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 September 30, 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
|
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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||
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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 6.
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||
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EX-10.1
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EX-10.2
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EX-10.3
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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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September 30,
2017 |
|
April 1,
2017 |
||||
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(millions)
(unaudited)
|
||||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,111.6
|
|
|
$
|
668.3
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|
Short-term investments
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507.1
|
|
|
684.7
|
|
||
Accounts receivable, net of allowances of $248.8 million and $214.4 million
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|
470.3
|
|
|
450.2
|
|
||
Inventories
|
|
864.6
|
|
|
791.5
|
|
||
Income tax receivable
|
|
70.5
|
|
|
79.4
|
|
||
Prepaid expenses and other current assets
|
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300.3
|
|
|
280.4
|
|
||
Total current assets
|
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3,324.4
|
|
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2,954.5
|
|
||
Property and equipment, net
|
|
1,240.5
|
|
|
1,316.0
|
|
||
Deferred tax assets
|
|
143.2
|
|
|
125.9
|
|
||
Goodwill
|
|
933.0
|
|
|
904.6
|
|
||
Intangible assets, net
|
|
207.7
|
|
|
219.8
|
|
||
Other non-current assets
|
|
179.5
|
|
|
131.2
|
|
||
Total assets
|
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$
|
6,028.3
|
|
|
$
|
5,652.0
|
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LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
298.6
|
|
|
$
|
—
|
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Accounts payable
|
|
172.8
|
|
|
147.7
|
|
||
Income tax payable
|
|
56.7
|
|
|
29.5
|
|
||
Accrued expenses and other current liabilities
|
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1,062.0
|
|
|
982.7
|
|
||
Total current liabilities
|
|
1,590.1
|
|
|
1,159.9
|
|
||
Long-term debt
|
|
291.8
|
|
|
588.2
|
|
||
Non-current liability for unrecognized tax benefits
|
|
75.2
|
|
|
62.7
|
|
||
Other non-current liabilities
|
|
561.6
|
|
|
541.6
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
||||
Total liabilities
|
|
2,518.7
|
|
|
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
|
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1.0
|
|
|
0.9
|
|
||
Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding
|
|
0.3
|
|
|
0.3
|
|
||
Additional paid-in-capital
|
|
2,348.2
|
|
|
2,308.8
|
|
||
Retained earnings
|
|
5,874.0
|
|
|
5,751.9
|
|
||
Treasury stock, Class A, at cost; 46.6 million and 46.4 million shares
|
|
(4,578.5
|
)
|
|
(4,563.9
|
)
|
||
Accumulated other comprehensive loss
|
|
(135.4
|
)
|
|
(198.4
|
)
|
||
Total equity
|
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3,509.6
|
|
|
3,299.6
|
|
||
Total liabilities and equity
|
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$
|
6,028.3
|
|
|
$
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5,652.0
|
|
|
3
|
|
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Three Months Ended
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Six Months Ended
|
||||||||||||
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September 30,
2017 |
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October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
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(millions, except per share data)
(unaudited)
|
||||||||||||||
Net revenues
|
|
$
|
1,664.2
|
|
|
$
|
1,820.6
|
|
|
$
|
3,011.3
|
|
|
$
|
3,372.8
|
|
Cost of goods sold
(a)
|
|
(668.4
|
)
|
|
(866.4
|
)
|
|
(1,164.3
|
)
|
|
(1,524.0
|
)
|
||||
Gross profit
|
|
995.8
|
|
|
954.2
|
|
|
1,847.0
|
|
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1,848.8
|
|
||||
Selling, general, and administrative expenses
(a)
|
|
(766.7
|
)
|
|
(803.3
|
)
|
|
(1,475.1
|
)
|
|
(1,618.0
|
)
|
||||
Amortization of intangible assets
|
|
(6.0
|
)
|
|
(6.1
|
)
|
|
(12.0
|
)
|
|
(12.1
|
)
|
||||
Impairment of assets
|
|
(11.2
|
)
|
|
(27.0
|
)
|
|
(20.9
|
)
|
|
(46.4
|
)
|
||||
Restructuring and other charges
(a)
|
|
(18.6
|
)
|
|
(41.5
|
)
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|
(55.4
|
)
|
|
(127.2
|
)
|
||||
Total other operating expenses, net
|
|
(802.5
|
)
|
|
(877.9
|
)
|
|
(1,563.4
|
)
|
|
(1,803.7
|
)
|
||||
Operating income
|
|
193.3
|
|
|
76.3
|
|
|
283.6
|
|
|
45.1
|
|
||||
Foreign currency gains
|
|
1.7
|
|
|
1.1
|
|
|
1.8
|
|
|
3.5
|
|
||||
Interest expense
|
|
(4.6
|
)
|
|
(4.1
|
)
|
|
(9.6
|
)
|
|
(7.5
|
)
|
||||
Interest and other income, net
|
|
2.0
|
|
|
2.3
|
|
|
4.3
|
|
|
3.2
|
|
||||
Equity in losses of equity-method investees
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(2.1
|
)
|
|
(3.8
|
)
|
||||
Income before income taxes
|
|
191.2
|
|
|
73.7
|
|
|
278.0
|
|
|
40.5
|
|
||||
Income tax provision
|
|
(47.4
|
)
|
|
(28.0
|
)
|
|
(74.7
|
)
|
|
(17.1
|
)
|
||||
Net income
|
|
$
|
143.8
|
|
|
$
|
45.7
|
|
|
$
|
203.3
|
|
|
$
|
23.4
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.76
|
|
|
$
|
0.55
|
|
|
$
|
2.49
|
|
|
$
|
0.28
|
|
Diluted
|
|
$
|
1.75
|
|
|
$
|
0.55
|
|
|
$
|
2.47
|
|
|
$
|
0.28
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
81.7
|
|
|
82.7
|
|
|
81.6
|
|
|
83.0
|
|
||||
Diluted
|
|
82.3
|
|
|
83.2
|
|
|
82.4
|
|
|
83.7
|
|
||||
Dividends declared per share
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
(a)
Includes total depreciation expense of:
|
|
$
|
(67.8
|
)
|
|
$
|
(69.5
|
)
|
|
$
|
(134.7
|
)
|
|
$
|
(141.9
|
)
|
|
4
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
(unaudited)
|
||||||||||||||
Net income
|
|
$
|
143.8
|
|
|
$
|
45.7
|
|
|
$
|
203.3
|
|
|
$
|
23.4
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gains
|
|
31.1
|
|
|
11.1
|
|
|
87.7
|
|
|
2.1
|
|
||||
Net gains (losses) on cash flow hedges
|
|
(2.3
|
)
|
|
0.5
|
|
|
(24.3
|
)
|
|
(1.8
|
)
|
||||
Net gains (losses) on defined benefit plans
|
|
(0.1
|
)
|
|
0.5
|
|
|
(0.4
|
)
|
|
0.9
|
|
||||
Other comprehensive income, net of tax
|
|
28.7
|
|
|
12.1
|
|
|
63.0
|
|
|
1.2
|
|
||||
Total comprehensive income
|
|
$
|
172.5
|
|
|
$
|
57.8
|
|
|
$
|
266.3
|
|
|
$
|
24.6
|
|
|
5
|
|
|
|
Six Months Ended
|
||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
||||
|
|
(millions)
(unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
203.3
|
|
|
$
|
23.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
146.7
|
|
|
154.0
|
|
||
Deferred income tax benefit
|
|
(25.3
|
)
|
|
(8.7
|
)
|
||
Equity in losses of equity-method investees
|
|
2.1
|
|
|
3.8
|
|
||
Non-cash stock-based compensation expense
|
|
39.4
|
|
|
31.9
|
|
||
Non-cash impairment of assets
|
|
20.9
|
|
|
46.4
|
|
||
Non-cash restructuring-related inventory charges
|
|
1.3
|
|
|
135.0
|
|
||
Other non-cash charges
|
|
2.3
|
|
|
9.9
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(17.4
|
)
|
|
21.9
|
|
||
Inventories
|
|
(53.4
|
)
|
|
(172.6
|
)
|
||
Prepaid expenses and other current assets
|
|
(1.9
|
)
|
|
(26.6
|
)
|
||
Accounts payable and accrued liabilities
|
|
72.2
|
|
|
59.8
|
|
||
Income tax receivables and payables
|
|
51.4
|
|
|
(22.0
|
)
|
||
Deferred income
|
|
3.0
|
|
|
(12.2
|
)
|
||
Other balance sheet changes
|
|
(7.6
|
)
|
|
(11.4
|
)
|
||
Net cash provided by operating activities
|
|
437.0
|
|
|
232.6
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(74.7
|
)
|
|
(165.4
|
)
|
||
Purchases of investments
|
|
(426.3
|
)
|
|
(392.4
|
)
|
||
Proceeds from sales and maturities of investments
|
|
591.3
|
|
|
546.6
|
|
||
Acquisitions and ventures
|
|
(3.6
|
)
|
|
(2.5
|
)
|
||
Net cash provided by (used in) investing activities
|
|
86.7
|
|
|
(13.7
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from issuance of short-term debt
|
|
—
|
|
|
2,945.3
|
|
||
Repayments of short-term debt
|
|
—
|
|
|
(2,966.4
|
)
|
||
Payments of capital lease obligations
|
|
(14.2
|
)
|
|
(13.3
|
)
|
||
Payments of dividends
|
|
(81.1
|
)
|
|
(82.6
|
)
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(14.6
|
)
|
|
(114.9
|
)
|
||
Proceeds from exercise of stock options
|
|
0.1
|
|
|
4.0
|
|
||
Net cash used in financing activities
|
|
(109.8
|
)
|
|
(227.9
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
33.2
|
|
|
(12.9
|
)
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
447.1
|
|
|
(21.9
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
711.8
|
|
|
502.1
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
1,158.9
|
|
|
$
|
480.2
|
|
|
6
|
|
1.
|
Description of Business
|
2.
|
Basis of Presentation
|
|
7
|
|
3.
