Breaking News

Staples Says 1.16 Million Cards May Have Been Affected in Breach
Tweet TWEET

Ralph Lauren Reports Better-Than-Expected Second Quarter Fiscal 2013 Results

  Ralph Lauren Reports Better-Than-Expected Second Quarter Fiscal 2013 Results

  *Second Quarter Revenues Were $1.9 billion, Led by Retail Segment Growth
  *Consolidated Comparable Store Sales Increased 5% in Constant Currency in
    the Second Quarter
  *Second Quarter Operating Income Was $348 million and Operating Income
    Margin Rose 30 Basis Points to 18.7%
  *Earnings Per Diluted Share Was $2.29 in the Second Quarter

Business Wire

NEW YORK -- November 02, 2012

Ralph Lauren Corporation (NYSE:RL) today reported net income of $214 million,
or $2.29 per diluted share, for the second quarter of Fiscal 2013, compared to
net income of $233 million, or $2.46 per diluted share, for the second quarter
of Fiscal 2012. Net income and net income per diluted share for the second
quarter of Fiscal 2013 include the net negative impact of an approximate $15
million one-time discrete tax item.

“Our year-to-date results affirm the tremendous resilience of our business,”
said Ralph Lauren, Chairman and Chief Executive Officer. “We continue to make
excellent progress on our long-term growth objectives as we invest along many
dimensions, including new stores and e-commerce platforms and emerging
merchandise categories and regions. Our clarity of vision and purpose has us
focused on the most compelling opportunities that we believe will create
significant shareholder value over the long term."

“I am proud of our better-than-expected second quarter and first half
results,” said Roger Farah, President and Chief Operating Officer. “In the
context of a more challenging operating environment, and on top of
double-digit sales and profit gains in the prior two years, disciplined
execution enabled us to strengthen the margin structure of our business once
again. While we expect continued margin improvement in the back half of the
year, macroeconomic conditions lead us to be incrementally more cautious on
near-term customer demand trends worldwide. Notwithstanding these
macroeconomic challenges, the desirability of the Ralph Lauren brand is
undeniable and we are well positioned for the upcoming Holiday season.”

Second Quarter Fiscal 2013 Income Statement Review

Net Revenues. Net revenues for the second quarter of Fiscal 2013 were $1.9
billion, 2% below the comparable period last year. The decline in net revenues
primarily reflects a planned contraction in wholesale shipments that was
partially offset by continued retail segment expansion. Excluding the impact
of strategic decisions to discontinue American Living and store closures
associated with the Company’s Greater China network repositioning efforts, in
addition to the net negative impact from foreign currency translation, net
revenues increased approximately 3% in the second quarter.

  *Wholesale Sales. Wholesale segment sales of $915 million in the second
    quarter were 8% below the prior year period, as a proactive reduction in
    shipments to certain European specialty stores and the net negative impact
    of foreign currency translation more than offset continued growth in core
    and emerging merchandise categories in the Americas. Comparisons with the
    prior year period were also impacted by the discontinuation of American
    Living in Fiscal 2013 and the global launch of Denim & Supply in the prior
    year period.
  *Retail Sales. Retail sales rose 5% to $901 million from $861 million in
    the second quarter last year, reflecting growth in comparable store sales
    and the incremental contribution from new stores and e-commerce operations
    that was partially offset by store closures associated with the Company’s
    Greater China network repositioning efforts. Consolidated comparable store
    sales rose 3% on a reported basis during the second quarter and increased
    5% in constant currency.
  *Licensing. Licensing revenues of $47 million in the second quarter were 3%
    below the prior year period. The decline in licensing revenues is
    primarily due to the discontinuation of certain American Living and South
    American licensing arrangements.

Gross Profit. Gross profit for the second quarter of Fiscal 2013 increased 2%
to $1.1 billion and gross profit margin improved 220 basis points to 58.8%.
The higher gross profit margin was primarily driven by lower input costs,
beneficial channel mix and operational discipline.

