þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended July 1, 2017
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-2622036
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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650 Madison Avenue,
New York, New York
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10022
(Zip Code)
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(Address of principal executive offices)
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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PART I. FINANCIAL INFORMATION (Unaudited)
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||
Item 1.
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Financial Statements:
|
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||
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Item 2.
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Item 3.
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Item 4.
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||
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PART II. OTHER INFORMATION
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Item 1.
|
||
Item 1A.
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Item 2.
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Item 5.
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Item 6.
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||
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EX-3.3
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EX-10.1
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EX-10.2
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EX-12.1
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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EX-101
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INSTANCE DOCUMENT
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EX-101
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SCHEMA DOCUMENT
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EX-101
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CALCULATION LINKBASE DOCUMENT
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EX-101
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LABELS LINKBASE DOCUMENT
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EX-101
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PRESENTATION LINKBASE DOCUMENT
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EX-101
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DEFINITION LINKBASE DOCUMENT
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2
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July 1,
2017 |
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April 1,
2017 |
||||
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(millions)
(unaudited)
|
||||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
830.4
|
|
|
$
|
668.3
|
|
Short-term investments
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|
740.5
|
|
|
684.7
|
|
||
Accounts receivable, net of allowances of $213.5 million and $214.4 million
|
|
279.2
|
|
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450.2
|
|
||
Inventories
|
|
859.9
|
|
|
791.5
|
|
||
Income tax receivable
|
|
77.5
|
|
|
79.4
|
|
||
Prepaid expenses and other current assets
|
|
299.2
|
|
|
280.4
|
|
||
Total current assets
|
|
3,086.7
|
|
|
2,954.5
|
|
||
Property and equipment, net
|
|
1,273.3
|
|
|
1,316.0
|
|
||
Deferred tax assets
|
|
141.4
|
|
|
125.9
|
|
||
Goodwill
|
|
924.2
|
|
|
904.6
|
|
||
Intangible assets, net
|
|
213.7
|
|
|
219.8
|
|
||
Other non-current assets
|
|
174.7
|
|
|
131.2
|
|
||
Total assets
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$
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5,814.0
|
|
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$
|
5,652.0
|
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LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
160.9
|
|
|
$
|
147.7
|
|
Income tax payable
|
|
36.6
|
|
|
29.5
|
|
||
Accrued expenses and other current liabilities
|
|
1,019.4
|
|
|
982.7
|
|
||
Total current liabilities
|
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1,216.9
|
|
|
1,159.9
|
|
||
Long-term debt
|
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590.4
|
|
|
588.2
|
|
||
Non-current liability for unrecognized tax benefits
|
|
64.7
|
|
|
62.7
|
|
||
Other non-current liabilities
|
|
581.9
|
|
|
541.6
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
||||
Total liabilities
|
|
2,453.9
|
|
|
2,352.4
|
|
||
Equity:
|
|
|
|
|
||||
Class A common stock, par value $.01 per share; 102.0 million and 101.5 million shares issued; 55.4 million and 55.1 million shares outstanding
|
|
1.0
|
|
|
0.9
|
|
||
Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding
|
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0.3
|
|
|
0.3
|
|
||
Additional paid-in-capital
|
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2,330.4
|
|
|
2,308.8
|
|
||
Retained earnings
|
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5,770.8
|
|
|
5,751.9
|
|
||
Treasury stock, Class A, at cost; 46.6 million and 46.4 million shares
|
|
(4,578.3
|
)
|
|
(4,563.9
|
)
|
||
Accumulated other comprehensive loss
|
|
(164.1
|
)
|
|
(198.4
|
)
|
||
Total equity
|
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3,360.1
|
|
|
3,299.6
|
|
||
Total liabilities and equity
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$
|
5,814.0
|
|
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$
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5,652.0
|
|
|
3
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|
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Three Months Ended
|
||||||
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July 1,
2017 |
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July 2,
2016 |
||||
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(millions, except per share data)
(unaudited)
|
||||||
Net revenues
|
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$
|
1,347.1
|
|
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$
|
1,552.2
|
|
Cost of goods sold
(a)
|
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(495.9
|
)
|
|
(657.6
|
)
|
||
Gross profit
|
|
851.2
|
|
|
894.6
|
|
||
Selling, general, and administrative expenses
(a)
|
|
(708.4
|
)
|
|
(814.7
|
)
|
||
Amortization of intangible assets
|
|
(6.0
|
)
|
|
(6.0
|
)
|
||
Impairment of assets
|
|
(9.7
|
)
|
|
(19.4
|
)
|
||
Restructuring and other charges
(a)
|
|
(36.8
|
)
|
|
(85.7
|
)
|
||
Total other operating expenses, net
|
|
(760.9
|
)
|
|
(925.8
|
)
|
||
Operating income (loss)
|
|
90.3
|
|
|
(31.2
|
)
|
||
Foreign currency gains
|
|
0.1
|
|
|
2.4
|
|
||
Interest expense
|
|
(5.0
|
)
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|
(3.4
|
)
|
||
Interest and other income, net
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|
2.3
|
|
|
0.9
|
|
||
Equity in losses of equity-method investees
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(0.9
|
)
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|
(1.9
|
)
|
||
Income (loss) before income taxes
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86.8
|
|
|
(33.2
|
)
|
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Income tax benefit (provision)
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(27.3
|
)
|
|
10.9
|
|
||
Net income (loss)
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$
|
59.5
|
|
|
$
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(22.3
|
)
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Net income (loss) per common share:
|
|
|
|
|
||||
Basic
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$
|
0.73
|
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|
$
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(0.27
|
)
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Diluted
|
|
$
|
0.72
|
|
|
$
|
(0.27
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
81.6
|
|
|
83.3
|
|
||
Diluted
|
|
82.5
|
|
|
83.3
|
|
||
Dividends declared per share
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
(a)
Includes total depreciation expense of:
|
|
$
|
(66.9
|
)
|
|
$
|
(72.4
|
)
|
|
4
|
|
|
|
Three Months Ended
|
||||||
|
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July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
(unaudited)
|
||||||
Net income (loss)
|
|
$
|
59.5
|
|
|
$
|
(22.3
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Foreign currency translation gains (losses)
|
|
56.6
|
|
|
(9.0
|
)
|
||
Net losses on cash flow hedges
|
|
(22.0
|
)
|
|
(2.3
|
)
|
||
Net gains (losses) on defined benefit plans
|
|
(0.3
|
)
|
|
0.4
|
|
||
Other comprehensive income (loss), net of tax
|
|
34.3
|
|
|
(10.9
|
)
|
||
Total comprehensive income (loss)
|
|
$
|
93.8
|
|
|
$
|
(33.2
|
)
|
|
5
|
|
|
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Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
(unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
59.5
|
|
|
$
|
(22.3
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
72.9
|
|
|
78.4
|
|
||
Deferred income tax expense (benefit)
|
|
(14.7
|
)
|
|
3.0
|
|
||
Equity in losses of equity-method investees
|
|
0.9
|
|
|
1.9
|
|
||
Non-cash stock-based compensation expense
|
|
21.6
|
|
|
17.7
|
|
||
Non-cash impairment of assets
|
|
9.7
|
|
|
19.4
|
|
||
Non-cash restructuring-related inventory charges
|
|
0.7
|
|
|
54.0
|
|
||
Other non-cash charges
|
|
1.1
|
|
|
9.7
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
174.0
|
|
|
174.4
|
|
||
Inventories
|
|
(55.4
|
)
|
|
(167.8
|
)
|
||
Prepaid expenses and other current assets
|
|
(4.6
|
)
|
|
(23.2
|
)
|
||
Accounts payable and accrued liabilities
|
|
42.4
|
|
|
141.7
|
|
||
Income tax receivables and payables
|
|
8.7
|
|
|
(20.8
|
)
|
||
Deferred income
|
|
0.6
|
|
|
(2.3
|
)
|
||
Other balance sheet changes
|
|
16.8
|
|
|
(20.9
|
)
|
||
Net cash provided by operating activities
|
|
334.2
|
|
|
242.9
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(41.9
|
)
|
|
(77.6
|
)
|
||
Purchases of investments
|
|
(270.4
|
)
|
|
(144.5
|
)
|
||
Proceeds from sales and maturities of investments
|
|
187.4
|
|
|
182.2
|
|
||
Acquisitions and ventures
|
|
(3.6
|
)
|
|
(1.3
|
)
|
||
Net cash used in investing activities
|
|
(128.5
|
)
|
|
(41.2
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from issuance of short-term debt
|
|
—
|
|
|
943.9
|
|
||
Repayments of short-term debt
|
|
—
|
|
|
(970.0
|
)
|
||
Payments of capital lease obligations
|
|
(6.2
|
)
|
|
(7.2
|
)
|
||
Payments of dividends
|
|
(40.5
|
)
|
|
(41.4
|
)
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(14.4
|
)
|
|
(114.9
|
)
|
||
Proceeds from exercise of stock options
|
|
0.1
|
|
|
3.2
|
|
||
Net cash used in financing activities
|
|
(61.0
|
)
|
|
(186.4
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
19.9
|
|
|
(14.6
|
)
|
||
Net increase in cash, cash equivalents, and restricted cash
|
|
164.6
|
|
|
0.7
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
711.8
|
|
|
502.1
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
876.4
|
|
|
$
|
502.8
|
|
|
6
|
|
1.
