☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
13-2622036
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|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
650 Madison Avenue,
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|
10022
|
|
New York,
|
New York
|
|
(Zip Code)
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(Address of principal executive offices)
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Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on which Registered
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Class A Common Stock, $.01 par value
|
RL
|
New York Stock Exchange
|
Large accelerated filer
|
☑
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Accelerated filer
|
☐
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Non-accelerated filer
|
☐
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Smaller reporting company
|
☐
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Emerging growth company
|
☐
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Page
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PART I. FINANCIAL INFORMATION (Unaudited)
|
||
Item 1.
|
Financial Statements:
|
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||
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||
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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
|
||
Item 1.
|
||
Item 1A.
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Item 2.
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Item 5.
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||
Item 6.
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||
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1
|
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
548.1
|
|
|
$
|
584.1
|
|
Short-term investments
|
|
1,041.4
|
|
|
1,403.4
|
|
||
Accounts receivable, net of allowances of $211.1 million and $192.2 million
|
|
483.2
|
|
|
398.1
|
|
||
Inventories
|
|
1,012.5
|
|
|
817.8
|
|
||
Income tax receivable
|
|
33.6
|
|
|
32.1
|
|
||
Prepaid expenses and other current assets
|
|
267.9
|
|
|
359.3
|
|
||
Total current assets
|
|
3,386.7
|
|
|
3,594.8
|
|
||
Property and equipment, net
|
|
1,011.0
|
|
|
1,039.2
|
|
||
Operating lease right-of-use assets
|
|
1,567.1
|
|
|
—
|
|
||
Deferred tax assets
|
|
97.6
|
|
|
67.0
|
|
||
Goodwill
|
|
913.8
|
|
|
919.6
|
|
||
Intangible assets, net
|
|
152.3
|
|
|
163.7
|
|
||
Other non-current assets
|
|
100.0
|
|
|
158.5
|
|
||
Total assets
|
|
$
|
7,228.5
|
|
|
$
|
5,942.8
|
|
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
297.3
|
|
|
$
|
—
|
|
Accounts payable
|
|
350.3
|
|
|
202.3
|
|
||
Income tax payable
|
|
60.1
|
|
|
29.4
|
|
||
Current operating lease liabilities
|
|
273.2
|
|
|
—
|
|
||
Accrued expenses and other current liabilities
|
|
755.1
|
|
|
968.4
|
|
||
Total current liabilities
|
|
1,736.0
|
|
|
1,200.1
|
|
||
Long-term debt
|
|
396.1
|
|
|
689.1
|
|
||
Long-term operating lease liabilities
|
|
1,651.3
|
|
|
—
|
|
||
Income tax payable
|
|
132.7
|
|
|
146.7
|
|
||
Non-current liability for unrecognized tax benefits
|
|
79.7
|
|
|
78.8
|
|
||
Other non-current liabilities
|
|
319.1
|
|
|
540.9
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
||||
Total liabilities
|
|
4,314.9
|
|
|
2,655.6
|
|
||
Equity:
|
|
|
|
|
||||
Class A common stock, par value $.01 per share; 104.8 million and 102.9 million shares issued; 49.7 million and 52.2 million shares outstanding
|
|
1.0
|
|
|
1.0
|
|
||
Class B common stock, par value $.01 per share; 24.9 million issued and outstanding; 25.9 million shares issued and outstanding
|
|
0.3
|
|
|
0.3
|
|
||
Additional paid-in-capital
|
|
2,544.6
|
|
|
2,493.8
|
|
||
Retained earnings
|
|
6,009.4
|
|
|
5,979.1
|
|
||
Treasury stock, Class A, at cost; 55.1 million and 50.7 million shares
|
|
(5,526.3
|
)
|
|
(5,083.6
|
)
|
||
Accumulated other comprehensive loss
|
|
(115.4
|
)
|
|
(103.4
|
)
|
||
Total equity
|
|
2,913.6
|
|
|
3,287.2
|
|
||
Total liabilities and equity
|
|
$
|
7,228.5
|
|
|
$
|
5,942.8
|
|
|
2
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions, except per share data)
|
||||||||||||||
Net revenues
|
|
$
|
1,706.2
|
|
|
$
|
1,690.9
|
|
|
$
|
3,135.0
|
|
|
$
|
3,081.5
|
|
Cost of goods sold
|
|
(657.2
|
)
|
|
(661.6
|
)
|
|
(1,165.2
|
)
|
|
(1,156.5
|
)
|
||||
Gross profit
|
|
1,049.0
|
|
|
1,029.3
|
|
|
1,969.8
|
|
|
1,925.0
|
|
||||
Selling, general, and administrative expenses
|
|
(795.3
|
)
|
|
(793.6
|
)
|
|
(1,542.0
|
)
|
|
(1,535.5
|
)
|
||||
Impairment of assets
|
|
(6.1
|
)
|
|
(9.8
|
)
|
|
(7.3
|
)
|
|
(11.1
|
)
|
||||
Restructuring and other charges
|
|
(14.5
|
)
|
|
(15.9
|
)
|
|
(44.1
|
)
|
|
(38.3
|
)
|
||||
Total other operating expenses, net
|
|
(815.9
|
)
|
|
(819.3
|
)
|
|
(1,593.4
|
)
|
|
(1,584.9
|
)
|
||||
Operating income
|
|
233.1
|
|
|
210.0
|
|
|
376.4
|
|
|
340.1
|
|
||||
Interest expense
|
|
(4.4
|
)
|
|
(6.0
|
)
|
|
(8.6
|
)
|
|
(10.4
|
)
|
||||
Interest income
|
|
9.6
|
|
|
10.4
|
|
|
21.2
|
|
|
19.6
|
|
||||
Other income (expense), net
|
|
(1.7
|
)
|
|
0.4
|
|
|
(5.8
|
)
|
|
(1.6
|
)
|
||||
Income before income taxes
|
|
236.6
|
|
|
214.8
|
|
|
383.2
|
|
|
347.7
|
|
||||
Income tax provision
|
|
(54.5
|
)
|
|
(44.5
|
)
|
|
(84.0
|
)
|
|
(68.4
|
)
|
||||
Net income
|
|
$
|
182.1
|
|
|
$
|
170.3
|
|
|
$
|
299.2
|
|
|
$
|
279.3
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
2.37
|
|
|
$
|
2.09
|
|
|
$
|
3.86
|
|
|
$
|
3.42
|
|
Diluted
|
|
$
|
2.34
|
|
|
$
|
2.07
|
|
|
$
|
3.79
|
|
|
$
|
3.37
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
76.7
|
|
|
81.3
|
|
|
77.4
|
|
|
81.6
|
|
||||
Diluted
|
|
77.9
|
|
|
82.3
|
|
|
78.9
|
|
|
82.8
|
|
||||
Dividends declared per share
|
|
$
|
0.6875
|
|
|
$
|
0.625
|
|
|
$
|
1.375
|
|
|
$
|
1.25
|
|
|
3
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Net income
|
|
$
|
182.1
|
|
|
$
|
170.3
|
|
|
$
|
299.2
|
|
|
$
|
279.3
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation losses
|
|
(19.9
|
)
|
|
(6.2
|
)
|
|
(15.9
|
)
|
|
(36.9
|
)
|
||||
Net gains (losses) on cash flow hedges
|
|
13.6
|
|
|
(0.2
|
)
|
|
3.9
|
|
|
27.5
|
|
||||
Net gains on defined benefit plans
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Other comprehensive loss, net of tax
|
|
(6.2
|
)
|
|
(6.4
|
)
|
|
(12.0
|
)
|
|
(9.3
|
)
|
||||
Total comprehensive income
|
|
$
|
175.9
|
|
|
$
|
163.9
|
|
|
$
|
287.2
|
|
|
$
|
270.0
|
|
|
4
|
|
|
|
Six Months Ended
|
||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
||||
|
|
(millions)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
299.2
|
|
|
$
|
279.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
132.8
|
|
|
140.0
|
|
||
Deferred income tax expense (benefit)
|
|
(15.4
|
)
|
|
11.2
|
|
||
Non-cash stock-based compensation expense
|
|
50.8
|
|
|
42.8
|
|
||
Non-cash impairment of assets
|
|
7.3
|
|
|
11.1
|
|
||
Non-cash restructuring-related inventory charges
|
|
1.0
|
|
|
—
|
|
||
Other non-cash charges
|
|
3.1
|
|
|
6.2
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(91.0
|
)
|
|
(18.7
|
)
|
||
Inventories
|
|
(203.3
|
)
|
|
(251.8
|
)
|
||
Prepaid expenses and other current assets
|
|
(47.1
|
)
|
|
(49.8
|
)
|
||
Accounts payable and accrued liabilities
|
|
47.3
|
|
|
3.4
|
|
||
Income tax receivables and payables
|
|
17.1
|
|
|
29.5
|
|
||
Deferred income
|
|
0.9
|
|
|
(11.6
|
)
|
||
Other balance sheet changes
|
|
1.4
|
|
|
21.4
|
|
||
Net cash provided by operating activities
|
|
204.1
|
|
|
213.0
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(130.6
|
)
|
|
(93.1
|
)
|
||
Purchases of investments
|
|
(571.6
|
)
|
|
(1,822.8
|
)
|
||
Proceeds from sales and maturities of investments
|
|
976.1
|
|
|
1,211.4
|
|
||
Acquisitions and ventures
|
|
0.9
|
|
|
(4.5
|
)
|
||
Proceeds from sale of property
|
|
20.8
|
|
|
—
|
|
||
Settlement of net investment hedges
|
|
—
|
|
|
(23.8
|
)
|
||
Net cash provided by (used in) investing activities
|
|
295.6
|
|
|
(732.8
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Repayments of short-term debt
|
|
—
|
|
|
(9.9
|
)
|
||
Proceeds from the issuance of long-term debt
|
|
—
|
|
|
398.1
|
|
||
Repayments of long-term debt
|
|
—
|
|
|
(300.0
|
)
|
||
Payments of finance lease obligations
|
|
(7.7
|
)
|
|
(10.5
|
)
|
||
Payments of dividends
|
|
(101.9
|
)
|
|
(91.3
|
)
|
||
Repurchases of common stock, including shares surrendered for tax withholdings
|
|
(442.7
|
)
|
|
(223.9
|
)
|
||
Proceeds from exercise of stock options
|
|
—
|
|
|
21.8
|
|
||
Other financing activities
|
|
(0.7
|
)
|
|
(2.8
|
)
|
||
Net cash used in financing activities
|
|
(553.0
|
)
|
|
(218.5
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(9.9
|
)
|
|
(20.7
|
)
|
||
Net decrease in cash, cash equivalents, and restricted cash
|
|
(63.2
|
)
|
|
(759.0
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
626.5
|
|
|
1,355.5
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
563.3
|
|
|
$
|
596.5
|
|
|
5
|
|
|
|
Three Months Ended September 28, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock(a)
|
|
Additional
Paid-in
Capital
|
|
|
|
Treasury Stock
at Cost
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Retained
Earnings
|
|
|
|
|
Total
Equity
|
|||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
AOCI(b)
|
|
|||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||
Balance at June 29, 2019
|
|
129.6
|
|
|
$
|
1.3
|
|
|
$
|
2,516.8
|
|
|
$
|
5,878.6
|
|
|
52.4
|
|
|
$
|
(5,274.7
|
)
|
|
$
|
(109.2
|
)
|
|
$
|
3,012.8
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
182.1
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6.2
|
)
|
|
|
|||||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175.9
|
|
|||||||||||||
Dividends declared
|
|
|
|
|
|
|
|
(51.3
|
)
|
|
|
|
|
|
|
|
(51.3
|
)
|
||||||||||||
Repurchases of common stock
|
|
|
|
|
|
|
|
|
|
2.7
|
|
|
(251.6
|
)
|
|
|
|
(251.6
|
)
|
|||||||||||
Stock-based compensation
|
|
|
|
|
|
27.8
|
|
|
|
|
|
|
|
|
|
|
27.8
|
|
||||||||||||
Shares issued pursuant to stock-based
compensation plans
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Balance at September 28, 2019
|
|
129.7
|
|
|
$
|
1.3
|
|
|
$
|
2,544.6
|
|
|
$
|
6,009.4
|
|
|
55.1
|
|
|
$
|
(5,526.3
|
)
|
|
$
|
(115.4
|
)
|
|
$
|
2,913.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended September 29, 2018
|
||||||||||||||||||||||||||||
|
|
Common Stock(a)
|
|
Additional
Paid-in
Capital
|
|
|
|
Treasury Stock
at Cost
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Retained
Earnings
|
|
|
|
|
Total
Equity
|
|||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
AOCI(b)
|
|
|||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||
Balance at June 30, 2018
|
|
128.7
|
|
|
$
|
1.3
|
|
|
$
|
2,426.7
|
|
|
$
|
5,805.4
|
|
|
47.5
|
|
|
$
|
(4,711.0
|
)
|
|
$
|
(101.4
|
)
|
|
$
|
3,421.0
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
170.3
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6.4
|
)
|
|
|
|||||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163.9
|
|
|||||||||||||
Dividends declared
|
|
|
|
|
|
|
|
(50.3
|
)
|
|
|
|
|
|
|
|
(50.3
|
)
|
||||||||||||
Repurchases of common stock
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
(93.9
|
)
|
|
|
|
(93.9
|
)
|
|||||||||||
Stock-based compensation
|
|
|
|
|
|
21.3
|
|
|
|
|
|
|
|
|
|
|
21.3
|
|
||||||||||||
Shares issued pursuant to stock-based
compensation plans
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Balance at September 29, 2018
|
|
128.8
|
|
|
$
|
1.3
|
|
|
$
|
2,448.0
|
|
|
$
|
5,925.4
|
|
|
48.3
|
|
|
$
|
(4,804.9
|
)
|
|
$
|
(107.8
|
)
|
|
$
|
3,462.0
|
|
|
(a)
|
Includes Class A and Class B common stock. During the three months ended September 28, 2019, 0.5 million shares of Class B common stock were converted into an equal number of shares of Class A common stock pursuant to the terms of the Class B common stock (see Note 15).