Operating Expenses. Operating expenses rose 3% in the second quarter to $747
million from $728 million in the second quarter of Fiscal 2012. The growth in
operating expenses primarily reflects continued investment in the Company’s
long-term strategic growth initiatives; increased marketing and advertising
expense during the quarter; and increased retail channel mix compared to the
prior year period. Operating expense rate was 40.1%, 190 basis points above
the prior year period.

Operating Income. Operating income for the second quarter of Fiscal 2013 was
$348 million, 1% below the prior year. Operating margin was 18.7%, 30 basis
points greater than the second quarter last year, primarily due to the higher
gross profit margin that was partially offset by the higher operating expense
rate.

  *Wholesale Operating Income. Wholesale operating income declined 4% in the
    second quarter of Fiscal 2013 to $233 million from $242 million last year.
    Wholesale operating margin was 25.5% in the second quarter, 120 basis
    points stronger than the prior year. The improvement in wholesale
    operating margin was primarily due to higher gross margins as a result of
    lower input costs and operational discipline.
  *Retail Operating Income. Retail operating income was $157 million, 8%
    greater than the $145 million achieved in the second quarter of Fiscal
    2012, and retail operating margin was 17.4%, 60 basis points higher than
    the prior year period. The growth in retail operating income and the
    expansion in operating margin is a result of comparable store sales growth
    and disciplined operational management that more than offset continued
    investment in global e-commerce and the impact of the Company’s Greater
    China network repositioning efforts.
  *Licensing Operating Income. Licensing operating income declined 2% to $35
    million from $36 million in the second quarter of Fiscal 2012, primarily
    due to lower licensing revenues.

Net Income and Diluted EPS. Net income for the second quarter of Fiscal 2013
was $214 million, 8% below the $233 million achieved last year. Net income per
diluted share declined 7% to $2.29 from $2.46 last year. The decline in net
income and diluted EPS results for the second quarter of Fiscal 2013
principally relates to a higher effective tax rate of 38% compared to 33% in
the prior year period. The higher effective tax rate is related to the net
negative impact of an approximate $15 million one-time discrete tax item.

Second Quarter Fiscal 2013 Balance Sheet Review

The Company ended the second quarter with $1.1 billion in cash and
investments, or $832 million in cash and investments net of debt ("net cash"),
compared to $979 million in cash and investments and $606 million in net cash
at the end of the second quarter of Fiscal 2012. The Company had $55 million
in capital expenditures in the second quarter, compared to $53 million in the
prior year period. The second quarter ended with inventory up 7% to $1.1
billion from $988 million in the second quarter of last year.

Global Retail Store Network

The Company ended the second quarter of Fiscal 2013 with 385 directly operated
stores, comprised of 107 Ralph Lauren stores, 58 Club Monaco stores, 206 Polo
factory stores and 14 Rugby stores. The Company also operated 488 concession
shop locations worldwide at the end of the second quarter. In addition to
Company-operated locations, international licensing partners operated 58 Ralph
Lauren stores and 29 dedicated concession shops as well as 64 Club Monaco
stores and shops at the end of the second quarter.

Rugby

Subsequent to the end of the second quarter, the Company approved a plan to
discontinue operations for the Rugby brand in order to focus resources on
higher growth, more scalable global opportunities with the core Ralph Lauren
brand. As a result, the Company expects to close 14 stores and an
e-commerce-enabled website over the balance of Fiscal 2013 and to record
associated pretax charges of $20 million - $30 million during the second half
of the year. Approximately 75% of the pretax charges is expected to be
incurred in the third quarter of Fiscal 2013, with the remainder booked in the
fourth quarter.

