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

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%.

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