|
(b)
|
Accumulated other comprehensive income (loss).
|
|
6
|
|
|
|
Six Months Ended September 28, 2019
|
||||||||||||||||||||||||||||
|
|
Common Stock(a)
|
|
Additional
Paid-in
Capital
|
|
|
|
Treasury Stock
at Cost
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Retained
Earnings
|
|
|
|
|
Total
Equity
|
|||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
AOCI(b)
|
|
|||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||
Balance at March 30, 2019
|
|
128.8
|
|
|
$
|
1.3
|
|
|
$
|
2,493.8
|
|
|
$
|
5,979.1
|
|
|
50.7
|
|
|
$
|
(5,083.6
|
)
|
|
$
|
(103.4
|
)
|
|
$
|
3,287.2
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
299.2
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.0
|
)
|
|
|
|||||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287.2
|
|
|||||||||||||
Dividends declared
|
|
|
|
|
|
|
|
(104.4
|
)
|
|
|
|
|
|
|
|
(104.4
|
)
|
||||||||||||
Repurchases of common stock
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
(442.7
|
)
|
|
|
|
(442.7
|
)
|
|||||||||||
Stock-based compensation
|
|
|
|
|
|
50.8
|
|
|
|
|
|
|
|
|
|
|
50.8
|
|
||||||||||||
Shares issued pursuant to stock-based
compensation plans
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Cumulative adjustments from adoption of new accounting standards (see Note 4)
|
|
|
|
|
|
|
|
(164.5
|
)
|
|
|
|
|
|
|
|
(164.5
|
)
|
||||||||||||
Balance at September 28, 2019
|
|
129.7
|
|
|
$
|
1.3
|
|
|
$
|
2,544.6
|
|
|
$
|
6,009.4
|
|
|
55.1
|
|
|
$
|
(5,526.3
|
)
|
|
$
|
(115.4
|
)
|
|
$
|
2,913.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Six Months Ended September 29, 2018
|
||||||||||||||||||||||||||||
|
|
Common Stock(a)
|
|
Additional
Paid-in
Capital
|
|
|
|
Treasury Stock
at Cost
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Retained
Earnings
|
|
|
|
|
Total
Equity
|
|||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
AOCI(b)
|
|
|||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||
Balance at March 31, 2018
|
|
127.9
|
|
|
$
|
1.3
|
|
|
$
|
2,383.4
|
|
|
$
|
5,752.2
|
|
|
46.6
|
|
|
$
|
(4,581.0
|
)
|
|
$
|
(98.5
|
)
|
|
$
|
3,457.4
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
279.3
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.3
|
)
|
|
|
|||||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270.0
|
|
|||||||||||||
Dividends declared
|
|
|
|
|
|
|
|
(101.0
|
)
|
|
|
|
|
|
|
|
(101.0
|
)
|
||||||||||||
Repurchases of common stock
|
|
|
|
|
|
|
|
|
|
1.7
|
|
|
(223.9
|
)
|
|
|
|
(223.9
|
)
|
|||||||||||
Stock-based compensation
|
|
|
|
|
|
42.8
|
|
|
|
|
|
|
|
|
|
|
42.8
|
|
||||||||||||
Shares issued pursuant to stock-based
compensation plans
|
|
0.9
|
|
|
—
|
|
|
21.8
|
|
|
|
|
|
|
|
|
|
|
21.8
|
|
||||||||||
Cumulative adjustments from adoption of new accounting standards
|
|
|
|
|
|
|
|
(5.1
|
)
|
|
|
|
|
|
|
|
(5.1
|
)
|
||||||||||||
Balance at September 29, 2018
|
|
128.8
|
|
|
$
|
1.3
|
|
|
$
|
2,448.0
|
|
|
$
|
5,925.4
|
|
|
48.3
|
|
|
$
|
(4,804.9
|
)
|
|
$
|
(107.8
|
)
|
|
$
|
3,462.0
|
|
|
(a)
|
Includes Class A and Class B common stock. During the six months ended September 28, 2019, 1.0 million shares of Class B common stock were converted into an equal number of shares of Class A common stock pursuant to the terms of the Class B common stock (see Note 15).
|
(b)
|
Accumulated other comprehensive income (loss).
|
|
7
|
|
1.
|
Description of Business
|
2.
|
Basis of Presentation
|
|
8
|
|
3.
|
Summary of Significant Accounting Policies
|
|
9
|
|
|
|
Contractually-Guaranteed
Minimum Royalties(a)
|
||
|
|
(millions)
|
||
Remainder of Fiscal 2020
|
|
$
|
57.0
|
|
Fiscal 2021
|
|
116.5
|
|
|
Fiscal 2022
|
|
78.4
|
|
|
Fiscal 2023
|
|
42.8
|
|
|
Fiscal 2024 and thereafter
|
|
25.6
|
|
|
Total
|
|
$
|
320.3
|
|
|
(a)
|
Amounts presented do not contemplate anticipated contract renewals or royalties earned in excess of contractually guaranteed minimums.
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||||||
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||||||||||||||||||||||||||||||
|
|
North America
|
|
Europe
|
|
Asia
|
|
Other
|
|
Total
|
|
North America
|
|
Europe
|
|
Asia
|
|
Other
|
|
Total
|
||||||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||||||||||||
Sales Channel(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail
|
|
$
|
457.9
|
|
|
$
|
238.6
|
|
|
$
|
233.3
|
|
|
$
|
45.4
|
|
|
$
|
975.2
|
|
|
$
|
435.4
|
|
|
$
|
227.6
|
|
|
$
|
222.5
|
|
|
$
|
47.4
|
|
|
$
|
932.9
|
|
Wholesale
|
|
423.3
|
|
|
241.6
|
|
|
22.0
|
|
|
1.9
|
|
|
688.8
|
|
|
452.8
|
|
|
237.1
|
|
|
22.2
|
|
|
1.5
|
|
|
713.6
|
|
||||||||||
Licensing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42.2
|
|
|
42.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44.4
|
|
|
44.4
|
|
||||||||||
Total
|
|
$
|
881.2
|
|
|
$
|
480.2
|
|
|
$
|
255.3
|
|
|
$
|
89.5
|
|
|
$
|
1,706.2
|
|
|
$
|
888.2
|
|
|
$
|
464.7
|
|
|
$
|
244.7
|
|
|
$
|
93.3
|
|
|
$
|
1,690.9
|
|
|
10
|
|
|
|
Six Months Ended
|
||||||||||||||||||||||||||||||||||||||
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||||||||||||||||||||||||||||||
|
|
North America
|
|
Europe
|
|
Asia
|
|
Other
|
|
Total
|
|
North America
|
|
Europe
|
|
Asia
|
|
Other
|
|
Total
|
||||||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||||||||||||
Sales Channel(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Retail
|
|
$
|
861.0
|
|
|
$
|
457.1
|
|
|
$
|
479.8
|
|
|
$
|
94.9
|
|
|
$
|
1,892.8
|
|
|
$
|
822.9
|
|
|
$
|
440.2
|
|
|
$
|
457.9
|
|
|
$
|
97.3
|
|
|
$
|
1,818.3
|
|
Wholesale
|
|
739.6
|
|
|
383.9
|
|
|
34.1
|
|
|
3.7
|
|
|
1,161.3
|
|
|
762.9
|
|
|
379.8
|
|
|
34.8
|
|
|
2.3
|
|
|
1,179.8
|
|
||||||||||
Licensing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80.9
|
|
|
80.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83.4
|
|
|
83.4
|
|
||||||||||
Total
|
|
$
|
1,600.6
|
|
|
$
|
841.0
|
|
|
$
|
513.9
|
|
|
$
|
179.5
|
|
|
$
|
3,135.0
|
|
|
$
|
1,585.8
|
|
|
$
|
820.0
|
|
|
$
|
492.7
|
|
|
$
|
183.0
|
|
|
$
|
3,081.5
|
|
|
(a)
|
Net revenues from the Company's retail and wholesale businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Shipping costs
|
|
$
|
12.5
|
|
|
$
|
10.9
|
|
|
$
|
22.4
|
|
|
$
|
19.6
|
|
Handling costs
|
|
39.5
|
|
|
39.0
|
|
|
75.7
|
|
|
74.7
|
|
|
11
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||
|
|
(millions)
|
||||||||||
Basic shares
|
|
76.7
|
|
|
81.3
|
|
|
77.4
|
|
|
81.6
|
|
Dilutive effect of stock options and RSUs
|
|
1.2
|
|
|
1.0
|
|
|
1.5
|
|
|
1.2
|
|
Diluted shares
|
|
77.9
|
|
|
82.3
|
|
|
78.9
|
|
|
82.8
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Beginning reserve balance
|
|
$
|
165.5
|
|
|
$
|
167.2
|
|
|
$
|
176.5
|
|
|
$
|
202.5
|
|
Amount charged against revenue to increase reserve
|
|
168.6
|
|
|
150.5
|
|
|
282.5
|
|
|
250.2
|
|
||||
Amount credited against customer accounts to decrease reserve
|
|
(135.8
|
)
|
|
(119.2
|
)
|
|
(261.7
|
)
|
|
(249.3
|
)
|
||||
Foreign currency translation
|
|
(2.8
|
)
|
|
0.2
|
|
|
(1.8
|
)
|
|
(4.7
|
)
|
||||
Ending reserve balance
|
|
$
|
195.5
|
|
|
$
|
198.7
|
|
|
$
|
195.5
|
|
|
$
|
198.7
|
|
|
12
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Beginning reserve balance
|
|
$
|
15.0
|
|
|
$
|
18.7
|
|
|
$
|
15.7
|
|
|
$
|
19.7
|
|
Amount recorded to expense to increase (decrease) reserve(a)
|
|
1.4
|
|
|
(0.5
|
)
|
|
1.5
|
|
|
(0.5
|
)
|
||||
Amount written-off against customer accounts to decrease reserve
|
|
(0.4
|
)
|
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(1.4
|
)
|
||||
Foreign currency translation
|
|
(0.4
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
(0.6
|
)
|
||||
Ending reserve balance
|
|
$
|
15.6
|
|
|
$
|
17.2
|
|
|
$
|
15.6
|
|
|
$
|
17.2
|
|
|
(a)
|
Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.
|
|
13
|
|
|
14
|
|
•
|
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.
|
•
|
Settlement of Foreign Currency Balances — recognized within other income (expense), net during the period that the hedged balance is remeasured through earnings, generally through its ultimate settlement when the related payment occurs.
|
|
15
|
|
4.
|
Recently Issued Accounting Standards
|
|
16
|
|
|
17
|
|
5.
