Ralph Lauren Corp Files 10-Q for June 29, 2024

TL;DR

RL 10-Q filed. Financials for Q ending 6/29/24 out.

AI Summary

Ralph Lauren Corporation filed its 10-Q for the period ending June 29, 2024. The filing details the company's financial performance and position. Key financial data and operational updates are provided for the reporting period.

Why It Matters

This filing provides investors and analysts with the latest financial snapshot of Ralph Lauren, crucial for understanding the company's performance and making informed investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing with no immediate red flags or significant new risks disclosed.

Key Numbers

• 20240629 — Period End Date (The end of the reporting quarter.)
• 20240807 — Filing Date (The date the report was submitted to the SEC.)

Key Players & Entities

• RALPH LAUREN CORP (company) — Filer
• 20240629 (date) — Period of Report
• 20240807 (date) — Filing Date
• 650 MADISON AVENUE (address) — Business Address
• NEW YORK (location) — Business City

FAQ

Filing Documents

• rl-20240629.htm (10-Q) — 1395KB
• rl-20240629x10qex101.htm (EX-10.1) — 18KB
• rl-20240629x10qex311.htm (EX-31.1) — 10KB
• rl-20240629x10qex312.htm (EX-31.2) — 10KB
• rl-20240629x10qex321.htm (EX-32.1) — 5KB
• rl-20240629x10qex322.htm (EX-32.2) — 5KB
• 0001037038-24-000022.txt ( ) — 8616KB
• rl-20240629.xsd (EX-101.SCH) — 56KB
• rl-20240629_cal.xml (EX-101.CAL) — 83KB
• rl-20240629_def.xml (EX-101.DEF) — 305KB
• rl-20240629_lab.xml (EX-101.LAB) — 732KB
• rl-20240629_pre.xml (EX-101.PRE) — 532KB
• rl-20240629_htm.xml (XML) — 1375KB

FINANCIAL INFORMATION (Unaudited)

PART I. FINANCIAL INFORMATION (Unaudited)

Financial Statements

Item 1. Financial Statements: Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income 4 Consolidated Statements of Cash Flows 5 Consolidated Statements of Equity 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 32

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 49

Controls and Procedures

Item 4. Controls and Procedures 49

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 50

Risk Factors

Item 1A. Risk Factors 50

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 50

Other Information

Item 5. Other Information 50

Exhibits

Item 6. Exhibits 51

Signatures

Signatures 52 1 RALPH LAUREN CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) June 29, 2024 March 30, 2024 (millions) ASSETS Current assets: Cash and cash equivalents $ 1,586.9 $ 1,662.2 Short-term investments 173.6 121.0 Accounts receivable, net of allowances of $ 158.8 million and $ 175.3 million 371.8 446.5 Inventories 1,039.1 902.2 Income tax receivable 50.6 56.0 Prepaid expenses and other current assets 225.9 171.9 Total current assets 3,447.9 3,359.8 Property and equipment, net 826.0 850.4 Operating lease right-of-use assets 1,019.3 1,014.6 Deferred tax assets 266.6 288.3 Goodwill 882.6 888.1 Intangible assets, net 72.5 75.7 Other non-current assets 126.1 125.7 Total assets $ 6,641.0 $ 6,602.6 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 477.8 $ 332.2 Current income tax payable 58.3 79.8 Current operating lease liabilities 236.0 245.5 Accrued expenses and other current liabilities 801.5 809.7 Total current liabilities 1,573.6 1,467.2 Long-term debt 1,141.1 1,140.5 Long-term finance lease liabilities 249.9 256.1 Long-term operating lease liabilities 1,036.1 1,014.0 Non-current income tax payable 42.2 42.2 Non-current liability for unrecognized tax benefits 123.3 118.7 Other non-current liabilities 107.8 113.6 Commitments and contingencies (Note 12) Total liabilities 4,274.0 4,152.3 Equity: Class A common stock, par value $ .01 per share; 112.0 million and 111.7 million shares issued; 40.5 million and 41.4 million shares outstanding 1.1 1.1 Class B common stock, par value $ .01 per share; 21.9 million shares issued and outstanding 0.2 0.2 Additional paid-in-capital 2,948.1 2,923.8 Retained earnings 7,168.7 7,051.6 Treasury stock, Class A, at cost; 71.5 million and 70.3 million shares ( 7,453.0 ) ( 7,250.3 ) Accumulated other comprehensive loss ( 298.1 ) ( 276.1 ) Total equity 2,367.0 2,450.3 Total liabilities and equity $ 6,641.0 $ 6,602.6 See accompanying notes. 2 RALPH LAU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share data and where otherwise indicated) (Unaudited) 1. Description of Business Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, fragrances, and hospitality. RLC's long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others. RLC and its subsidiaries are collectively referred to herein as the "Company," "we," "us," "our," and "ourselves," unless the context indicates otherwise. The Company diversifies its business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows the Company to maintain a dynamic balance as its operating results do not depend solely on the performance of any single geographic area or channel of distribution. The Company sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and digital commerce operations around the world. The Company's wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which the Company has licensed the right to operate in defined geographic territories using its trademarks. In addition, the Company licenses to third parties for specified periods the right to access its various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings. The Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Actual results could differ materially from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include reserves for customer bad debt, customer returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; fair value measurements; accounting for income taxes and related uncertain tax positions; valuation of stock-based compensation awards and related forfeiture rates; and reserves for restructuring activity, among others. Reclassifications Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation . Seasonality of Business The Company's business is typically affected by seasonal trends, with higher levels of retail sales in its second and third fiscal quarters and higher wholesale sales in its second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting its retail business and the timing of seasonal wholesale shipments. As a result of changes in its business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly operating trends and working capital requirements may not be indicative of the Company's future performance. In addition, fluctuations in sales, operating income (loss), and cash flows in any fiscal quarter may be affected