|
Description of Business
|
2.
|
Basis of Presentation
|
|
7
|
|
3.
|
Summary of Significant Accounting Policies
|
|
8
|
|
|
|
Three Months Ended
|
|
||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
||
|
|
(millions)
|
|
||||
Basic shares
|
|
81.6
|
|
|
83.3
|
|
|
Dilutive effect of stock options, restricted stock, and RSUs
|
|
0.9
|
|
|
—
|
|
(a)
|
Diluted shares
|
|
82.5
|
|
|
83.3
|
|
|
|
(a)
|
Incremental shares of
1.0 million
attributable to outstanding stock options, restricted stock, and RSUs were excluded from the computation of diluted shares for the three months ended July 2, 2016, as such shares would not be dilutive as a result of the net loss incurred during the period.
|
|
9
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Beginning reserve balance
|
|
$
|
202.8
|
|
|
$
|
239.7
|
|
Amount charged against revenue to increase reserve
|
|
117.7
|
|
|
132.0
|
|
||
Amount credited against customer accounts to decrease reserve
|
|
(126.0
|
)
|
|
(164.4
|
)
|
||
Foreign currency translation
|
|
5.1
|
|
|
(0.3
|
)
|
||
Ending reserve balance
|
|
$
|
199.6
|
|
|
$
|
207.0
|
|
|
10
|
|
•
|
Forecasted Inventory Transactions
— recognized as part of the cost of the inventory being hedged within cost of goods sold when the related inventory is sold to a third party.
|
•
|
Intercompany Royalties/Settlement of Foreign Currency Balances
— recognized within foreign currency gains (losses) during the period that the hedged balance is remeasured through earnings, generally through its settlement when the related payment occurs.
|
|
11
|
|
4.
|
Recently Issued Accounting Standards
|
|
12
|
|
|
13
|
|
5.
|
Property and Equipment
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Land and improvements
|
|
$
|
16.8
|
|
|
$
|
16.8
|
|
Buildings and improvements
|
|
457.7
|
|
|
457.2
|
|
||
Furniture and fixtures
|
|
690.6
|
|
|
687.2
|
|
||
Machinery and equipment
|
|
420.1
|
|
|
414.0
|
|
||
Capitalized software
|
|
558.2
|
|
|
549.0
|
|
||
Leasehold improvements
|
|
1,175.2
|
|
|
1,179.1
|
|
||
Construction in progress
|
|
21.8
|
|
|
33.4
|
|
||
|
|
3,340.4
|
|
|
3,336.7
|
|
||
Less: accumulated depreciation
|
|
(2,067.1
|
)
|
|
(2,020.7
|
)
|
||
Property and equipment, net
|
|
$
|
1,273.3
|
|
|
$
|
1,316.0
|
|
6.
|
Other Assets and Liabilities
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Other taxes receivable
|
|
$
|
135.3
|
|
|
$
|
127.8
|
|
Prepaid rent expense
|
|
37.9
|
|
|
37.4
|
|
||
Restricted cash
|
|
14.0
|
|
|
9.8
|
|
||
Derivative financial instruments
|
|
13.5
|
|
|
23.0
|
|
||
Tenant allowances receivable
|
|
12.0
|
|
|
16.4
|
|
||
Prepaid samples
|
|
8.4
|
|
|
5.9
|
|
||
Prepaid software maintenance
|
|
8.0
|
|
|
6.5
|
|
||
Prepaid advertising and marketing
|
|
7.3
|
|
|
4.1
|
|
||
Other prepaid expenses and current assets
|
|
62.8
|
|
|
49.5
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
299.2
|
|
|
$
|
280.4
|
|
|
14
|
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Non-current investments
|
|
$
|
80.1
|
|
|
$
|
21.4
|
|
Restricted cash
|
|
32.0
|
|
|
33.7
|
|
||
Security deposits
|
|
26.4
|
|
|
26.5
|
|
||
Derivative financial instruments
|
|
—
|
|
|
9.6
|
|
||
Other non-current assets
|
|
36.2
|
|
|
40.0
|
|
||
Total other non-current assets
|
|
$
|
174.7
|
|
|
$
|
131.2
|
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Accrued inventory
|
|
$
|
211.6
|
|
|
$
|
154.9
|
|
Other taxes payable
|
|
203.8
|
|
|
172.2
|
|
||
Accrued operating expenses
|
|
196.8
|
|
|
188.0
|
|
||
Accrued payroll and benefits
|
|
142.0
|
|
|
173.5
|
|
||
Restructuring reserve
|
|
118.9
|
|
|
140.8
|
|
||
Dividends payable
|
|
40.6
|
|
|
40.5
|
|
||
Accrued capital expenditures
|
|
30.6
|
|
|
45.7
|
|
||
Deferred income
|
|
30.6
|
|
|
29.7
|
|
||
Capital lease obligations
|
|
22.1
|
|
|
22.6
|
|
||
Derivative financial instruments
|
|
16.0
|
|
|
12.3
|
|
||
Other accrued expenses and current liabilities
|
|
6.4
|
|
|
2.5
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
1,019.4
|
|
|
$
|
982.7
|
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Capital lease obligations
|
|
$
|
246.7
|
|
|
$
|
250.9
|
|
Deferred rent obligations
|
|
209.7
|
|
|
211.1
|
|
||
Derivative financial instruments
|
|
39.2
|
|
|
9.4
|
|
||
Deferred tax liabilities
|
|
12.1
|
|
|
11.8
|
|
||
Deferred compensation
|
|
7.4
|
|
|
7.8
|
|
||
Other non-current liabilities
|
|
66.8
|
|
|
50.6
|
|
||
Total other non-current liabilities
|
|
$
|
581.9
|
|
|
$
|
541.6
|
|
7.
|
Impairment of Assets
|
|
15
|
|
8.