|
Property and Equipment
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
Land and improvements
|
|
$
|
15.3
|
|
|
$
|
15.3
|
|
Buildings and improvements
|
|
312.6
|
|
|
387.8
|
|
||
Furniture and fixtures
|
|
629.9
|
|
|
626.4
|
|
||
Machinery and equipment
|
|
359.2
|
|
|
350.4
|
|
||
Capitalized software
|
|
549.5
|
|
|
534.0
|
|
||
Leasehold improvements
|
|
1,182.7
|
|
|
1,169.4
|
|
||
Construction in progress
|
|
110.8
|
|
|
58.7
|
|
||
|
|
3,160.0
|
|
|
3,142.0
|
|
||
Less: accumulated depreciation
|
|
(2,149.0
|
)
|
|
(2,102.8
|
)
|
||
Property and equipment, net
|
|
$
|
1,011.0
|
|
|
$
|
1,039.2
|
|
6.
|
Other Assets and Liabilities
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
Other taxes receivable
|
|
$
|
59.2
|
|
|
$
|
137.9
|
|
Non-trade receivables
|
|
30.5
|
|
|
30.8
|
|
||
Tenant allowances receivable
|
|
24.8
|
|
|
8.2
|
|
||
Derivative financial instruments
|
|
23.2
|
|
|
19.8
|
|
||
Inventory return asset
|
|
22.1
|
|
|
18.4
|
|
||
Prepaid software maintenance
|
|
21.2
|
|
|
19.8
|
|
||
Prepaid occupancy costs
|
|
16.1
|
|
|
38.0
|
|
||
Prepaid advertising and marketing
|
|
13.9
|
|
|
9.6
|
|
||
Restricted cash
|
|
7.1
|
|
|
11.9
|
|
||
Asset held-for-sale(a)
|
|
—
|
|
|
20.8
|
|
||
Other prepaid expenses and current assets
|
|
49.8
|
|
|
44.1
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
267.9
|
|
|
$
|
359.3
|
|
|
(a)
|
Balance as of March 30, 2019 related to the estimated fair value, less costs to sell, of the Company's corporate jet. The jet was sold during the first quarter of Fiscal 2020 with no gain or loss recognized on sale. The Company donated the $20.8 million net cash proceeds received from the sale to the Polo Ralph Lauren Foundation, a non-profit, charitable foundation that supports various philanthropic programs.
|
|
18
|
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
|
|
|
|
|
||||
Derivative financial instruments
|
|
$
|
30.2
|
|
|
$
|
12.2
|
|
Security deposits
|
|
27.7
|
|
|
24.5
|
|
||
Restricted cash
|
|
8.1
|
|
|
30.5
|
|
||
Non-current investments
|
|
—
|
|
|
44.9
|
|
||
Other non-current assets
|
|
34.0
|
|
|
46.4
|
|
||
Total other non-current assets
|
|
$
|
100.0
|
|
|
$
|
158.5
|
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
Accrued operating expenses
|
|
$
|
191.4
|
|
|
$
|
235.2
|
|
Accrued inventory
|
|
171.5
|
|
|
141.0
|
|
||
Accrued payroll and benefits
|
|
152.0
|
|
|
232.5
|
|
||
Other taxes payable
|
|
66.8
|
|
|
158.3
|
|
||
Accrued capital expenditures
|
|
55.3
|
|
|
47.6
|
|
||
Dividends payable
|
|
51.3
|
|
|
48.8
|
|
||
Restructuring reserve
|
|
31.5
|
|
|
60.4
|
|
||
Deferred income
|
|
15.1
|
|
|
14.1
|
|
||
Finance lease obligations
|
|
10.7
|
|
|
22.3
|
|
||
Derivative financial instruments
|
|
5.2
|
|
|
3.6
|
|
||
Other accrued expenses and current liabilities
|
|
4.3
|
|
|
4.6
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
755.1
|
|
|
$
|
968.4
|
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
Finance lease obligations
|
|
$
|
196.1
|
|
|
$
|
212.6
|
|
Deferred lease incentives and obligations
|
|
62.1
|
|
|
202.7
|
|
||
Accrued benefits and deferred compensation
|
|
20.1
|
|
|
26.2
|
|
||
Deferred tax liabilities
|
|
13.1
|
|
|
50.2
|
|
||
Restructuring reserve
|
|
2.9
|
|
|
11.4
|
|
||
Derivative financial instruments
|
|
—
|
|
|
11.9
|
|
||
Other non-current liabilities
|
|
24.8
|
|
|
25.9
|
|
||
Total other non-current liabilities
|
|
$
|
319.1
|
|
|
$
|
540.9
|
|
|
19
|
|
7.
|
Impairment of Assets
|
8.
|
Restructuring and Other Charges
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
|
Cumulative Charges
|
||||||||||
|
|
(millions)
|
||||||||||||||||||
Cash-related restructuring charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance and benefit costs
|
|
$
|
9.0
|
|
|
$
|
9.0
|
|
|
$
|
14.9
|
|
|
$
|
17.2
|
|
|
$
|
75.1
|
|
Lease termination and store closure costs
|
|
0.2
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
2.3
|
|
|||||
Other cash charges
|
|
0.3
|
|
|
1.6
|
|
|
1.1
|
|
|
1.6
|
|
|
8.5
|
|
|||||
Total cash-related restructuring charges
|
|
9.5
|
|
|
10.6
|
|
|
16.5
|
|
|
18.8
|
|
|
85.9
|
|
|||||
Non-cash charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impairment of assets (see Note 7)
|
|
2.3
|
|
|
4.5
|
|
|
3.5
|
|
|
5.8
|
|
|
13.8
|
|
|||||
Inventory-related charges(a)
|
|
0.4
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
7.0
|
|
|||||
Accelerated stock-based compensation
expense(b)
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
|||||
Loss on sale of property(c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.6
|
|
|||||
Total non-cash charges
|
|
6.3
|
|
|
4.5
|
|
|
8.1
|
|
|
5.8
|
|
|
36.0
|
|
|||||
Total charges
|
|
$
|
15.8
|
|
|
$
|
15.1
|
|
|
$
|
24.6
|
|
|
$
|
24.6
|
|
|
$
|
121.9
|
|
|
(a)
|
Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
20
|
|
(b)
|
Accelerated stock-based compensation, 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.
|
(c)
|
Loss on sale of property, which was recorded within restructuring and other charges in the consolidated statements of operations during the third quarter of Fiscal 2019, was incurred in connection with the sale of one of the Company's distribution centers in North America. Total cash proceeds from the sale were $20.0 million.
|
|
|
Severance and Benefit Costs
|
|
Lease Termination
and Store
Closure Costs
|
|
Other Cash Charges
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at March 30, 2019
|
|
$
|
41.0
|
|
|
$
|
0.5
|
|
|
$
|
0.1
|
|
|
$
|
41.6
|
|
Additions charged to expense
|
|
14.9
|
|
|
0.5
|
|
|
1.1
|
|
|
16.5
|
|
||||
Cash payments charged against reserve
|
|
(27.9
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(28.9
|
)
|
||||
Non-cash adjustments(a)
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
||||
Balance at September 28, 2019
|
|
$
|
28.0
|
|
|
$
|
0.1
|
|
|
$
|
0.7
|
|
|
$
|
28.8
|
|
|
(a)
|
Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4).
|
|
|
Severance and Benefit Costs
|
|
Lease Termination
and Store
Closure Costs
|
|
Other Cash Charges
|
|
Total
|
||||||||
|
|
(millions)
|
||||||||||||||
Balance at March 30, 2019
|
|
$
|
6.5
|
|
|
$
|
23.3
|
|
|
$
|
0.4
|
|
|
$
|
30.2
|
|
Additions charged to expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash payments charged against reserve
|
|
(4.1
|
)
|
|
(1.5
|
)
|
|
(0.1
|
)
|
|
(5.7
|
)
|
||||
Non-cash adjustments(a)
|
|
—
|
|
|
(18.9
|
)
|
|
—
|
|
|
(18.9
|
)
|
||||
Balance at September 28, 2019
|
|
$
|
2.4
|
|
|
$
|
2.9
|
|
|
$
|
0.3
|
|
|
$
|
5.6
|
|
|
(a)
|
Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4).
|
|
21
|
|
9.
|
Income Taxes
|
|
22
|
|
10.
|
Debt
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
$300 million 2.625% Senior Notes(a)
|
|
$
|
297.3
|
|
|
$
|
293.4
|
|
$400 million 3.750% Senior Notes(b)
|
|
396.1
|
|
|
395.7
|
|
||
Total debt
|
|
693.4
|
|
|
689.1
|
|
||
Less: current portion of long-term debt
|
|
297.3
|
|
|
—
|
|
||
Long-term debt
|
|
$
|
396.1
|
|
|
$
|
689.1
|
|
|
(a)
|
The carrying value of the 2.625% Senior Notes as of September 28, 2019 and March 30, 2019 reflects adjustments of $2.3 million and $5.9 million, respectively, associated with the Company's related interest rate swap contract (see Note 12). The carrying value of the 2.625% Senior Notes is also presented net of unamortized debt issuance costs and discount of $0.4 million and $0.7 million as of September 28, 2019 and March 30, 2019, respectively.
|
(b)
|
The carrying value of the 3.750% Senior Notes is presented net of unamortized debt issuance costs and discount of $3.9 million and $4.3 million as of September 28, 2019 and March 30, 2019, respectively.
|
|
23
|
|
|
24
|
|
•
|
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 3, 2020, which is also able to be used to support bank guarantees.
|
•
|
South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 30 billion South Korean Won (approximately $25 million) through October 30, 2020.
|
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.
|
|
25
|
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
Investments in commercial paper(a)(b)
|
|
$
|
218.0
|
|
|
$
|
290.7
|
|
Derivative assets(a)
|
|
53.4
|
|
|
32.0
|
|
||
Derivative liabilities(a)
|
|
5.2
|
|
|
15.5
|
|
|
(a)
|
Based on Level 2 measurements.
|
(b)
|
Amount as of September 28, 2019 was included within short-term investments in the consolidated balance sheet. As of March 30, 2019, $54.7 million was included within cash and cash equivalents and $236.0 million was included within short-term investments in the consolidated balance sheet.
|
|
|
September 28, 2019
|
|
March 30, 2019
|
||||||||||||
|
|
Carrying Value(a)
|
|
Fair Value(b)
|
|
Carrying Value(a)
|
|
Fair Value(b)
|
||||||||
|
|
(millions)
|
||||||||||||||
$300 million 2.625% Senior Notes
|
|
$
|
297.3
|
|
|
$
|
301.1
|
|
|
$
|
293.4
|
|
|
$
|
299.1
|
|
$400 million 3.750% Senior Notes
|
|
396.1
|
|
|
430.5
|
|
|
395.7
|
|
|
410.0
|
|
|
(a)
|
See Note 10 for discussion of the carrying values of the Company's senior notes.
|
(b)
|
Based on Level 2 measurements.
|
|
26
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||||||
Long-Lived Asset Category
|
|
Fair Value
As of Impairment Date
|
|
Total Impairments
|
|
Fair Value
As of Impairment Date
|
|
Total Impairments
|
||||||||
|
|
(millions)
|
||||||||||||||
Property and equipment, net
|
|
$
|
5.5
|
|
|
$
|
1.7
|
|
|
$
|
—
|
|
|
$
|
9.8
|
|
Operating lease right-of-use assets
|
|
19.2
|
|
|
4.4
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Six Months Ended
|
||||||||||||||
|
|
September 28, 2019
|
|
September 29, 2018
|
||||||||||||
Long-Lived Asset Category
|
|
Fair Value
As of Impairment Date
|
|
Total Impairments
|
|
Fair Value
As of Impairment Date
|
|
Total Impairments
|
||||||||
|
|
(millions)
|
||||||||||||||
Property and equipment, net
|
|
$
|
5.5
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
11.1
|
|
Operating lease right-of-use assets
|
|
112.1
|
|
|
229.8
|
|
(a)
|
N/A
|
|
|
N/A
|
|
|
(a)
|
Includes $225.1 million recorded in connection with the Company's adoption of ASC 2016-02 as of the beginning of Fiscal 2020 which, net of related income tax benefits, reduced its opening retained earnings balance by $169.4 million (see Note 4).
|
|
27
|
|
12.
