Ralph Lauren Reports First Quarter Fiscal 2020 Results
- First Quarter Revenues Grew 3% to
$1.4 billion - Earnings Per Diluted Share Increased Double-Digits on Both a Reported and Adjusted Basis
- Operating Margins Increased 60 Basis Points on a Reported Basis and 110 Basis Points on an Adjusted Basis
- The Company Repurchased 1.3 Million Shares of Class A Common Stock During the First Quarter
“Our Company continues to evolve with the world around us while staying true to our values and creating inspiring style that endures,” said
“We delivered first quarter results in line with our overall expectations, with better than expected operating margin and double-digit EPS growth,” said
We delivered across the following strategic initiatives in the first quarter of Fiscal 2020:
- Win Over a New Generation of Consumers
- Increased marketing investment by 19% to last year. Key marketing activities included: our ‘Family is Who You Love’ and Pride campaigns, celebrating our brands’ multi-generational appeal and the diversity of modern families, our spring golf partnerships, and the
Earth Day launch of our Earth Polo, made entirely of recycled plastic bottles and a water-less dyeing process - Elevated our brand voice with our Limited Edition Polo Sport, Pride capsule, and Polo Golf x
Justin Thomas Collection as we kicked off our Summer of Sports program
- Increased marketing investment by 19% to last year. Key marketing activities included: our ‘Family is Who You Love’ and Pride campaigns, celebrating our brands’ multi-generational appeal and the diversity of modern families, our spring golf partnerships, and the
- Energize Core Products and Accelerate Under-Developed Categories
- Average unit retail across our direct-to-consumer network was up 1% in the first quarter, on top of an 8% increase last year, with continued increases in
Europe andAsia partly offset by a 1% decline inNorth America as we moved through Spring inventory - We continue to expect low to mid-single digit AUR growth for Fiscal ’20, in-line with our long-term plan, driven by our brand elevation and product mix strategy, particularly in our international regions
- Under-developed categories continued to outpace overall growth, led by momentum in denim and outerwear
- Average unit retail across our direct-to-consumer network was up 1% in the first quarter, on top of an 8% increase last year, with continued increases in
- Drive Targeted Expansion in Our Regions and Channels
- Continued momentum in international markets, including constant currency revenue growth of 7% in
Europe and 8% inAsia , with nearly 30% revenue growth in Mainland China - Delivered 5% constant currency comp growth and expanded our store network in
Asia , driven by 25 new owned and partnered doors.
- Continued momentum in international markets, including constant currency revenue growth of 7% in
- Lead With Digital
- Total digital ecosystem sales increased 1%, with nearly 10% growth in International partly offset by softer performance in
North America - Strong continued global expansion on digital pure play partners with a focus on winning over a new generation of consumers
- Total digital ecosystem sales increased 1%, with nearly 10% growth in International partly offset by softer performance in
- Operate With Discipline to Fuel Growth
- Adjusted operating margins expanded 110 basis points in the quarter, driven by disciplined cost management and SG&A leverage
- Adjusted operating expenses, excluding double-digit growth in marketing investments, declined to last year on improved supply chain efficiencies
First Quarter Fiscal 2020 Income Statement Review
Net Revenue. In the first quarter of Fiscal 2020, revenue increased by 3% to
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 increased 3% to$719 million .North America wholesale revenue increased 2%. In retail, comparable store sales inNorth America were up 1%, driven by a 1% comp in brick and mortar stores and flat comps at ralphlauren.com.
- Europe Revenue.
Europe revenue in the first quarter increased 2% to$361 million on a reported basis and 7% in constant currency.Europe wholesale revenue was flat on a reported basis and grew 5% in constant currency. In retail, comparable store sales inEurope were up 4%, driven by a 2% increase in brick and mortar stores and a 22% increase in digital commerce.
- Asia Revenue.
Asia revenue in the first quarter increased 4% to$259 million on a reported basis and increased 8% in constant currency, driven by solid growth in retail. Comparable store sales inAsia increased 5%, reflecting growth in both brick and mortar and digital commerce operations.
