 19.7%,
up 10 basis points to last year.
- Europe Operating Income. Europe operating income in the first
quarter was $121 million on both a reported and adjusted basis.
Adjusted Europe operating margin was 25.2%, up 370 basis points to
last year. Foreign currency negatively impacted adjusted operating
margin rate by 50 basis points in the first quarter.
- Asia Operating Income. Asia operating income in the first
quarter was $107 million on both a reported and adjusted basis.
Adjusted Asia operating margin was 27.4%, up 270 basis points to
last year. Foreign currency negatively impacted adjusted operating
margin rate by 30 basis points in the first quarter.
Net Income and EPS. Net income in the first quarter of
Fiscal 2025 was $169 million, or $2.61 per diluted share on a
reported basis. On an adjusted basis, net income was $175 million,
or $2.70 per diluted share. This compared to net income of $132
million, or $1.96 per diluted share on a reported basis, and net
income of $158 million, or $2.34 per diluted share on an adjusted
basis, for the first quarter of Fiscal 2024.
In the first quarter of Fiscal 2025, the Company had an
effective tax rate of approximately 22% on both a reported and
adjusted basis. This compared to an effective tax rate of
approximately 23% on both a reported and adjusted basis in the
prior year period. The modest decline was driven primarily by
favorable tax credits, more than offsetting the absence of discrete
foreign tax benefits realized in the prior year period.
Balance Sheet and Cash Flow Review
The Company ended the first quarter of Fiscal 2025 with $1.8
billion in cash and short-term investments and $1.1 billion in
total debt, compared to $1.7 billion and $1.1 billion,
respectively, at the end of the first quarter of Fiscal 2024.
Inventory at the end of the first quarter of Fiscal 2025 was
$1.0 billion, down 13% compared to the prior year period, primarily
driven by strategic reductions in North America.
The Company repurchased approximately $176 million of Class A
Common Stock in the first quarter.
Full Year Fiscal 2025 and Second Quarter Outlook
The Company's outlook is based on its best assessment of the
current geopolitical and macroeconomic environment, including
inflationary pressures, other consumer spending-related headwinds
and foreign currency volatility, among others. The full year Fiscal
2025 and second quarter guidance excludes any potential
restructuring-related and other net charges that may be incurred in
future periods, as described in the "Non-U.S. GAAP Financial
Measures" section of this press release.
For Fiscal 2025, the Company continues to expect revenues to
increase approximately low-single digits to last year on a constant
currency basis, centering on around 2% to 3%. Based on current
exchange rates, foreign currency is now expected to negatively
impact revenue growth by approximately 150 basis points in Fiscal
2025.
The Company continues to expect operating margin for Fiscal 2025
to expand approximately 100 to 120 basis points in constant
currency, driven by gross margin expansion and operating expense
leverage. Gross margin is expected to increase approximately 50 to
100 basis points in constant currency. Foreign currency is now
expected to negatively impact gross and operating margins by
approximately 40 basis points.
For the second quarter, the Company expects constant currency
revenues to grow approximately low- to mid-single digits to last
year, in a range centered around 3% to 4%. Foreign currency is
expected to negatively impact revenue growth by approximately 160
basis points.
Operating margin for the second quarter is expected to expand
approximately 80 to 120 basis points in constant currency, with
roughly 110 to 130 basis points of gross margin expansion more than
offsetting higher planned operating expenses to support key
marketing campaigns in the quarter. Excluding marketing expense,
operating expenses are expected to decline slightly as a percent of
sales compared to prior year. Foreign currency is expected to
negatively impact gross and operating margins by approximately 40
and 50 basis points, respectively, in the second quarter.
The Company's full year Fiscal 2025 tax rate is now expected to
be in the range of approximately 22% to 23%, increasing from 19% in
the prior year, following discrete tax benefits recognized in the
prior year period. The second quarter tax rate is expected to be in
the range of 21% to 22%.
The Company continues to expect capital expenditures for Fiscal
2025 of approximately $300 million to $325 million.