|
Financial Instruments
|
|
|
Notional Amounts
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||
Derivative Instrument(a)
|
|
September 28,
2019 |
|
March 30,
2019 |
|
September 28,
2019 |
|
March 30,
2019 |
|
September 28,
2019 |
|
March 30,
2019 |
||||||||||||||||||||
|
|
|
|
|
|
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
|
|
$
|
612.4
|
|
|
$
|
636.3
|
|
|
(e)
|
|
$
|
24.6
|
|
|
PP
|
|
$
|
19.5
|
|
|
AE
|
|
$
|
2.8
|
|
|
AE
|
|
$
|
2.3
|
|
IRS — Fixed-rate debt
|
|
300.0
|
|
|
300.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
AE
|
|
2.3
|
|
|
ONCL
|
|
5.9
|
|
||||||
Net investment hedges(c)
|
|
676.7
|
|
|
695.3
|
|
|
(f)
|
|
28.5
|
|
|
ONCA
|
|
12.2
|
|
|
|
|
—
|
|
|
ONCL
|
|
6.0
|
|
||||||
Total Designated Hedges
|
|
1,589.1
|
|
|
1,631.6
|
|
|
|
|
53.1
|
|
|
|
|
31.7
|
|
|
|
|
5.1
|
|
|
|
|
14.2
|
|
||||||
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FC — Undesignated hedges(d)
|
|
201.3
|
|
|
146.6
|
|
|
PP
|
|
0.3
|
|
|
PP
|
|
0.3
|
|
|
AE
|
|
0.1
|
|
|
AE
|
|
1.3
|
|
||||||
Total Hedges
|
|
$
|
1,790.4
|
|
|
$
|
1,778.2
|
|
|
|
|
$
|
53.4
|
|
|
|
|
$
|
32.0
|
|
|
|
|
$
|
5.2
|
|
|
|
|
$
|
15.5
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts.
|
(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)
|
Includes cross-currency swaps designated as hedges of the Company's net investment in certain foreign operations.
|
(d)
|
Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.
|
(e)
|
$21.9 million included within prepaid expenses and other current assets and $2.7 million included within other non-current assets.
|
(f)
|
$1.0 million included within prepaid expenses and other current assets and $27.5 million included within other non-current assets.
|
|
|
September 28, 2019
|
|
March 30, 2019
|
||||||||||||||||||||
|
|
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
|
|
$
|
53.4
|
|
|
$
|
(4.6
|
)
|
|
$
|
48.8
|
|
|
$
|
32.0
|
|
|
$
|
(4.8
|
)
|
|
$
|
27.2
|
|
Derivative liabilities
|
|
5.2
|
|
|
(4.6
|
)
|
|
0.6
|
|
|
15.5
|
|
|
(4.8
|
)
|
|
10.7
|
|
|
28
|
|
|
|
Gains (Losses)
Recognized in OCI
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Designated Hedges:
|
|
|
|
|
|
|
|
|
||||||||
FC — Cash flow hedges
|
|
$
|
20.0
|
|
|
$
|
1.3
|
|
|
$
|
15.6
|
|
|
$
|
27.4
|
|
Net investment hedges — effective portion
|
|
27.1
|
|
|
2.8
|
|
|
17.1
|
|
|
40.2
|
|
||||
Net investment hedges — portion excluded from assessment of hedge effectiveness
|
|
2.7
|
|
|
(8.5
|
)
|
|
5.2
|
|
|
(6.7
|
)
|
||||
Total Designated Hedges
|
|
$
|
49.8
|
|
|
$
|
(4.4
|
)
|
|
$
|
37.9
|
|
|
$
|
60.9
|
|
|
|
Location and Amount of Gains (Losses)
from Cash Flow Hedges Reclassified from AOCI to Earnings
|
||||||||||||||||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||||||||||||||||||
|
|
Cost of goods sold
|
|
Other income (expense), net
|
|
Cost of goods sold
|
|
Other income (expense), net
|
|
Cost of
goods sold
|
|
Other income (expense), net
|
|
Cost of
goods sold
|
|
Other income (expense), net
|
||||||||||||||||
|
|
(millions)
|
||||||||||||||||||||||||||||||
Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded
|
|
$
|
(657.2
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
(661.6
|
)
|
|
$
|
0.4
|
|
|
$
|
(1,165.2
|
)
|
|
$
|
(5.8
|
)
|
|
$
|
(1,156.5
|
)
|
|
$
|
(1.6
|
)
|
Effects of cash flow hedging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
FC — Cash flow hedges
|
|
4.4
|
|
|
0.2
|
|
|
0.7
|
|
|
0.7
|
|
|
10.6
|
|
|
0.4
|
|
|
(5.5
|
)
|
|
2.1
|
|
|
|
Gains (Losses) from Net Investment Hedges
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings |
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
|
|||||||||
|
|
(millions)
|
|
|
||||||||||||||
Net Investment Hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment hedges — portion excluded from assessment of hedge effectiveness(a)
|
|
$
|
4.8
|
|
|
$
|
4.8
|
|
|
$
|
9.8
|
|
|
$
|
9.1
|
|
|
Interest expense
|
Total Net Investment Hedges
|
|
$
|
4.8
|
|
|
$
|
4.8
|
|
|
$
|
9.8
|
|
|
$
|
9.1
|
|
|
|
|
(a)
|
Amounts recognized in other comprehensive income (loss) ("OCI") related to the effective portion of the Company's net investment hedges would be recognized in earnings only upon the sale or liquidation of the hedged net investment.
|
|
29
|
|
|
|
Gains (Losses)
Recognized in Earnings
|
|
Location of Gains (Losses)
Recognized in Earnings
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
|
|||||||||
|
|
(millions)
|
|
|
||||||||||||||
Undesignated Hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
FC — Undesignated hedges
|
|
$
|
3.2
|
|
|
$
|
2.6
|
|
|
$
|
5.1
|
|
|
$
|
5.7
|
|
|
Other income (expense), net
|
Total Undesignated Hedges
|
|
$
|
3.2
|
|
|
$
|
2.6
|
|
|
$
|
5.1
|
|
|
$
|
5.7
|
|
|
|
|
|
|
|
Carrying Value of
the Hedged Item
|
|
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item
|
||||||||||||
Hedged Item
|
|
Balance Sheet Line in which the Hedged Item is Included
|
|
September 28,
2019 |
|
March 30,
2019 |
|
September 28,
2019 |
|
March 30,
2019 |
||||||||
|
|
|
|
(millions)
|
||||||||||||||
$300 million 2.625% Senior Notes
|
|
Current portion of long-term debt
|
|
$
|
297.3
|
|
|
N/A
|
|
|
$
|
(2.3
|
)
|
|
N/A
|
|
||
$300 million 2.625% Senior Notes
|
|
Long-term debt
|
|
N/A
|
|
|
$
|
293.4
|
|
|
N/A
|
|
|
$
|
(5.9
|
)
|
|
30
|
|
|
31
|
|
13.
|
Leases
|
|
|
September 28,
2019 |
|
Location Recorded on Balance Sheet
|
||
|
|
(millions)
|
|
|
||
Assets:
|
|
|
|
|
||
Operating leases
|
|
$
|
1,567.1
|
|
|
Operating lease right-of-use assets
|
Finance leases
|
|
176.5
|
|
|
Property and equipment, net
|
|
Total lease assets
|
|
$
|
1,743.6
|
|
|
|
Liabilities:
|
|
|
|
|
||
Operating leases:
|
|
|
|
|
||
Current portion
|
|
$
|
273.2
|
|
|
Current operating lease liabilities
|
Non-current portion
|
|
1,651.3
|
|
|
Long-term operating lease liabilities
|
|
Total operating lease liabilities
|
|
1,924.5
|
|
|
|
|
Finance leases:
|
|
|
|
|
||
Current portion
|
|
10.7
|
|
|
Accrued expenses and other current liabilities
|
|
Non-current portion
|
|
196.1
|
|
|
Other non-current liabilities
|
|
Total finance lease liabilities
|
|
206.8
|
|
|
|
|
Total lease liabilities
|
|
$
|
2,131.3
|
|
|
|
|
|
September 28, 2019
|
|
|
||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Location Recorded in Earnings
|
||||
|
|
(millions)
|
|
|
||||||
Operating lease cost
|
|
$
|
81.5
|
|
|
$
|
160.1
|
|
|
(a)
|
Finance lease costs:
|
|
|
|
|
|
|
||||
Depreciation of leased assets
|
|
4.7
|
|
|
8.9
|
|
|
SG&A expenses
|
||
Accretion of lease liabilities
|
|
2.1
|
|
|
4.0
|
|
|
Interest expense
|
||
Variable lease cost
|
|
75.7
|
|
|
153.7
|
|
|
(b)
|
||
Short-term lease cost
|
|
1.8
|
|
|
3.5
|
|
|
SG&A expenses
|
||
Sublease income
|
|
(0.8
|
)
|
|
(1.7
|
)
|
|
Restructuring and other charges
|
||
Total lease cost
|
|
$
|
165.0
|
|
|
$
|
328.5
|
|
|
|
|
(a)
|
During the three months ended September 28, 2019, $1.5 million included within cost of goods sold, $76.4 million included within SG&A expenses, and $3.6 million included within restructuring and other charges. During the six months ended September 28, 2019, $2.3 million included within cost of goods sold, $152.4 million included within SG&A expenses, and $5.4 million included within restructuring and other charges.
|
(b)
|
During the three months ended September 28, 2019, $0.5 million included within cost of goods sold, $74.2 million included within SG&A expenses, and $1.0 million included within restructuring and other charges. During the six months ended September 28, 2019, $2.1 million included within cost of goods sold, $150.1 million included within SG&A expenses, and $1.5 million included within restructuring and other charges.
|
|
32
|
|
|
|
September 28, 2019
|
||||||
|
|
Operating
Leases
|
|
Finance
Leases
|
||||
|
|
(millions)
|
||||||
Remainder of Fiscal 2020
|
|
$
|
140.4
|
|
|
$
|
9.0
|
|
Fiscal 2021
|
|
335.0
|
|
|
18.6
|
|
||
Fiscal 2022
|
|
309.8
|
|
|
23.3
|
|
||
Fiscal 2023
|
|
277.4
|
|
|
22.5
|
|
||
Fiscal 2024
|
|
250.7
|
|
|
22.4
|
|
||
Fiscal 2025 and thereafter
|
|
797.1
|
|
|
175.6
|
|
||
Total lease payments
|
|
2,110.4
|
|
|
271.4
|
|
||
Less: interest
|
|
(185.9
|
)
|
|
(64.6
|
)
|
||
Total lease liabilities
|
|
$
|
1,924.5
|
|
|
$
|
206.8
|
|
|
|
September 28, 2019
|
||||
|
|
Operating
Leases
|
|
Finance
Leases
|
||
Weighted-average remaining lease term (years)
|
|
8.1
|
|
|
13.0
|
|
Weighted-average discount rate
|
|
2.1
|
%
|
|
4.1
|
%
|
|
33
|
|
14.
|
Commitments and Contingencies
|
15.
|
Equity
|
|
|
Six Months Ended
|
||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
||||
|
|
(millions)
|
||||||
Cost of shares repurchased
|
|
$
|
400.0
|
|
|
$
|
192.3
|
|
Number of shares repurchased
|
|
4.0
|
|
|
1.4
|
|
|
34
|
|
16.
|
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 March 30, 2019
|
|
$
|
(118.5
|
)
|
|
$
|
20.2
|
|
|
$
|
(5.1
|
)
|
|
$
|
(103.4
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
(11.0
|
)
|
|
13.8
|
|
|
0.1
|
|
|
2.9
|
|
||||
Amounts reclassified from AOCI to earnings
|
|
(4.9
|
)
|
|
(9.9
|
)
|
|
(0.1
|
)
|
|
(14.9
|
)
|
||||
Other comprehensive income (loss), net of tax
|
|
(15.9
|
)
|
|
3.9
|
|
|
—
|
|
|
(12.0
|
)
|
||||
Balance at September 28, 2019
|
|
$
|
(134.4
|
)
|
|
$
|
24.1
|
|
|
$
|
(5.1
|
)
|
|
$
|
(115.4
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at March 31, 2018
|
|
$
|
(79.3
|
)
|
|
$
|
(16.0
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
(98.5
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
OCI before reclassifications
|
|
(36.9
|
)
|
|
24.4
|
|
|
0.2
|
|
|
(12.3
|
)
|
||||
Amounts reclassified from AOCI to earnings
|
|
—
|
|
|
3.1
|
|
|
(0.1
|
)
|
|
3.0
|
|
||||
Other comprehensive income (loss), net of tax
|
|
(36.9
|
)
|
|
27.5
|
|
|
0.1
|
|
|
(9.3
|
)
|
||||
Balance at September 29, 2018
|
|
$
|
(116.2
|
)
|
|
$
|
11.5
|
|
|
$
|
(3.1
|
)
|
|
$
|
(107.8
|
)
|
|
(a)
|
OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes income tax provisions of $4.3 million and $3.4 million for the six-month periods ended September 28, 2019 and September 29, 2018, respectively. OCI before reclassifications to earnings for the six-month periods ended September 28, 2019 and September 29, 2018 includes a gain of $17.0 million (net of a $5.3 million income tax provision) and a gain of $25.4 million (net of an $8.1 million income tax provision), respectively, related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations (see Note 12). Amounts reclassified from AOCI to earnings related to foreign currency translation gains (losses) for the six months ended September 28, 2019 relate to the reclassification to retained earnings of income tax effects stranded in AOCI (see Note 4).
