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TheStreet Open House

Ralph Lauren Reports Better-Than-Expected Third Quarter Fiscal 2013 Results And Raises Its Full Year Fiscal 2013 Profit Outlook

Stock quotes in this article: RL

In the fourth quarter of Fiscal 2013, the Company expects consolidated net revenues to increase by a mid-single-digit percentage, reflecting an 8%-11% increase in retail revenues and wholesale revenues that are flat to the prior year period. Included in the fourth quarter net revenue expectation is an approximate 300 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 fourth quarter of Fiscal 2013 is expected to be approximately 125-150 basis points above the comparable prior year period. The fourth quarter sales and operating margin expectations outlined in this press release do not include anticipated pretax charges related to the previously announced closure of the Rugby brand. The Company currently estimates the fourth quarter tax rate at approximately 29%.

Conference Call

As previously announced, the Company will host a conference call and live online webcast today, Wednesday, February 6, 2013, 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 719-457-2652. To access the conference call, listeners should dial in by 8:45 a.m. Eastern and request to be connected to the Ralph Lauren Third 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, Wednesday, February 6, 2013 through 1:00 P.M. Eastern, Tuesday, February 12, 2013 by dialing 719-457-0820 and entering passcode 5147093.

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, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, 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, 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 and our ability to access sources of liquidity; our ability to successfully implement our anticipated growth strategies, to continue to expand or grow our business and capitalize on our repositioning initiatives in certain merchandise categories; 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)
 
 
December 29, March 31, December 31,
2012 2012 2011
 
ASSETS
Current assets:
Cash and cash equivalents $ 999.1 $ 671.6 $ 815.8
Short-term investments 313.2 515.7 386.3
Accounts receivable, net of allowances 383.9 547.2 440.2
Inventories 981.1 841.6 894.7
Income tax receivable 18.9 17.2 9.8
Deferred tax assets 125.9 125.6 101.9
Prepaid expenses and other   179.9     181.0     177.8  
 
Total current assets 3,002.0 2,899.9 2,826.5
 
Non-current investments 89.0 99.9 72.5
Property and equipment, net 926.4 884.1 826.5
Deferred tax assets 16.2 39.8 72.2
Goodwill 993.1 1,004.0 1,013.4
Intangible assets, net 339.8 359.0 370.2
Other assets   122.7     129.7     145.2  
 
Total assets $ 5,489.2   $ 5,416.4   $ 5,326.5  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 274.1 $ - $ -
Accounts payable 146.2 180.6 169.7
Income tax payable 89.3 71.9 142.8
Accrued expenses and other   682.0     693.7     666.7  
 
Total current liabilities 1,191.6 946.2 979.2
 
Long-term debt - 274.4 265.6
Non-current liability for unrecognized tax benefits 155.6 168.0 162.8
Other non-current liabilities   372.3     375.3     389.2  
 
Total liabilities   1,719.5     1,763.9     1,796.8  
 
Equity:
Common stock 1.2 1.2 1.2
Additional paid-in-capital 1,760.2 1,624.0 1,567.0
Retained earnings 4,555.9 4,042.4 3,966.5
Treasury stock, Class A, at cost (2,708.4 ) (2,211.7 ) (2,211.7 )
Accumulated other comprehensive income   160.8     196.6     206.7  
 
Total equity   3,769.7     3,652.5     3,529.7  
 
Total liabilities and equity $ 5,489.2   $ 5,416.4   $ 5,326.5  
 
                 
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
December 29, December 31,
2012 2011
 
 
Wholesale Net Sales $ 733.9 $ 750.0
Retail Net Sales   1,062.0     1,006.0  
 
Net Sales 1,795.9 1,756.0
 
Licensing Revenue   50.2     49.6  
 
Net Revenues 1,846.1 1,805.6
 
Cost of Goods Sold (a)   (752.0 )   (774.0 )
 
Gross Profit 1,094.1 1,031.6
 
Selling, General & Administrative Expenses (a) (768.9 ) (750.7 )
Amortization of Intangible Assets (6.8 ) (7.2 )
Impairment of Assets (11.4 ) (2.0 )
Restructuring Charges   (2.6 )   (1.6 )
Total Operating Expenses (789.7 ) (761.5 )
 