|
Summary of Significant Accounting Policies
|
|
8
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Shipping costs
|
|
$
|
9.4
|
|
|
$
|
10.1
|
|
|
$
|
16.7
|
|
|
$
|
19.4
|
|
Handling costs
|
|
38.4
|
|
|
42.7
|
|
|
75.6
|
|
|
83.7
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||
|
|
(millions)
|
||||||||||
Basic shares
|
|
81.7
|
|
|
82.7
|
|
|
81.6
|
|
|
83.0
|
|
Dilutive effect of stock options and RSUs
|
|
0.6
|
|
|
0.5
|
|
|
0.8
|
|
|
0.7
|
|
Diluted shares
|
|
82.3
|
|
|
83.2
|
|
|
82.4
|
|
|
83.7
|
|
|
9
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Beginning reserve balance
|
|
$
|
199.6
|
|
|
$
|
207.0
|
|
|
$
|
202.8
|
|
|
$
|
239.7
|
|
Amount charged against revenue to increase reserve
|
|
175.6
|
|
|
195.8
|
|
|
293.3
|
|
|
327.8
|
|
||||
Amount credited against customer accounts to decrease reserve
|
|
(146.2
|
)
|
|
(174.9
|
)
|
|
(272.2
|
)
|
|
(339.3
|
)
|
||||
Foreign currency translation
|
|
2.5
|
|
|
1.0
|
|
|
7.6
|
|
|
0.7
|
|
||||
Ending reserve balance
|
|
$
|
231.5
|
|
|
$
|
228.9
|
|
|
$
|
231.5
|
|
|
$
|
228.9
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Beginning reserve balance
|
|
$
|
13.9
|
|
|
$
|
16.2
|
|
|
$
|
11.6
|
|
|
$
|
14.5
|
|
Amount recorded to expense to increase reserve
(a)
|
|
3.8
|
|
|
2.1
|
|
|
6.3
|
|
|
6.0
|
|
||||
Amount written-off against customer accounts to decrease reserve
|
|
(0.7
|
)
|
|
(2.6
|
)
|
|
(1.4
|
)
|
|
(4.6
|
)
|
||||
Foreign currency translation
|
|
0.3
|
|
|
0.1
|
|
|
0.8
|
|
|
(0.1
|
)
|
||||
Ending reserve balance
|
|
$
|
17.3
|
|
|
$
|
15.8
|
|
|
$
|
17.3
|
|
|
$
|
15.8
|
|
|
(a)
|
Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.
|
|
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
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Land and improvements
|
|
$
|
16.8
|
|
|
$
|
16.8
|
|
Buildings and improvements
|
|
458.5
|
|
|
457.2
|
|
||
Furniture and fixtures
|
|
658.2
|
|
|
687.2
|
|
||
Machinery and equipment
|
|
422.7
|
|
|
414.0
|
|
||
Capitalized software
|
|
564.1
|
|
|
549.0
|
|
||
Leasehold improvements
|
|
1,179.5
|
|
|
1,179.1
|
|
||
Construction in progress
|
|
29.2
|
|
|
33.4
|
|
||
|
|
3,329.0
|
|
|
3,336.7
|
|
||
Less: accumulated depreciation
|
|
(2,088.5
|
)
|
|
(2,020.7
|
)
|
||
Property and equipment, net
|
|
$
|
1,240.5
|
|
|
$
|
1,316.0
|
|
|
14
|
|
6.
|
Other Assets and Liabilities
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Other taxes receivable
|
|
$
|
143.9
|
|
|
$
|
127.8
|
|
Prepaid rent expense
|
|
43.7
|
|
|
37.4
|
|
||
Derivative financial instruments
|
|
15.3
|
|
|
23.0
|
|
||
Restricted cash
|
|
13.3
|
|
|
9.8
|
|
||
Tenant allowances receivable
|
|
10.1
|
|
|
16.4
|
|
||
Prepaid samples
|
|
8.7
|
|
|
5.9
|
|
||
Prepaid software maintenance
|
|
7.2
|
|
|
6.5
|
|
||
Prepaid advertising and marketing
|
|
4.9
|
|
|
4.1
|
|
||
Other prepaid expenses and current assets
|
|
53.2
|
|
|
49.5
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
300.3
|
|
|
$
|
280.4
|
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Non-current investments
|
|
$
|
82.6
|
|
|
$
|
21.4
|
|
Restricted cash
|
|
34.0
|
|
|
33.7
|
|
||
Security deposits
|
|
27.7
|
|
|
26.5
|
|
||
Derivative financial instruments
|
|
0.4
|
|
|
9.6
|
|
||
Other non-current assets
|
|
34.8
|
|
|
40.0
|
|
||
Total other non-current assets
|
|
$
|
179.5
|
|
|
$
|
131.2
|
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Other taxes payable
|
|
$
|
212.5
|
|
|
$
|
172.2
|
|
Accrued operating expenses
|
|
212.4
|
|
|
188.0
|
|
||
Accrued inventory
|
|
179.9
|
|
|
154.9
|
|
||
Accrued payroll and benefits
|
|
177.6
|
|
|
173.5
|
|
||
Restructuring reserve
|
|
95.1
|
|
|
140.8
|
|
||
Derivative financial instruments
|
|
48.5
|
|
|
12.3
|
|
||
Dividends payable
|
|
40.6
|
|
|
40.5
|
|
||
Accrued capital expenditures
|
|
37.5
|
|
|
45.7
|
|
||
Deferred income
|
|
33.1
|
|
|
29.7
|
|
||
Capital lease obligations
|
|
22.1
|
|
|
22.6
|
|
||
Other accrued expenses and current liabilities
|
|
2.7
|
|
|
2.5
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
1,062.0
|
|
|
$
|
982.7
|
|
|
15
|
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Capital lease obligations
|
|
$
|
242.6
|
|
|
$
|
250.9
|
|
Deferred rent obligations
|
|
208.5
|
|
|
211.1
|
|
||
Derivative financial instruments
|
|
30.9
|
|
|
9.4
|
|
||
Deferred compensation
|
|
7.3
|
|
|
7.8
|
|
||
Deferred tax liabilities
|
|
7.0
|
|
|
11.8
|
|
||
Other non-current liabilities
|
|
65.3
|
|
|
50.6
|
|
||
Total other non-current liabilities
|
|
$
|
561.6
|
|
|
$
|
541.6
|
|
7.
|
Impairment of Assets
|
8.
|
Restructuring and Other Charges
|
|
16
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
|
Cumulative Charges
|
||||||||||
|
|
(millions)
|
||||||||||||||||||
Cash-related restructuring charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance and benefit costs
|
|
$
|
6.2
|
|
|
$
|
24.5
|
|
|
$
|
17.9
|
|
|
$
|
101.6
|
|
|
$
|
200.6
|
|
Lease termination and store closure costs
|
|
5.4
|
|
|
12.9
|
|
|
17.6
|
|
|
14.7
|
|
|
104.9
|
|
|||||
Other cash charges
|
|
5.7
|
|
|
4.1
|
|
|
8.4
|
|
|
6.0
|
|
|
27.5
|
|
|||||
Total cash-related restructuring charges
|
|
17.3
|
|
|
41.5
|
|
|
43.9
|
|
|
122.3
|
|
|
333.0
|
|
|||||
Non-cash charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impairment of assets (see Note 7)
|
|
2.1
|
|
|
27.0
|
|
|
11.8
|
|
|
46.4
|
|
|
246.4
|
|
|||||
Inventory-related charges
(a)
|
|
0.6
|
|
|
81.0
|
|
|
1.3
|
|
|
135.0
|
|
|
199.2
|
|
|||||
Total non-cash charges
|
|
2.7
|
|
|
108.0
|
|
|
13.1
|
|
|
181.4
|
|
|
445.6
|
|
|||||
Total charges
|
|
$
|
20.0
|
|
|
$
|
149.5
|
|
|
$
|
57.0
|
|
|
$
|
303.7
|
|
|
$
|
778.6
|
|
|
(a)
|
Cumulative inventory-related charges include
$155.2 million
associated with the destruction of inventory out of current liquidation channels, of which
$63.5 million
and
$113.8 million
was recorded during the
three-month and six-month periods ended
October 1, 2016
, respectively. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
|
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
|
|
17.9
|
|
|
17.6
|
|
|
8.4
|
|
|
43.9
|
|
||||
Cash payments charged against reserve
|
|
(54.9
|
)
|
|
(12.5
|
)
|
|
(8.0
|
)
|
|
(75.4
|
)
|
||||
Non-cash adjustments
|
|
0.9
|
|
|
5.5
|
|
|
—
|
|
|
6.4
|
|
||||
Balance at September 30, 2017
|
|
$
|
58.2
|
|
|
$
|
44.9
|
|
|
$
|
7.0
|
|
|
$
|
110.1
|
|
|
17
|
|
|
|
October 1, 2016
|
|
|
||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
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
|
|
|||
Inventory-related charges
(a)
|
|
—
|
|
|
—
|
|
|
20.4
|
|
|||
Accelerated stock-based compensation expense
(b)
|
|
—
|
|
|
—
|
|
|
8.9
|
|
|||
Total non-cash charges
|
|
—
|
|
|
—
|
|
|
56.5
|
|
|||
Total charges
|
|
$
|
—
|
|
|
$
|
4.9
|
|
|
$
|
147.4
|
|
|
(a)
|
Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.
|
(b)
|
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.
|
|
|
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
|
|
(2.7
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
(4.1
|
)
|
||||
Balance at September 30, 2017
|
|
$
|
5.9
|
|
|
$
|
2.0
|
|
|
$
|
0.2
|
|
|
$
|
8.1
|
|
|
18
|
|
9.
|
Income Taxes
|
|
19
|
|
10.
|
Debt
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
$300 million 2.125% Senior Notes
(a)
|
|
$
|
298.6
|
|
|
$
|
298.1
|
|
$300 million 2.625% Senior Notes
(b)
|
|
291.8
|
|
|
290.1
|
|
||
Total debt
|
|
590.4
|
|
|
588.2
|
|
||
Less: current portion of long-term debt
|
|
298.6
|
|
|
—
|
|
||
Long-term debt
|
|
$
|
291.8
|
|
|
$
|
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
September 30, 2017
and
April 1, 2017
reflects adjustments of
$0.9 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
$0.5 million
and
$0.7 million
as of
September 30, 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
September 30, 2017
and
April 1, 2017
reflects adjustments of
$6.7 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
September 30, 2017
and
April 1, 2017
, respectively.
|
|
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, 2018
.
|
|
21
|
|
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.