Conference Call
As previously announced, the Company will host a conference call
and live online webcast today, Wednesday, August 7, 2024, at 9:00
A.M. Eastern. Listeners may access a live broadcast of the
conference call on the Company investor relations website at
http://investor.ralphlauren.com or by dialing 517-623-4963 or
800-857-5209. To access the conference call, listeners should dial
in by 8:45 A.M. Eastern and request to be connected to the Ralph
Lauren First Quarter 2025 conference call.
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 P.M. Eastern, Wednesday, August 7,
2024 through 6:00 P.M. Eastern, Wednesday, August 14, 2024 by
dialing 203-369-0607 or 866-405-7296 and entering passcode
5841.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the
design, marketing and distribution of luxury lifestyle products in
five categories: apparel, footwear & accessories, home,
fragrances, and hospitality. For more than 50 years, Ralph Lauren
has sought to inspire the dream of a better life through
authenticity and timeless style. Its reputation and distinctive
image have been developed across a wide range of products, brands,
distribution channels and international markets. The Company's
brand names — which include Ralph Lauren, Ralph Lauren Collection,
Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren
Ralph Lauren, Polo Ralph Lauren Children and Chaps, among others —
constitute one of the world's most widely recognized families of
consumer brands. For more information, go to
https://investor.ralphlauren.com.
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, without limitation, statements regarding our
current expectations about the Company's future operating results
and financial condition, the implementation and results of our
strategic plans and initiatives, store openings and closings,
capital expenses, our plans regarding our quarterly cash dividend
and Class A common stock repurchase programs, and our ability to
meet citizenship and sustainability goals. Forward-looking
statements are based on current expectations and are indicated by
words or phrases such as "aim," "anticipate," "outlook,"
"estimate," "ensure," "commit," "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. 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, including any potential changes resulting from
the execution of our long-term growth strategy, and our ability to
effectively transfer knowledge and maintain adequate controls and
procedures during periods of transition; the potential impact to
our business resulting from inflationary pressures, including
increases in the costs of raw materials, transportation, wages,
healthcare, and other benefit-related costs; the impact of
economic, political, and other conditions on us, our customers,
suppliers, vendors, and lenders, including potential business
disruptions related to the Russia-Ukraine and Israel-Hamas wars,
militant attacks on cargo vessels in the Red Sea, civil and
political unrest, diplomatic tensions between the U.S. and other
countries, rising interest rates, and bank failures, among other
factors described herein; the potential impact to our business
resulting from supply chain disruptions, including those caused by
capacity constraints, closed factories and/or labor shortages
(stemming from pandemic diseases, labor disputes, strikes, or
otherwise), scarcity of raw materials, port congestion, and
scrutiny or detention of goods produced in certain territories
resulting from laws, regulations, or trade restrictions, such as
those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA")
or the Countering America's Adversaries Through Sanctions Act
("CAATSA"), which could result in shipment approval delays leading
to inventory shortages and lost sales, as well as potential
shipping delays, inventory shortages, and/or higher freight costs
resulting from the recent Red Sea crisis and/or disruptions to
major waterways such as the Suez and Panama canals; our ability to
effectively manage inventory levels and the increasing pressure on
our margins in a highly promotional retail environment; our
exposure to currency exchange rate fluctuations from both a
transactional and translational perspective; our ability to recruit
and retain qualified employees to operate our retail stores,
distribution centers, and various corporate functions; the impact
to our business resulting from a recession or changes in consumers'
ability, willingness, or preferences to purchase discretionary
items and luxury retail products, which tends to decline during
recessionary periods, and our ability to accurately forecast
consumer demand, the failure of which could result in either a
build-up or shortage of inventory; our ability to successfully
implement our long-term growth strategy; our ability to continue to
expand and grow our business internationally and the impact of
related changes in our customer, channel, and geographic sales mix
as a result, as well as our ability to accelerate growth in certain