|
Restructuring and Other Charges
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
Cumulative Charges
|
||||||
|
|
(millions)
|
||||||||||
Cash-related restructuring charges:
|
|
|
|
|
|
|
||||||
Severance and benefit costs
|
|
$
|
11.7
|
|
|
$
|
77.1
|
|
|
$
|
194.4
|
|
Lease termination and store closure costs
|
|
12.2
|
|
|
1.8
|
|
|
99.5
|
|
|||
Other cash charges
|
|
2.7
|
|
|
1.9
|
|
|
21.8
|
|
|||
Total cash-related restructuring charges
|
|
26.6
|
|
|
80.8
|
|
|
315.7
|
|
|||
Non-cash charges:
|
|
|
|
|
|
|
||||||
Impairment of assets (see Note 7)
|
|
9.7
|
|
|
19.4
|
|
|
244.3
|
|
|||
Inventory-related charges
(a)
|
|
0.7
|
|
|
54.0
|
|
|
198.6
|
|
|||
Total non-cash charges
|
|
10.4
|
|
|
73.4
|
|
|
442.9
|
|
|||
Total charges
|
|
$
|
37.0
|
|
|
$
|
154.2
|
|
|
$
|
758.6
|
|
|
(a)
|
Cumulative inventory-related charges include
$155.2 million
associated with the destruction of inventory out of current liquidation channels, of which
$50.3 million
was recorded during the
three months ended
July 2, 2016
. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
16
|
|
|
|
Severance and Benefit Costs
|
|
Lease Termination
and Store
Closure Costs
|
|
Other Cash Charges
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at April 1, 2017
|
|
$
|
94.3
|
|
|
$
|
34.3
|
|
|
$
|
6.6
|
|
|
$
|
135.2
|
|
Additions charged to expense
|
|
11.7
|
|
|
12.2
|
|
|
2.7
|
|
|
26.6
|
|
||||
Cash payments charged against reserve
|
|
(24.6
|
)
|
|
(4.0
|
)
|
|
(4.4
|
)
|
|
(33.0
|
)
|
||||
Non-cash adjustments
|
|
0.6
|
|
|
4.9
|
|
|
—
|
|
|
5.5
|
|
||||
Balance at July 1, 2017
|
|
$
|
82.0
|
|
|
$
|
47.4
|
|
|
$
|
4.9
|
|
|
$
|
134.3
|
|
|
|
Three Months Ended
|
|
|
||||
|
|
July 2,
2016 |
|
Cumulative
Charges
|
||||
|
|
(millions)
|
||||||
Cash-related restructuring charges:
|
|
|
|
|
||||
Severance and benefit costs
|
|
$
|
4.7
|
|
|
$
|
69.1
|
|
Lease termination and store closure costs
|
|
0.2
|
|
|
8.0
|
|
||
Other cash charges
|
|
—
|
|
|
13.8
|
|
||
Total cash-related restructuring charges
|
|
4.9
|
|
|
90.9
|
|
||
Non-cash charges:
|
|
|
|
|
||||
Impairment of assets (see Note 7)
|
|
—
|
|
|
27.2
|
|
||
Accelerated stock-based compensation expense
(a)
|
|
—
|
|
|
8.9
|
|
||
Inventory-related charges
(b)
|
|
—
|
|
|
20.4
|
|
||
Total non-cash charges
|
|
—
|
|
|
56.5
|
|
||
Total charges
|
|
$
|
4.9
|
|
|
$
|
147.4
|
|
|
(a)
|
Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements of operations, was recorded in connection with vesting provisions associated with certain separation agreements.
|
(b)
|
Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
17
|
|
|
|
Severance and Benefit Costs
|
|
Lease Termination
and Store
Closure Costs
|
|
Other Cash Charges
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at April 1, 2017
|
|
$
|
8.6
|
|
|
$
|
3.4
|
|
|
$
|
0.2
|
|
|
$
|
12.2
|
|
Cash payments charged against reserve
|
|
(1.5
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
(2.2
|
)
|
||||
Balance at July 1, 2017
|
|
$
|
7.1
|
|
|
$
|
2.7
|
|
|
$
|
0.2
|
|
|
$
|
10.0
|
|
9.
|
Income Taxes
|
|
18
|
|
10.
|
Debt
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
$300 million 2.125% Senior Notes
(a)
|
|
$
|
298.4
|
|
|
$
|
298.1
|
|
$300 million 2.625% Senior Notes
(b)
|
|
292.0
|
|
|
290.1
|
|
||
Total long-term debt
|
|
$
|
590.4
|
|
|
$
|
588.2
|
|
|
(a)
|
During its fiscal year ended April 2, 2016 ("Fiscal 2016"), the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate 2.125% Senior Notes, as defined below (see
Note 12
). Accordingly, the carrying value of the 2.125% Senior Notes as of
July 1, 2017
and
April 1, 2017
reflects adjustments of
$1.0 million
and
$1.2 million
, respectively, for the change in fair value attributable to the benchmark interest rate. The carrying value of the 2.125% Senior Notes is also net of unamortized debt issuance costs and discount of
$0.6 million
and
$0.7 million
as of
July 1, 2017
and
April 1, 2017
, respectively.
|
(b)
|
During Fiscal 2016, the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate 2.625% Senior Notes, as defined below (see
Note 12
). Accordingly, the carrying value of the 2.625% Senior Notes as of
July 1, 2017
and
April 1, 2017
reflects adjustments of
$6.5 million
and
$8.2 million
, respectively, for the change in fair value attributable to the benchmark interest rate. The carrying value of the 2.625% Senior Notes is also net of unamortized debt issuance costs and discount of
$1.5 million
and
$1.7 million
as of
July 1, 2017
and
April 1, 2017
, respectively.
|
|
19
|
|
|
20
|
|
•
|
China Credit Facility
— provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to
50 million
Chinese Renminbi (approximately
$7 million
) through
April 5, 2018
, and may also be used to support bank guarantees.
|
•
|
South Korea Credit Facility
— provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to
47 billion
South Korean Won (approximately
$41 million
) through
October 31, 2017
.
|
11.
|
Fair Value Measurements
|
•
|
Level 1
— inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
•
|
Level 2
— inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable.
|
•
|
Level 3
— inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement.
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Derivative assets
(a)
|
|
$
|
13.5
|
|
|
$
|
32.6
|
|
Derivative liabilities
(a)
|
|
55.2
|
|
|
21.7
|
|
|
(a)
|
Based on Level 2 measurements.
|
|
21
|
|
|
|
July 1, 2017
|
|
April 1, 2017
|
||||||||||||
|
|
Carrying Value
(a)
|
|
Fair Value
(b)
|
|
Carrying Value
(a)
|
|
Fair Value
(b)
|
||||||||
|
|
(millions)
|
||||||||||||||
$300 million 2.125% Senior Notes
|
|
$
|
298.4
|
|
|
$
|
302.0
|
|
|
$
|
298.1
|
|
|
$
|
302.2
|
|
$300 million 2.625% Senior Notes
|
|
292.0
|
|
|
305.0
|
|
|
290.1
|
|
|
302.8
|
|
|
(a)
|
See
Note 10
for discussion of the carrying values of the Company's Senior Notes.
|
(b)
|
Based on Level 2 measurements.
|
|
22
|
|
12.
|
Financial Instruments
|
|
|
Notional Amounts
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||
Derivative Instrument
(a)
|
|
July 1,
2017 |
|
April 1,
2017 |
|
July 1,
2017 |
|
April 1,
2017 |
|
July 1,
2017 |
|
April 1,
2017 |
||||||||||||||||||||
|
|
|
|
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
|
Balance
Sheet
Line
(b)
|
|
Fair
Value
|
||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||||
Designated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FC — Cash flow hedges
|
|
$
|
468.5
|
|
|
$
|
533.2
|
|
|
PP
|
|
$
|
4.4
|
|
|
PP
|
|
$
|
17.7
|
|
|
AE
|
|
$
|
11.5
|
|
|
AE
|
|
$
|
3.7
|
|
IRS — Fixed-rate debt
|
|
600.0
|
|
|
600.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
ONCL
|
|
7.5
|
|
|
ONCL
|
|
9.4
|
|
||||||
CCS — NI
|
|
633.6
|
|
|
591.2
|
|
|
|
|
—
|
|
|
ONCA
|
|
9.6
|
|
|
ONCL
|
|
31.7
|
|
|
|
|
—
|
|
||||||
Total Designated Hedges
|
|
1,702.1
|
|
|
1,724.4
|
|
|
|
|
4.4
|
|
|
|
|
27.3
|
|
|
|
|
50.7
|
|
|
|
|
13.1
|
|
||||||
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FC — Undesignated hedges
(c)
|
|
340.1
|
|
|
375.1
|
|
|
PP
|
|
9.1
|
|
|
PP
|
|
5.3
|
|
|
AE
|
|
4.5
|
|
|
AE
|
|
8.6
|
|
||||||
Total Hedges
|
|
$
|
2,042.2
|
|
|
$
|
2,099.5
|
|
|
|
|
$
|
13.5
|
|
|
|
|
$
|
32.6
|
|
|
|
|
$
|
55.2
|
|
|
|
|
$
|
21.7
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts; CCS = Cross-currency swap contracts; NI = Net investment hedges.
|
(b)
|
PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCA = Other non-current assets; ONCL = Other non-current liabilities.
|
(c)
|
Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.