Gross Profit. Gross profit for the first quarter of Fiscal 2020 was
Gross margin benefited from favorable product, geographic, and channel mix, partly offset by increased promotional activity to keep inventories current and healthy.
Operating Expenses. Operating expenses in the first quarter of Fiscal 2020 were
Adjusted operating expense rate was 52.3%, 100 basis points below the prior year period, excluding restructuring-related and other charges. This decrease was driven by leverage of fixed expenses on sales growth and cost reduction initiatives, partly offset by planned increases in marketing investments.
Operating Income. Operating income for the first quarter of Fiscal 2020 was
- North America Operating Income.
North America operating income in the first quarter was$158 million on both a reported and adjusted basis.Adjusted North America operating margin was 21.9%, down 100 basis points from last year.
- Europe Operating Income.
Europe operating income in the first quarter was$79 million on a reported and$80 million on an adjusted basis. AdjustedEurope operating margin was 22.0%, up 100 basis points to the prior year period. In constant currency, the adjusted operating margin increased 10 basis points.
- Asia Operating Income.
Asia operating income in the first quarter was$48 million on a reported and$49 million on an adjusted basis. AdjustedAsia operating margin was 18.8%, up 150 basis points to the prior year and 180 basis points higher in constant currency.
Net Income and EPS. On a reported basis, net income in the first quarter of Fiscal 2020 was
In the first quarter of Fiscal 2020, the Company had an effective tax rate of 20.1% on a reported basis and 20.5% on an adjusted basis, excluding restructuring and related other charges. This compared to an effective tax rate of 18% on both a reported and adjusted basis, excluding restructuring and related other charges, in the prior year period.
Balance Sheet and Cash Flow Review
The Company ended the first quarter of Fiscal 2020 with
Inventory at the end of the first quarter of Fiscal 2020 was
The Company repurchased approximately
Full Year Fiscal 2020 and Second Quarter Outlook
The full year Fiscal 2020 and second quarter guidance excludes restructuring-related and other charges, as described in the “Non-U.S. GAAP Financial Measures” section of this press release.
For Fiscal 2020, the Company continues to expect net revenues to increase 2% to 3%. Foreign currency is expected to negatively impact revenue growth by 90 to 100 basis points in Fiscal 2020.
The Company continues to expect operating margin for Fiscal 2020 to increase 40 to 60 basis points in constant currency. Foreign currency is expected to negatively impact operating margin by about 10 to 20 basis points in Fiscal 2020.
In the second quarter of Fiscal 2020, the Company expects net revenue to be up about 1% in constant currency. Foreign currency is expected to pressure revenue growth by approximately 90 to 100 basis points in the second quarter of Fiscal 2020.
Operating margin for the second quarter of Fiscal 2020 is expected to be up 40 to 60 basis points in constant currency. Foreign currency is expected to negatively impact operating margin by about 20 basis points in the second quarter.
We continue to expect the full year Fiscal 2020 tax rate to be approximately 22%. Second quarter of Fiscal 2020 tax rate is estimated at approximately 23%.