product categories; our ability to open new retail stores and
concession shops, as well as enhance and expand our digital
footprint and capabilities, all in an effort to expand our
direct-to-consumer presence; our ability to respond to constantly
changing fashion and retail trends and consumer demands in a timely
manner, develop products that resonate with our existing customers
and attract new customers, and execute marketing and advertising
programs that appeal to consumers; our ability to competitively
price our products and create an acceptable value proposition for
consumers; our ability to continue to maintain our brand image and
reputation and protect our trademarks; our ability to achieve our
goals regarding citizenship and sustainability practices, including
those related to climate change, our human capital, and our supply
chain; our ability and the ability of our third-party service
providers to secure our respective facilities and systems from,
among other things, cybersecurity breaches, acts of vandalism,
computer viruses, ransomware, or similar Internet or email events;
our efforts to successfully enhance, upgrade, and/or transition our
global information technology systems and digital commerce
platforms; the potential impact to our business if any of our
distribution centers were to become inoperable or inaccessible; the
potential impact to our business resulting from pandemic diseases
such as COVID-19, including periods of reduced operating hours and
capacity limits and/or temporary closure of our stores,
distribution centers, and corporate facilities, as well as those of
our customers, suppliers, and vendors, and potential changes to
consumer behavior, spending levels, and/or shopping preferences,
such as willingness to congregate in shopping centers or other
populated locations; the potential impact on our operations and on
our suppliers and customers resulting from man-made or natural
disasters, including pandemic diseases, severe weather, geological
events, and other catastrophic events, such as terrorist attacks,
military conflicts, and other hostilities; our ability to achieve
anticipated operating enhancements and cost reductions from our
restructuring plans, as well as the impact to our business
resulting from restructuring-related charges, which may be dilutive
to our earnings in the short term; the impact to our business
resulting from potential costs and obligations related to the early
or temporary closure of our stores or termination of our long-term,
non-cancellable leases; our ability to maintain adequate levels of
liquidity to provide for our cash needs, including our debt
obligations, tax obligations, capital expenditures, and potential
payment of dividends and repurchases of our Class A common stock,
as well as the ability of our customers, suppliers, vendors, and
lenders to access sources of liquidity to provide for their own
cash needs; the potential impact to our business resulting from the
financial difficulties of certain of our large wholesale customers,
which may result in consolidations, liquidations, restructurings,
and other ownership changes in the retail industry, as well as
other changes in the competitive marketplace, including the
introduction of new products or pricing changes by our competitors;
our ability to access capital markets and maintain compliance with
covenants associated with our existing debt instruments; a variety
of legal, regulatory, tax, political, and economic risks, including
risks related to the importation and exportation of products 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 potential imposition of
additional duties, tariffs, taxes, and other charges or barriers to
trade, including those resulting from trade developments between
the U.S. and China or other countries, and any related impact to
global stock markets, as well as our ability to implement
mitigating sourcing strategies; changes in our tax obligations and
effective tax rate due to a variety of factors, including potential
changes in U.S. or foreign tax laws and regulations, accounting
rules, or the mix and level of earnings by jurisdiction in future
periods that are not currently known or anticipated; the potential
impact to the trading prices of our securities if our operating
results, Class A common stock share repurchase activity, and/or
cash dividend payments differ from investors' expectations; our
ability to maintain our credit profile and ratings within the
financial community; our intention to introduce new products or
brands, or enter into or renew alliances; changes in the business
of, and our relationships with, major wholesale customers and
licensing partners; our ability to make strategic acquisitions and
successfully integrate the acquired businesses into our existing
operations; and other risk factors identified in the Company’s
Annual Report on Form 10-K, Form 10-Q and Form 8-K reports filed
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.