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Derivative assets
(a)
|
|
$
|
15.7
|
|
|
$
|
32.6
|
|
Derivative liabilities
(a)
|
|
79.4
|
|
|
21.7
|
|
|
(a)
|
Based on Level 2 measurements.
|
|
22
|
|
|
|
September 30, 2017
|
|
April 1, 2017
|
||||||||||||
|
|
Carrying Value
(a)
|
|
Fair Value
(b)
|
|
Carrying Value
(a)
|
|
Fair Value
(b)
|
||||||||
|
|
(millions)
|
||||||||||||||
$300 million 2.125% Senior Notes
|
|
$
|
298.6
|
|
|
$
|
301.6
|
|
|
$
|
298.1
|
|
|
$
|
302.2
|
|
$300 million 2.625% Senior Notes
|
|
291.8
|
|
|
304.6
|
|
|
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.
|
|
23
|
|
12.
|
Financial Instruments
|
|
|
Notional Amounts
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||
Derivative Instrument
(a)
|
|
September 30,
2017 |
|
April 1,
2017 |
|
September 30,
2017 |
|
April 1,
2017 |
|
September 30,
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
|
|
$
|
503.2
|
|
|
$
|
533.2
|
|
|
(d)
|
|
$
|
3.9
|
|
|
PP
|
|
$
|
17.7
|
|
|
(e)
|
|
$
|
12.1
|
|
|
AE
|
|
$
|
3.7
|
|
IRS — Fixed-rate debt
|
|
600.0
|
|
|
600.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
(f)
|
|
7.7
|
|
|
ONCL
|
|
9.4
|
|
||||||
CCS — NI
|
|
652.7
|
|
|
591.2
|
|
|
|
|
—
|
|
|
ONCA
|
|
9.6
|
|
|
(g)
|
|
55.0
|
|
|
|
|
—
|
|
||||||
Total Designated Hedges
|
|
1,755.9
|
|
|
1,724.4
|
|
|
|
|
3.9
|
|
|
|
|
27.3
|
|
|
|
|
74.8
|
|
|
|
|
13.1
|
|
||||||
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FC — Undesignated hedges
(c)
|
|
400.2
|
|
|
375.1
|
|
|
PP
|
|
11.8
|
|
|
PP
|
|
5.3
|
|
|
AE
|
|
4.6
|
|
|
AE
|
|
8.6
|
|
||||||
Total Hedges
|
|
$
|
2,156.1
|
|
|
$
|
2,099.5
|
|
|
|
|
$
|
15.7
|
|
|
|
|
$
|
32.6
|
|
|
|
|
$
|
79.4
|
|
|
|
|
$
|
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.
|
(d)
|
$3.5 million
included within prepaid expenses and other current assets and
$0.4 million
included within other non-current assets.
|
(e)
|
$12.0 million
included within accrued expenses and other current liabilities and
$0.1 million
included within other non-current liabilities.
|
(f)
|
$1.0 million
included within accrued expenses and other current liabilities and
$6.7 million
included within other non-current liabilities.
|
(g)
|
$30.9 million
included within accrued expenses and other current liabilities and
$24.1 million
included within other non-current liabilities.
|
|
24
|
|
|
|
September 30, 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
|
|
$
|
15.7
|
|
|
$
|
(9.1
|
)
|
|
$
|
6.6
|
|
|
$
|
32.6
|
|
|
$
|
(18.3
|
)
|
|
$
|
14.3
|
|
Derivative liabilities
|
|
79.4
|
|
|
(9.1
|
)
|
|
70.3
|
|
|
21.7
|
|
|
(18.3
|
)
|
|
3.4
|
|
|
|
Gains (Losses)
Recognized in OCI
|
|
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
|
|
||||||||
|
|
(millions)
|
|
|
||||||||||||||
Designated Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
FC — Cash flow hedges
|
|
$
|
(6.8
|
)
|
|
$
|
(6.3
|
)
|
|
$
|
(25.9
|
)
|
|
$
|
(11.5
|
)
|
|
|
CCS — NI
(a)
|
|
(22.4
|
)
|
|
(5.9
|
)
|
|
(62.7
|
)
|
|
7.1
|
|
|
|
||||
Total Designated Hedges
|
|
$
|
(29.2
|
)
|
|
$
|
(12.2
|
)
|
|
$
|
(88.6
|
)
|
|
$
|
(4.4
|
)
|
|
|
|
|
Gains (Losses) Reclassified
from AOCI to Earnings
|
|
Location of Gains (Losses)
Reclassified from
AOCI to Earnings
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
|
|||||||||
|
|
(millions)
|
|
|
||||||||||||||
Designated Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
FC — Cash flow hedges
|
|
$
|
(2.4
|
)
|
|
$
|
(4.8
|
)
|
|
$
|
1.6
|
|
|
$
|
(1.5
|
)
|
|
Cost of goods sold
|
FC — Cash flow hedges
|
|
(0.4
|
)
|
|
(1.3
|
)
|
|
(1.0
|
)
|
|
(6.0
|
)
|
|
Foreign currency gains (losses)
|
||||
Total Designated Hedges
|
|
$
|
(2.8
|
)
|
|
$
|
(6.1
|
)
|
|
$
|
0.6
|
|
|
$
|
(7.5
|
)
|
|
|
|
(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.
|
|
25
|
|
|
|
Gains (Losses)
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
|
|||||||||
|
|
(millions)
|
|
|
||||||||||||||
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
FC — Undesignated hedges
|
|
$
|
(0.5
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
2.1
|
|
|
$
|
(11.3
|
)
|
|
Foreign currency gains (losses)
|
Total Undesignated Hedges
|
|
$
|
(0.5
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
2.1
|
|
|
$
|
(11.3
|
)
|
|
|
|
26
|
|
13.
|
Commitments and Contingencies
|
|
27
|
|
14.
|
Equity
|
|
|
Six Months Ended
|
||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
||||
|
|
(millions)
|
||||||
Balance at beginning of period
|
|
$
|
3,299.6
|
|
|
$
|
3,743.5
|
|
Comprehensive income
|
|
266.3
|
|
|
24.6
|
|
||
Dividends declared
|
|
(81.2
|
)
|
|
(82.2
|
)
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(14.6
|
)
|
|
(114.9
|
)
|
||
Stock-based compensation
|
|
39.4
|
|
|
31.9
|
|
||
Shares issued and tax benefits (shortfalls) recognized pursuant to stock-based compensation arrangements
|
|
0.1
|
|
|
(5.0
|
)
|
||
Balance at end of period
|
|
$
|
3,509.6
|
|
|
$
|
3,597.9
|
|
|
|
Six Months Ended
|
||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
||||
|
|
(millions)
|
||||||
Cost of shares repurchased
|
|
$
|
—
|
|
|
$
|
100.0
|
|
Number of shares repurchased
|
|
0.0
|
|
|
1.0
|
|
|
28
|
|
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
|
|
2.1
|
|
|
(8.1
|
)
|
|
—
|
|
|
(6.0
|
)
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
6.3
|
|
|
0.9
|
|
|
7.2
|
|
||||
Other comprehensive income (loss), net of tax
|
|
2.1
|
|
|
(1.8
|
)
|
|
0.9
|
|
|
1.2
|
|
||||
Balance at October 1, 2016
|
|
$
|
(155.5
|
)
|
|
$
|
(13.8
|
)
|
|
$
|
(11.0
|
)
|
|
$
|
(180.3
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at April 1, 2017
|
|
$
|
(206.2
|
)
|
|
$
|
14.6
|
|
|
$
|
(6.8
|
)
|
|
$
|
(198.4
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
87.7
|
|
|
(23.9
|
)
|
|
(0.7
|
)
|
|
63.1
|
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
(0.4
|
)
|
|
0.3
|
|
|
(0.1
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
87.7
|
|
|
(24.3
|
)
|
|
(0.4
|
)
|
|
63.0
|
|
||||
Balance at September 30, 2017
|
|
$
|
(118.5
|
)
|
|
$
|
(9.7
|
)
|
|
$
|
(7.2
|
)
|
|
$
|
(135.4
|
)
|
|
(a)
|
OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes an income tax benefit of
$20.1 million
for the
six months ended
September 30, 2017
, and is net of an income tax provision of
$2.3 million
for the
six months ended
October 1, 2016
. OCI before reclassifications to earnings for the
six-month periods ended
September 30, 2017
and
October 1, 2016
include a loss of
$39.0 million
(net of a
$23.7 million
income tax benefit) and a gain of
$4.4 million
(net of a
$2.7 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
$2.0 million
and
$3.4 million
for the
six-month periods ended
September 30, 2017
and
October 1, 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.
|
|
29
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Location of Gains (Losses)
Reclassified from AOCI
to Earnings
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
|
|||||||||
|
|
(millions)
|
|
|
||||||||||||||
Gains (losses) on cash flow hedges
(a)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||
FC
—
Cash flow hedges
|
|
$
|
(2.4
|
)
|
|
$
|
(4.8
|
)
|
|
$
|
1.6
|
|
|
$
|
(1.5
|
)
|
|
Cost of goods sold
|
FC
—
Cash flow hedges
|
|
(0.4
|
)
|
|
(1.3
|
)
|
|
(1.0
|
)
|
|
(6.0
|
)
|
|
Foreign currency gains (losses)
|
||||
Tax effect
|
|
—
|
|
|
0.8
|
|
|
(0.2
|
)
|
|
1.2
|
|
|
Income tax benefit (provision)
|
||||
Net of tax
|
|
$
|
(2.8
|
)
|
|
$
|
(5.3
|
)
|
|
$
|
0.4
|
|
|
$
|
(6.3
|
)
|
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts.
|
16.
|
Stock-based Compensation
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Compensation expense
|
|
$
|
17.8
|
|
|
$
|
14.2
|
|
|
$
|
39.4
|
|
(a)
|
$
|
31.9
|
|
Income tax benefit
|
|
(6.7
|
)
|
|
(5.2
|
)
|
|
(14.6
|
)
|
|
(11.7
|
)
|
|
(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 first quarter of Fiscal 2018 (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.