The Company continues to plan capital expenditures of approximately
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
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 the 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,” “estimate,” “expect,” “project,” “we believe,” “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 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; 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 effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to competitively price our products and create an acceptable value proposition for consumers; the impact to our business resulting from 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 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 closure of our stores or termination of our long-term, non-cancellable leases; 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 potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments with
RALPH LAUREN CORPORATION | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||||||
(in millions) | ||||||||||||
(Unaudited) | ||||||||||||
June 29, | March 30, | June 30, | ||||||||||
2019 |
| 2019 |
| 2018 |
| |||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 648.4 | $ | 584.1 | $ | 532.3 | ||||||
Short-term investments |
| 1,280.7 |
| 1,403.4 |
| 1,487.7 | ||||||
Accounts receivable, net of allowances |
| 290.7 |
| 398.1 |
| 260.0 | ||||||
Inventories |
| 988.6 |
| 817.8 |
| 890.0 | ||||||
Income tax receivable |
| 33.0 |
| 32.1 |
| 37.3 | ||||||
Prepaid expenses and other current assets |
| 412.7 |
| 359.3 |
| 342.8 | ||||||
Total current assets |
| 3,654.1 |
| 3,594.8 |
| 3,550.1 | ||||||
Property and equipment, net |
| 987.0 |
| 1,039.2 |
| 1,141.7 | ||||||
Operating lease right-of-use assets |
| 1,415.8 |
| - |
| - | ||||||
Deferred tax assets |
| 94.3 |
| 67.0 |
| 70.7 | ||||||
Goodwill |
| 925.3 |
| 919.6 |
| 928.7 | ||||||
Intangible assets, net |
| 158.2 |
| 163.7 |
| 181.4 | ||||||
Other non-current assets(a) |
| 109.0 |
| 158.5 |
| 162.7 | ||||||
Total assets | $ | 7,343.7 | $ | 5,942.8 | $ | 6,035.3 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of long-term debt | $ | - | $ | - | $ | 299.0 | ||||||
Accounts payable |
| 351.5 |
| 202.3 |
| 202.7 | ||||||
Income tax payable |
| 45.3 |
| 29.4 |
| 45.4 | ||||||
Current portion of operating lease liabilities |
| 293.8 |
| - |
| - | ||||||
Accrued expenses and other current liabilities |
| 900.4 |
| 968.4 |
| 1,016.6 | ||||||
Total current liabilities |
| 1,591.0 |
| 1,200.1 |
| 1,563.7 | ||||||
Long-term debt |
| 692.1 |
| 689.1 |
| 288.0 | ||||||
Long-term operating lease liabilities |
| 1,483.9 |
| - |
| - | ||||||
Income tax payable |
| 146.7 |
| 146.7 |
| 124.8 | ||||||
Non-current liability for unrecognized tax benefits |
| 77.9 |
| 78.8 |
| 77.8 | ||||||
Other non-current liabilities |
| 339.3 |
| 540.9 |
| 560.0 | ||||||
Total liabilities |
| 4,330.9 |
| 2,655.6 |
| 2,614.3 | ||||||
Equity: | ||||||||||||
Common stock |
| 1.3 |
| 1.3 |
| 1.3 | ||||||
Additional paid-in-capital |
| 2,516.8 |
| 2,493.8 |
| 2,426.7 | ||||||
Retained earnings |
| 5,878.6 |
| 5,979.1 |
| 5,805.4 | ||||||
Treasury stock, Class A, at cost |
| (5,274.7) |
| (5,083.6) |
| (4,711.0) | ||||||
Accumulated other comprehensive loss |
| (109.2) |
| (103.4) |
| (101.4) | ||||||
Total equity |
| 3,012.8 |
| 3,287.2 |
| 3,421.0 | ||||||
Total liabilities and equity | $ | 7,343.7 | $ | 5,942.8 | $ | 6,035.3 | ||||||
Net Cash (incl. LT Investments) |
| 1,271.1 |
| 1,343.3 |
| 1,502.5 | ||||||
Cash & Investments (ST & LT) |
| 1,963.2 |
| 2,032.4 |
| 2,089.5 | ||||||