RALPH LAUREN
CORPORATION
CONSOLIDATED BALANCE
SHEETS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
June 29, 2024
March 30, 2024
July 1, 2023
(millions)
ASSETS
Current assets:
Cash and cash equivalents
$
1,586.9
$
1,662.2
$
1,607.2
Short-term investments
173.6
121.0
73.1
Accounts receivable, net of allowances
371.8
446.5
345.8
Inventories
1,039.1
902.2
1,187.8
Income tax receivable
50.6
56.0
51.2
Prepaid expenses and other current
assets
225.9
171.9
208.0
Total current assets
3,447.9
3,359.8
3,473.1
Property and equipment, net
826.0
850.4
930.0
Operating lease right-of-use assets
1,019.3
1,014.6
1,106.6
Deferred tax assets
266.6
288.3
258.0
Goodwill
882.6
888.1
892.5
Intangible assets, net
72.5
75.7
85.5
Other non-current assets
126.1
125.7
122.7
Total assets
$
6,641.0
$
6,602.6
$
6,868.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
477.8
$
332.2
$
448.4
Current income tax payable
58.3
79.8
61.8
Current operating lease liabilities
236.0
245.5
274.5
Accrued expenses and other current
liabilities
801.5
809.7
809.0
Total current liabilities
1,573.6
1,467.2
1,593.7
Long-term debt
1,141.1
1,140.5
1,139.0
Long-term finance lease liabilities
249.9
256.1
307.3
Long-term operating lease liabilities
1,036.1
1,014.0
1,099.2
Non-current income tax payable
42.2
42.2
75.9
Non-current liability for unrecognized tax
benefits
123.3
118.7
99.1
Other non-current liabilities
107.8
113.6
113.2
Total liabilities
4,274.0
4,152.3
4,427.4
Equity:
Common stock
1.3
1.3
1.3
Additional paid-in-capital
2,948.1
2,923.8
2,845.7
Retained earnings
7,168.7
7,051.6
6,681.3
Treasury stock, Class A, at cost
(7,453.0
)
(7,250.3
)
(6,854.5
)
Accumulated other comprehensive loss
(298.1
)
(276.1
)
(232.8
)
Total equity
2,367.0
2,450.3
2,441.0
Total liabilities and equity
$
6,641.0
$
6,602.6
$
6,868.4
Net Cash & Short-term
Investments(a)
$
619.4
$
642.7
$
541.3
Cash & Short-term Investments
1,760.5
1,783.2
1,680.3
___________________
(a) Calculated as cash and cash equivalents, plus
short-term investments, less total debt.
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Three Months Ended
June 29, 2024
July 1, 2023
(millions, except per share
data)
Net revenues
$
1,512.2
$
1,496.5
Cost of goods sold
(446.4
)
(464.5
)
Gross profit
1,065.8
1,032.0
Selling, general, and administrative
expenses
(849.9
)
(830.0
)
Restructuring and other charges, net
(7.4
)
(35.6
)
Total other operating expenses,
net
(857.3
)
(865.6
)
Operating income
208.5
166.4
Interest expense
(10.9
)
(10.0
)
Interest income
20.1
15.7
Other expense, net
(1.1
)
(1.5
)
Income before income taxes
216.6
170.6
Income tax provision
(48.0
)
(38.5
)
Net income
$
168.6
$
132.1
Net income per common share:
Basic
$
2.67
$
2.01
Diluted
$
2.61
$
1.96
Weighted-average common shares
outstanding:
Basic
63.2
65.9
Diluted
64.6
67.4
Dividends declared per share
$
0.825
$
0.75
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Three Months Ended
June 29, 2024
July 1, 2023
(millions)
Cash flows from operating
activities:
Net income
$
168.6
$
132.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
54.4
58.3
Deferred income tax expense (benefit)
12.3
(0.4
)
Stock-based compensation expense
24.3
21.4
Bad debt expense (reversals)
0.8
(0.8
)
Other non-cash charges
0.6
3.5
Changes in operating assets and
liabilities:
Accounts receivable
70.3
97.8
Inventories
(145.5
)
(128.3
)
Prepaid expenses and other current
assets
(58.1
)
(21.8
)
Accounts payable and accrued
liabilities
145.6
105.3
Income tax receivables and payables
(0.5
)
6.8
Operating lease right-of-use assets and
liabilities, net