|
|
30
|
|
|
|
Number of Options
|
|
|
|
(thousands)
|
|
Options outstanding at April 1, 2017
|
|
1,720
|
|
Granted
|
|
—
|
|
Exercised
|
|
—
|
|
Cancelled/Forfeited
|
|
(502
|
)
|
Options outstanding at September 30, 2017
|
|
1,218
|
|
|
|
Number of Shares
|
||||
|
|
Restricted Stock
|
|
Service-based RSUs
|
||
|
|
(thousands)
|
||||
Nonvested at April 1, 2017
|
|
19
|
|
|
922
|
|
Granted
|
|
—
|
|
|
678
|
|
Vested
|
|
—
|
|
|
(317
|
)
|
Forfeited
|
|
—
|
|
|
(116
|
)
|
Nonvested at September 30, 2017
|
|
19
|
|
|
1,167
|
|
|
31
|
|
|
|
Number of Shares
|
||||
|
|
Performance-based
RSUs — without
TSR Modifier
|
|
Performance-based
RSUs — with
TSR Modifier
|
||
|
|
(thousands)
|
||||
Nonvested at April 1, 2017
|
|
788
|
|
|
61
|
|
Granted
|
|
585
|
|
|
—
|
|
Change due to performance/market condition achievement
|
|
(12
|
)
|
|
(21
|
)
|
Vested
|
|
(149
|
)
|
|
(40
|
)
|
Forfeited
|
|
(24
|
)
|
|
—
|
|
Nonvested at September 30, 2017
|
|
1,188
|
|
|
—
|
|
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.
|
|
32
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
876.7
|
|
|
$
|
1,044.8
|
|
|
$
|
1,586.4
|
|
|
$
|
1,900.4
|
|
Europe
|
|
463.0
|
|
|
445.8
|
|
|
786.5
|
|
|
823.4
|
|
||||
Asia
|
|
216.8
|
|
|
216.5
|
|
|
425.9
|
|
|
427.6
|
|
||||
Other non-reportable segments
|
|
107.7
|
|
|
113.5
|
|
|
212.5
|
|
|
221.4
|
|
||||
Total net revenues
|
|
$
|
1,664.2
|
|
|
$
|
1,820.6
|
|
|
$
|
3,011.3
|
|
|
$
|
3,372.8
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Operating income (loss)
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
202.7
|
|
|
$
|
202.4
|
|
|
$
|
353.2
|
|
|
$
|
368.2
|
|
Europe
|
|
125.5
|
|
|
100.4
|
|
|
192.6
|
|
|
175.4
|
|
||||
Asia
|
|
26.5
|
|
|
(65.8
|
)
|
|
56.7
|
|
|
(103.6
|
)
|
||||
Other non-reportable segments
|
|
26.3
|
|
|
30.0
|
|
|
59.3
|
|
|
57.8
|
|
||||
|
|
381.0
|
|
|
267.0
|
|
|
661.8
|
|
|
497.8
|
|
||||
Unallocated corporate expenses
|
|
(169.1
|
)
|
|
(149.2
|
)
|
|
(322.8
|
)
|
|
(325.5
|
)
|
||||
Unallocated restructuring and other charges
(b)
|
|
(18.6
|
)
|
|
(41.5
|
)
|
|
(55.4
|
)
|
|
(127.2
|
)
|
||||
Total operating income
|
|
$
|
193.3
|
|
|
$
|
76.3
|
|
|
$
|
283.6
|
|
|
$
|
45.1
|
|
|
(a)
|
Segment operating income (loss) and unallocated corporate expenses during the
three-month and six-month periods ended
September 30, 2017
and
October 1, 2016
included certain restructuring-related inventory charges (see Note 8) and asset impairment charges (see Note 7), which are detailed below:
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Restructuring-related inventory charges:
|
|
|
|
|
|
|
|
|
||||||||
|
North America
|
|
$
|
(0.1
|
)
|
|
$
|
(17.9
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(24.8
|
)
|
|
Europe
|
|
(0.1
|
)
|
|
(4.6
|
)
|
|
(0.1
|
)
|
|
(12.5
|
)
|
||||
|
Asia
|
|
—
|
|
|
(57.8
|
)
|
|
—
|
|
|
(94.1
|
)
|
||||
|
Other non-reportable segments
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|
(0.4
|
)
|
|
(3.6
|
)
|
||||
|
Total restructuring-related inventory charges
|
|
$
|
(0.6
|
)
|
|
$
|
(81.0
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(135.0
|
)
|
|
33
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Asset impairment charges:
|
|
|
|
|
|
|
|
|
||||||||
|
North America
|
|
$
|
(0.3
|
)
|
|
$
|
(6.9
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
(7.7
|
)
|
|
Europe
|
|
—
|
|
|
(0.2
|
)
|
|
(1.2
|
)
|
|
(1.6
|
)
|
||||
|
Asia
|
|
(0.8
|
)
|
|
(19.0
|
)
|
|
(0.9
|
)
|
|
(35.5
|
)
|
||||
|
Other non-reportable segments
|
|
(8.5
|
)
|
|
(0.9
|
)
|
|
(8.6
|
)
|
|
(1.0
|
)
|
||||
|
Unallocated corporate expenses
|
|
(1.6
|
)
|
|
—
|
|
|
(9.3
|
)
|
|
(0.6
|
)
|
||||
|
Total asset impairment charges
|
|
$
|
(11.2
|
)
|
|
$
|
(27.0
|
)
|
|
$
|
(20.9
|
)
|
|
$
|
(46.4
|
)
|
(b)
|
The
three-month and six-month periods ended
September 30, 2017
and
October 1, 2016
included certain unallocated restructuring and other charges (see
Note 8
), which are detailed below:
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Unallocated restructuring and other charges:
|
|
|
|
|
|
|
|
|
||||||||
|
North America-related
|
|
$
|
(1.2
|
)
|
|
$
|
(4.5
|
)
|
|
$
|
(13.2
|
)
|
|
$
|
(22.5
|
)
|
|
Europe-related
|
|
(5.0
|
)
|
|
(5.9
|
)
|
|
(5.1
|
)
|
|
(16.4
|
)
|
||||
|
Asia-related
|
|
(2.4
|
)
|
|
(6.8
|
)
|
|
0.9
|
|
|
(8.3
|
)
|
||||
|
Other non-reportable segment-related
|
|
(2.0
|
)
|
|
(1.0
|
)
|
|
(6.8
|
)
|
|
(3.1
|
)
|
||||
|
Corporate-related
|
|
(6.7
|
)
|
|
(23.3
|
)
|
|
(19.7
|
)
|
|
(76.9
|
)
|
||||
|
Unallocated restructuring charges
|
|
(17.3
|
)
|
|
(41.5
|
)
|
|
(43.9
|
)
|
|
(127.2
|
)
|
||||
|
Other charges (see Note 8)
|
|
(1.3
|
)
|
|
—
|
|
|
(11.5
|
)
|
|
—
|
|
||||
|
Total unallocated restructuring and other charges
|
|
$
|
(18.6
|
)
|
|
$
|
(41.5
|
)
|
|
$
|
(55.4
|
)
|
|
$
|
(127.2
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
20.6
|
|
|
$
|
26.7
|
|
|
$
|
41.6
|
|
|
$
|
56.2
|
|
Europe
|
|
8.6
|
|
|
7.1
|
|
|
16.6
|
|
|
14.9
|
|
||||
Asia
|
|
12.1
|
|
|
12.2
|
|
|
23.6
|
|
|
25.5
|
|
||||
Other non-reportable segments
|
|
2.8
|
|
|
4.1
|
|
|
5.6
|
|
|
7.6
|
|
||||
Unallocated corporate expenses
|
|
26.2
|
|
|
25.5
|
|
|
52.3
|
|
|
49.8
|
|
||||
Unallocated restructuring and other charges (see Note 8)
|
|
3.5
|
|
|
—
|
|
|
7.0
|
|
|
—
|
|
||||
Total depreciation and amortization
|
|
$
|
73.8
|
|
|
$
|
75.6
|
|
|
$
|
146.7
|
|
|
$
|
154.0
|
|
|
34
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Net revenues
(a)
:
|
|
|
|
|
|
|
|
|
||||||||
The Americas
(b)
|
|
$
|
980.8
|
|
|
$
|
1,155.1
|
|
|
$
|
1,792.3
|
|
|
$
|
2,115.7
|
|
Europe
(c)
|
|
466.1
|
|
|
448.5
|
|
|
792.3
|
|
|
828.7
|
|
||||
Asia
(d)
|
|
217.3
|
|
|
217.0
|
|
|
426.7
|
|
|
428.4
|
|
||||
Total net revenues
|
|
$
|
1,664.2
|
|
|
$
|
1,820.6
|
|
|
$
|
3,011.3
|
|
|
$
|
3,372.8
|
|
|
(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 and six-month periods ended
September 30, 2017
were
$917.9 million
and
$1.683 billion
, respectively, and
$1.092 billion
and
$2.002 billion
during the
three-month and six-month periods ended
October 1, 2016
, respectively.
|
(c)
|
Includes the Middle East.
|
(d)
|
Includes Australia and New Zealand.
|
18.
|
Additional Financial Information
|
|
|
September 30,
2017 |
|
April 1,
2017 |
||||
|
|
(millions)
|
||||||
Cash and cash equivalents
|
|
$
|
1,111.6
|
|
|
$
|
668.3
|
|
Restricted cash included within prepaid expenses and other current assets
|
|
13.3
|
|
|
9.8
|
|
||
Restricted cash included within other non-current assets
|
|
34.0
|
|
|
33.7
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
1,158.9
|
|
|
$
|
711.8
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Cash paid for interest
|
|
$
|
3.0
|
|
|
$
|
3.2
|
|
|
$
|
5.6
|
|
|
$
|
6.8
|
|
Cash paid for income taxes
|
|
7.5
|
|
|
32.8
|
|
|
28.3
|
|
|
50.3
|
|
|
35
|
|
|
36
|
|
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;
|
|
37
|
|
•
|
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.
|
|
38
|
|
•
|
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-month and six-month periods ended
September 30, 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-month and six-month periods ended
September 30, 2017
as compared to the
three-month and six-month periods ended
October 1, 2016
.
|
•
|
Financial condition and liquidity.