Net Cash (excl. LT Investments) |
| 1,237.0 |
| 1,298.4 |
| 1,433.0 | ||||||
Cash & ST Investments |
| 1,929.1 |
| 1,987.5 |
| 2,020.0 | ||||||
(a) Includes non-current investments of: | $ | 34.1 | $ | 44.9 | $ | 69.5 | ||||||
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 | |||||||||
June 29, | June 30, | ||||||||
|
|
| 2019 |
| 2018 | ||||
North America | $ | 719.4 | $ | 697.6 | |||||
Europe |
| 360.8 |
| 355.3 | |||||
Asia |
| 258.6 |
| 248.0 | |||||
Other non-reportable segments |
| 90.0 |
| 89.7 | |||||
Net revenues |
| 1,428.8 |
| 1,390.6 | |||||
Cost of goods sold |
| (508.0) |
| (494.9) | |||||
Gross profit |
| 920.8 |
| 895.7 | |||||
Selling, general, and administrative expenses |
| (746.7) |
| (741.9) | |||||
Impairment of assets |
| (1.2) |
| (1.3) | |||||
Restructuring and other charges |
| (29.6) |
| (22.4) | |||||
Total other operating expenses, net |
| (777.5) |
| (765.6) | |||||
Operating income |
| 143.3 |
| 130.1 | |||||
Interest expense |
| (4.2) |
| (4.4) | |||||
Interest income |
| 11.6 |
| 9.2 | |||||
Other expense, net |
| (4.1) |
| (2.0) | |||||
Income before income taxes |
| 146.6 |
| 132.9 | |||||
Income tax provision |
| (29.5) |
| (23.9) | |||||
Net income | $ | 117.1 | $ | 109.0 | |||||
Net income per common share - Basic | $ | 1.50 | $ | 1.33 | |||||
Net income per common share - Diluted | $ | 1.47 | $ | 1.31 | |||||
Weighted average common shares outstanding - Basic |
| 78.2 |
| 81.9 | |||||
Weighted average common shares outstanding - Diluted |
| 79.9 |
| 83.3 | |||||
Dividends declared per share | $ | 0.6875 | $ | 0.625 | |||||
RALPH LAUREN CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Prepared in accordance with U.S. Generally Accepted Accounting Principles | ||||||||
(in millions) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
June 29, | June 30, | |||||||
2019 |
| 2018 |
| |||||
Cash flows from operating activities: | ||||||||
Net income | $ | 117.1 | $ | 109.0 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense |
| 66.2 |
| 70.3 | ||||
Deferred income tax expense (benefit) |
| (8.1) |
| 7.3 | ||||
Non-cash stock-based compensation expense |
| 23.0 |
| 21.5 | ||||
Non-cash impairment of assets |
| 1.2 |
| 1.3 | ||||
Non-cash restructuring-related inventory charges |
| 0.6 |
| - | ||||
Other non-cash charges (benefits) |
| (1.9) |
| 5.8 | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
| 108.6 |
| 153.8 | ||||
Inventories |
| (166.3) |
| (147.1) | ||||
Prepaid expenses and other current assets |
| (48.8) |
| (35.9) | ||||
Accounts payable and accrued liabilities |
| 82.9 |
| (0.1) | ||||
Income tax receivables and payables |
| 13.3 |
| 19.4 | ||||
Deferred income |
| 1.8 |
| (4.8) | ||||
Other balance sheet changes |
| 7.8 |
| 30.1 | ||||
Net cash provided by operating activities |
| 197.4 |
| 230.6 | ||||
Cash flows from investing activities: | ||||||||
Capital expenditures |
| (49.4) |
| (42.3) | ||||
Purchases of investments |
| (173.5) |
| (1,250.1) | ||||
Proceeds from sales and maturities of investments |
| 308.4 |
| 469.8 | ||||
Acquisitions and ventures |
| 0.9 |
| (4.5) | ||||
Proceeds from sale of property |
| 20.8 |
| - | ||||
Net cash provided by (used in) investing activities |
| 107.2 |
| (827.1) | ||||
Cash flows from financing activities: | ||||||||
Repayments of short-term debt |
| - |
| (9.9) | ||||
Payments of finance lease obligations |
| (4.9) |
| (5.7) | ||||
Payments of dividends |
| (48.8) |
| (40.6) | ||||
Repurchases of common stock, including shares surrendered for tax withholdings |
| (191.1) |
| (130.0) | ||||
Proceeds from exercise of stock options |