Fiscal 2013 Outlook

The Company expects consolidated net revenues for Fiscal 2013 to increase by
2%-3%, which compares to its previous expectation for mid-single-digit
consolidated net revenue growth. Included in the Fiscal 2013 net revenue
expectation is an approximate 400-500 basis point net negative impact
associated with strategic decisions regarding certain operations, including
store closures associated with the Company’s Greater China network
repositioning efforts and the discontinuation of American Living, in addition
to unfavorable foreign currency effects. Operating margin from continuing
operations for Fiscal 2013 is expected to be approximately 50 basis points
above the prior year period as anticipated gross profit margin expansion is
largely offset by continued investment in the Company's long-term growth
initiatives and the impact of overall channel mix. The full year Fiscal 2013
sales and operating margin expectations outlined in this press release do not
include the anticipated pretax charges related to the closure of the Rugby
brand noted above. The Company continues to estimate the full year Fiscal 2013
tax rate at approximately 33%.

In the third quarter of Fiscal 2013, the Company expects consolidated net
revenues to increase by a low-single-digit percentage, as a mid-single-digit
increase in retail revenues is partially offset by a low-single-digit decline
in wholesale revenues. Included in the third quarter net revenue expectation
is an approximate 400 basis point net negative impact from strategic decisions
regarding certain operations, including store closures associated with the
Company’s Greater China network repositioning efforts and the discontinuation
of American Living, in addition to unfavorable foreign currency effects.
Operating margin from continuing operations for the third quarter of Fiscal
2013 is expected to be approximately 25-75 basis points above the comparable
prior year period, as an anticipated increase in gross profit margin is
partially offset by incremental investment to support the Company's strategic
growth objectives and the impact of overall channel mix. The third quarter
sales and operating margin expectations outlined in this press release do not
include the anticipated pretax charges related to the closure of the Rugby
brand noted above. Subsequent to the end of the second quarter, the Company
had a favorable resolution of a discrete tax item. As such, the Company
currently expects the third quarter tax rate to be approximately 29%.

Conference Call

As previously announced, the Company will host a conference call and live
online webcast today, Friday, November 2, 2012, at 9:00 a.m. Eastern.
Listeners may access a live broadcast of the conference call on the Company's
investor relations website at http://investor.ralphlauren.com or by dialing
719-325-2243. To access the conference call, listeners should dial in by 8:45
a.m. Eastern and request to be connected to the Ralph Lauren Second Quarter
Fiscal Year 2013 conference call.

An online archive of the broadcast will be available by accessing the
Company's investor relations website at http://investor.ralphlauren.com. A
telephone replay of the call will be available from 1:00 P.M. Eastern, Friday,
November 2, 2012 through 1:00 P.M. Eastern, Thursday, November 8, 2012 by
dialing 719-457-0820 and entering passcode 5406889.

ABOUT RALPH LAUREN

Ralph Lauren Corporation (NYSE: RL) is a leader in the design, marketing and
distribution of premium lifestyle products in four categories: apparel, home,
accessories and fragrances. For more than 45 years, Ralph Lauren's reputation
and distinctive image have been consistently developed across an expanding
number of products, brands and international markets. The Company's brand
names, which include Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph
Lauren Collection, Black Label, Blue Label, Lauren by Ralph Lauren, RRL, RLX,
Rugby, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, American
Living, Chaps and Club Monaco, constitute one of the world's most widely
recognized families of consumer brands. For more information, go to
http://investor.ralphlauren.com.