|
(b)
|
OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of income tax provisions of $1.8 million and $3.0 million for the six-month periods ended September 28, 2019 and September 29, 2018, respectively. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.
|
(c)
|
Activity is presented net of taxes, which were immaterial for both periods presented.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Location of
Gains (Losses)
Reclassified from AOCI
to Earnings
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
|
|||||||||
|
|
(millions)
|
|
|
||||||||||||||
Gains (losses) on cash flow hedges(a):
|
|
|
|
|
|
|
|
|
|
|
||||||||
FC — Cash flow hedges
|
|
$
|
4.4
|
|
|
$
|
0.7
|
|
|
$
|
10.6
|
|
|
$
|
(5.5
|
)
|
|
Cost of goods sold
|
FC — Cash flow hedges
|
|
0.2
|
|
|
0.7
|
|
|
0.4
|
|
|
2.1
|
|
|
Other income (expense), net
|
||||
Tax effect
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(1.1
|
)
|
|
0.3
|
|
|
Income tax provision
|
||||
Net of tax
|
|
$
|
4.1
|
|
|
$
|
1.3
|
|
|
$
|
9.9
|
|
|
$
|
(3.1
|
)
|
|
|
|
(a)
|
FC = Forward foreign currency exchange contracts.
|
|
35
|
|
17.
|
Stock-based Compensation
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Compensation expense
|
|
$
|
27.8
|
|
(a)
|
$
|
21.3
|
|
|
$
|
50.8
|
|
(a)
|
$
|
42.8
|
|
Income tax benefit
|
|
(4.1
|
)
|
|
(3.3
|
)
|
|
(7.7
|
)
|
|
(6.5
|
)
|
|
(a)
|
Includes $3.6 million of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations during the second quarter of Fiscal 2020 (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.
|
|
|
Number of Options
|
|
|
|
(thousands)
|
|
Options outstanding at March 30, 2019
|
|
834
|
|
Granted
|
|
—
|
|
Exercised
|
|
—
|
|
Cancelled/Forfeited
|
|
(263
|
)
|
Options outstanding at September 28, 2019
|
|
571
|
|
|
36
|
|
|
|
Number of Shares/Units
|
||||
|
|
Restricted Stock
|
|
Service-based RSUs
|
||
|
|
(thousands)
|
||||
Unvested at March 30, 2019
|
|
10
|
|
|
1,112
|
|
Granted
|
|
—
|
|
|
517
|
|
Vested
|
|
(6
|
)
|
|
(437
|
)
|
Forfeited
|
|
—
|
|
|
(53
|
)
|
Unvested at September 28, 2019
|
|
4
|
|
|
1,139
|
|
|
|
Number of
Performance-based
RSUs
|
|
|
|
(thousands)
|
|
Unvested at March 30, 2019
|
|
1,011
|
|
Granted
|
|
289
|
|
Change due to performance condition achievement
|
|
123
|
|
Vested
|
|
(482
|
)
|
Forfeited
|
|
(6
|
)
|
Unvested at September 28, 2019
|
|
935
|
|
|
37
|
|
|
Six Months Ended
|
||||
|
September 28,
2019 |
|
September 29,
2018 |
||
Expected term (years)
|
2.6
|
|
|
2.6
|
|
Expected volatility
|
31.4
|
%
|
|
33.5
|
%
|
Expected dividend yield
|
3.2
|
%
|
|
1.9
|
%
|
Risk-free interest rate
|
1.4
|
%
|
|
2.6
|
%
|
|
|
Number of
Market-based RSUs
|
|
|
|
(thousands)
|
|
Unvested at March 30, 2019
|
|
76
|
|
Granted
|
|
159
|
|
Change due to market condition achievement
|
|
—
|
|
Vested
|
|
—
|
|
Forfeited
|
|
(1
|
)
|
Unvested at September 28, 2019
|
|
234
|
|
18.
|
Segment Information
|
•
|
North America — The North America segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's retail and wholesale businesses in the U.S. and Canada, excluding Club Monaco. In North America, the Company's retail business is primarily comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site, www.RalphLauren.com. The Company's wholesale business in North America is comprised primarily of sales to department stores, and to a lesser extent, specialty stores.
|
•
|
Europe — The Europe segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's retail and wholesale businesses in Europe, the Middle East, and Latin America, excluding Club Monaco. In Europe, the Company's retail business is primarily comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various digital commerce sites. The Company's wholesale business in Europe is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country.
|
•
|
Asia — The Asia segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's retail and wholesale businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is primarily comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, the Company sells its products online through various third-party digital partner 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.
|
|
38
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
881.2
|
|
|
$
|
888.2
|
|
|
$
|
1,600.6
|
|
|
$
|
1,585.8
|
|
Europe
|
|
480.2
|
|
|
464.7
|
|
|
841.0
|
|
|
820.0
|
|
||||
Asia
|
|
255.3
|
|
|
244.7
|
|
|
513.9
|
|
|
492.7
|
|
||||
Other non-reportable segments
|
|
89.5
|
|
|
93.3
|
|
|
179.5
|
|
|
183.0
|
|
||||
Total net revenues
|
|
$
|
1,706.2
|
|
|
$
|
1,690.9
|
|
|
$
|
3,135.0
|
|
|
$
|
3,081.5
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Operating income(a):
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
199.9
|
|
|
$
|
209.8
|
|
|
$
|
357.8
|
|
|
$
|
369.7
|
|
Europe
|
|
140.6
|
|
|
127.9
|
|
|
220.0
|
|
|
201.6
|
|
||||
Asia
|
|
40.9
|
|
|
32.7
|
|
|
89.0
|
|
|
75.4
|
|
||||
Other non-reportable segments
|
|
22.8
|
|
|
23.2
|
|
|
55.7
|
|
|
54.2
|
|
||||
|
|
404.2
|
|
|
393.6
|
|
|
722.5
|
|
|
700.9
|
|
||||
Unallocated corporate expenses
|
|
(156.6
|
)
|
|
(167.7
|
)
|
|
(302.0
|
)
|
|
(322.5
|
)
|
||||
Unallocated restructuring and other charges(b)
|
|
(14.5
|
)
|
|
(15.9
|
)
|
|
(44.1
|
)
|
|
(38.3
|
)
|
||||
Total operating income
|
|
$
|
233.1
|
|
|
$
|
210.0
|
|
|
$
|
376.4
|
|
|
$
|
340.1
|
|
|
39
|
|
|
(a)
|
Segment operating income and unallocated corporate expenses during the three-month and six-month periods ended September 28, 2019 and September 29, 2018 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 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Restructuring-related inventory charges:
|
|
|
|
|
|
|
|
|
||||||||
|
Europe
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
Asia
|
|
(0.4
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
||||
|
Total restructuring-related inventory charges
|
|
$
|
(0.4
|
)
|
|
$
|
—
|
|
|
$
|
(1.0
|
)
|
|
$
|
—
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Asset impairment charges:
|
|
|
|
|
|
|
|
|
||||||||
|
North America
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
Europe
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
(1.5
|
)
|
||||
|
Asia
|
|
—
|
|
|
(3.5
|
)
|
|
—
|
|
|
(3.7
|
)
|
||||
|
Other non-reportable segments
|
|
(3.8
|
)
|
|
(5.3
|
)
|
|
(3.8
|
)
|
|
(5.3
|
)
|
||||
|
Unallocated corporate expenses
|
|
(2.3
|
)
|
|
(0.2
|
)
|
|
(3.5
|
)
|
|
(0.3
|
)
|
||||
|
Total asset impairment charges
|
|
$
|
(6.1
|
)
|
|
$
|
(9.8
|
)
|
|
$
|
(7.3
|
)
|
|
$
|
(11.1
|
)
|
(b)
|
The three-month and six-month periods ended September 28, 2019 and September 29, 2018 included certain unallocated restructuring and other charges (see Note 8), which are detailed below:
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
|
(millions)
|
||||||||||||||
|
Unallocated restructuring and other charges:
|
|
|
|
|
|
|
|
|
||||||||
|
North America-related
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(3.5
|
)
|
|
Europe-related
|
|
(1.3
|
)
|
|
(4.0
|
)
|
|
(3.1
|
)
|
|
(9.0
|
)
|
||||
|
Asia-related
|
|
(0.3
|
)
|
|
0.3
|
|
|
(0.8
|
)
|
|
0.2
|
|
||||
|
Other non-reportable segment-related
|
|
(0.7
|
)
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|
(1.2
|
)
|
||||
|
Corporate-related
|
|
(10.8
|
)
|
|
(7.7
|
)
|
|
(14.8
|
)
|
|
(13.6
|
)
|
||||
|
Unallocated restructuring charges
|
|
(13.1
|
)
|
|
(12.4
|
)
|
|
(20.1
|
)
|
|
(27.1
|
)
|
||||
|
Other charges (see Note 8)
|
|
(1.4
|
)
|
|
(3.5
|
)
|
|
(24.0
|
)
|
|
(11.2
|
)
|
||||
|
Total unallocated restructuring and other charges
|
|
$
|
(14.5
|
)
|
|
$
|
(15.9
|
)
|
|
$
|
(44.1
|
)
|
|
$
|
(38.3
|
)
|
|
40
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
18.6
|
|
|
$
|
20.3
|
|
|
$
|
37.5
|
|
|
$
|
40.1
|
|
Europe
|
|
7.7
|
|
|
8.1
|
|
|
15.3
|
|
|
16.5
|
|
||||
Asia
|
|
14.7
|
|
|
12.0
|
|
|
29.7
|
|
|
24.6
|
|
||||
Other non-reportable segments
|
|
1.5
|
|
|
1.9
|
|
|
2.8
|
|
|
3.8
|
|
||||
Unallocated corporate expenses
|
|
24.1
|
|
|
23.9
|
|
|
47.5
|
|
|
48.0
|
|
||||
Unallocated restructuring and other charges (see Note 8)
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
7.0
|
|
||||
Total depreciation and amortization
|
|
$
|
66.6
|
|
|
$
|
69.7
|
|
|
$
|
132.8
|
|
|
$
|
140.0
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Net revenues(a):
|
|
|
|
|
|
|
|
|
||||||||
The Americas(b)
|
|
$
|
972.6
|
|
|
$
|
984.2
|
|
|
$
|
1,783.0
|
|
|
$
|
1,773.6
|
|
Europe(c)
|
|
478.0
|
|
|
461.6
|
|
|
837.5
|
|
|
814.4
|
|
||||
Asia(d)
|
|
255.6
|
|
|
245.1
|
|
|
514.5
|
|
|
493.5
|
|
||||
Total net revenues
|
|
$
|
1,706.2
|
|
|
$
|
1,690.9
|
|
|
$
|
3,135.0
|
|
|
$
|
3,081.5
|
|
|
(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 28, 2019 were $911.1 million and $1.671 billion, respectively, and $923.3 million and $1.662 billion during the three-month and six-month periods ended September 29, 2018.
|
(c)
|
Includes the Middle East.
|
(d)
|
Includes Australia and New Zealand.
|
|
41
|
|
19.