|
|
|
July 1, 2017
|
|
April 1, 2017
|
||||||||||||||||||||
|
|
Gross Amounts Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements
|
|
Net
Amount
|
|
Gross Amounts Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements
|
|
Net
Amount
|
||||||||||||
|
|
(millions)
|
||||||||||||||||||||||
Derivative assets
|
|
$
|
13.5
|
|
|
$
|
(8.4
|
)
|
|
$
|
5.1
|
|
|
$
|
32.6
|
|
|
$
|
(18.3
|
)
|
|
$
|
14.3
|
|
Derivative liabilities
|
|
55.2
|
|
|
(8.4
|
)
|
|
46.8
|
|
|
21.7
|
|
|
(18.3
|
)
|
|
3.4
|
|
|
23
|
|
|
|
Gains (Losses)
Recognized in OCI
|
|
|
||||||
|
|
Three Months Ended
|
|
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
|
||||
|
|
(millions)
|
|
|
||||||
Designated Hedges:
|
|
|
|
|
|
|
||||
FC — Cash flow hedges
|
|
$
|
(19.1
|
)
|
|
$
|
(5.2
|
)
|
|
|
CCS — NI
(a)
|
|
(40.3
|
)
|
|
13.0
|
|
|
|
||
Total Designated Hedges
|
|
$
|
(59.4
|
)
|
|
$
|
7.8
|
|
|
|
|
|
Gains (Losses) Reclassified
from AOCI to Earnings
|
|
Location of Gains (Losses)
Reclassified from
AOCI to Earnings
|
||||||
|
|
Three Months Ended
|
|
|||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
|||||
|
|
(millions)
|
|
|
||||||
Designated Hedges:
|
|
|
|
|
|
|
||||
FC — Cash flow hedges
|
|
$
|
4.0
|
|
|
$
|
3.3
|
|
|
Cost of goods sold
|
FC — Cash flow hedges
|
|
(0.6
|
)
|
|
(4.7
|
)
|
|
Foreign currency gains (losses)
|
||
Total Designated Hedges
|
|
$
|
3.4
|
|
|
$
|
(1.4
|
)
|
|
|
|
(a)
|
Amounts recognized in other comprehensive income (loss) ("OCI") would be recognized in earnings only upon the sale or liquidation of the hedged net investment.
|
|
|
Gains (Losses)
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings
|
||||||
|
|
Three Months Ended
|
|
|||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
|||||
|
|
(millions)
|
|
|
||||||
Undesignated Hedges:
|
|
|
|
|
|
|
||||
FC — Undesignated hedges
|
|
$
|
2.6
|
|
|
$
|
(7.5
|
)
|
|
Foreign currency gains (losses)
|
Total Undesignated Hedges
|
|
$
|
2.6
|
|
|
$
|
(7.5
|
)
|
|
|
|
24
|
|
13.
|
Commitments and Contingencies
|
|
25
|
|
14.
|
Equity
|
|
|
Three Months Ended
|
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
||||
|
|
(millions)
|
|
||||||
Balance at beginning of period
|
|
$
|
3,299.6
|
|
|
$
|
3,743.5
|
|
|
Comprehensive income (loss)
|
|
93.8
|
|
|
(33.2
|
)
|
|
||
Dividends declared
|
|
(40.6
|
)
|
|
(41.1
|
)
|
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(14.4
|
)
|
|
(114.9
|
)
|
(a)
|
||
Stock-based compensation
|
|
21.6
|
|
|
17.7
|
|
|
||
Shares issued and tax benefits (shortfalls) recognized pursuant to stock-based compensation arrangements
|
|
0.1
|
|
|
(5.7
|
)
|
|
||
Balance at end of period
|
|
$
|
3,360.1
|
|
|
$
|
3,566.3
|
|
|
|
(a)
|
Includes
$10 million
of Class A common stock delivered to the Company under its ASR Program (as defined below) during the second quarter of Fiscal 2017, which was recorded as a reduction to additional paid-in capital in the Company's consolidated balance sheet as of July 2, 2016.
|
|
26
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016
(a)
|
||||
|
|
(millions)
|
||||||
Cost of shares repurchased
|
|
$
|
—
|
|
|
$
|
90.0
|
|
Number of shares repurchased
|
|
0.0
|
|
|
0.9
|
|
|
(a)
|
Excludes
0.1 million
additional shares of Class A common stock delivered to the Company under its ASR Program during the second quarter of Fiscal 2017, which had an aggregate cost of
$10 million
.
|
|
27
|
|
15.
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
Foreign Currency Translation Gains (Losses)
(a)
|
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
(b)
|
|
Net Unrealized Gains (Losses) on Defined
Benefit Plans
(c)
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at April 2, 2016
|
|
$
|
(157.6
|
)
|
|
$
|
(12.0
|
)
|
|
$
|
(11.9
|
)
|
|
$
|
(181.5
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
(9.0
|
)
|
|
(3.3
|
)
|
|
0.1
|
|
|
(12.2
|
)
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
1.0
|
|
|
0.3
|
|
|
1.3
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(9.0
|
)
|
|
(2.3
|
)
|
|
0.4
|
|
|
(10.9
|
)
|
||||
Balance at July 2, 2016
|
|
$
|
(166.6
|
)
|
|
$
|
(14.3
|
)
|
|
$
|
(11.5
|
)
|
|
$
|
(192.4
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at April 1, 2017
|
|
$
|
(206.2
|
)
|
|
$
|
14.6
|
|
|
$
|
(6.8
|
)
|
|
$
|
(198.4
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
56.6
|
|
|
(18.8
|
)
|
|
(0.5
|
)
|
|
37.3
|
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
(3.2
|
)
|
|
0.2
|
|
|
(3.0
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
56.6
|
|
|
(22.0
|
)
|
|
(0.3
|
)
|
|
34.3
|
|
||||
Balance at July 1, 2017
|
|
$
|
(149.6
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
(7.1
|
)
|
|
$
|
(164.1
|
)
|
|
(a)
|
OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes an income tax benefit of
$12.8 million
for the
three months ended
July 1, 2017
, and includes an income tax provision of
$4.5 million
for the
three months ended
July 2, 2016
. OCI before reclassifications to earnings for the
three-month periods ended
July 1, 2017
and
July 2, 2016
include a loss of
$25.1 million
(net of a
$15.2 million
income tax benefit) and a gain of
$7.9 million
(net of a
$5.1 million
income tax provision), respectively, related to the effective portion of changes in the fair values of the Cross-Currency Swaps designated as hedges of the Company's net investment in certain of its European subsidiaries (see
Note 12
).
|
(b)
|
OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are net of income tax benefits of
$0.3 million
and
$1.9 million
for the
three-month periods ended
July 1, 2017
and
July 2, 2016
, respectively. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.
|
(c)
|
Activity is presented net of taxes, which were immaterial for both periods presented.
|
|
|
Three Months Ended
|
|
Location of Gains (Losses)
Reclassified from AOCI
to Earnings
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
|||||
|
|
(millions)
|
|
|
||||||
Gains (losses) on cash flow hedges
(a)
:
|
|
|
|
|
|
|
||||
FC
—
Cash flow hedges
|
|
$
|
4.0
|
|
|
$
|
3.3
|
|
|
Cost of goods sold
|
FC
—
Cash flow hedges
|
|
(0.6
|
)
|
|
(4.7
|
)
|
|
Foreign currency gains (losses)
|
||
Tax effect
|
|
(0.2
|
)
|
|
0.4
|
|
|
Income tax benefit (provision)
|
||
Net of tax
|
|
$
|
3.2
|
|
|
$
|
(1.0
|
)
|
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts.
|
|
28
|
|
16.
|
Stock-based Compensation
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Compensation expense
|
|
$
|
21.6
|
|
(a)
|
$
|
17.7
|
|
Income tax benefit
|
|
(7.9
|
)
|
|
(6.5
|
)
|
|
(a)
|
Includes
$2.1 million
of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations during the
three-month period ended
July 1, 2017
(see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.
|
|
|
Number of Options
|
|
|
|
(thousands)
|
|
Options outstanding at April 1, 2017
|
|
1,720
|
|
Granted
|
|
—
|
|
Exercised
|
|
—
|
|
Cancelled/Forfeited
|
|
(122
|
)
|
Options outstanding at July 1, 2017
|
|
1,598
|
|
|
29
|
|
|
|
Number of Shares
|
||||
|
|
Restricted Stock
|
|
Service-based RSUs
|
||
|
|
(thousands)
|
||||
Nonvested at April 1, 2017
|
|
19
|
|
|
922
|
|
Granted
|
|
—
|
|
|
628
|
|
Vested
|
|
—
|
|
|
(294
|
)
|
Forfeited
|
|
—
|
|
|
(58
|
)
|
Nonvested at July 1, 2017
|
|
19
|
|
|
1,198
|
|
|
|
Number of Shares
|
||||
|
|
Performance-based
RSUs — without
TSR Modifier
|
|
Performance-based
RSUs — with
TSR Modifier
|
||
|
|
(thousands)
|
||||
Nonvested at April 1, 2017
|
|
788
|
|
|
61
|
|
Granted
|
|
391
|
|
|
—
|
|
Change due to performance/market condition achievement
|
|
(12
|
)
|
|
(21
|
)
|
Vested
|
|
(149
|
)
|
|
(40
|
)
|
Forfeited
|
|
(21
|
)
|
|
—
|
|
Nonvested at July 1, 2017
|
|
997
|
|
|
—
|
|
|
30
|
|
17.