8.0
(6.3
)
Other balance sheet changes
(3.5
)
3.1
Net cash provided by operating
activities
277.3
270.7
Cash flows from investing
activities:
Capital expenditures
(33.4
)
(39.6
)
Purchases of investments
(174.3
)
(73.3
)
Proceeds from sales and maturities of
investments
119.1
35.4
Other investing activities
1.0
—
Net cash used in investing
activities
(87.6
)
(77.5
)
Cash flows from financing
activities:
Payments of finance lease obligations
(4.9
)
(6.0
)
Payments of dividends
(47.5
)
(49.2
)
Repurchases of common stock, including
shares surrendered for tax withholdings
(201.2
)
(56.8
)
Net cash used in financing
activities
(253.6
)
(112.0
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(13.1
)
(3.9
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(77.0
)
77.3
Cash, cash equivalents, and restricted
cash at beginning of period
1,670.6
1,536.9
Cash, cash equivalents, and restricted
cash at end of period
$
1,593.6
$
1,614.2
RALPH LAUREN
CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
June 29, 2024
July 1, 2023
(millions)
Net revenues:
North America
$
608.2
$
631.7
Europe
479.1
450.5
Asia
390.9
377.5
Other non-reportable segments
34.0
36.8
Total net revenues
$
1,512.2
$
1,496.5
Operating income:
North America
$
119.8
$
125.3
Europe
120.6
97.2
Asia
107.2
93.3
Other non-reportable segments
29.6
33.8
377.2
349.6
Unallocated corporate expenses
(161.3
)
(147.6
)
Unallocated restructuring and other
charges, net
(7.4
)
(35.6
)
Total operating income
$
208.5
$
166.4
RALPH LAUREN
CORPORATION
CONSTANT CURRENCY FINANCIAL
MEASURES
(Unaudited)
Comparable Store Sales Data
Three Months Ended
June 29, 2024
% Change
Constant Currency
North America:
Digital commerce
(4
%)
Brick and mortar
3
%
Total North America
1
%
Europe:
Digital commerce
14
%
Brick and mortar
7
%
Total Europe
8
%
Asia:
Digital commerce
21
%
Brick and mortar
7
%
Total Asia
9
%
Total Ralph Lauren Corporation
5
%
Operating Segment Net Revenues
Data
Three Months Ended
% Change
June 29, 2024
July 1, 2023
As
Reported
Constant
Currency
North America
$
608.2
$
631.7
(3.7
%)
(3.6
%)
Europe
479.1
450.5
6.3
%
7.2
%
Asia
390.9
377.5
3.6
%
9.4
%
Other non-reportable segments
34.0
36.8
(7.5
%)
(7.5
%)
Net revenues
$
1,512.2
$
1,496.5
1.1
%
2.8
%
RALPH LAUREN
CORPORATION
NET REVENUES BY SALES
CHANNEL
(Unaudited)
Three Months Ended
June 29, 2024
July 1, 2023
North America
Europe
Asia
Other
Total
North America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
416.7
$
245.1
$
370.8
$
—
$
1,032.6
$
411.0
$
226.7
$
352.1
$
—
$
989.8
Wholesale
191.5
234.0
20.1
—
445.6
220.7
223.8
25.4
—
469.9
Licensing
—
—
—
34.0
34.0
—
—
—
36.8
36.8
Net revenues
$
608.2
$
479.1
$
390.9
$
34.0
$
1,512.2
$
631.7
$
450.5
$
377.5
$
36.8
$
1,496.5
RALPH LAUREN
CORPORATION
GLOBAL RETAIL STORE
NETWORK
(Unaudited)
June 29, 2024
July 1, 2023
North
America
Ralph Lauren Stores
50
48
Outlet Stores
178
189
Total Directly Operated Stores
228
237
Concessions
1
1
Europe
Ralph Lauren Stores
44
44
Outlet Stores
59
60
Total Directly Operated Stores
103
104
Concessions
27
27
Asia
Ralph Lauren Stores
141
123
Outlet Stores
93
96
Total Directly Operated Stores
234
219
Concessions
669
693
Global Directly
Operated Stores and Concessions
Ralph Lauren Stores
235
215
Outlet Stores
330
345
Total Directly Operated Stores
565
560
Concessions
697
721
Global Licensed
Partner Stores
Total Licensed Partner Stores
101
90
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
June 29, 2024
As Reported
Total
Adjustments(a)(b)
As Adjusted
(Reported $)
Foreign Currency
Impact
As Adjusted
(Constant $)
(millions, except per share