Operating Income 304.4 270.1
 
Foreign Currency Gains (Losses) (3.9 ) (2.2 )
 
Interest Expense (5.6 ) (6.3 )
 
Interest and Other Income, Net 1.5 2.7
 
Equity in Income (Loss) of Equity-Method Investees   (1.8 )   (2.2 )
 
Income Before Provision for Income Taxes 294.6 262.1
 
Provision for Income Taxes   (78.9 )   (93.1 )
 
Net Income Attributable to RLC $ 215.7   $ 169.0  
 
Net Income Per Share - Basic $ 2.37   $ 1.83  
 
Net Income Per Share - Diluted $ 2.31   $ 1.78  
 
Weighted Average Shares Outstanding - Basic   91.1     92.2  
 
Weighted Average Shares Outstanding - Diluted   93.3     94.9  
 
Dividends declared per share $ 0.40   $ 0.20  
 
(a) Includes total depreciation expense of: $ (53.8 ) $ (49.6 )
 
                 
RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Prepared in accordance with Generally Accepted Accounting Principles
(in millions, except per share data)
(Unaudited)
 
 
Nine Months Ended
December 29, December 31,
2012 2011
 
 
Wholesale Net Sales $ 2,342.5 $ 2,418.5
Retail Net Sales   2,820.2     2,680.8  
 
Net Sales 5,162.7 5,099.3
 
Licensing Revenue   138.8     137.3  
 
Net Revenues 5,301.5 5,236.6
 
Cost of Goods Sold (a)   (2,120.0 )   (2,164.9 )
 
Gross Profit 3,181.5 3,071.7
 
Selling, General & Administrative Expenses (a) (2,200.7 ) (2,142.4 )
Amortization of Intangible Assets (20.3 ) (21.8 )
Impairment of Assets (12.4 ) (2.2 )
Restructuring Charges   (3.4 )   (2.3 )
Total Operating Expenses (2,236.8 ) (2,168.7 )
 
Operating Income 944.7 903.0
 
Foreign Currency Gains (Losses) (7.0 ) (4.2 )
 
Interest Expense (16.5 ) (18.8 )
 
Interest and Other Income, Net 4.1 9.3
 
Equity in Income (Loss) of Equity-Method Investees   (4.6 )   (5.2 )
 
Income Before Provision for Income Taxes 920.7 884.1
 
Provision for Income Taxes   (297.9 )   (297.5 )
 
Net Income Attributable to RLC $ 622.8   $ 586.6  
 
Net Income Per Share - Basic $ 6.80   $ 6.32  
 
Net Income Per Share - Diluted $ 6.63   $ 6.14  
 
Weighted Average Shares Outstanding - Basic   91.6     92.8  
 
Weighted Average Shares Outstanding - Diluted   93.9     95.6  
 
Dividends declared per share $ 1.20   $ 0.60  
 
(a) Includes total depreciation expense of: $ (153.7 ) $ (146.4 )
 
       
RALPH LAUREN CORPORATION
OTHER INFORMATION
(in millions)
(Unaudited)
 
SEGMENT INFORMATION
Net revenues and operating income for the periods ended December 29, 2012 and December 31, 2011 for each segment were as follows:
 

Three Months Ended

Nine Months Ended
December 29, December 31, December 29, December 31,
2012 2011 2012 2011
 
Net Revenues:
Wholesale $ 733.9 $ 750.0 $ 2,342.5 $ 2,418.5
Retail 1,062.0 1,006.0 2,820.2 2,680.8
Licensing   50.2     49.6     138.8     137.3  
Total Net Revenues $ 1,846.1   $ 1,805.6   $ 5,301.5   $ 5,236.6  
 
Operating Income:
Wholesale $ 144.9 $ 112.6 $ 531.3 $ 503.9
Retail 201.2 193.3 537.2 510.3
Licensing   37.0     35.9     101.3     99.2  
383.1 341.8 1,169.8 1,113.4
Less:
Unallocated corporate expenses (76.1 ) (70.1 ) (221.7 ) (208.1 )
Unallocated restructuring charges, net   (2.6 )   (1.6 )   (3.4 )   (2.3 )
Total Operating Income $ 304.4   $ 270.1   $ 944.7   $ 903.0  
 

SUPPLEMENTAL FINANCIAL INFORMATION

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