|
Additional Financial Information
|
|
|
September 28,
2019 |
|
March 30,
2019 |
||||
|
|
(millions)
|
||||||
Cash and cash equivalents
|
|
$
|
548.1
|
|
|
$
|
584.1
|
|
Restricted cash included within prepaid expenses and other current assets
|
|
7.1
|
|
|
11.9
|
|
||
Restricted cash included within other non-current assets
|
|
8.1
|
|
|
30.5
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
563.3
|
|
|
$
|
626.5
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Cash paid for interest
|
|
$
|
5.4
|
|
|
$
|
5.1
|
|
|
$
|
7.8
|
|
|
$
|
8.1
|
|
Cash paid for income taxes
|
|
59.8
|
|
|
27.3
|
|
|
82.1
|
|
|
30.6
|
|
|
42
|
|
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;
|
•
|
our ability to successfully implement our long-term growth strategy;
|
•
|
our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories;
|
•
|
our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence;
|
•
|
our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers;
|
•
|
our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;
|
•
|
our ability to continue to maintain our brand image and reputation and protect our trademarks;
|
•
|
our ability to competitively price our products and create an acceptable value proposition for consumers;
|
•
|
the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory;
|
•
|
our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term;
|
•
|
the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases;
|
•
|
a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business;
|
•
|
the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments with China and the related impact to global stock markets, as well as our ability to implement mitigating sourcing strategies;
|
•
|
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;
|
|
43
|
|
•
|
the impact to our business resulting from increases in the costs of raw materials, transportation, and labor, including wages, healthcare, and other benefit-related costs;
|
•
|
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;
|
•
|
our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms;
|
•
|
changes in our tax obligations and effective tax rate due to a variety of other factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;
|
•
|
our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;
|
•
|
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 of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including business disruptions in Hong Kong resulting from ongoing protests and political unrest;
|
•
|
the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible;
|
•
|
the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters;
|
•
|
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 access sources of liquidity to provide for our cash needs, including our debt obligations, tax 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;
|
•
|
our ability to maintain our credit profile and ratings within the financial community;
|
•
|
our intention to introduce new products or brands, or enter into or renew alliances;
|
•
|
changes in the business of, and our relationships with, major department store customers and licensing partners;
|
•
|
our ability to achieve our goals regarding environmental, social, and governance practices; and
|
•
|
our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations.
|
|
44
|
|
•
|
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 28, 2019. 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 28, 2019 as compared to the three-month and six-month periods ended September 29, 2018.
|
•
|
Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of September 28, 2019, 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 28, 2019 as compared to the six months ended September 29, 2018; (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 March 30, 2019.
|
•
|
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 March 30, 2019.
|
•
|
Critical accounting policies. This section discusses any significant changes in our critical accounting policies since March 30, 2019. 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 2019 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.
|
|
45
|
|
•
|
North America — Our North America segment, representing approximately 51% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in the U.S. and Canada, excluding Club Monaco. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com. Our wholesale business in North America is comprised primarily of sales to department stores, and to a lesser extent, specialty stores.
|
•
|
Europe — Our Europe segment, representing approximately 26% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Europe, the Middle East, and Latin America, excluding Club Monaco. In Europe, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites. Our wholesale business in Europe is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country.
|
•
|
Asia — Our Asia segment, representing approximately 17% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, we sell our products online through various third-party digital partner commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.
|
|
46
|
|
|
47
|
|
|
48
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
September 28,
2019 |
|
September 29,
2018 |
||||||||
|
|
(millions)
|
||||||||||||||
Impairment of assets (see Note 7)
|
|
$
|
(6.1
|
)
|
|
$
|
(9.8
|
)
|
|
$
|
(7.3
|
)
|
|
$
|
(11.1
|
)
|
Restructuring and other charges (see Note 8)
|
|
(14.5
|
)
|
|
(15.9
|
)
|
|
(44.1
|
)
|
|
(38.3
|
)
|
||||
Restructuring-related inventory charges (see Note 8)(a)
|
|
(0.4
|
)
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
||||
Total charges
|
|
$
|
(21.0
|
)
|
|
$
|
(25.7
|
)
|
|
$
|
(52.4
|
)
|
|
$
|
(49.4
|
)
|
|
(a)
|
Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations.
|
|
49
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net revenues
|
|
$
|
1,706.2
|
|
|
$
|
1,690.9
|
|
|
$
|
15.3
|
|
|
0.9
|
%
|
Cost of goods sold
|
|
(657.2
|
)
|
|
(661.6
|
)
|
|
4.4
|
|
|
(0.7
|
%)
|
|||
Gross profit
|
|
1,049.0
|
|
|
1,029.3
|
|
|
19.7
|
|
|
1.9
|
%
|
|||
Gross profit as % of net revenues
|
|
61.5
|
%
|
|
60.9
|
%
|
|
|
|
60 bps
|
|
||||
Selling, general, and administrative expenses
|
|
(795.3
|
)
|
|
(793.6
|
)
|
|
(1.7
|
)
|
|
0.2
|
%
|
|||
SG&A expenses as % of net revenues
|
|
46.6
|
%
|
|
46.9
|
%
|
|
|
|
(30 bps)
|
|
||||
Impairment of assets
|
|
(6.1
|
)
|
|
(9.8
|
)
|
|
3.7
|
|
|
(37.3
|
%)
|
|||
Restructuring and other charges
|
|
(14.5
|
)
|
|
(15.9
|
)
|
|
1.4
|
|
|
(8.8
|
%)
|
|||
Operating income
|
|
233.1
|
|
|
210.0
|
|
|
23.1
|
|
|
11.0
|
%
|
|||
Operating income as % of net revenues
|
|
13.7
|
%
|
|
12.4
|
%
|
|
|
|
130 bps
|
|
||||
Interest expense
|
|
(4.4
|
)
|
|
(6.0
|
)
|
|
1.6
|
|
|
(28.0
|
%)
|
|||
Interest income
|
|
9.6
|
|
|
10.4
|
|
|
(0.8
|
)
|
|
(8.0
|
%)
|
|||
Other income (expense), net
|
|
(1.7
|
)
|
|
0.4
|
|
|
(2.1
|
)
|
|
NM
|
|
|||
Income before income taxes
|
|
236.6
|
|
|
214.8
|
|
|
21.8
|
|
|
10.2
|
%
|
|||
Income tax provision
|
|
(54.5
|
)
|
|
(44.5
|
)
|
|
(10.0
|
)
|
|
22.7
|
%
|
|||
Effective tax rate(a)
|
|
23.1
|
%
|
|
20.7
|
%
|
|
|
|
240 bps
|
|
||||
Net income
|
|
$
|
182.1
|
|
|
$
|
170.3
|
|
|
$
|
11.8
|
|
|
6.9
|
%
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
2.37
|
|
|
$
|
2.09
|
|
|
$
|
0.28
|
|
|
13.4
|
%
|
Diluted
|
|
$
|
2.34
|
|
|
$
|
2.07
|
|
|
$
|
0.27
|
|
|
13.0
|
%
|
|
(a)
|
Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
4
|
%
|
Comparable store sales excluding digital commerce
|
|
1
|
%
|
Total comparable store sales
|
|
2
|
%
|
|
50
|
|
|
|
September 28,
2019 |
|
September 29,
2018 |
||
Freestanding Stores:
|
|
|
|
|
||
North America
|
|
225
|
|
|
221
|
|
Europe
|
|
94
|
|
|
83
|
|
Asia
|
|
123
|
|
|
108
|
|
Other non-reportable segments
|
|
75
|
|
|
75
|
|
Total freestanding stores
|
|
517
|
|
|
487
|
|
|
|
|
|
|
||
Concession Shops:
|
|
|
|
|
||
North America
|
|
3
|
|
|
2
|
|
Europe
|
|
29
|
|
|
25
|
|
Asia
|
|
616
|
|
|
606
|
|
Other non-reportable segments
|
|
5
|
|
|
5
|
|
Total concession shops
|
|
653
|
|
|
638
|
|
Total stores
|
|
1,170
|
|
|
1,125
|
|
|
|
Three Months Ended
|
|
$ Change
|
|
Foreign Exchange Impact
|
|
$ Change
|
|
% Change
|
||||||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
As
Reported
|
|
|
Constant
Currency
|
|
As
Reported
|
|
Constant
Currency
|
|||||||||||||
|
|
(millions)
|
|
|
|
|
||||||||||||||||||||
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
|
$
|
881.2
|
|
|
$
|
888.2
|
|
|
$
|
(7.0
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(6.7
|
)
|
|
(0.8
|
%)
|
|
(0.7
|
%)
|
Europe
|
|
480.2
|
|
|
464.7
|
|
|
15.5
|
|
|
(21.1
|
)
|
|
36.6
|
|
|
3.3
|
%
|
|
7.9
|
%
|
|||||
Asia
|
|
255.3
|
|
|
244.7
|
|
|
10.6
|
|
|
(0.6
|
)
|
|
11.2
|
|
|
4.3
|
%
|
|
4.6
|
%
|
|||||
Other non-reportable segments
|
|
89.5
|
|
|
93.3
|
|
|
(3.8
|
)
|
|
(0.2
|
)
|
|
(3.6
|
)
|
|
(4.0
|
%)
|
|
(3.9
|
%)
|
|||||
Total net revenues
|
|
$
|
1,706.2
|
|
|
$
|
1,690.9
|
|
|
$
|
15.3
|
|
|
$
|
(22.2
|
)
|
|
$
|
37.5
|
|
|
0.9
|
%
|
|
2.2
|
%
|
•
|
a $22.4 million net increase related to our North America retail business, inclusive of net unfavorable foreign currency effects of $0.1 million. On a constant currency basis, net revenues increased by $22.5 million driven by increases of $15.2 million in non-comparable store sales and $7.3 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business:
|
|
51
|
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
2
|
%
|
Comparable store sales excluding digital commerce
|
|
2
|
%
|
Total comparable store sales
|
|
2
|
%
|
•
|
an $11.0 million net increase related to our Europe retail business, inclusive of net unfavorable foreign currency effects of $9.7 million. On a constant currency basis, net revenues increased by $20.7 million driven by increases of $14.0 million in non-comparable store sales and $6.7 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
13
|
%
|
Comparable store sales excluding digital commerce
|
|
2
|
%
|
Total comparable store sales
|
|
3
|
%
|
•
|
a $4.5 million net increase related to our Europe wholesale business driven by stronger demand, partially offset by net unfavorable foreign currency effects of $11.4 million.