| - |
| 21.8 | ||||
Net cash used in financing activities |
| (244.8) |
| (164.4) | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
| 5.1 |
| (18.8) | ||||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
| 64.9 |
| (779.7) | ||||
Cash, cash equivalents, and restricted cash at beginning of period |
| 626.5 |
| 1,355.5 | ||||
Cash, cash equivalents, and restricted cash at end of period | $ | 691.4 | $ | 575.8 | ||||
RALPH LAUREN CORPORATION | ||||||
OTHER INFORMATION | ||||||
(in millions) | ||||||
(Unaudited) | ||||||
SEGMENT INFORMATION | ||||||
Effective beginning in the first quarter of Fiscal 2020, operating results related to the Company's business in Latin America are included within its Europe segment due to a change in the way in which the Company manages this business. Previously, such results were included within the Company's other non-reportable segments. All prior period segment information has been recast to reflect this change on a comparative basis. | ||||||
Net revenues and operating income for the periods ended June 29, 2019 and June 30, 2018 for each segment were as follows: | ||||||
Three Months Ended | ||||||
June 29, | June 30, | |||||
| 2019 |
| 2018 | |||
|
|
| ||||
Net revenues: | ||||||
North America | $ | 719.4 | $ | 697.6 | ||
Europe |
| 360.8 |
| 355.3 | ||
Asia |
| 258.6 |
| 248.0 | ||
Other non-reportable segments |
| 90.0 |
| 89.7 | ||
Total net revenues | $ | 1,428.8 | $ | 1,390.6 | ||
Operating income: | ||||||
North America | $ | 157.9 | $ | 159.9 | ||
Europe |
| 79.4 |
| 73.7 | ||
Asia |
| 48.1 |
| 42.7 | ||
Other non-reportable segments |
| 32.9 |
| 31.0 | ||
| 318.3 |
| 307.3 | |||
Unallocated corporate expenses |
| (145.4) |
| (154.8) | ||
Unallocated restructuring and other charges |
| (29.6) |
| (22.4) | ||
Total operating income | $ | 143.3 | $ | 130.1 | ||
RALPH LAUREN CORPORATION | ||||||||||
Constant Currency Financial Measures | ||||||||||
(in millions) | ||||||||||
(Unaudited) | ||||||||||
Comparable Store Sales Data | ||||||||||
Three Months Ended | ||||||||||
June 29, 2019 % Change | ||||||||||
Constant Currency | ||||||||||
North America | ||||||||||
Digital commerce | -% | |||||||||
Excluding Digital commerce | 1% | |||||||||
Total North America | 1% | |||||||||
Europe | ||||||||||
Digital commerce | 22% | |||||||||
Excluding Digital commerce | 2% | |||||||||
Total Europe | 4% | |||||||||
Asia | ||||||||||
Digital commerce | 26% | |||||||||
Excluding Digital commerce | 4% | |||||||||
Total Asia | 5% | |||||||||
Total Ralph Lauren | 2% | |||||||||
Operating Segment Net Revenue Data | ||||||||||
Three Months Ended | % Change | |||||||||
June 29, 2019 | June 30, 2018 | As Reported | Constant Currency | |||||||
North America | $ 719.4 | $ 697.6 | 3.1% | 3.3% | ||||||
Europe | 360.8 | 355.3 | 1.5% | 7.1% | ||||||
Asia | 258.6 | 248.0 | 4.3% | 7.8% | ||||||
Other non-reportable segments | 90.0 | 89.7 | 0.3% | 0.5% | ||||||
Net revenues | $ 1,428.8 | $ 1,390.6 | 2.7% | 4.9% | ||||||
RALPH LAUREN CORPORATION | |||||||||||||||||||||
Revenue by Sales Channel | |||||||||||||||||||||
(in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
June 29, 2019 | June 30, 2018 | ||||||||||||||||||||
North America | Europe | Asia | Other | Total | North America | Europe | Asia | Other | Total | ||||||||||||
Sales Channel: | |||||||||||||||||||||
Wholesale | $ 316.3 | $ 142.3 | $ 12.1 | $ 1.8 | $ 472.5 | $ 310.1 | $ 142.7 | $ 12.6 | $ 0.8 | $ 466.2 | |||||||||||
Retail | 403.1 | 218.5 | 246.5 | 49.5 | 917.6 | 387.5 | 212.6 | 235.4 | 49.9 | 885.4 | |||||||||||