|
Segment Information
|
•
|
North America
— The North America segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, the Company's wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. The Company's retail business in North America is comprised of its Ralph Lauren stores, its factory stores, and its e-commerce site, www.RalphLauren.com.
|
•
|
Europe
— The Europe segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, the Company's wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. The Company's retail business in Europe is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various e-commerce sites.
|
•
|
Asia
— The Asia segment primarily consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is comprised of its Ralph Lauren stores, its factory stores, and its concession-based shop-within-shops. In addition, the Company sells its products through various third-party digital partner e-commerce sites. In Asia, the Company's wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.
|
|
31
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Net revenues:
|
|
|
|
|
||||
North America
|
|
$
|
709.7
|
|
|
$
|
855.6
|
|
Europe
|
|
323.5
|
|
|
377.6
|
|
||
Asia
|
|
209.1
|
|
|
211.1
|
|
||
Other non-reportable segments
|
|
104.8
|
|
|
107.9
|
|
||
Total net revenues
|
|
$
|
1,347.1
|
|
|
$
|
1,552.2
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Operating income (loss)
(a)
:
|
|
|
|
|
||||
North America
|
|
$
|
150.5
|
|
|
$
|
165.8
|
|
Europe
|
|
67.1
|
|
|
75.0
|
|
||
Asia
|
|
30.2
|
|
|
(37.8
|
)
|
||
Other non-reportable segments
|
|
33.0
|
|
|
27.8
|
|
||
|
|
280.8
|
|
|
230.8
|
|
||
Unallocated corporate expenses
|
|
(153.7
|
)
|
|
(176.3
|
)
|
||
Unallocated restructuring and other charges
(b)
|
|
(36.8
|
)
|
|
(85.7
|
)
|
||
Total operating income (loss)
|
|
$
|
90.3
|
|
|
$
|
(31.2
|
)
|
|
(a)
|
Segment operating income (loss) and unallocated corporate expenses during the
three-month periods ended
July 1, 2017
and
July 2, 2016
included certain restructuring-related inventory charges (see Note 8) and asset impairment charges (see Note 7), which are detailed below:
|
|
|
|
Three Months Ended
|
||||||
|
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
|
(millions)
|
||||||
|
Restructuring-related inventory charges:
|
|
|
|
|
||||
|
North America
|
|
$
|
(0.7
|
)
|
|
$
|
(6.9
|
)
|
|
Europe
|
|
—
|
|
|
(7.9
|
)
|
||
|
Asia
|
|
—
|
|
|
(36.3
|
)
|
||
|
Other non-reportable segments
|
|
—
|
|
|
(2.9
|
)
|
||
|
Total restructuring-related inventory charges
|
|
$
|
(0.7
|
)
|
|
$
|
(54.0
|
)
|
|
32
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
|
(millions)
|
||||||
|
Asset impairment charges:
|
|
|
|
|
||||
|
North America
|
|
$
|
(0.6
|
)
|
|
$
|
(0.8
|
)
|
|
Europe
|
|
(1.2
|
)
|
|
(1.4
|
)
|
||
|
Asia
|
|
(0.1
|
)
|
|
(16.5
|
)
|
||
|
Other non-reportable segments
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||
|
Unallocated corporate expenses
|
|
(7.7
|
)
|
|
(0.6
|
)
|
||
|
Total asset impairment charges
|
|
$
|
(9.7
|
)
|
|
$
|
(19.4
|
)
|
(b)
|
The
three-month periods ended
July 1, 2017
and
July 2, 2016
included certain unallocated restructuring and other charges (see
Note 8
), which are detailed below:
|
|
|
|
Three Months Ended
|
||||||
|
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
|
(millions)
|
||||||
|
Unallocated restructuring and other charges:
|
|
|
|
|
||||
|
North America-related
|
|
$
|
(12.0
|
)
|
|
$
|
(18.0
|
)
|
|
Europe-related
|
|
(0.1
|
)
|
|
(10.5
|
)
|
||
|
Asia-related
|
|
3.3
|
|
|
(1.5
|
)
|
||
|
Other non-reportable segment-related
|
|
(4.8
|
)
|
|
(2.1
|
)
|
||
|
Corporate-related
|
|
(13.0
|
)
|
|
(53.6
|
)
|
||
|
Unallocated restructuring charges
|
|
(26.6
|
)
|
|
(85.7
|
)
|
||
|
Other charges (see Note 8)
|
|
(10.2
|
)
|
|
—
|
|
||
|
Total unallocated restructuring and other charges
|
|
$
|
(36.8
|
)
|
|
$
|
(85.7
|
)
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Depreciation and amortization:
|
|
|
|
|
||||
North America
|
|
$
|
21.0
|
|
|
$
|
29.5
|
|
Europe
|
|
8.0
|
|
|
7.8
|
|
||
Asia
|
|
11.5
|
|
|
13.3
|
|
||
Other non-reportable segments
|
|
2.8
|
|
|
3.5
|
|
||
Unallocated corporate expenses
|
|
26.1
|
|
|
24.3
|
|
||
Unallocated restructuring and other charges (see Note 8)
|
|
3.5
|
|
|
—
|
|
||
Total depreciation and amortization
|
|
$
|
72.9
|
|
|
$
|
78.4
|
|
|
33
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Net revenues
(a)
:
|
|
|
|
|
||||
The Americas
(b)
|
|
$
|
811.5
|
|
|
$
|
960.6
|
|
Europe
(c)
|
|
326.2
|
|
|
380.2
|
|
||
Asia
(d)
|
|
209.4
|
|
|
211.4
|
|
||
Total net revenues
|
|
$
|
1,347.1
|
|
|
$
|
1,552.2
|
|
|
(a)
|
Net revenues for certain of the Company's licensed operations are included within the geographic location of the reporting subsidiary which holds the respective license.
|
(b)
|
Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the
three-month periods ended
July 1, 2017
and
July 2, 2016
were
$764.6 million
and
$910.5 million
, respectively.
|
(c)
|
Includes the Middle East.
|
(d)
|
Includes Australia and New Zealand.
|
18.
|
Additional Financial Information
|
|
|
July 1,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Cash and cash equivalents
|
|
$
|
830.4
|
|
|
$
|
668.3
|
|
Restricted cash included within prepaid expenses and other current assets
|
|
14.0
|
|
|
9.8
|
|
||
Restricted cash included within other non-current assets
|
|
32.0
|
|
|
33.7
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
876.4
|
|
|
$
|
711.8
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Cash paid for interest
|
|
$
|
2.6
|
|
|
$
|
3.6
|
|
Cash paid for income taxes
|
|
20.8
|
|
|
17.5
|
|
|
34
|
|
|
35
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
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 our new Chief Executive Officer;
|
•
|
our ability to successfully implement our long-term growth strategy and achieve anticipated operating enhancements and cost reductions from our restructuring plans;
|
•
|
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 effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;
|
•
|
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 efforts to successfully enhance, upgrade, and/or transition our global information technology systems and e-commerce 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;
|
•
|
changes in our tax obligations and effective tax rates due to a variety of factors, including potential changes in tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction;
|
•
|
our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;
|
•
|
the impact to our business resulting from increases in the costs of raw materials, transportation, and labor;
|
•
|
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;
|
•
|
the impact to our business resulting from changes in consumers' ability or preferences to purchase premium lifestyle products that we offer for sale and our ability to forecast consumer demand, which could result in either a build-up or shortage of inventory;
|
•
|
our ability to maintain our credit profile and ratings within the financial community;
|
|
36
|
|
•
|
our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, payment of dividends, capital expenditures, and potential 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 the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors' expectations;
|
•
|
the impact of the volatile state of the global economy, stock markets, and other global economic conditions on us, our customers, suppliers, vendors, and lenders;
|
•
|
the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation;
|
•
|
our ability to open new retail stores, concession shops, and e-commerce sites in an effort to expand our direct-to-consumer presence;
|
•
|
our ability to continue to expand or grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result;
|
•
|
our ability to continue to maintain our brand image and reputation and protect our trademarks;
|
•
|
our intention to introduce new products or enter into or renew alliances and exclusive relationships;
|
•
|
changes in the business of, and our relationships with, major department store customers and licensing partners;
|
•
|
the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters;
|
•
|
the impact to our business resulting from the United Kingdom's decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates; and
|
•
|
our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations.
|
|
37
|
|
•
|
Overview.