This press release and oral statements made from time to time by
representatives of the Company contain certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding, among other things,
our current expectations about the Company's future results and financial
condition, revenues, store openings, gross margins, expenses and earnings and
are indicated by words or phrases such as "anticipate," "estimate," "expect,"
"project," "we believe" and similar words or phrases. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements to be materially
different from the future results, performance or achievements expressed in or
implied by such forward-looking statements. Forward-looking statements are
based largely on the Company's expectations and judgments and are subject to a
number of risks and uncertainties, many of which are unforeseeable and beyond
our control. The factors that could cause actual results to materially differ
include, among others: the loss of key personnel; the impact of global
economic conditions and domestic and foreign currency fluctuations on the
Company, the global economy and the consumer marketplace; our ability to
successfully implement our anticipated growth strategies and to continue to
expand or grow our business; changes in our effective tax rates or credit
profile and ratings within the financial community; our ability to secure the
technology facilities and systems used by the Company and those of third party
service providers from, among other things, cybersecurity breaches, acts of
vandalism, computer viruses or similar events; changes in the competitive
marketplace and in our commercial relationships; risks associated with changes
in social, political, economic and other conditions affecting foreign
operations or sourcing (including tariffs and trade controls, raw materials
prices and labor costs); risks associated with our international operations,
such as violations of laws prohibiting improper payments and the burdens of
complying with a variety of foreign laws and regulations, including tax laws;
risks arising out of litigation or trademark conflicts; our ability to
continue to maintain our brand image and reputation; the potential impact on
our operations and customers resulting from natural or man-made disasters; and
other risk factors identified in the Company's Annual Report on Form 10-K,
Form 10-Q and Form 8-K reports filed with the Securities and Exchange
Commission. The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.

RALPH LAUREN CORPORATION
CONSOLIDATED BALANCE SHEETS
Prepared in accordance with Generally Accepted Accounting Principles
(in millions)
(Unaudited)
                                                               
                                                                  
                                                                  
                                   September 29,   March 31,      October 1,
                                   2012            2012           2011
                                                                  
ASSETS
Current assets:
Cash and cash equivalents          $  543.7        $ 671.6        $ 407.7
Short-term investments                469.1          515.7          477.9
Accounts receivable, net of           606.8          547.2          633.5
allowances
Inventories                           1,060.2        841.6          988.4
Income tax receivable                 22.2           17.2           5.9
Deferred tax assets                   123.5          125.6          103.6
Prepaid expenses and other           177.5        181.0        156.9    
                                                                  
Total current assets                  3,003.0        2,899.9        2,773.9
                                                                  
Non-current investments               84.9           99.9           93.8
Property and equipment, net           911.9          884.1          833.5
Deferred tax assets                   34.8           39.8           75.5
Goodwill                              1,014.0        1,004.0        1,024.5
Intangible assets, net                349.7          359.0          378.6
Other assets                         125.2        129.7        148.6    
                                                                  
Total assets                       $  5,523.5     $ 5,416.4     $ 5,328.4  
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt                    $  -            $ -            $ 100.0
Accounts payable                      224.4          180.6          190.0
Income tax payable                    35.1           71.9           123.1
Accrued expenses and other           698.6        693.7        709.3    
                                                                  
Total current liabilities             958.1          946.2          1,122.4
                                                                  
Long-term debt                        265.8          274.4          273.7
Non-current liability for             186.5          168.0          160.2
unrecognized tax benefits
Other non-current liabilities        376.7        375.3        388.2    
                                                                  
Total liabilities                    1,787.1      1,763.9      1,944.5  
                                                                  
Equity:
Common stock                          1.2            1.2            1.2
Additional paid-in-capital            1,719.6        1,624.0        1,529.4
Retained earnings                     4,376.5        4,042.4        3,816.0
Treasury stock, Class A, at cost      (2,558.4 )     (2,211.7 )     (2,210.1 )
Accumulated other comprehensive      197.5        196.6        247.4    
income
                                                                  
Total equity                         3,736.4      3,652.5      3,383.9  
                                                                  
Total liabilities and equity       $  5,523.5     $ 5,416.4     $ 5,328.4  
                                                                             

RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Prepared in accordance with Generally Accepted Accounting Principles
(in millions, except per share data)
(Unaudited)
                                                                 
                                                                   
                                                   Three Months Ended
                                                   September 29,   October 1,
                                                   2012            2011
                                                                   
                                                                   
Wholesale Net Sales                                $  914.5        $ 995.5
Retail Net Sales                                     900.9        861.3   
                                                                   