This section provides a discussion of our financial condition and liquidity as of
September 30, 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
six months ended
September 30, 2017
as compared to the
six months ended
October 1, 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.
|
|
39
|
|
•
|
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.
|
•
|
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.
|
|
40
|
|
|
41
|
|
|
42
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
September 30,
2017 |
|
October 1,
2016 |
||||||||
|
|
(millions)
|
||||||||||||||
Impairment of assets (see Note 7)
|
|
$
|
(11.2
|
)
|
|
$
|
(27.0
|
)
|
|
$
|
(20.9
|
)
|
|
$
|
(46.4
|
)
|
Restructuring and other charges (see Note 8)
|
|
(18.6
|
)
|
|
(41.5
|
)
|
|
(55.4
|
)
|
|
(127.2
|
)
|
||||
Restructuring-related inventory charges (see Note 8)
(a)
|
|
(0.6
|
)
|
|
(81.0
|
)
|
|
(1.3
|
)
|
|
(135.0
|
)
|
||||
Total charges
|
|
$
|
(30.4
|
)
|
|
$
|
(149.5
|
)
|
|
$
|
(77.6
|
)
|
|
$
|
(308.6
|
)
|
|
(a)
|
Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
43
|
|
|
44
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net revenues
|
|
$
|
1,664.2
|
|
|
$
|
1,820.6
|
|
|
$
|
(156.4
|
)
|
|
(8.6
|
%)
|
Cost of goods sold
(a)
|
|
(668.4
|
)
|
|
(866.4
|
)
|
|
198.0
|
|
|
(22.8
|
%)
|
|||
Gross profit
|
|
995.8
|
|
|
954.2
|
|
|
41.6
|
|
|
4.4
|
%
|
|||
Gross profit as % of net revenues
|
|
59.8
|
%
|
|
52.4
|
%
|
|
|
|
740 bps
|
|
||||
Selling, general, and administrative expenses
(a)
|
|
(766.7
|
)
|
|
(803.3
|
)
|
|
36.6
|
|
|
(4.5
|
%)
|
|||
SG&A expenses as % of net revenues
|
|
46.1
|
%
|
|
44.1
|
%
|
|
|
|
200 bps
|
|
||||
Amortization of intangible assets
|
|
(6.0
|
)
|
|
(6.1
|
)
|
|
0.1
|
|
|
(1.6
|
%)
|
|||
Impairment of assets
|
|
(11.2
|
)
|
|
(27.0
|
)
|
|
15.8
|
|
|
(58.5
|
%)
|
|||
Restructuring and other charges
(a)
|
|
(18.6
|
)
|
|
(41.5
|
)
|
|
22.9
|
|
|
(55.2
|
%)
|
|||
Operating income
|
|
193.3
|
|
|
76.3
|
|
|
117.0
|
|
|
153.2
|
%
|
|||
Operating income as % of net revenues
|
|
11.6
|
%
|
|
4.2
|
%
|
|
|
|
740 bps
|
|
||||
Foreign currency gains
|
|
1.7
|
|
|
1.1
|
|
|
0.6
|
|
|
63.8
|
%
|
|||
Interest expense
|
|
(4.6
|
)
|
|
(4.1
|
)
|
|
(0.5
|
)
|
|
10.4
|
%
|
|||
Interest and other income, net
|
|
2.0
|
|
|
2.3
|
|
|
(0.3
|
)
|
|
(16.1
|
%)
|
|||
Equity in losses of equity-method investees
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
0.7
|
|
|
(35.6
|
%)
|
|||
Income before income taxes
|
|
191.2
|
|
|
73.7
|
|
|
117.5
|
|
|
159.4
|
%
|
|||
Income tax provision
|
|
(47.4
|
)
|
|
(28.0
|
)
|
|
(19.4
|
)
|
|
69.4
|
%
|
|||
Effective tax rate
(b)
|
|
24.8
|
%
|
|
38.0
|
%
|
|
|
|
(1,320 bps)
|
|
||||
Net income
|
|
$
|
143.8
|
|
|
$
|
45.7
|
|
|
$
|
98.1
|
|
|
214.4
|
%
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
1.76
|
|
|
$
|
0.55
|
|
|
$
|
1.21
|
|
|
220.0
|
%
|
Diluted
|
|
$
|
1.75
|
|
|
$
|
0.55
|
|
|
$
|
1.20
|
|
|
218.2
|
%
|
|
(a)
|
Includes total depreciation expense of
$67.8 million
and
$69.5 million
for the three-month periods ended
September 30, 2017
and
October 1, 2016
, respectively.
|
(b)
|
Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
|
|
|
As
Reported
|
|
Constant
Currency
|
||
E-commerce comparable store sales
|
|
(13
|
%)
|
|
(14
|
%)
|
Comparable store sales excluding e-commerce
|
|
(4
|
%)
|
|
(4
|
%)
|
Total comparable store sales
|
|
(5
|
%)
|
|
(6
|
%)
|
|
45
|
|
|
|
September 30,
2017 |
|
October 1,
2016 |
||
Freestanding Stores:
|
|
|
|
|
||
North America
|
|
215
|
|
|
218
|
|
Europe
|
|
83
|
|
|
85
|
|
Asia
|
|
93
|
|
|
100
|
|
Other non-reportable segments
|
|
78
|
|
|
82
|
|
Total freestanding stores
|
|
469
|
|
|
485
|
|
|
|
|
|
|
||
Concession Shops:
|
|
|
|
|
||
North America
|
|
2
|
|
|
1
|
|
Europe
|
|
25
|
|
|
36
|
|
Asia
|
|
593
|
|
|
582
|
|
Other non-reportable segments
|
|
2
|
|
|
2
|
|
Total concession shops
|
|
622
|
|
|
621
|
|
Total stores
|
|
1,091
|
|
|
1,106
|
|
|
|
Three Months Ended
|
|
$ Change
|
|
Foreign Exchange Impact
|
|
$ Change
|
|
% Change
|
||||||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
As
Reported
|
|
|
Constant
Currency
|
|
As
Reported
|
|
Constant
Currency
|
|||||||||||||
|
|
(millions)
|
|
|
|
|
||||||||||||||||||||
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
|
$
|
876.7
|
|
|
$
|
1,044.8
|
|
|
$
|
(168.1
|
)
|
|
$
|
1.4
|
|
|
$
|
(169.5
|
)
|
|
(16.1
|
%)
|
|
(16.2
|
%)
|
Europe
|
|
463.0
|
|
|
445.8
|
|
|
17.2
|
|
|
15.7
|
|
|
1.5
|
|
|
3.9
|
%
|
|
0.3
|
%
|
|||||
Asia
|
|
216.8
|
|
|
216.5
|
|
|
0.3
|
|
|
(9.0
|
)
|
|
9.3
|
|
|
0.2
|
%
|
|
4.3
|
%
|
|||||
Other non-reportable segments
|
|
107.7
|
|
|
113.5
|
|
|
(5.8
|
)
|
|
(0.6
|
)
|
|
(5.2
|
)
|
|
(5.2
|
%)
|
|
(4.6
|
%)
|
|||||
Total net revenues
|
|
$
|
1,664.2
|
|
|
$
|
1,820.6
|
|
|
$
|
(156.4
|
)
|
|
$
|
7.5
|
|
|
$
|
(163.9
|
)
|
|
(8.6
|
%)
|
|
(9.0
|
%)
|
•
|
a $129.8 million net decrease related to our North America wholesale business, largely driven by a strategic reduction of shipments (including within the off-price channel) and points of distribution in connection with our long-term growth strategy, the impact of brand discontinuances, and lower consumer demand; and
|
|
46
|
|
•
|
a $34.7 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
|
|
(18
|
%)
|
|
(18
|
%)
|
Comparable store sales excluding e-commerce
|
|
(6
|
%)
|
|
(6
|
%)
|
Total comparable store sales
|
|
(8
|
%)
|
|
(9
|
%)
|
•
|
a $3.6 million net decrease in non-comparable store sales.
|
•
|
a $15.4 million net increase in non-comparable store sales, primarily driven by new store openings and net favorable foreign currency effects of $2.2 million; and
|
•
|
a $7.1 million net increase related to our Europe wholesale business, primarily driven by the shift in the timing of certain shipments from the first quarter of Fiscal 2018 that benefited the second quarter of Fiscal 2018, partially offset by the impact of brand discontinuances and a strategic reduction of shipments within the off-price channel in connection with our long-term growth strategy. The net increase also reflected favorable foreign currency effects of $8.9 million.
|
•
|
a $5.3 million net decrease in comparable store sales, including net favorable foreign currency effects of $4.6 million. Our comparable store sales decreased by $9.9 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
|
|
(8
|
%)
|
|
(11
|
%)
|
Comparable store sales excluding e-commerce
|
|
(2
|
%)
|
|
(5
|
%)
|
Total comparable store sales
|
|
(3
|
%)
|
|
(6
|
%)
|
•
|
a $3.1 million net increase related to our Asia wholesale business, driven by new door openings primarily in Japan, partially offset by net unfavorable foreign currency effects of $0.4 million.
|
•
|
a $2.0 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 $3.3 million, partially offset by new concession shop openings; and
|
•
|
a $0.8 million net decrease in comparable store sales, including net unfavorable foreign currency effects of $5.3 million. Our comparable store sales increased by $4.5 million on a constant currency basis, primarily driven by higher
|
|
47
|
|
|
|
As
Reported
|
|
Constant
Currency
|
||
Total comparable store sales
(a)
|
|
(1
|
%)
|
|
3
|
%
|
|
(a)
|
Comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.