|
•
|
a $10.8 million net increase related to our Asia retail business, inclusive of net unfavorable foreign currency effects of $0.5 million. On a constant currency basis, net revenues increased by $11.3 million, reflecting increases of $9.0 million in non-comparable store sales and $2.3 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
12
|
%
|
Comparable store sales excluding digital commerce
|
|
1
|
%
|
Total comparable store sales
|
|
1
|
%
|
|
52
|
|
|
|
Three Months Ended September 28, 2019
Compared to
Three Months Ended September 29, 2018 |
||
|
|
(millions)
|
||
SG&A expense category:
|
|
|
||
Rent and occupancy costs
|
|
$
|
3.5
|
|
Selling-related expenses
|
|
2.8
|
|
|
Shipping and handling costs
|
|
2.1
|
|
|
Compensation-related expenses
|
|
1.9
|
|
|
Marketing and advertising expenses
|
|
(7.6
|
)
|
|
Consulting fees
|
|
(1.6
|
)
|
|
Other
|
|
0.6
|
|
|
Total change in SG&A expenses
|
|
$
|
1.7
|
|
|
53
|
|
|
|
Three Months Ended
|
|
|
|
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
|
|
|
|||||||||||
|
Operating
Income |
|
Operating
Margin |
|
Operating
Income |
|
Operating
Margin |
|
$
Change |
|
Margin
Change |
|||||||
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
199.9
|
|
|
22.7%
|
|
$
|
209.8
|
|
|
23.6%
|
|
$
|
(9.9
|
)
|
|
(90 bps)
|
Europe
|
|
140.6
|
|
|
29.3%
|
|
127.9
|
|
|
27.5%
|
|
12.7
|
|
|
180 bps
|
|||
Asia
|
|
40.9
|
|
|
16.0%
|
|
32.7
|
|
|
13.4%
|
|
8.2
|
|
|
260 bps
|
|||
Other non-reportable segments
|
|
22.8
|
|
|
25.5%
|
|
23.2
|
|
|
24.9%
|
|
(0.4
|
)
|
|
60 bps
|
|||
|
|
404.2
|
|
|
|
|
393.6
|
|
|
|
|
10.6
|
|
|
|
|||
Unallocated corporate expenses
|
|
(156.6
|
)
|
|
|
|
(167.7
|
)
|
|
|
|
11.1
|
|
|
|
|||
Unallocated restructuring and other charges
|
|
(14.5
|
)
|
|
|
|
(15.9
|
)
|
|
|
|
1.4
|
|
|
|
|||
Total operating income
|
|
$
|
233.1
|
|
|
13.7%
|
|
$
|
210.0
|
|
|
12.4%
|
|
$
|
23.1
|
|
|
130 bps
|
|
54
|
|
|
55
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
$
Change
|
|
% / bps
Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net revenues
|
|
$
|
3,135.0
|
|
|
$
|
3,081.5
|
|
|
$
|
53.5
|
|
|
1.7
|
%
|
Cost of goods sold
|
|
(1,165.2
|
)
|
|
(1,156.5
|
)
|
|
(8.7
|
)
|
|
0.8
|
%
|
|||
Gross profit
|
|
1,969.8
|
|
|
1,925.0
|
|
|
44.8
|
|
|
2.3
|
%
|
|||
Gross profit as % of net revenues
|
|
62.8
|
%
|
|
62.5
|
%
|
|
|
|
30 bps
|
|
||||
Selling, general, and administrative expenses
|
|
(1,542.0
|
)
|
|
(1,535.5
|
)
|
|
(6.5
|
)
|
|
0.4
|
%
|
|||
SG&A expenses as % of net revenues
|
|
49.2
|
%
|
|
49.8
|
%
|
|
|
|
(60 bps)
|
|
||||
Impairment of assets
|
|
(7.3
|
)
|
|
(11.1
|
)
|
|
3.8
|
|
|
(33.8
|
%)
|
|||
Restructuring and other charges
|
|
(44.1
|
)
|
|
(38.3
|
)
|
|
(5.8
|
)
|
|
14.9
|
%
|
|||
Operating income
|
|
376.4
|
|
|
340.1
|
|
|
36.3
|
|
|
10.7
|
%
|
|||
Operating income as % of net revenues
|
|
12.0
|
%
|
|
11.0
|
%
|
|
|
|
100 bps
|
|
||||
Interest expense
|
|
(8.6
|
)
|
|
(10.4
|
)
|
|
1.8
|
|
|
(17.5
|
%)
|
|||
Interest income
|
|
21.2
|
|
|
19.6
|
|
|
1.6
|
|
|
8.2
|
%
|
|||
Other expense, net
|
|
(5.8
|
)
|
|
(1.6
|
)
|
|
(4.2
|
)
|
|
264.9
|
%
|
|||
Income before income taxes
|
|
383.2
|
|
|
347.7
|
|
|
35.5
|
|
|
10.2
|
%
|
|||
Income tax provision
|
|
(84.0
|
)
|
|
(68.4
|
)
|
|
(15.6
|
)
|
|
22.8
|
%
|
|||
Effective tax rate(a)
|
|
21.9
|
%
|
|
19.7
|
%
|
|
|
|
220 bps
|
|
||||
Net income
|
|
$
|
299.2
|
|
|
$
|
279.3
|
|
|
$
|
19.9
|
|
|
7.1
|
%
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
3.86
|
|
|
$
|
3.42
|
|
|
$
|
0.44
|
|
|
12.9
|
%
|
Diluted
|
|
$
|
3.79
|
|
|
$
|
3.37
|
|
|
$
|
0.42
|
|
|
12.5
|
%
|
|
(a)
|
Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
4
|
%
|
Comparable store sales excluding digital commerce
|
|
2
|
%
|
Total comparable store sales
|
|
2
|
%
|
|
56
|
|
|
|
Six Months Ended
|
|
$ Change
|
|
Foreign Exchange Impact
|
|
$ Change
|
|
% Change
|
||||||||||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
As
Reported
|
|
|
Constant
Currency
|
|
As
Reported
|
|
Constant
Currency
|
|||||||||||||
|
|
(millions)
|
|
|
|
|
||||||||||||||||||||
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
|
$
|
1,600.6
|
|
|
$
|
1,585.8
|
|
|
$
|
14.8
|
|
|
$
|
(1.4
|
)
|
|
$
|
16.2
|
|
|
0.9
|
%
|
|
1.0
|
%
|
Europe
|
|
841.0
|
|
|
820.0
|
|
|
21.0
|
|
|
(40.9
|
)
|
|
61.9
|
|
|
2.6
|
%
|
|
7.5
|
%
|
|||||
Asia
|
|
513.9
|
|
|
492.7
|
|
|
21.2
|
|
|
(9.3
|
)
|
|
30.5
|
|
|
4.3
|
%
|
|
6.2
|
%
|
|||||
Other non-reportable segments
|
|
179.5
|
|
|
183.0
|
|
|
(3.5
|
)
|
|
(0.3
|
)
|
|
(3.2
|
)
|
|
(1.9
|
%)
|
|
(1.7
|
%)
|
|||||
Total net revenues
|
|
$
|
3,135.0
|
|
|
$
|
3,081.5
|
|
|
$
|
53.5
|
|
|
$
|
(51.9
|
)
|
|
$
|
105.4
|
|
|
1.7
|
%
|
|
3.4
|
%
|
•
|
a $38.1 million net increase related to our North America retail business, inclusive of net unfavorable foreign currency effects of $0.7 million. On a constant currency basis, net revenues increased by $38.8 million driven by increases of $29.7 million in non-comparable store sales and $9.1 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
1
|
%
|
Comparable store sales excluding digital commerce
|
|
1
|
%
|
Total comparable store sales
|
|
1
|
%
|
•
|
a $16.9 million net increase related to our Europe retail business, inclusive of net unfavorable foreign currency effects of $21.6 million. On a constant currency basis, net revenues increased by $38.5 million driven by increases of $24.4 million in non-comparable store sales and $14.1 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
18
|
%
|
Comparable store sales excluding digital commerce
|
|
2
|
%
|
Total comparable store sales
|
|
4
|
%
|
•
|
a $4.1 million increase related to our Europe wholesale business driven by stronger demand, partially offset by net unfavorable foreign currency effects of $19.3 million.
|
|
57
|
|
•
|
a $21.8 million net increase related to our Asia retail business, inclusive of net unfavorable foreign currency effects of $8.8 million. On a constant currency basis, net revenues increased by $30.6 million, reflecting increases of $18.3 million in non-comparable store sales and $12.3 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business:
|
|
|
% Change
|
|
Digital commerce comparable store sales
|
|
19
|
%
|
Comparable store sales excluding digital commerce
|
|
3
|
%
|
Total comparable store sales
|
|
3
|
%
|
|
|
Six Months Ended September 28, 2019 Compared to
Six Months Ended September 29, 2018
|
||
|
|
(millions)
|
||
SG&A expense category:
|
|
|
||
Compensation-related expenses
|
|
$
|
5.2
|
|
Rent and occupancy expenses
|
|
4.0
|
|
|
Shipping and handling costs
|
|
3.8
|
|
|
Consulting fees
|
|
(6.0
|
)
|
|
Other
|
|
(0.5
|
)
|
|
Total change in SG&A expenses
|
|
$
|
6.5
|
|
|
58
|
|
|
|
Six Months Ended
|
|
|
|
|
||||||||||||
|
September 28, 2019
|
|
September 29, 2018
|
|
|
|
|
|||||||||||
|
Operating
Income
|
|
Operating
Margin
|
|
Operating
Income |
|
Operating
Margin
|
|
$
Change
|
|
Margin
Change
|
|||||||
|
(millions)
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
357.8
|
|
|
22.4%
|
|
$
|
369.7
|
|
|
23.3%
|
|
$
|
(11.9
|
)
|
|
(90 bps)
|
Europe
|
|
220.0
|
|
|
26.2%
|
|
201.6
|
|
|
24.6%
|
|
18.4
|
|
|
160 bps
|
|||
Asia
|
|
89.0
|
|
|
17.3%
|
|
75.4
|
|
|
15.3%
|
|
13.6
|
|
|
200 bps
|
|||
Other non-reportable segments
|
|
55.7
|
|
|
31.0%
|
|
54.2
|
|
|
29.7%
|
|
1.5
|
|
|
130 bps
|
|||
|
|
722.5
|
|
|
|
|
700.9
|
|
|
|
|
21.6
|
|
|
|
|||
Unallocated corporate expenses
|
|
(302.0
|
)
|
|
|
|
(322.5
|
)
|
|
|
|
20.5
|
|
|
|
|||
Unallocated restructuring and other charges
|
|
(44.1
|
)
|
|
|
|
(38.3
|
)
|
|
|
|
(5.8
|
)
|
|
|
|||
Total operating income
|
|
$
|
376.4
|
|
|
12.0%
|
|
$
|
340.1
|
|
|
11.0%
|
|
$
|
36.3
|
|
|
100 bps
|
|
59
|
|
|
|
September 28,
2019 |
|
March 30,
2019 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Cash and cash equivalents
|
|
$
|
548.1
|
|
|
$
|
584.1
|
|
|
$
|
(36.0
|
)
|
Short-term investments
|
|
1,041.4
|
|
|
1,403.4
|
|
|
(362.0
|
)
|
|||
Non-current investments(a)
|
|
—
|
|
|
44.9
|
|
|
(44.9
|
)
|
|||
Current portion of long-term debt(b)
|
|
(297.3
|
)
|
|
—
|
|
|
(297.3
|
)
|
|||
Long-term debt(b)
|
|
(396.1
|
)
|
|
(689.1
|
)
|
|
293.0
|
|
|||
Net cash and investments(c)
|
|
$
|
896.1
|
|
|
$
|
1,343.3
|
|
|
$
|
(447.2
|
)
|
Equity
|
|
$
|
2,913.6
|
|
|
$
|
3,287.2
|
|
|
$
|
(373.6
|
)
|
|
(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 values 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.
|
|
60
|
|
|
|
Six Months Ended
|
|
|
||||||||
|
|
September 28,
2019 |
|
September 29,
2018 |
|
$
Change |
||||||
|
|
(millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
204.1
|
|
|
$
|
213.0
|
|
|
$
|
(8.9
|
)
|
Net cash provided by (used in) investing activities
|
|
295.6
|
|
|
(732.8
|
)
|
|
1,028.4
|
|
|||
Net cash used in financing activities
|
|
(553.0
|
)
|
|
(218.5
|
)
|
|
(334.5
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(9.9
|
)
|
|
(20.7
|
)
|
|
10.8
|
|
|||
Net decrease in cash, cash equivalents, and restricted cash
|
|
$
|
(63.2
|
)
|
|
$
|
(759.0
|
)
|
|
$
|
695.8
|
|
•
|
a favorable change related to our inventory due to the timing of inventory receipts; and
|
•
|
a favorable change related to our accounts payable and accrued liabilities, largely driven by fluctuations associated with our derivative instruments.
|
•
|
an unfavorable change related to our accounts receivable, largely driven by the timing of cash receipts.
|
•
|
a $1.016 billion increase in proceeds from sales and maturities of investments, less purchases of investments. During the six months ended September 28, 2019, we received net proceeds from sales and maturities of investments of $404.5 million, as compared to making net investment purchases of $611.4 million during the six months ended September 29, 2018;
|
•
|
a $23.8 million decrease in payments to settle net investment hedges; and
|
•
|
net cash proceeds of $20.8 million received from the sale of our corporate jet during the six months ended September 28, 2019. These proceeds were donated to the Polo Ralph Lauren Foundation, which is reflected within cash flows from operating activities for the six months ended September 28, 2019.
|
|
61
|
|
•
|
a $37.5 million increase in capital expenditures. During the six months ended September 28, 2019, we spent $130.6 million on capital expenditures, as compared to $93.1 million during the six months ended September 29, 2018. Our capital expenditures during the six months ended September 28, 2019 primarily related to new store openings, retail and department store renovations, enhancements to our information technology systems, and the consolidation of our corporate office footprint.
|
•
|
a $218.8 million increase in cash used to repurchase shares of our Class A common stock. During the six months ended September 28, 2019, we used $400.0 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $42.7 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 September 29, 2018, we used $192.3 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $31.6 million in shares of Class A common stock were surrendered or withheld for taxes;
|
•
|
an $88.2 million increase in cash proceeds from the issuance of debt, less debt repayments. During the six months ended September 28, 2019, we did not issue or repay any debt. On a comparative basis, during the six months ended September 29, 2018, we received $398.1 million in proceeds from our issuance of 3.750% unsecured senior notes in August 2018, a portion of which was used to repay $300.0 million of our 2.125% unsecured senior notes that matured in September 2018. Additionally, during the six months ended September 29, 2018, we repaid $9.9 million of borrowings previously outstanding under our credit facilities;
|
•
|
a $21.8 million decrease in proceeds from exercise of stock options; and
|
•
|
a $10.6 million increase in payments of dividends, driven by an increase to the quarterly cash dividend per share. Dividends paid amounted to $101.9 million and $91.3 million during the six-month periods ended September 28, 2019 and September 29, 2018, respectively.