data)
Net revenues
$
1,512.2
$
—
$
1,512.2
$
26.1
$
1,538.3
Gross profit
1,065.8
—
1,065.8
24.8
1,090.6
Gross profit margin
70.5
%
70.5
%
70.9
%
Total other operating expenses, net
(857.3
)
7.4
(849.9
)
(13.8
)
(863.7
)
(d)
Operating expense margin
56.7
%
56.2
%
56.1
%
Operating income
208.5
7.4
215.9
11.0
226.9
Operating margin
13.8
%
14.3
%
14.8
%
Income before income taxes
216.6
7.4
224.0
Income tax provision
(48.0
)
(1.4
)
(49.4
)
Effective tax rate
22.1
%
22.1
%
Net income
$
168.6
$
6.0
$
174.6
Net income per diluted common share
$
2.61
$
2.70
SEGMENT
INFORMATION
REVENUE:
North America
$
608.2
$
—
$
608.2
$
0.5
$
608.7
Europe
479.1
—
479.1
3.7
482.8
Asia
390.9
—
390.9
21.9
412.8
Other non-reportable segments
34.0
—
34.0
—
34.0
Total revenue
$
1,512.2
$
—
$
1,512.2
$
26.1
$
1,538.3
OPERATING INCOME:
North America
$
119.8
$
—
$
119.8
Operating margin
19.7
%
19.7
%
Europe
120.6
—
120.6
Operating margin
25.2
%
25.2
%
Asia
107.2
—
107.2
Operating margin
27.4
%
27.4
%
Other non-reportable segments
29.6
—
29.6
Operating margin
87.1
%
87.1
%
Unallocated corporate expenses and
restructuring & other charges, net
(168.7
)
7.4
(161.3
)
Total operating income
$
208.5
$
7.4
$
215.9
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Three Months Ended
July 1, 2023
As Reported
Total
Adjustments(a)(c)
As Adjusted
(millions, except per share
data)
Net revenues
$
1,496.5
$
—
$
1,496.5
Gross profit
1,032.0
(1.8
)
1,030.2
Gross profit margin
69.0
%
68.8
%
Total other operating expenses, net
(865.6
)
35.5
(830.1
)
(e)
Operating expense margin
57.8
%
55.5
%
Operating income
166.4
33.7
200.1
Operating margin
11.1
%
13.4
%
Income before income taxes
170.6
33.7
204.3
Income tax provision
(38.5
)
(7.8
)
(46.3
)
Effective tax rate
22.6
%
22.6
%
Net income
$
132.1
$
25.9
$
158.0
Net income per diluted common share
$
1.96
$
2.34
SEGMENT
INFORMATION
OPERATING INCOME:
North America
$
125.3
$
(1.7
)
$
123.6
Operating margin
19.8
%
19.6
%
Europe
97.2
(0.2
)
97.0
Operating margin
21.6
%
21.5
%
Asia
93.3
—
93.3
Operating margin
24.7
%
24.7
%
Other non-reportable segments
33.8
—
33.8
Operating margin
91.9
%
91.9
%
Unallocated corporate expenses and
restructuring & other charges, net
(183.2
)
35.6
(147.6
)
Total operating income
$
166.4
$
33.7
$
200.1
RALPH LAUREN CORPORATION
FOOTNOTES TO RECONCILIATION OF NON-U.S. GAAP
FINANCIAL MEASURES
(a)
Adjustments for non-routine inventory-related charges (benefits)
are recorded within cost of goods sold in the consolidated
statements of operations. Adjustments for non-routine bad debt
expense (benefit) are recorded within selling, general, and
administrative ("SG&A") expenses in the consolidated statements
of operations. Adjustments for all other charges are recorded
within restructuring and other charges, net in the consolidated
statements of operations.
(b)
Adjustments for the three months ended June 29, 2024 include (i)
charges of $3.3 million recorded in connection with the Company's
restructuring activities, primarily associated with severance and
benefit costs; (ii) other charges of $2.8 million primarily related
to rent and occupancy costs associated with certain previously
exited real estate locations in connection with the Company's
restructuring activities for which the related lease agreements
have not yet expired; (iii) other charges of $2.3 million in
connection with the Company's Next Generation Transformation
project; and (iv) income of $1.0 million related to consideration
received from Regent, L.P. in connection with the Company's
previously sold Club Monaco business.