|
|
|
Three Months Ended September 30, 2017
Compared to
Three Months Ended October 1, 2016 |
||
|
|
(millions)
|
||
SG&A expense category:
|
|
|
||
Rent and occupancy expenses
|
|
$
|
(9.1
|
)
|
Marketing and advertising expenses
|
|
(8.2
|
)
|
|
Depreciation expense
|
|
(5.1
|
)
|
|
Shipping and handling costs
|
|
(5.0
|
)
|
|
Consulting fees
|
|
(3.0
|
)
|
|
Other
|
|
(6.2
|
)
|
|
Total change in SG&A expenses
|
|
$
|
(36.6
|
)
|
|
48
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
|
|
|
|||||||||||
|
Operating
Income (Loss) |
|
Operating
Margin |
|
Operating
Income (Loss) |
|
Operating
Margin |
|
$
Change |
|
Margin
Change |
|||||||
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
202.7
|
|
|
23.1%
|
|
$
|
202.4
|
|
|
19.4%
|
|
$
|
0.3
|
|
|
370 bps
|
Europe
|
|
125.5
|
|
|
27.1%
|
|
100.4
|
|
|
22.5%
|
|
25.1
|
|
|
460 bps
|
|||
Asia
|
|
26.5
|
|
|
12.2%
|
|
(65.8
|
)
|
|
(30.4%)
|
|
92.3
|
|
|
4,260 bps
|
|||
Other non-reportable segments
|
|
26.3
|
|
|
24.4%
|
|
30.0
|
|
|
26.4%
|
|
(3.7
|
)
|
|
(200 bps)
|
|||
|
|
381.0
|
|
|
|
|
267.0
|
|
|
|
|
114.0
|
|
|
|
|||
Unallocated corporate expenses
|
|
(169.1
|
)
|
|
|
|
(149.2
|
)
|
|
|
|
(19.9
|
)
|
|
|
|||
Unallocated restructuring and other charges
|
|
(18.6
|
)
|
|
|
|
(41.5
|
)
|
|
|
|
22.9
|
|
|
|
|||
Total operating income
|
|
$
|
193.3
|
|
|
11.6%
|
|
$
|
76.3
|
|
|
4.2%
|
|
$
|
117.0
|
|
|
740 bps
|
|
49
|
|
|
50
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net revenues
|
|
$
|
3,011.3
|
|
|
$
|
3,372.8
|
|
|
$
|
(361.5
|
)
|
|
(10.7
|
%)
|
Cost of goods sold
(a)
|
|
(1,164.3
|
)
|
|
(1,524.0
|
)
|
|
359.7
|
|
|
(23.6
|
%)
|
|||
Gross profit
|
|
1,847.0
|
|
|
1,848.8
|
|
|
(1.8
|
)
|
|
(0.1
|
%)
|
|||
Gross profit as % of net revenues
|
|
61.3
|
%
|
|
54.8
|
%
|
|
|
|
650 bps
|
|
||||
Selling, general, and administrative expenses
(a)
|
|
(1,475.1
|
)
|
|
(1,618.0
|
)
|
|
142.9
|
|
|
(8.8
|
%)
|
|||
SG&A expenses as % of net revenues
|
|
49.0
|
%
|
|
48.0
|
%
|
|
|
|
100 bps
|
|
||||
Amortization of intangible assets
|
|
(12.0
|
)
|
|
(12.1
|
)
|
|
0.1
|
|
|
(1.1
|
%)
|
|||
Impairment of assets
|
|
(20.9
|
)
|
|
(46.4
|
)
|
|
25.5
|
|
|
(55.0
|
%)
|
|||
Restructuring and other charges
(a)
|
|
(55.4
|
)
|
|
(127.2
|
)
|
|
71.8
|
|
|
(56.5
|
%)
|
|||
Operating income
|
|
283.6
|
|
|
45.1
|
|
|
238.5
|
|
|
528.9
|
%
|
|||
Operating income as % of net revenues
|
|
9.4
|
%
|
|
1.3
|
%
|
|
|
|
810 bps
|
|
||||
Foreign currency gains
|
|
1.8
|
|
|
3.5
|
|
|
(1.7
|
)
|
|
(48.7
|
%)
|
|||
Interest expense
|
|
(9.6
|
)
|
|
(7.5
|
)
|
|
(2.1
|
)
|
|
27.5
|
%
|
|||
Interest and other income, net
|
|
4.3
|
|
|
3.2
|
|
|
1.1
|
|
|
30.0
|
%
|
|||
Equity in losses of equity-method investees
|
|
(2.1
|
)
|
|
(3.8
|
)
|
|
1.7
|
|
|
(44.9
|
%)
|
|||
Income before income taxes
|
|
278.0
|
|
|
40.5
|
|
|
237.5
|
|
|
585.5
|
%
|
|||
Income tax provision
|
|
(74.7
|
)
|
|
(17.1
|
)
|
|
(57.6
|
)
|
|
336.3
|
%
|
|||
Effective tax rate
(b)
|
|
26.9
|
%
|
|
42.2
|
%
|
|
|
|
(1,530 bps)
|
|
||||
Net income
|
|
$
|
203.3
|
|
|
$
|
23.4
|
|
|
$
|
179.9
|
|
|
767.6
|
%
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
2.49
|
|
|
$
|
0.28
|
|
|
$
|
2.21
|
|
|
789.3
|
%
|
Diluted
|
|
$
|
2.47
|
|
|
$
|
0.28
|
|
|
$
|
2.19
|
|
|
782.1
|
%
|
|
(a)
|
Includes total depreciation expense of
$134.7 million
and
$141.9 million
for the
six-month periods ended
September 30, 2017
and
October 1, 2016
, respectively.
|
(b)
|
Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
|
|
|
As
Reported
|
|
Constant
Currency
|
||
E-commerce comparable store sales
|
|
(15
|
%)
|
|
(15
|
%)
|
Comparable store sales excluding e-commerce
|
|
(5
|
%)
|
|
(4
|
%)
|
Total comparable store sales
|
|
(6
|
%)
|
|
(6
|
%)
|
|
51
|
|
|
|
Six Months Ended
|
|
$ Change
|
|
Foreign Exchange Impact
|
|
$ Change
|
|
% Change
|
||||||||||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
As
Reported
|
|
|
Constant
Currency
|
|
As
Reported
|
|
Constant
Currency
|
|||||||||||||
|
|
(millions)
|
|
|
|
|
||||||||||||||||||||
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
|
$
|
1,586.4
|
|
|
$
|
1,900.4
|
|
|
$
|
(314.0
|
)
|
|
$
|
0.3
|
|
|
$
|
(314.3
|
)
|
|
(16.5
|
%)
|
|
(16.5
|
%)
|
Europe
|
|
786.5
|
|
|
823.4
|
|
|
(36.9
|
)
|
|
0.3
|
|
|
(37.2
|
)
|
|
(4.5
|
%)
|
|
(4.5
|
%)
|
|||||
Asia
|
|
425.9
|
|
|
427.6
|
|
|
(1.7
|
)
|
|
(12.1
|
)
|
|
10.4
|
|
|
(0.4
|
%)
|
|
2.4
|
%
|
|||||
Other non-reportable segments
|
|
212.5
|
|
|
221.4
|
|
|
(8.9
|
)
|
|
(1.5
|
)
|
|
(7.4
|
)
|
|
(4.0
|
%)
|
|
(3.3
|
%)
|
|||||
Total net revenues
|
|
$
|
3,011.3
|
|
|
$
|
3,372.8
|
|
|
$
|
(361.5
|
)
|
|
$
|
(13.0
|
)
|
|
$
|
(348.5
|
)
|
|
(10.7
|
%)
|
|
(10.3
|
%)
|
•
|
a $244.0 million net decrease related to our North America wholesale business, largely driven by a strategic reduction of shipments (including within the off-price channel) and points of distribution in connection with our long-term growth strategy, the impact of brand discontinuances, and lower consumer demand;
|
•
|
a $66.8 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
|
|
(20
|
%)
|
|
(20
|
%)
|
Comparable store sales excluding e-commerce
|
|
(5
|
%)
|
|
(5
|
%)
|
Total comparable store sales
|
|
(8
|
%)
|
|
(8
|
%)
|
•
|
a $3.2 million net decrease in non-comparable store sales.
|
•
|
a $37.8 million net decrease related to our Europe wholesale business, driven by the impact of brand discontinuances and a strategic reduction of shipments within the off-price channel in connection with our long-term growth strategy, partially offset by net favorable foreign currency effects of $3.5 million; and
|
•
|
a $25.0 million net decrease in comparable store sales, including net unfavorable foreign currency effects of $3.2 million. Our comparable store sales decreased by $21.8 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:
|
|
52
|
|
|
|
As
Reported
|
|
Constant
Currency
|
||
E-commerce comparable store sales
|
|
(7
|
%)
|
|
(9
|
%)
|
Comparable store sales excluding e-commerce
|
|
(7
|
%)
|
|
(7
|
%)
|
Total comparable store sales
|
|
(7
|
%)
|
|
(7
|
%)
|
•
|
a $0.5 million net increase in comparable store sales, including net unfavorable foreign currency effects of $6.7 million. Our comparable store sales increased by $7.2 million on a constant currency basis, primarily driven by higher sales from certain of our retail locations due in part to improved traffic and conversion, 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:
|
|
|
As
Reported
|
|
Constant
Currency
|
|
Total comparable store sales
(a)
|
|
0%
|
|
3
|
%
|
|
(a)
|
Comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.
|
•
|
a $0.1 million net increase related to our Asia wholesale business, inclusive of net unfavorable foreign currency effects of $0.7 million.
|
|
53
|
|
|
|
Six Months Ended September 30, 2017
Compared to
Six Months Ended October 1, 2016
|
||
|
|
(millions)
|
||
SG&A expense category:
|
|
|
||
Compensation-related expenses
(a)
|
|
$
|
(49.5
|
)
|
Marketing and advertising expenses
|
|
(23.1
|
)
|
|
Rent and occupancy expenses
|
|
(19.0
|
)
|
|
Depreciation expense
|
|
(14.0
|
)
|
|
Shipping and handling costs
|
|
(10.8
|
)
|
|
Consulting fees
|
|
(10.5
|
)
|
|
Other
|
|
(16.0
|
)
|
|
Total change in SG&A expenses
|
|
$
|
(142.9
|
)
|
|
(a)
|
Includes the favorable impact of $7.6 million related to Mr. Ralph Lauren electing to forgo his Fiscal 2017 executive incentive bonus.