|
|
|
September 28, 2019
|
||||||||||
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
|
|
32
|
|
|
—
|
|
|
32
|
|
|
62
|
|
|
(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 28, 2019.
|
|
63
|
|
|
64
|
|
|
65
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 4.
|
Controls and Procedures.
|
|
66
|
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
(a)
|
Sales of Unregistered Securities
|
|
67
|
|
Stockholder That Converted Class B Common Stock to Class A Common Stock
|
|
Date of Conversion
|
|
Number of Shares
Converted/
Received
|
|
|
|
|
|
|
|
Lauren Family, L.L.C.
|
|
August 15, 2019
|
|
500,004
|
|
(b)
|
Not Applicable
|
(c)
|
Stock Repurchases
|
|
Total Number of Shares Purchased
|
|
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(a)
|
||||||
|
|
|
|
|
|
|
(millions)
|
||||||
June 30, 2019 to July 27, 2019
|
730
|
|
(b)
|
$
|
113.98
|
|
|
—
|
|
|
$
|
1,080
|
|
July 28, 2019 to August 24, 2019
|
1,292,106
|
|
(c)
|
94.06
|
|
|
1,276,112
|
|
|
960
|
|
||
August 25, 2019 to September 28, 2019
|
1,367,953
|
|
(d)
|
95.21
|
|
|
1,363,583
|
|
|
830
|
|
||
|
2,660,789
|
|
|
|
|
2,639,695
|
|
|
|
|
(a)
|
Repurchases of shares of Class A common stock are subject to overall business and market conditions.
|
(b)
|
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.
|
(c)
|
Includes 15,994 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.
|
(d)
|
Includes 4,370 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.
|
Item 5.
|
Other Information.
|
|
68
|
|
Item 6.
|
Exhibits.
|
3.1
|
|
3.2
|
|
3.3
|
|
10.1*
|
|
10.2*
|
|
10.3*
|
|
10.4*
|
|
10.5*
|
|
31.1*
|
|
31.2*
|
|
32.1*
|
|
32.2*
|
|
101.INS*
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
*
|
Filed herewith.
|
†
|
Management contract or compensatory plan or arrangement.
|
|
69
|
|
|
|
RALPH LAUREN CORPORATION
|
|
|
|
|
By:
|
/S/ JANE HAMILTON NIELSEN
|
|
|
Jane Hamilton Nielsen
|
|
|
Chief Operating Officer and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
Date: November 7, 2019
|
|
|
|
70
|
|
|
1. Section 1(h) of the Separation Agreement is amended in its entirety to read as follows, effective as of the date set forth above:
|
|
|
|
|
|
1
|
|
Fiscal 2020 PSU Overview
|
|
|
|
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 2020 PSU Overview
|
|
|
|
An eligible employee who receives an Unsatisfactory (U) rating
|
||||
on their annual performance appraisal is not eligible for an equity award
|
||||
in the fiscal year following that performance appraisal period. An employee who receives a Below
|
||||
Expectations (B) performance rating will be eligible for an equity award based on manager discretion.
|
▪
|
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 2020 PSU Overview
|
|
|
|
Performance
Level
|
Relative TSR Performance
|
% of Target
PSUs Vested
|
Below Threshold
|
<30th Percentile
|
0%
|
Threshold
|
30th Percentile
|
50%
|
Target
|
50th Percentile
|
100%
|
Stretch
|
70th Percentile
|
150%
|
Maximum
|
90th Percentile
|
200%
|
|
|
4
|
|
Fiscal 2020 PSU Overview
|
|
|
|
Grant
Date
|
# PSUs Granted
|
Performance
Period
|
Vesting
Date1
|
Performance Level 2
|
Vested
Percentage2
|
# Shares Vested
|
FY20 (August 2019)
|
1,500
|
FY20 - FY22
|
FY22 (June 2022)
|
110%
|
200%
|
3,000
|
100%
|
100%
|
1,500
|
||||
90%
|
50%
|
750
|
Grant
Date
|
# PSUs Granted
|
Performance
Period
|
Vesting
Date1
|
Performance Level 2
|
Vested
Percentage2
|
# Shares Vested
|
FY20 (August 2019)
|
1,000
|
FY20 - FY22
|
FY22 (June 2022)
|
90th Percentile
|
200%
|
2,000
|
50th Percentile
|
100%
|
1,000
|
||||
30th Percentile
|
50%
|
500
|
▪
|
Receive shares of RL Class A Common Stock without paying any exercise price
|
▪
|
The number of PSUs vesting can range from 50% (Threshold) to 200% (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 2020 PSU Overview
|
|
|
|
|
|
If Stock Price Reaches:
|
|||
Value At:
|
# of Shares
|
$120
|
$130
|
$140
|
$150
|
Threshold Performance
|
1,250
|
$150,000
|
$162,500
|
$175,000
|
$187,500
|
Target Performance
|
2,500
|
$300,000
|
$325,000
|
$350,000
|
$375,000
|
Maximum Performance
|
5,000
|
$600,000
|
$650,000
|
$700,000
|
$750,000
|
|
|
6
|
|
Fiscal 2020 PSU Overview
|
|
|
|
Termination as a result of:
|
Status of PSU Awards
|
Retirement 1
Long-Term Disability (LTD) 2
Death
|
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.
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.
The above is subject to the terms and conditions in the On-Line Grant Agreement.
|
Voluntary Resignation
Involuntary Termination
|
All unvested PSUs are forfeited.
|
|
|
7
|
|
Fiscal 2020 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
|
▪
|
“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.
|
|
|
8
|
|
Fiscal 2020 PSU Overview
|
|
|
|
▪
|
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 2020 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 2020 PSU Overview
|
|
|
|
|
|
11
|
|
Fiscal 2020 PSU Overview
|
Award Type
|
Number of Shares
|
PRSUs
|
[_____]
|
•
|
Vest over a three‐year period in one‐third annual installments (tranches) beginning FY21 if the FY20 performance goal (ROIC of [__]%) is achieved and certified by the Compensation and Organizational Development Committee, and employment is continuous.
|
|
|
|
|
|
1
|
|
Fiscal 2020 RSU Overview
|
|
|
|
|
|
2
|
|
Fiscal 2020 RSU Overview
|
|
|
|
An eligible employee who receives an Unsatisfactory (U) rating on their annual performance
|
||||
appraisal is not eligible for an equity award in the fiscal year following that performance appraisal period.
|
||||
An eligible employee who receives a Below Expectations (B) performance rating will be eligible for an
|
||||
equity award based on manager discretion.
|
Grant Date
|
RSUs
Eligible to Vest
|
Vesting Date
|
August 15, 2019
|
70
|
August 15, 2020
|
August 15, 2019
|
70
|
August 15, 2021
|
August 15, 2019
|
70
|
August 15, 2022
|
Total
|
210
|
|
Year Granted
|
RSUs Granted
|
1/3 of RSUs Eligible to Vest
|
||
August 15, 2019
|
August 15, 2020
|
August 15, 2021
|
||
August 15, 2018
|
300
|
100
|
100
|
100
|
August 15, 2019
|
210
|
—
|
70
|
70
|
August 15, 2020
|
270
|
—
|
—
|
90
|
Total RSUs
|
780
|
100
|
170
|
260
|
|
|
3
|
|
Fiscal 2020 RSU Overview
|
|
|
|
|
If Stock Price Reaches:
|
||||
|
# of Shares
|
$110
|
$120
|
$130
|
$140
|
Value (assumes shares vest)
|
210
|
$23,100
|
$25,200
|
$27,300
|
$29,400
|
|
|
4
|
|
Fiscal 2020 RSU Overview
|
|
|
|
Termination as a result of:
|
Status of RSU Awards
|
Retirement 1
Long-Term Disability (LTD) 2
Death
|
If retirement date is more than one year from the date of grant, participant is entitled to full award on scheduled vesting dates.
If retirement date is within the first year following the Grant date, participant is entitled to one-third of award on the first scheduled vesting date. All remaining RSUs are forfeited.
The above is subject to the terms and conditions in the On-Line Grant Agreement.
|
Voluntary Resignation
Involuntary Termination
|
All unvested RSUs are forfeited.
|
|
|
5
|
|
Fiscal 2020 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
|
▪
|
“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.
|
|
|
6
|
|
Fiscal 2020 RSU Overview
|
|
|
|
▪
|
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 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 and Securities 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.
|
|
|
7
|
|
Fiscal 2020 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.
|
|
|
8
|
|
Fiscal 2020 RSU Overview
|
|
|
|
|
|
9
|
|
Fiscal 2020 RSU Overview
|
(a)
|
Subject to the Participant's continued service as an Outside Director of the Company, the RSUs shall fully vest and become non-forfeitable on the first anniversary of the Grant Date.
|
(b)
|
Once vested, the RSUs shall be paid to Participant in Shares as soon as administratively practicable, but not later than thirty (30) days, after their applicable vesting date.
|
(c)
|
Notwithstanding the foregoing, in the event the above vesting schedule results in the vesting of any fractional Shares, such fractional Shares shall be payable in cash.
|
(d)
|
The RSUs shall be settled exclusively in Class A Common Stock of the Company.
|
(e)
|
If the Participant’s service as an Outside Director of the Company is terminated for any reason other than due to the Participant’s death or Disability, the RSUs shall, to the extent not then vested, be forfeited by the Participant without consideration. In the event of the death or disability of the Participant, unvested RSUs shall continue to vest according to the original vesting schedule.
|
(f)
|
Notwithstanding any other provision of this Agreement to the contrary, in the event of a Change of Control (as defined in the Plan), the RSUs shall, to the extent not then vested and not previously forfeited, immediately become fully vested as contemplated by Section 13 of the Plan.
|
(a)
|
The Participant shall be entitled to receive dividend equivalents on the RSUs in the event of an issuance of any cash or stock dividend on the Shares of the Company (a “Dividend”). The Participant shall be credited with an additional number of RSUs (each, a “Dividend RSU”), determined as follows:
|
i.
|
in the event of a cash dividend, equal to the quotient obtained by dividing: (a) the product of (i) the number of RSUs that the Participant holds at the time of the record date for such Dividend multiplied by (ii) the amount of the Dividend per Share, divided by (b) the fair market value per Share on the payment date for such Dividend; and
|
ii.
|
in the event of a stock dividend, equal to the number of Shares (including fractions thereof) issued with respect to each Share, multiplied by the number of RSUs.
|
(b)
|
Once credited, each Dividend RSU shall be treated as a RSU hereunder and shall be subject to the same terms and conditions as the RSU from which such Dividend RSU is derived, including, but not limited to, the applicable vesting schedule and rights to Dividend RSUs with respect to future Dividends.
|
a)
|
the Participant has received and read a copy of the Plan, that the Plan forms a part of this Agreement, and that if there is a conflict between this Agreement and either the Plan or the provision under which the Plan is administered and governed by the Committee, the Plan and/or the determination of the Committee will govern, as applicable. This Agreement is qualified in its entirety based on the determinations, interpretations and other decisions made within the sole discretion of the Committee;
|
b)
|
the grant of RSUs is voluntary and occasional and does not create any contractual or other right to receive future RSUs, or benefits in lieu of these awards, even if RSUs have been granted in the past;
|
c)
|
the Participant is subject to the Company’s Securities Trading Policy; and
|
d)
|
no claim or entitlement to compensation or damages shall arise from the forfeiture of the RSUs (either in whole or in part) resulting from the Participant’s termination of service, other than due to the Participant’s death or Disability.
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: November 7, 2019
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
Chief Operating Officer and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
|
Date: November 7, 2019
|
|
|
/s/ PATRICE LOUVET
|
|
Patrice Louvet
|
|
|
Date: November 7, 2019
|
|
|
/s/ JANE HAMILTON NIELSEN
|
|
Jane Hamilton Nielsen
|
|
|
Date: November 7, 2019
|
|