Net Sales                                             1,815.4        1,856.8
                                                                   
Licensing Revenue                                    46.6         47.8    
                                                                   
Net Revenues                                          1,862.0        1,904.6
                                                                   
Cost of Goods Sold (a)                               (766.7   )    (826.0  )
                                                                   
Gross Profit                                          1,095.3        1,078.6
                                                                   
Selling, General & Administrative Expenses (a)        (740.2   )     (720.3  )
Amortization of Intangible Assets                    (6.8     )    (7.5    )
Total Operating Expenses                              (747.0   )     (727.8  )
                                                                   
Operating Income                                      348.3          350.8
                                                                   
Foreign Currency Gains (Losses)                       (0.5     )     1.8
                                                                   
Interest Expense                                      (5.4     )     (6.4    )
                                                                   
Interest and Other Income, Net                        1.3            2.4
                                                                   
Equity in Income (Loss) of Equity-Method Investees   (1.5     )    (1.1    )
                                                                   
Income Before Provision for Income Taxes              342.2          347.5
                                                                   
Provision for Income Taxes                           (128.5   )    (114.0  )
                                                                   
Net Income Attributable to RLC                     $  213.7       $ 233.5   
                                                                   
Net Income Per Share - Basic                       $  2.34        $ 2.53    
                                                                   
Net Income Per Share - Diluted                     $  2.29        $ 2.46    
                                                                   
Weighted Average Shares Outstanding - Basic          91.3         92.2    
                                                                   
Weighted Average Shares Outstanding - Diluted        93.4         94.9    
                                                                   
Dividends declared per share                       $  0.40        $ 0.20    
                                                                   
(a) Includes total depreciation expense of:        $  (50.5    )   $ (48.5   )
                                                                             


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Prepared in accordance with Generally Accepted Accounting Principles
(in millions, except per share data)
(Unaudited)
                                                               
                                                  Six Months Ended
                                                  September 29,   October 1,
                                                  2012            2011
                                                                  
                                                                  
Wholesale Net Sales                               $  1,608.6      $ 1,668.5
Retail Net Sales                                    1,758.2      1,674.8  
                                                                  
Net Sales                                            3,366.8        3,343.3
                                                                  
Licensing Revenue                                   88.6         87.7     
                                                                  
Net Revenues                                         3,455.4        3,431.0
                                                                  
Cost of Goods Sold (a)                              (1,368.0 )    (1,390.9 )
                                                                  
Gross Profit                                         2,087.4        2,040.1
                                                                  
Selling, General & Administrative Expenses (a)       (1,433.6 )     (1,392.6 )
Amortization of Intangible Assets                   (13.5    )    (14.6    )
Total Operating Expenses                             (1,447.1 )     (1,407.2 )
                                                                  
Operating Income                                     640.3          632.9
                                                                  
Foreign Currency Gains (Losses)                      (3.1     )     (2.0     )
                                                                  
Interest Expense                                     (10.9    )     (12.5    )
                                                                  
Interest and Other Income, Net                       2.6            6.6
                                                                  
Equity in Income (Loss) of Equity-Method            (2.8     )    (3.0     )
Investees
                                                                  
Income Before Provision for Income Taxes             626.1          622.0
                                                                  
Provision for Income Taxes                          (219.0   )    (204.4   )
                                                                  
Net Income Attributable to RLC                    $  407.1       $ 417.6    
                                                                  
Net Income Per Share - Basic                      $  4.44        $ 4.49     
                                                                  
Net Income Per Share - Diluted                    $  4.32        $ 4.35     
                                                                  
Weighted Average Shares Outstanding - Basic         91.7         93.1     
                                                                  
Weighted Average Shares Outstanding - Diluted       94.2         95.9     
                                                                  
Dividends declared per share                      $  0.80        $ 0.40     
                                                                  
(a) Includes total depreciation expense of:       $  (99.9    )   $ (96.8    )
                                                                             

RALPH LAUREN CORPORATION
OTHER INFORMATION
(in millions)
(Unaudited)
                                                              