|
|
54
|
|
|
|
Six Months Ended
|
|
|
|
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
|
|
|
|||||||||||
|
Operating
Income (Loss)
|
|
Operating
Margin
|
|
Operating
Income (Loss) |
|
Operating
Margin
|
|
$
Change
|
|
Margin
Change
|
|||||||
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
353.2
|
|
|
22.3%
|
|
$
|
368.2
|
|
|
19.4%
|
|
$
|
(15.0
|
)
|
|
290 bps
|
Europe
|
|
192.6
|
|
|
24.5%
|
|
175.4
|
|
|
21.3%
|
|
17.2
|
|
|
320 bps
|
|||
Asia
|
|
56.7
|
|
|
13.3%
|
|
(103.6
|
)
|
|
(24.2%)
|
|
160.3
|
|
|
3,750 bps
|
|||
Other non-reportable segments
|
|
59.3
|
|
|
27.9%
|
|
57.8
|
|
|
26.1%
|
|
1.5
|
|
|
180 bps
|
|||
|
|
661.8
|
|
|
|
|
497.8
|
|
|
|
|
164.0
|
|
|
|
|||
Unallocated corporate expenses
|
|
(322.8
|
)
|
|
|
|
(325.5
|
)
|
|
|
|
2.7
|
|
|
|
|||
Unallocated restructuring and other charges
|
|
(55.4
|
)
|
|
|
|
(127.2
|
)
|
|
|
|
71.8
|
|
|
|
|||
Total operating income
|
|
$
|
283.6
|
|
|
9.4%
|
|
$
|
45.1
|
|
|
1.3%
|
|
$
|
238.5
|
|
|
810 bps
|
|
55
|
|
|
|
September 30,
2017 |
|
April 1,
2017 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Cash and cash equivalents
|
|
$
|
1,111.6
|
|
|
$
|
668.3
|
|
|
$
|
443.3
|
|
Short-term investments
|
|
507.1
|
|
|
684.7
|
|
|
(177.6
|
)
|
|||
Non-current investments
(a)
|
|
82.6
|
|
|
21.4
|
|
|
61.2
|
|
|||
Current portion of long-term debt
(b)
|
|
(298.6
|
)
|
|
—
|
|
|
(298.6
|
)
|
|||
Long-term debt
(b)
|
|
(291.8
|
)
|
|
(588.2
|
)
|
|
296.4
|
|
|||
Net cash and investments
(c)
|
|
$
|
1,110.9
|
|
|
$
|
786.2
|
|
|
$
|
324.7
|
|
Equity
|
|
$
|
3,509.6
|
|
|
$
|
3,299.6
|
|
|
$
|
210.0
|
|
|
(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 debt.
|
(c)
|
"Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt.
|
|
56
|
|
|
|
Six Months Ended
|
|
|
||||||||
|
|
September 30,
2017 |
|
October 1,
2016 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
437.0
|
|
|
$
|
232.6
|
|
|
$
|
204.4
|
|
Net cash provided by (used in) investing activities
|
|
86.7
|
|
|
(13.7
|
)
|
|
100.4
|
|
|||
Net cash used in financing activities
|
|
(109.8
|
)
|
|
(227.9
|
)
|
|
118.1
|
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
33.2
|
|
|
(12.9
|
)
|
|
46.1
|
|
|||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
$
|
447.1
|
|
|
$
|
(21.9
|
)
|
|
$
|
469.0
|
|
•
|
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
$90.7 million
decline in capital expenditures. During the
six months ended September 30, 2017
, we spent
$74.7 million
on capital expenditures, as compared to
$165.4 million
during the
six months ended October 1, 2016
. Our capital expenditures during the
six months ended September 30, 2017
primarily related to our global retail and department store renovations, new store openings, and the continued enhancements to our global information technology systems; and
|
•
|
a
$10.8 million
increase in proceeds from sales and maturities of investments, less purchases of investments. During the
six months ended September 30, 2017
, we received net investment proceeds of
$165.0 million
, as compared to
$154.2 million
during the
six months ended October 1, 2016
.
|
•
|
a
$100.3 million
decline in cash used to repurchase shares of our Class A common stock. During the
six months ended September 30, 2017
,
$14.6 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
six months ended October 1, 2016
, we used $100.0 million to repurchase shares
|
|
57
|
|
•
|
a
$21.1 million
decline in cash used to repay debt, less proceeds from debt issuances. We did not issue or repay any debt during the
six months ended September 30, 2017
. On a comparative basis, during the
six months ended October 1, 2016
, we repaid $26.1 million of borrowings previously outstanding under our credit facilities and received $5.0 million in net proceeds related to our commercial paper note issuances and repayments.
|
|
|
September 30, 2017
|
||||||||||
Description
(a)
|
|
Total
Availability
|
|
Borrowings
Outstanding
|
|
Remaining
Availability
|
||||||
|
|
(millions)
|
||||||||||
Global Credit Facility and Commercial Paper Program
(b)
|
|
$
|
500
|
|
|
$
|
9
|
|
(c)
|
$
|
491
|
|
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
September 30, 2017
.
|
|
58
|
|
|
59
|
|
|
60
|
|
|
61
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 4.
|
Controls and Procedures.
|
|
62
|
|
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)
|
||||||
July 2, 2017 to July 29, 2017
|
990
|
|
|
$
|
73.65
|
|
|
—
|
|
|
$
|
100
|
|
July 30, 2017 to August 26, 2017
|
817
|
|
|
88.64
|
|
|
—
|
|
|
100
|
|
||
August 27, 2017 to September 30, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
|
||
|
1,807
|
|
|
|
|
—
|
|
|
|
|
(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.
|
|
63
|
|
Item 6.
|
Exhibits.
|
3.1
|
|
3.2
|
|
3.3
|
|
10.1*
|
|
10.2*
|
|
10.3*
|
|
12.1*
|
|
31.1*
|
|
31.2*
|
|
32.1*
|
|
32.2*
|
|
101*
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at September 30, 2017 and April 1, 2017, (ii) the Consolidated Statements of Operations for the three-month and six-month periods ended September 30, 2017 and October 1, 2016, (iii) the Consolidated Statements of Comprehensive Income for the three-month and six-month periods ended September 30, 2017 and October 1, 2016, (iv) the Consolidated Statements of Cash Flows for the six-month periods ended September 30, 2017 and October 1, 2016, and (v) the Notes to the Consolidated Financial Statements.
|
|
|
64
|
|
|
|
RALPH LAUREN CORPORATION
|
|
|
|
|
By:
|
/
S
/ JANE HAMILTON NIELSEN
|
|
|
Jane Hamilton Nielsen
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
Date: November 9, 2017
|
|
|
|
65
|
|
|
|
|
1.
|
Attract and retain exceptional individuals of superior talent
|
2.
|
Motivate such individuals to achieve longer-range performance
|
3.
|
Enable such individuals to participate in the long-term growth and financial success of the Company
|
|
|
2
|
|
Fiscal 2018 PSU Overview
|
|
|
|
An eligible employee who receives a Below Expectations (B) or Unsatisfactory (U) rating
on their annual performance appraisal is not eligible for an equity award
in the fiscal year following that performance appraisal period.
|
▪
|
Net Earnings or Net Income (before or after taxes)
|
▪
|
Basic or Diluted Earnings Per Share (before or after taxes)
|
▪
|
Net Operating Profit (before or after taxes)
|
▪
|
Net Revenue or Net Revenue Growth
|
▪
|
Gross Profit or Gross Profit Growth
|
▪
|
Return Measures (including but not limited to Return on Assets, Investments, Capital)
|
▪
|
Other measures of economic value added or other value creation metrics
|
|
|
3
|
|
Fiscal 2018 PSU Overview
|
|
|
|
Performance
Level
|
% of Goal
Achieved
|
% of Target
PSUs Vested
|
Threshold
|
95%
|
75%
|
Target
|
100%
|
100%
|
Maximum
|
105%
|
150%
|
|
|
4
|
|
Fiscal 2018 PSU Overview
|
|
|
|
Grant Date
|
# PSUs Granted
|
Performance
Period
|
Vesting
Date
1
|
Performance Level
2
|
Vested
Percentage
2
|
# Shares Vested
|
FY18 (June 2017)
|
1,000
|
FY18 - FY20
|
FY20 (June 2020)
|
110%
|
150%
|
1,500
|
100%
|
100%
|
1,000
|
||||
70%
|
75%
|
750
|
▪
|
Receive shares of RL Class A Common Stock without paying any exercise price
|
▪
|
The number of PSUs vesting can range from 75% (Threshold) to 150% (Maximum) of the target shares granted
|
▪
|
Any increases in the Company’s Class A Common Stock price above the price on the grant date increases the value of the award
|
|
|
5
|
|
Fiscal 2018 PSU Overview
|
|
|
|
|
|
If Stock Price Reaches:
|
|||
Value At:
|
# of Shares
|
$80
|
$90
|
$100
|
$110
|
Threshold Performance
|
750
|
$60,000
|
$67,500
|
$75,000
|
$82,500
|
Target Performance
|
1,000
|
$80,000
|
$90,000
|
$100,000
|
$110,000
|
Maximum Performance
|
1,500
|
$120,000
|
$135,000
|
$150,000
|
$165,000
|
|
|
6
|
|
Fiscal 2018 PSU Overview
|
|
|
|
Termination as a result of:
|
Status of PSU Awards
|
|
|
|
|
Retirement
1
Long-Term Disability (LTD)
2
Death
|
l
|
If retirement date is more than one year from the date of grant, participant is entitled to full award on the scheduled vesting date. Payout is based on performance achievement.
|
l
|
If retirement date is within the first year following the grant date, participant is entitled to one-third of award on the scheduled vesting date. Payout is based on performance achievement. All remaining PSUs are forfeited
|
|
l
|
The above is subject to the terms and conditions in the On-Line Grant Agreement
|
|
|
|
|
Voluntary Resignation
Involuntary Termination
|
l
|
All unvested PSUs are forfeited
|
|
|
7
|
|
Fiscal 2018 PSU Overview
|
|
|
|
▪
|
Earnings or other financial information
|
▪
|
Changes in dividend policy
|
▪
|
Stock splits
|
▪
|
Mergers and acquisitions
|
▪
|
Major new contracts or product-line introductions
|
▪
|
Litigation involving substantial amounts of money
|
▪
|
Changes in management
|
|
|
8
|
|
Fiscal 2018 PSU Overview
|
|
|
|
▪
|
“In and out” trading in securities of the Company.
Any Company stock purchased in the market must be held for a minimum of six months and ideally longer. Note that the Securities and Exchange Commission (SEC) has a “short-swing profit recapture” rule that effectively prohibits Executive Officers and members of the Board of Directors from selling any Company stock within six months of a purchase. The Company has extended this prohibition to all employees. The receipt of shares pursuant to the vesting of PSU awards is not considered a purchase under the SEC’s rule.
|
▪
|
Purchases of stock of the Company on margin.
|
▪
|
Short sales
(i.e., selling stock one does not own and then borrowing the shares to make delivery)
|
▪
|
“Hedging” and Pledging of Company Stock.
