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Ralph Lauren Reports Better-Than-Expected First Quarter Fiscal 2014 Results

Stocks in this article: RL

Conference Call

As previously announced, the Company will host a conference call and live online webcast today, Wednesday, August 7, 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 517-623-4799. To access the conference call, listeners should dial in by 8:45 a.m. Eastern and request to be connected to the Ralph Lauren First Quarter Fiscal 2014 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 12:00 P.M. Eastern, Wednesday, August 7, 2013 through 6:00 P.M. Eastern, Tuesday, August 13, 2013 by dialing 203-369-0827 and entering passcode 6293.

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 46 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; 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; 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 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; our ability to continue to maintain our brand image and reputation and protect our trademarks; the impact of the challenging state of the global economy on consumer purchases of premium lifestyle products that we sell and our ability to forecast consumer demand; 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); changes in our effective tax rates or credit profile and ratings within the financial community; our ability to continue to expand our business internationally; changes in our relationships with department store customers and licensing partners; 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; 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)
 
 
 
June 29, March 30, June 30,
  2013     2013     2012  
 
ASSETS
Current assets:
Cash and cash equivalents

$  

940

$  

974

$  

469
Short-term investments 411 325 563
Accounts receivable, net of allowances 349 458 395
Inventories 1,053 896 964
Income tax receivable 28 29 20
Deferred tax assets 117 120 127
Prepaid expenses and other current assets   186     161     181  
 
Total current assets 3,084 2,963 2,719
 
Non-current investments 9 81 82
Property and equipment, net 944 932 870
Deferred tax assets 22 22 33
Goodwill 963 968 1,003
Intangible assets, net 325 328 355
Other non-current assets   113     124     132  
 
Total assets $ 5,460   $ 5,418   $ 5,194  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 271 $ 267 $ -
Accounts payable 196 147 207
Income tax payable 71 43 65
Accrued expenses and other current liabilities   641     664     661  
 
Total current liabilities 1,179 1,121 933
 
Long-term debt - - 261
Non-current liability for unrecognized tax benefits 151 150 164
Other non-current liabilities   369     362     364  
 
Total liabilities   1,699     1,633     1,722  
 
Equity:
Common stock 1 1 1
Additional paid-in-capital 1,797 1,752 1,668
Retained earnings 4,791 4,647 4,199
Treasury stock, Class A, at cost (2,910 ) (2,709 ) (2,558 )
Accumulated other comprehensive income   82     94     162  
 
Total equity   3,761     3,785     3,472  
 
Total liabilities and equity $ 5,460   $ 5,418   $ 5,194  
 
 
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

June 29, June 30,
2013 2012
 
 
Wholesale net sales

$   

735

$   

694
Retail net sales   879     857  
 
Net sales 1,614 1,551
 
Licensing revenue   39     42  
 
Net revenues 1,653 1,593
 
Cost of goods sold (a)   (649 )   (601 )
 
Gross profit 1,004 992
 
Selling, general, and administrative expenses (a) (735 ) (693 )
Amortization of intangible assets (9 ) (7 )
Gain on acquisition of Chaps   16     -  
Total other operating expenses, net (728 ) (700 )
 
Operating income 276 292
 
Foreign currency gains (losses) (6 ) (3 )
 
Interest expense (5 ) (5 )
 
Interest and other income, net 2 1
 
Equity in loss of equity-method investees   (2 )   (1 )
 
Income before provision for income taxes 265 284
 
Provision for income taxes   (84 )   (91 )
 
Net income $ 181   $ 193  
 
Net income per share - Basic $ 1.99   $ 2.10  
 
Net income per share - Diluted $ 1.94   $ 2.03  
 
Weighted average shares outstanding - Basic   90.8     92.2  
 
Weighted average shares outstanding - Diluted   93.1     95.1  
 
Dividends declared per share $ 0.40   $ 0.40  
 
(a) Includes total depreciation expense of: $ (51 ) $ (49 )
 
     

RALPH LAUREN CORPORATION

OTHER INFORMATION

(in millions)

(Unaudited)

 

SEGMENT INFORMATION

Net revenues and operating income for the periods ended June 29, 2013 andJune 30, 2012 for each segment were as follows:

 
Three Months Ended
June 29,   June 30,
2013 2012
 
Net revenues:
Wholesale

$   

735

$   

694
Retail 879 857
Licensing   39     42  
Total net revenues $ 1,653   $ 1,593  
 
Operating income:
Wholesale $ 154 $ 154
Retail 160 179
Licensing   29     29  
343 362
Less:
Unallocated corporate expenses (83 ) (70 )
Gain on acquisition of Chaps   16     -  
Total operating income $ 276   $ 292  
 
   
RALPH LAUREN CORPORATION
Constant Currency Financial Measures
(in millions)
(Unaudited)
         
Same - Store Sales Data
 

Three Months Ended June 29, 2013 % Change

As Reported Constant Currency
Total Ralph Lauren (1 %) 1 %
 
 
Operating Segment Data
 
Three Months Ended % Change
June 29, 2013 June 30, 2012 As Reported Constant Currency
Wholesale net sales $ 735 $ 694 5.9 % 6.1 %
Retail net sales   879     857   2.5 % 4.4 %
Net sales 1,614 1,551 4.0 % 5.2 %
Licensing revenue   39     42   (8.1 %) (8.1 %)
Net revenues $ 1,653   $ 1,593   3.7 % 4.8 %
 

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.

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