Licensing | - | - | - | 38.7 | 38.7 | - | - | - | 39.0 | 39.0 | |||||||||||
Total net revenues | $ 719.4 | $ 360.8 | $ 258.6 | $ 90.0 | $1,428.8 | $ 697.6 | $ 355.3 | $ 248.0 | $ 89.7 | $1,390.6 | |||||||||||
RALPH LAUREN CORPORATION | ||||||
Global Retail Store Network | ||||||
June 29, | June 30, | |||||
2019 |
| 2018 |
| |||
North America | ||||||
Ralph Lauren Stores | 41 | 42 | ||||
Polo Factory Stores | 183 | 178 | ||||
Total Directly Operated Stores | 224 | 220 | ||||
Concessions | 3 | 2 | ||||
Europe | ||||||
Ralph Lauren Stores | 26 | 20 | ||||
Polo Factory Stores | 66 | 63 | ||||
Total Directly Operated Stores | 92 | 83 | ||||
Concessions | 29 | 25 | ||||
Asia | ||||||
Ralph Lauren Stores | 59 | 53 | ||||
Polo Factory Stores | 60 | 54 | ||||
Total Directly Operated Stores | 119 | 107 | ||||
Concessions | 624 | 604 | ||||
Other | ||||||
Club Monaco Stores | 75 | 74 | ||||
Club Monaco Concessions | 5 | 2 | ||||
Global Directly Operated Stores and Concessions | ||||||
Ralph Lauren Stores | 126 | 115 | ||||
Polo Factory Stores | 309 | 295 | ||||
Club Monaco Stores | 75 | 74 | ||||
Total Directly Operated Stores | 510 | 484 | ||||
Concessions | 661 | 633 | ||||
Global Licensed Stores | ||||||
Total Licensed Stores | 262 | 279 | ||||
RALPH LAUREN CORPORATION | ||||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | ||||||||||
(in millions, except per share data) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
June 29, 2019 | ||||||||||
As |
| Total |
| As | ||||||
Net revenues | $ | 1,428.8 | $ | - | $ | 1,428.8 | ||||
Gross profit |
| 920.8 |
| 0.6 |
| 921.4 | ||||
Gross profit margin |
| 64.4% |
| 64.5% | ||||||
Total other operating expenses, net |
| (777.5) |
| 30.8 |
| (746.7) | ||||
Operating expense margin |
| 54.4% |
| 52.3% | ||||||
Operating income |
| 143.3 |
| 31.4 |
| 174.7 | ||||
Operating margin |
| 10.0% |
| 12.2% | ||||||
Income before income taxes |
| 146.6 |
| 31.4 |
| 178.0 | ||||
Income tax provision |
| (29.5) |
| (7.0) |
| (36.5) | ||||
Effective tax rate |
| 20.1% |
| 20.5% | ||||||
Net income | $ | 117.1 | $ | 24.4 | $ | 141.5 | ||||
Net income per diluted common share | $ | 1.47 | $ | 1.77 | ||||||
Weighted average common shares outstanding - Diluted |
| 79.9 |
| 79.9 | ||||||
SEGMENT INFORMATION - | ||||||||||
OPERATING INCOME: | ||||||||||
North America | $ | 157.9 | $ | - | $ | 157.9 | ||||
Operating margin |
| 21.9% |
| 21.9% | ||||||
Europe |
| 79.4 |
| 0.1 |
| 79.5 | ||||
Operating margin |
| 22.0% |
| 22.0% | ||||||
Asia |
| 48.1 |
| 0.5 |
| 48.6 | ||||
Operating margin |
| 18.6% |
| 18.8% | ||||||
Other non-reportable segments |
| 32.9 |
| - |
| 32.9 | ||||
Operating margin |
| 36.5% |
| 36.5% | ||||||
Unallocated corporate expenses and restructuring and other charges |
| (175.0) |
| 30.8 |
| (144.2) | ||||
Total operating income | $ | 143.3 | $ | 31.4 | $ | 174.7 | ||||
RALPH LAUREN CORPORATION | |||||||||
Reconciliation of Certain Non-U.S. GAAP Financial Measures | |||||||||
(in millions, except per share data) | |||||||||
(Unaudited) | |||||||||
Three Months Ended | |||||||||
June 30, 2018 | |||||||||
As Reported | Total Adjustments(a)(c) | As Adjusted | |||||||
Net revenues | $ | 1,390.6 | $ | - | $ | 1,390.6 | |||
Gross profit |
| 895.7 |
| - |
| 895.7 | |||
Gross profit margin |
| 64.4% |
| 64.4% | |||||
Total other operating expenses, net |
| (765.6) |
| 23.7 |
| (741.9) | |||
Operating expense margin |
| 55.1% |
| 53.3% | |||||
Operating income |
| 130.1 |
| 23.7 |
| 153.8 | |||
Operating margin |
| 9.4% |
| 11.1% | |||||
Income before income taxes |
| 132.9 |
| 23.7 |
| 156.6 | |||
Income tax provision |