(c)
Adjustments for the three months ended July 1, 2023 include (i)
charges of $30.5 million recorded in connection with the Company's
restructuring activities, primarily associated with severance and
benefit costs; (ii) other charges of $5.1 million primarily related
to rent and occupancy costs associated with certain previously
exited real estate locations in connection with the Company's
restructuring activities for which the related lease agreements
have not yet expired; (iii) non-routine inventory benefits of $1.8
million primarily related to reversals of amounts previously
recognized in connection with the COVID-19 pandemic and delays in
U.S. customs shipment reviews and approvals; and (iv) benefit of
$0.1 million primarily related to Russia-related bad debt reserve
adjustments.
(d)
Total adjusted other operating expenses, net excluding marketing
and advertising ("Marketing") expenses for the three months ended
June 29, 2024 were as follows:
Three Months Ended
June 29, 2024
As Adjusted in Constant
$ (incl. Marketing)
Marketing Expenses
As Adjusted in Constant
$ (excl. Marketing)
(millions)
Total other operating expenses, net
$
(863.7
)
102.5
$
(761.2
)
Operating expense margin
56.1
%
49.5
%
(e)
Total adjusted other operating expenses, net excluding Marketing
expenses for the three months ended July 1, 2023 were as
follows:
Three Months Ended
July 1, 2023
As Adjusted
(incl. Marketing)
Marketing Expenses
As Adjusted
(excl. Marketing)
(millions)
Total other operating expenses, net
$
(830.1
)
85.0
$
(745.1
)
Operating expense margin
55.5
%
49.8
%
NON-U.S. GAAP FINANCIAL MEASURES
Because Ralph Lauren Corporation is a global company, the
comparability of its operating results reported in U.S. Dollars is
affected by foreign currency exchange rate fluctuations because the
underlying currencies in which it transacts change in value over
time compared to the U.S. Dollar. Such fluctuations can have a
significant effect on the Company's reported results. As such, in
addition to financial measures prepared in accordance with
accounting principles generally accepted in the U.S. ("U.S. GAAP"),
the Company's discussions often contain references to constant
currency measures, which are calculated by translating current-year
and prior-year reported amounts into comparable amounts using a
single foreign exchange rate for each currency. The Company
presents constant currency financial information, which is a
non-U.S. GAAP financial measure, as a supplement to its reported
operating results. The Company uses constant currency information
to provide a framework for assessing how its businesses performed
excluding the effects of foreign currency exchange rate
fluctuations. Management believes this information is useful to
investors for facilitating comparisons of operating results and
better identifying trends in the Company's businesses. The constant
currency performance measures should be viewed in addition to, and
not in lieu of or superior to, the Company's operating performance
measures calculated in accordance with U.S. GAAP.
This earnings release also includes certain other non-U.S. GAAP
financial measures relating to the impact of charges and other
items as described herein. The Company uses non-U.S. GAAP financial
measures, among other things, to evaluate its operating performance
and to better represent the manner in which it conducts and views
its business. The Company believes that excluding items that are
not comparable from period to period helps investors and others
compare operating performance between two periods. While the
Company considers non-U.S. GAAP measures useful in analyzing its
results, they are not intended to replace, nor act as a substitute
for, any presentation included in the consolidated financial
statements prepared in conformity with U.S. GAAP, and may be
different from non-U.S. GAAP measures reported by other
companies.
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-U.S. GAAP financial measures above. The income tax benefit
(provision) has been adjusted for the tax-related effects of these
charges, which were calculated using the respective statutory tax
rates for each applicable jurisdiction. Included in this earnings
release are reconciliations between the non-U.S. GAAP financial
measures and the most directly comparable U.S. GAAP measures before
and after these adjustments.
Additionally, the Company's full year Fiscal 2025 and second
quarter guidance excludes any potential restructuring-related and
other charges that may be incurred in future periods. The Company
is not able to provide a full reconciliation of these non-U.S. GAAP
financial measures to U.S. GAAP as it is not known at this time if
and when any such charges may be incurred in the future.
Accordingly, a reconciliation of the Company's non-U.S. GAAP based
financial measure guidance to the most directly comparable U.S.
GAAP measures cannot be provided at this time given the uncertain
nature of any such potential charges that may be incurred in future
periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806187706/en/
Investor Relations: Corinna Van der Ghinst ir@ralphlauren.com Or
Corporate Communications rl-press@ralphlauren.com
Ralph Lauren (NYSE:RL)
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