SEGMENT
INFORMATION
Net revenues and operating income for the periods ended September 29, 2012 and
October 1, 2011 for each segment were as follows:
                                                                   
                Three Months Ended                  Six Months Ended
                September 29,     October 1,        September      October 1,
                                                    29,
                2012              2011              2012           2011
                                                                   
Net
revenues:
Wholesale       $  914.5          $  995.5          $  1,608.6     $ 1,668.5
Retail             900.9             861.3             1,758.2       1,674.8
Licensing         46.6            47.8            88.6        87.7    
Total Net       $  1,862.0       $  1,904.6       $  3,455.4    $ 3,431.0 
Revenues
                                                                   
Operating
Income
(Loss):
Wholesale       $  232.8          $  241.9          $  386.4       $ 391.3
Retail             156.7             144.8             336.0         317.0
Licensing         34.9            35.5            64.3        63.3    
                   424.4             422.2             786.7         771.6
Less:
Unallocated
Corporate         (76.1    )       (71.4    )       (146.4  )    (138.7  )
Expenses
Total
Operating       $  348.3         $  350.8         $  640.3      $ 632.9   
Income
                                                                   
                                                    `

RALPH LAUREN CORPORATION
Constant Currency Financial Measures
(in millions)
(Unaudited)
                                                                 
Same - Store Sales
Data
                                                                     
                     Three Months Ended                  Six Months Ended

                     September 29, 2012                  September 29, 2012

                     % Change                            % Change
                     As Reported      Constant           As          Constant
                                      Currency           Reported    Currency
Total Ralph Lauren      3%                5%             2%          4%
                                                                     
                                                                     
Operating Segment
Data
                                                                     
                     Three Months Ended                  % Change
                     September 29,    October 1, 2011    As          Constant
                     2012                                Reported    Currency
Wholesale Net Sales  $  914.5             995.5          (8.1  %)    (5.3  %)
Retail Net Sales       900.9           861.3         4.6   %     6.8   %
Net Sales               1,815.4           1,856.8        (2.2  %)    0.3   %
Licensing Revenue      46.6            47.8          (2.5  %)    (2.3  %)
Net Revenue          $  1,862.0         1,904.6       (2.2  %)    0.2   %
                                                                     
                     Six Months Ended                    % Change
                     September 29,    October 1, 2011    As          Constant
                     2012                                Reported    Currency
Wholesale Net Sales  $  1,608.6       $   1,668.5        (3.6  %)    (1.0  %)
Retail Net Sales       1,758.2         1,674.8       5.0   %     7.0   %
Net Sales               3,366.8           3,343.3        0.7   %     3.0   %
Licensing Revenue      88.6            87.7          1.0   %     1.1   %
Net Revenue          $  3,455.4      $   3,431.0       0.7   %     3.0   %
                                                                           

Ralph Lauren is a global company that reports its financial information in
U.S. dollars, in accordance with U.S. GAAP (“GAAP”). Foreign currency exchange
rate fluctuations affect the amounts reported by the Company in U.S. dollars
because the underlying currencies in which the Company transacts change in
value over time compared to the U.S. dollar. These rate fluctuations can have
a significant effect on reported operating results. As a supplement to its
reported operating results, the Company presents constant currency financial
information, which is a non-GAAP financial measure. The Company uses constant
currency information to provide a framework to assess how its businesses
performed excluding the effects of foreign currency exchange rate
fluctuations. The Company believes this information is useful to investors to
facilitate comparisons of operating results and better identify trends in its
businesses. These constant currency performance measures should be viewed in
addition to, and not in lieu of or superior to, the Company's operating
performance measures calculated in accordance with GAAP.

Contact:

Ralph Lauren Corporation
Investor Relations
James Hurley, 212-813-7862
or
Corporate Communications
Julie Berman, 212-583-2262
 
Press spacebar to pause and continue. Press esc to stop.