This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the
three months ended
July 1, 2017
. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.
|
•
|
Results of operations.
This section provides an analysis of our results of operations for the
three months ended
July 1, 2017
as compared to the
three months ended
July 2, 2016
.
|
•
|
Financial condition and liquidity.
This section provides a discussion of our financial condition and liquidity as of
July 1, 2017
, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the
three months ended
July 1, 2017
as compared to the
three months ended
July 2, 2016
; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, and our outstanding debt and covenant compliance; and (iv) a description of any material changes in our contractual and other obligations since
April 1, 2017
.
|
•
|
Market risk management.
This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since
April 1, 2017
.
|
•
|
Critical accounting policies.
This section discusses any significant changes in our critical accounting policies since
April 1, 2017
. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal
2017
10-K.
|
•
|
Recently issued accounting standards.
This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued or proposed.
|
•
|
North America
— Our North America segment, representing approximately 57% of our Fiscal
2017
net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. Our retail business in North America is comprised of our Ralph Lauren stores, our factory stores, and our e-commerce site, www.RalphLauren.com.
|
|
38
|
|
•
|
Europe
— Our Europe segment, representing approximately 23% of our Fiscal
2017
net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. In Europe, our wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. Our retail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various e-commerce sites.
|
•
|
Asia
— Our Asia segment, representing approximately 13% of our Fiscal
2017
net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Asia, Australia, and New Zealand. Our retail business in Asia is comprised of our Ralph Lauren stores, our factory stores, and our concession-based shop-within-shops. In addition, we sell our products through various third-party digital partner e-commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.
|
|
39
|
|
|
40
|
|
|
41
|
|
|
|
Three Months Ended
|
||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
|
|
(millions)
|
||||||
Impairment of assets (see Note 7)
|
|
$
|
(9.7
|
)
|
|
$
|
(19.4
|
)
|
Restructuring and other charges (see Note 8)
|
|
(36.8
|
)
|
|
(85.7
|
)
|
||
Restructuring-related inventory charges (see Note 8)
(a)
|
|
(0.7
|
)
|
|
(54.0
|
)
|
||
Total charges
|
|
$
|
(47.2
|
)
|
|
$
|
(159.1
|
)
|
|
(a)
|
Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
42
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net revenues
|
|
$
|
1,347.1
|
|
|
$
|
1,552.2
|
|
|
$
|
(205.1
|
)
|
|
(13.2
|
%)
|
Cost of goods sold
(a)
|
|
(495.9
|
)
|
|
(657.6
|
)
|
|
161.7
|
|
|
(24.6
|
%)
|
|||
Gross profit
|
|
851.2
|
|
|
894.6
|
|
|
(43.4
|
)
|
|
(4.8
|
%)
|
|||
Gross profit as % of net revenues
|
|
63.2
|
%
|
|
57.6
|
%
|
|
|
|
560 bps
|
|
||||
Selling, general, and administrative expenses
(a)
|
|
(708.4
|
)
|
|
(814.7
|
)
|
|
106.3
|
|
|
(13.0
|
%)
|
|||
SG&A expenses as % of net revenues
|
|
52.6
|
%
|
|
52.5
|
%
|
|
|
|
10 bps
|
|
||||
Amortization of intangible assets
|
|
(6.0
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
(0.5
|
%)
|
|||
Impairment of assets
|
|
(9.7
|
)
|
|
(19.4
|
)
|
|
9.7
|
|
|
(50.0
|
%)
|
|||
Restructuring and other charges
(a)
|
|
(36.8
|
)
|
|
(85.7
|
)
|
|
48.9
|
|
|
(57.1
|
%)
|
|||
Operating income (loss)
|
|
90.3
|
|
|
(31.2
|
)
|
|
121.5
|
|
|
(389.4
|
%)
|
|||
Operating income (loss) as % of net revenues
|
|
6.7
|
%
|
|
(2.0
|
%)
|
|
|
|
870 bps
|
|
||||
Foreign currency gains
|
|
0.1
|
|
|
2.4
|
|
|
(2.3
|
)
|
|
(97.8
|
%)
|
|||
Interest expense
|
|
(5.0
|
)
|
|
(3.4
|
)
|
|
(1.6
|
)
|
|
48.2
|
%
|
|||
Interest and other income, net
|
|
2.3
|
|
|
0.9
|
|
|
1.4
|
|
|
144.4
|
%
|
|||
Equity in losses of equity-method investees
|
|
(0.9
|
)
|
|
(1.9
|
)
|
|
1.0
|
|
|
(54.0
|
%)
|
|||
Income (loss) before income taxes
|
|
86.8
|
|
|
(33.2
|
)
|
|
120.0
|
|
|
(361.5
|
%)
|
|||
Income tax benefit (provision)
|
|
(27.3
|
)
|
|
10.9
|
|
|
(38.2
|
)
|
|
(350.4
|
%)
|
|||
Effective tax rate
(b)
|
|
31.4
|
%
|
|
32.8
|
%
|
|
|
|
(140 bps)
|
|
||||
Net income (loss)
|
|
$
|
59.5
|
|
|
$
|
(22.3
|
)
|
|
$
|
81.8
|
|
|
(367.0
|
%)
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
0.73
|
|
|
$
|
(0.27
|
)
|
|
$
|
1.00
|
|
|
(370.4
|
%)
|
Diluted
|
|
$
|
0.72
|
|
|
$
|
(0.27
|
)
|
|
$
|
0.99
|
|
|
(366.7
|
%)
|
|
(a)
|
Includes total depreciation expense of
$66.9 million
and
$72.4 million
for the
three-month periods ended
July 1, 2017
and
July 2, 2016
, respectively.
|
(b)
|
Effective tax rate is calculated by dividing the income tax benefit (provision) by income (loss) before income taxes.