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Revenue from the Company's wholesale business is generally recognized upon shipment of products, at which point title passes and risk of loss is transferred to the customer. In certain arrangements where the Company retains the risk of loss during shipment, revenue is recognized upon receipt of products by the customer. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends. The Company reviews and refines these estimates on at least a quarterly basis. The Company's historical estimates of these amounts have not differed materially from actual results. Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks (i.e., symbolic intellectual property) and benefit from such access through their own sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for most arrangements, may be subject to a contractually-guaranteed minimum royalty amount. Payments are generally due quarterly and, depending on time of receipt, may be recorded as a liability until recognized as revenue. The Company recognizes revenue for sales-based royalty arrangements (including those for which the royalty exceeds any contractually-guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-b

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (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. Deferred Income Deferred income represents cash payments received in advance of the Company's transfer of control of products or services to its customers and generally consists of unredeemed gift cards (net of breakage) and advance royalty payments from its licensees. The Company's deferred income balances were $ 18.4 million and $ 17.4 million as of June 29, 2024 and March 30, 2024, respectively, and were primarily recorded within accrued expenses and other current liabilities within the consolidated balance sheets. The majority of the deferred income balance as of June 29, 2024 is expected to be recognized as revenue within the next twelve months. Shipping and Handling Costs Costs associated with shipping goods to customers are accounted for as fulfillment activities and reflected as selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations. Costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs"), are also included in SG&A expenses. Shipping and handling costs billed to customers are included in revenue. A summary of shipping and handling costs for the fiscal periods presented is as follows: Three Months Ended June 29, 2024 July 1, 2023 (millions) Shipping costs $ 17.3 $ 16.9 Handling costs 35.1 39.2 Net Income per Common Share Basic net income per common share is computed by dividing net income attributable to common shares by the weighted-average number of common shares outstanding during the period. Weighted-average common shares include shares of the Company's Class A and Class B common stock. Diluted net income per common share adjusts basic net income per common share for the dilutive effects of outstanding re

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Accounts Receivable In the normal course of business, the Company extends credit to wholesale customers that satisfy certain defined credit criteria. Payment is generally due within 30 to 120 days and does not involve a significant financing component. Accounts receivable are recorded at amortized cost, which approximates fair value, and are presented in the consolidated balance sheets net of certain reserves and allowances. These reserves and allowances consist of (i) reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances (see the " Revenue Recognition " section above for further discussion of related accounting policies) and (ii) allowances for doubtful accounts. A rollforward of the activity in the Company's reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances is presented as follows: Three Months Ended June 29, 2024 July 1, 2023 (millions) Beginning reserve balance $ 143.1 $ 148.1 Amount charged against revenue to increase reserve 94.8 95.6 Amount credited against customer accounts to decrease reserve ( 110.6 ) ( 107.5 ) Foreign currency translation ( 1.0 ) ( 1.0 ) Ending reserve balance $ 126.3 $ 135.2 An allowance for doubtful accounts is determined through analysis of accounts receivable aging, assessments of collectability based on evaluation of historical trends, the financial condition of the Company's customers and their ability to withstand prolonged periods of adverse economic conditions, and evaluation of the impact of current and forecasted economic and market conditions over the related asset's contractual life, among other factors. A rollforward of the activity in the Company's allowance for doubtful accounts is presented as follows: Three Months Ended June 29, 2024 July 1, 2023 (millions) Beginning reserve balance $ 32.2 $

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Inventories The Company holds inventory that is sold in its retail stores and digital commerce sites directly to consumers. The Company also holds inventory that is to be sold through wholesale distribution channels to major department stores, specialty stores, and third-party digital partners. Substantially all of the Company's inventories consist of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined

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