| (23.9) |
| (4.8) |
| (28.7) | |||
Effective tax rate |
| 18.0% |
| 18.3% | |||||
Net income | $ | 109.0 | $ | 18.9 | $ | 127.9 | |||
Net income per diluted common share | $ | 1.31 | $ | 1.54 | |||||
Weighted average common shares outstanding - Diluted |
| 83.3 |
| 83.3 | |||||
SEGMENT INFORMATION - | |||||||||
OPERATING INCOME: | |||||||||
North America | $ | 159.9 | $ | - | $ | 159.9 | |||
Operating margin |
| 22.9% |
| 22.9% | |||||
Europe |
| 73.7 |
| 1.0 |
| 74.7 | |||
Operating margin |
| 20.8% |
| 21.0% | |||||
Asia |
| 42.7 |
| 0.2 |
| 42.9 | |||
Operating margin |
| 17.2% |
| 17.3% | |||||
Other non-reportable segments |
| 31.0 |
| - |
| 31.0 | |||
Operating margin |
| 34.6% |
| 34.6% | |||||
Unallocated corporate expenses and restructuring and other charges |
| (177.2) |
| 22.5 |
| (154.7) | |||
Total operating income | $ | 130.1 | $ | 23.7 | $ | 153.8 | |||
RALPH LAUREN CORPORATION | ||||||||||||||
Footnotes to Non-U.S. GAAP Financial Measures | ||||||||||||||
(a) | Adjustments for inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations. Adjustments for impairment-related charges are recorded within impairment of assets in the consolidated statements of operations. Adjustments for all other charges are recorded within restructuring and other charges in the consolidated statements of operations. | |||||||||||||
(b) | Adjustments for the three months ended June 29, 2019 include (i) other charges of $22.6 million primarily related to the charitable donation of the net cash proceeds received from the sale of the Company's corporate jet, and rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired; and (ii) charges of $8.8 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges, impairment of assets, and inventory-related charges. | |||||||||||||
(c) | Adjustments for the three months ended June 30, 2018 include (i) charges of $16.0 million recorded in connection with the Company's restructuring plans, consisting of restructuring charges and impairment of assets; and (ii) other charges of $7.7 million primarily related to its customs audit and depreciation expense associated with the Company's former Polo store at 711 Fifth Avenue in New York City. | |||||||||||||
NON-U.S. GAAP FINANCIAL MEASURES
Since
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 plans, as well as certain other charges associated with other non-recurring events, as described in the footnotes to the non-U.S. GAAP financial measures above. The income tax 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 2020 and second quarter Fiscal 2020 guidance excludes certain anticipated restructuring-related and other charges. The Company is not able to provide a full reconciliation of these non-U.S. GAAP financial measures to U.S. GAAP because certain material items that impact these measures, such as the timing and exact amount of charges related to our restructuring plans, have not yet occurred or are out of the Company’s control. Accordingly, a reconciliation of our non-U.S. GAAP based financial measure guidance to the most directly comparable U.S. GAAP measures is not available without unreasonable effort. However, the Company has identified the estimated impact of certain items excluded from its financial outlook. Specifically, the Company’s financial outlook excludes estimated pretax charges of approximately
View source version on businesswire.com: https://www.businesswire.com/news/home/20190730005319/en/
Source:
Ralph Lauren
Investor Relations:
Corinna Van der Ghinst
IR@ralphlauren.com
or
Corporate Communications:
rl-press@ralphlauren.com