|
|
|
As
Reported
|
|
Constant
Currency
|
||
E-commerce comparable store sales
|
|
(16
|
%)
|
|
(16
|
%)
|
Comparable store sales excluding e-commerce
|
|
(5
|
%)
|
|
(4
|
%)
|
Total comparable store sales
|
|
(7
|
%)
|
|
(6
|
%)
|
|
43
|
|
|
|
July 1,
2017 |
|
July 2,
2016 |
||
Freestanding Stores:
|
|
|
|
|
||
North America
|
|
216
|
|
|
220
|
|
Europe
|
|
82
|
|
|
83
|
|
Asia
|
|
90
|
|
|
101
|
|
Other non-reportable segments
|
|
79
|
|
|
81
|
|
Total freestanding stores
|
|
467
|
|
|
485
|
|
|
|
|
|
|
||
Concession Shops:
|
|
|
|
|
||
Europe
|
|
31
|
|
|
36
|
|
Asia
|
|
591
|
|
|
560
|
|
Other non-reportable segments
|
|
2
|
|
|
2
|
|
Total concession shops
|
|
624
|
|
|
598
|
|
Total stores
|
|
1,091
|
|
|
1,083
|
|
|
|
Three Months Ended
|
|
$ Change
|
|
Foreign Exchange Impact
|
|
$ Change
|
|
% Change
|
||||||||||||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
As
Reported
|
|
|
Constant
Currency
|
|
As
Reported
|
|
Constant
Currency
|
|||||||||||||
|
|
(millions)
|
|
|
|
|
||||||||||||||||||||
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
|
$
|
709.7
|
|
|
$
|
855.6
|
|
|
$
|
(145.9
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(144.8
|
)
|
|
(17.1
|
%)
|
|
(16.9
|
%)
|
Europe
|
|
323.5
|
|
|
377.6
|
|
|
(54.1
|
)
|
|
(15.4
|
)
|
|
(38.7
|
)
|
|
(14.3
|
%)
|
|
(10.2
|
%)
|
|||||
Asia
|
|
209.1
|
|
|
211.1
|
|
|
(2.0
|
)
|
|
(3.1
|
)
|
|
1.1
|
|
|
(1.0
|
%)
|
|
0.5
|
%
|
|||||
Other non-reportable segments
|
|
104.8
|
|
|
107.9
|
|
|
(3.1
|
)
|
|
(0.9
|
)
|
|
(2.2
|
)
|
|
(2.7
|
%)
|
|
(1.9
|
%)
|
|||||
Total net revenues
|
|
$
|
1,347.1
|
|
|
$
|
1,552.2
|
|
|
$
|
(205.1
|
)
|
|
$
|
(20.5
|
)
|
|
$
|
(184.6
|
)
|
|
(13.2
|
%)
|
|
(11.9
|
%)
|
•
|
a $114.2 million net decrease related to our North America wholesale business, largely driven by a strategic reduction of shipments (including within the off-price channel) in connection with our long-term growth strategy, the impact of certain brand discontinuances, and the continued challenging department store traffic trends, which contributed to a more competitive retail environment; and
|
|
44
|
|
•
|
a $32.1 million net decrease in comparable store sales, primarily driven by lower sales from our Ralph Lauren e-commerce operations and certain of our retail stores due in part to a decline in traffic, as well as lower levels of promotional activity and a planned reduction in inventory in connection with our long-term growth strategy. The following table summarizes our comparable store sales percentages on both a reported and constant currency basis related to our North America retail business:
|
|
|
As
Reported
|
|
Constant
Currency
|
||
E-commerce comparable store sales
|
|
(22
|
%)
|
|
(22
|
%)
|
Comparable store sales excluding e-commerce
|
|
(5
|
%)
|
|
(4
|
%)
|
Total comparable store sales
|
|
(8
|
%)
|
|
(8
|
%)
|
•
|
a $44.9 million net decrease related to our Europe wholesale business, approximately half of which was due to a shift in the timing of certain shipments. The remaining decline was driven by the impact of certain brand discontinuances and a strategic reduction of shipments within the off-price channel in connection with our long-term growth strategy, as well as unfavorable foreign currency effects of $5.4 million; and
|
•
|
a $19.7 million net decrease in comparable store sales, including net unfavorable foreign currency effects of $7.8 million. Our comparable store sales decreased by $11.9 million on a constant currency basis, primarily driven by lower sales from certain of our retail stores due in part to lower levels of promotional activity in connection with our long-term growth strategy. The following table summarizes our comparable store sales percentages on both a reported and constant currency basis related to our Europe retail business:
|
|
|
As
Reported
|
|
Constant
Currency
|
||
E-commerce comparable store sales
|
|
(7
|
%)
|
|
(5
|
%)
|
Comparable store sales excluding e-commerce
|
|
(12
|
%)
|
|
(8
|
%)
|
Total comparable store sales
|
|
(11
|
%)
|
|
(8
|
%)
|
•
|
a $3.0 million net decrease related to our Asia wholesale business, primarily driven by lower sales in Japan and South Korea and net unfavorable foreign currency effects of $0.3 million; and
|
•
|
a $0.3 million net decrease in non-comparable store sales, primarily driven by the strategic closure of certain of our retail stores and net unfavorable foreign currency effects of $1.4 million, largely offset by new concession shop openings during the past twelve months.
|
•
|
a $1.3 million net increase in comparable store sales, including net unfavorable foreign currency effects of $1.4 million. Our comparable store sales increased by $2.7 million on a constant currency basis, primarily driven by higher sales from certain of our retail locations due in part to increased traffic, partially offset by the impact of lower levels of promotional activity in connection with our long-term growth strategy. The following table summarizes our comparable store sales percentage on both a reported and constant currency basis related to our Asia retail business:
|
|
45
|
|
|
|
As
Reported
|
|
Constant
Currency
|
||
Total comparable store sales
(a)
|
|
1
|
%
|
|
2
|
%
|
|
(a)
|
Comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.
|
|
|
Three Months Ended July 1, 2017 Compared to
Three Months Ended July 2, 2016
|
||
|
|
(millions)
|
||
SG&A expense category:
|
|
|
||
Compensation-related expenses
(a)
|
|
$
|
(50.2
|
)
|
Marketing and advertising expenses
|
|
(14.9
|
)
|
|
Rent and occupancy expenses
|
|
(9.9
|
)
|
|
Depreciation expense
|
|
(8.9
|
)
|
|
Consulting fees
|
|
(7.5
|
)
|
|
Shipping and handling costs
|
|
(5.8
|
)
|
|
Other
|
|
(9.1
|
)
|
|
Total change in SG&A expenses
|
|
$
|
(106.3
|
)
|
|
(a)
|
Includes the favorable impact of $7.6 million related to Mr. Ralph Lauren electing to forgo his Fiscal 2017 executive incentive bonus.
|
|
46
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||||||
|
July 1, 2017
|
|
July 2, 2016
|
|
|
|
|
|||||||||||
|
Operating
Income (Loss)
|
|
Operating
Margin
|
|
Operating
Income (Loss) |
|
Operating
Margin
|
|
$
Change
|
|
Margin
Change
|
|||||||
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
150.5
|
|
|
21.2%
|
|
$
|
165.8
|
|
|
19.4%
|
|
$
|
(15.3
|
)
|
|
180 bps
|
Europe
|
|
67.1
|
|
|
20.7%
|
|
75.0
|
|
|
19.9%
|
|
(7.9
|
)
|
|
80 bps
|
|||
Asia
|
|
30.2
|
|
|
14.4%
|
|
(37.8
|
)
|
|
(17.9%)
|
|
68.0
|
|
|
3,230 bps
|
|||
Other non-reportable segments
|
|
33.0
|
|
|
31.5%
|
|
27.8
|
|
|
25.7%
|
|
5.2
|
|
|
580 bps
|
|||
|
|
280.8
|
|
|
|
|
230.8
|
|
|
|
|
50.0
|
|
|
|
|||
Unallocated corporate expenses
|
|
(153.7
|
)
|
|
|
|
(176.3
|
)
|
|
|
|
22.6
|
|
|
|
|||
Unallocated restructuring and other charges
|
|
(36.8
|
)
|
|
|
|
(85.7
|
)
|
|
|
|
48.9
|
|
|
|
|||
Total operating income (loss)
|
|
$
|
90.3
|
|
|
6.7%
|
|
$
|
(31.2
|
)
|
|
(2.0%)
|
|
$
|
121.5
|
|
|
870 bps
|
|
47
|
|
|
48
|
|
|
|
July 1,
2017 |
|
April 1,
2017 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Cash and cash equivalents
|
|
$
|
830.4
|
|
|
$
|
668.3
|
|
|
$
|
162.1
|
|
Short-term investments
|
|
740.5
|
|
|
684.7
|
|
|
55.8
|
|
|||
Non-current investments
(a)
|
|
80.1
|
|
|
21.4
|
|
|
58.7
|
|
|||
Long-term debt
(b)
|
|
(590.4
|
)
|
|
(588.2
|
)
|
|
(2.2
|
)
|
|||
Net cash and investments
(c)
|
|
$
|
1,060.6
|
|
|
$
|
786.2
|
|
|
$
|
274.4
|
|
Equity
|
|
$
|
3,360.1
|
|
|
$
|
3,299.6
|
|
|
$
|
60.5
|
|
|
(a)
|
Recorded within other non-current assets in our consolidated balance sheets.
|
(b)
|
See
Note 10
to the accompanying consolidated financial statements for discussion of the carrying value of our long-term debt.
|
(c)
|
"Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt.
|
|
|
Three Months Ended
|
|
|
||||||||
|
|
July 1,
2017 |
|
July 2,
2016 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
334.2
|
|
|
$
|
242.9
|
|
|
$
|
91.3
|
|
Net cash used in investing activities
|
|
(128.5
|
)
|
|
(41.2
|
)
|
|
(87.3
|
)
|
|||
Net cash used in financing activities
|
|
(61.0
|
)
|
|
(186.4
|
)
|
|
125.4
|
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
19.9
|
|
|
(14.6
|
)
|
|
34.5
|
|
|||
Net increase in cash, cash equivalents, and restricted cash
|
|
$
|
164.6
|
|
|
$
|
0.7
|
|
|
$
|
163.9
|
|
|
49
|
|
•
|
a decline in our inventory levels, largely driven by our inventory management initiatives, lower sourcing costs, and the timing of inventory receipts; and
|
•
|
favorable changes in our (i) income tax receivables and payables and (ii) prepaid expenses and other current assets, both largely driven by the timing of cash collections and payments.