No insider, including any director, officer or employee of the Company, shall purchase or sell, or make any offer to purchase or offer to sell derivative securities relating to the Company’s securities, whether or not issued by the Company, such as exchange traded options to purchase or sell the Company’s securities (so called “puts” and “calls”) or financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s securities. In addition, no director or Section 16 Officer of the Company shall hold the Company’s securities in a margin account, or maintain or enter into any arrangement that, directly or indirectly, involves pledging the Company’s securities as collateral for a loan.
|
For employees at the Senior Vice President level or above (“Officers”) and for all employees in the Finance, Legal and People and Development departments, all transactions in the Company’s securities (including, but not limited to purchases, sales, transfers, etc.) must be conducted during an open trading window and pre-cleared with the Corporate Counsel, or their designee. If contemplating a transaction, please provide a written request via e-mail to RLTrading@ralphlauren.com, specifying the number of shares you wish to sell
before
contacting Merrill Lynch or any other broker, or taking any other step to initiate a transaction.
|
|
|
9
|
|
Fiscal 2018 PSU Overview
|
|
|
|
(a)
|
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
|
(b)
|
the grant of PSU awards is voluntary and occasional and does not create any contractual or other right to receive future PSU awards, or benefits in lieu of these awards, even if PSU awards have been granted in the past;
|
(c)
|
all decisions with respect to future PSU awards, if any, will be at the sole discretion of the Compensation Committee;
|
(d)
|
the Participant's participation in the Plan shall not create a right to further employment or service with the Company or, if different, the employing Subsidiary and shall not interfere with the ability of the Company or employing Subsidiary to terminate the Participant's employment or service relationship at any time with or without cause;
|
(e)
|
the Participant is voluntarily participating in the Plan;
|
(f)
|
any PSU awards and the Company's Class A Common Stock subject to awards, and the income and value of same, are not part of the Participant's normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments; and
|
(g)
|
no claim or entitlement to compensation or damages shall arise from the forfeiture of a PSU award resulting from the Participant's termination of employment or service (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or rendering services or the terms of the Participant's employment or service agreement, if any), and in consideration of the grant of a PSU award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any Subsidiary.
|
|
|
10
|
|
Fiscal 2018 PSU Overview
|
|
|
|
|
|
|
|
|
|
|
11
|
|
Fiscal 2018 PSU Overview
|
Award Type
|
Number of Shares
|
PRSUs
|
[_____]
|
•
|
Vest over three-year period in one-third increments beginning FY19 if the FY18 performance goal (Operating Margin of [__]%) is achieved and certified by the Compensation and Organizational Development Committee, and employment is continuous through each vesting date (unless otherwise provided for in the employment agreement).
|
|
|
|
1.
|
Attract and retain exceptional individuals of superior talent
|
2.
|
Motivate such individuals to achieve longer-range performance
|
3.
|
Enable such individuals to participate in the long-term growth and financial success of the Company
|
|
|
2
|
|
Fiscal 2018 RSU Overview
|
|
|
|
An eligible employee who receives a Below Expectations (B) or Unsatisfactory (U) rating
on their annual performance appraisal is not eligible for an equity award
in the fiscal year following that performance appraisal period.
|
|
|
3
|
|
Fiscal 2018 RSU Overview
|
|
|
|
Grant Date
|
RSUs
Eligible to Vest
|
Vesting
Date
|
May 15, 2017
|
70
|
May 15, 2018
|
May 15, 2017
|
70
|
May 15, 2019
|
May 15, 2017
|
70
|
May 15, 2020
|
Total
|
210
|
|
Year Granted
|
RSUs Granted
|
1/3 of RSUs Eligible to Vest
|
||
May 2017
|
May 2018
|
May 2019
|
||
May 2016
|
300
|
100
|
100
|
100
|
May 2017
|
210
|
-
|
70
|
70
|
May 2018
|
270
|
-
|
-
|
90
|
Total RSUs
|
780
|
100
|
170
|
260
|
|
|
4
|
|
Fiscal 2018 RSU Overview
|
|
|
|
|
|
If Stock Price Reaches:
|
|||
|
# of Shares
|
$70
|
$80
|
$90
|
$100
|
Value
(assumes shares vest)
|
210
|
$14,700
|
$16,800
|
$18,900
|
$21,000
|
|
|
5
|
|
Fiscal 2018 RSU Overview
|
|
|
|
Termination as a result of:
|
Status of RSU Awards
|
|
|
|
|
Retirement
1
Long-Term Disability (LTD)
2
Death
|
l
|
If retirement date is more than one year from the date of grant, participant is entitled to full award on scheduled vesting dates
|
l
|
If retirement date is within the first year following the Grant date, participant is entitled to one-third of award on of the first scheduled vesting date. All remaining RSUs are forfeited
|
|
l
|
The above is subject to the terms and conditions in the On-Line Grant Agreement
|
|
|
|
|
Voluntary Resignation
Involuntary Termination
|
l
|
All unvested RSUs are forfeited
|
|
|
6
|
|
Fiscal 2018 RSU Overview
|
|
|
|
▪
|
Earnings or other financial information
|
▪
|
Changes in dividend policy
|
▪
|
Stock splits
|
▪
|
Mergers and acquisitions
|
▪
|
Major new contracts or product-line introductions
|
▪
|
Litigation involving substantial amounts of money
|
▪
|
Changes in management
|
|
|
7
|
|
Fiscal 2018 RSU Overview
|
|
|
|
▪
|
“In and out” trading in securities of the Company.
Any Company stock purchased in the market must be held for a minimum of six months and ideally longer. Note that the Securities and Exchange Commission (SEC) has a “short-swing profit recapture” rule that effectively prohibits Executive Officers and members of the Board of Directors from selling any Company stock within six months of a purchase. The Company has extended this prohibition to all employees. The receipt of shares pursuant to the vesting of RSU awards is not considered a purchase under the SEC’s rule.
|
▪
|
Purchases of stock of the Company on margin.
|
▪
|
Short sales
(i.e., selling stock one does not own and then borrowing the shares to make delivery).
|
▪
|
“Hedging” and Pledging of Company Stock.
No insider, including any director, officer or employee of the Company, shall purchase or sell, or make any offer to purchase or offer to sell derivative securities relating to the Company’s securities, whether or not issued by the Company, such as exchange traded options to purchase or sell the Company’s securities (so called “puts” and “calls”) or financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s securities.
|
For employees at the Senior Vice President level or above (“Officers”) and for all employees in the Finance, Legal and People and Development departments, all transactions in the Company’s securities (including, but not limited to purchases, sales, transfers, etc.) must be conducted during an open trading window and pre-cleared with the Corporate Counsel, or their designee. If contemplating a transaction, please provide a written request via e-mail to RLTrading@ralphlauren.com, specifying the number of shares you wish to sell
before
contacting Merrill Lynch or any other broker, or taking any other step to initiate a transaction.
|
|
|
8
|
|
Fiscal 2018 RSU Overview
|
|
|
|
(a)
|
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
|
(b)
|
the grant of RSU awards is voluntary and occasional and does not create any contractual or other right to receive future RSU awards, or benefits in lieu of these awards, even if RSU awards have been granted in the past;
|
(c)
|
all decisions with respect to future RSU awards, if any, will be at the sole discretion of the Compensation Committee;
|
(d)
|
the Participant's participation in the Plan shall not create a right to further employment or service with the Company or, if different, the employing Subsidiary and shall not interfere with the ability of the Company or employing Subsidiary to terminate the Participant's employment or service relationship at any time with or without cause;
|
(e)
|
the Participant is voluntarily participating in the Plan;
|
(f)
|
any RSU awards and the Company's Class A Common Stock subject to awards, and the income and value of same, are not part of the Participant's normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments; and
|
(g)
|
no claim or entitlement to compensation or damages shall arise from the forfeiture of a RSU award resulting from the Participant's termination of employment or service (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or rendering services or the terms of the Participant's employment or service agreement, if any), and in consideration of the grant of a RSU award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any Subsidiary.
|
|
|
9
|
|
Fiscal 2018 RSU Overview
|
|
|
|
|
|
|
|
|
|
|
10
|
|
Fiscal 2018 RSU Overview
|
|
|
Six Months Ended
|
|
Fiscal Years Ended
(a)
|
||||||||||||||||||||
|
|
September 30,
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
|
|
$
|
278.0
|
|
|
$
|
(104.9
|
)
|
|
$
|
551.8
|
|
|
$
|
987.4
|
|
|
$
|
1,095.8
|
|
|
$
|
1,089.3
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity in losses of equity-method investees
|
|
2.1
|
|
|
5.2
|
|
|
10.9
|
|
|
11.5
|
|
|
9.4
|
|
|
9.5
|
|
||||||
Fixed charges
|
|
82.4
|
|
|
165.9
|
|
|
178.4
|
|
|
172.0
|
|
|
170.2
|
|
|
162.3
|
|
||||||
Subtract:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Earnings available to cover fixed charges
|
|
$
|
362.5
|
|
|
$
|
66.2
|
|
|
$
|
741.1
|
|
|
$
|
1,170.9
|
|
|
$
|
1,275.4
|
|
|
$
|
1,260.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
$
|
9.6
|
|
|
$
|
12.4
|
|
|
$
|
21.0
|
|
|
$
|
16.7
|
|
|
$
|
18.7
|
|
|
$
|
19.1
|
|
Interest component of rent expense
|
|
72.8
|
|
|
153.5
|
|
|
157.4
|
|
|
155.3
|
|
|
151.5
|
|
|
143.2
|
|
||||||
Total fixed charges
|
|
$
|
82.4
|
|
|
$
|
165.9
|
|
|
$
|
178.4
|
|
|
$
|
172.0
|
|
|
$
|
170.2
|
|
|
$
|
162.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
(b)
|
|
4.4
|
|
|
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 have been calculated using unrounded numbers.
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: November 9, 2017
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
|
Date: November 9, 2017
|
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
|
November 9, 2017
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
|
November 9, 2017
|
|