|
•
|
a
$120.7 million
increase in purchases of investments, less proceeds from sales and maturities of investments. During the
three months ended July 1, 2017
, we made net investment purchases of
$83.0 million
, as compared to net investment sales of
$37.7 million
during the
three months ended July 2, 2016
.
|
•
|
a
$35.7 million
decline in capital expenditures. During the
three months ended July 1, 2017
, we spent
$41.9 million
on capital expenditures, as compared to
$77.6 million
during the
three months ended July 2, 2016
. Our capital expenditures during the
three months ended July 1, 2017
primarily related to our global retail and department store renovations, new store openings, and the continued enhancements to our global information technology systems.
|
•
|
a
$100.5 million
decline in cash used to repurchase shares of our Class A common stock. During the
three months ended July 1, 2017
,
$14.4 million
in shares of Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during the
three months ended July 2, 2016
, we used $100.0 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional
$14.9 million
in shares of Class A common stock were surrendered or withheld for taxes; and
|
•
|
a
$26.1 million
decline in cash used to repay debt, less proceeds from debt issuances. We did not issue or repay any debt during the
three months ended July 1, 2017
. On a comparative basis, during the
three months ended July 2, 2016
, we issued $943.9 million of commercial paper notes, which was offset by an equal amount of commercial paper repayments. Additionally, we repaid
$26.1 million
of borrowings previously outstanding under our credit facilities during the
three months ended July 2, 2016
.
|
|
50
|
|
|
|
July 1, 2017
|
||||||||||
Description
(a)
|
|
Total
Availability
|
|
Borrowings
Outstanding
|
|
Remaining
Availability
|
||||||
|
|
(millions)
|
||||||||||
Global Credit Facility and Commercial Paper Program
(b)
|
|
$
|
500
|
|
|
$
|
10
|
|
(c)
|
$
|
490
|
|
Pan-Asia Credit Facilities
|
|
48
|
|
|
—
|
|
|
48
|
|
|
(a)
|
As defined in
Note 10
to the accompanying consolidated financial statements.
|
(b)
|
Borrowings under the Commercial Paper Program are supported by the Global Credit Facility. Accordingly, we do not expect combined borrowings outstanding under the Commercial Paper Program and the Global Credit Facility to exceed $500 million.
|
(c)
|
Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of
July 1, 2017
.
|
|
51
|
|
|
52
|
|
|
53
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 4.
|
Controls and Procedures.
|
|
54
|
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
(a)
|
Sales of Unregistered Securities
|
(b)
|
Not Applicable
|
(c)
|
Stock Repurchases
|
|
Total Number of Shares Purchased
(a)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
(b)
|
||||||
|
|
|
|
|
|
|
(millions)
|
||||||
April 2, 2017 to April 29, 2017
|
1,738
|
|
|
$
|
79.82
|
|
|
—
|
|
|
$
|
100
|
|
April 30, 2017 to May 27, 2017
|
125,986
|
|
|
77.24
|
|
|
—
|
|
|
100
|
|
||
May 28, 2017 to July 1, 2017
|
70,174
|
|
|
66.53
|
|
|
—
|
|
|
100
|
|
||
|
197,898
|
|
|
|
|
—
|
|
|
|
|
(a)
|
Represents shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans.
|
(b)
|
Repurchases of shares of Class A common stock are subject to overall business and market conditions.
|
|
55
|
|
Item 5.
|
Other Information.
|
Item 6.
|
Exhibits.
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1/A (File No. 333-24733) filed June 10, 1997).
|
3.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Form 8-K filed August 16, 2011).
|
3.3*
|
Fourth Amended and Restated By-Laws of the Company.
|
10.1*
|
Amendment No. 1 to the Employment Agreement, dated June 30, 2017, between the Company and Patrice Louvet.†
|
10.2*
|
Executive Officer Annual Incentive Plan, as amended as of August 10, 2017.†
|
12.1*
|
Computation of Ratio of Earnings to Fixed Charges.
|
31.1*
|
Certification of Principal Executive Officer pursuant to 17 CFR 240.13a-14(a).
|
31.2*
|
Certification of Principal Financial Officer pursuant to 17 CFR 240.13a-14(a).
|
32.1*
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101*
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at July 1, 2017 and April 1, 2017, (ii) the Consolidated Statements of Operations for the three-month periods ended July 1, 2017 and July 2, 2016, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the three-month periods ended July 1, 2017 and July 2, 2016, (iv) the Consolidated Statements of Cash Flows for the three-month periods ended July 1, 2017 and July 2, 2016, and (v) the Notes to the Consolidated Financial Statements.
|
|
|
56
|
|
|
|
RALPH LAUREN CORPORATION
|
|
|
|
|
By:
|
/
S
/ JANE HAMILTON NIELSEN
|
|
|
Jane Hamilton Nielsen
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
Date: August 10, 2017
|
|
|
|
57
|
|
|
RALPH LAUREN CORPORATION
|
||
|
|
|
|
|
|
|
|
|
By:
|
/s/ JOEL FLEISHMAN
|
|
|
|
Joel Fleishman,
|
|
|
|
Chairman of the Compensation &
|
|
|
|
Organizational Development Committee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
/s/ PATRICE LOUVET
|
|
|
|
Patrice Louvet
|
|
|
|
|
|
|
1.
|
PURPOSE
.
|
2.
|
DEFINITIONS
.
|
3.
|
PARTICIPATION
.
|
4.
|
AWARDS
.
|
5.
|
TERMINATION OF EMPLOYMENT
.
|
6.
|
ADMINISTRATION
.
|
7.
|
MISCELLANEOUS
.
|
Date of Amendment and Adoption by the Board
|
Date of Approval by Stockholders and Plan Effective Date
|
June 27, 2007
|
August 9, 2007
|
June 29, 2012
|
August 9, 2012
|
|
|
Three Months Ended
|
|
Fiscal Years Ended
(a)
|
||||||||||||||||||||
|
|
July 1,
2017 |
|
April 1, 2017
|
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
|
March 30, 2013
|
||||||||||||
|
|
(millions)
|
||||||||||||||||||||||
Earnings, as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) before income taxes
|
|
$
|
86.8
|
|
|
$
|
(104.9
|
)
|
|
$
|
551.8
|
|
|
$
|
987.4
|
|
|
$
|
1,095.8
|
|
|
$
|
1,089.3
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity in losses of equity-method investees
|
|
0.9
|
|
|
5.2
|
|
|
10.9
|
|
|
11.5
|
|
|
9.4
|
|
|
9.5
|
|
||||||
Fixed charges
|
|
41.3
|
|
|
165.9
|
|
|
178.4
|
|
|
172.0
|
|
|
170.2
|
|
|
162.3
|
|
||||||
Subtract:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Earnings available to cover fixed charges
|
|
$
|
129.0
|
|
|
$
|
66.2
|
|
|
$
|
741.1
|
|
|
$
|
1,170.9
|
|
|
$
|
1,275.4
|
|
|
$
|
1,260.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
$
|
5.0
|
|
|
$
|
12.4
|
|
|
$
|
21.0
|
|
|
$
|
16.7
|
|
|
$
|
18.7
|
|
|
$
|
19.1
|
|
Interest component of rent expense
|
|
36.3
|
|
|
153.5
|
|
|
157.4
|
|
|
155.3
|
|
|
151.5
|
|
|
143.2
|
|
||||||
Total fixed charges
|
|
$
|
41.3
|
|
|
$
|
165.9
|
|
|
$
|
178.4
|
|
|
$
|
172.0
|
|
|
$
|
170.2
|
|
|
$
|
162.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
(b)
|
|
3.1
|
|
|
0.4
|
|
|
4.2
|
|
|
6.8
|
|
|
7.5
|
|
|
7.8
|
|
|
(a)
|
The fiscal year ended April 2, 2016 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks.
|
(b)
|
All ratios shown in the above table have been calculated using unrounded numbers.
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: August 10, 2017
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
|
Date: August 10, 2017
|
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
|
August 10, 2017
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
|
August 10, 2017
|
|