QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
(Zip Code) | |||
(Address of principal executive offices) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered |
☑ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
Page | ||
PART I. FINANCIAL INFORMATION (Unaudited) | ||
Item 1. | Financial Statements: | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
1 |
June 29, 2019 | March 30, 2019 | |||||||
(millions) (unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Short-term investments | ||||||||
Accounts receivable, net of allowances of $180.5 million and $192.2 million | ||||||||
Inventories | ||||||||
Income tax receivable | ||||||||
Prepaid expenses and other current assets | ||||||||
Total current assets | ||||||||
Property and equipment, net | ||||||||
Operating lease right-of-use assets | ||||||||
Deferred tax assets | ||||||||
Goodwill | ||||||||
Intangible assets, net | ||||||||
Other non-current assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Income tax payable | ||||||||
Current portion of operating lease liabilities | ||||||||
Accrued expenses and other current liabilities | ||||||||
Total current liabilities | ||||||||
Long-term debt | ||||||||
Long-term operating lease liabilities | ||||||||
Income tax payable | ||||||||
Non-current liability for unrecognized tax benefits | ||||||||
Other non-current liabilities | ||||||||
Commitments and contingencies (Note 14) | ||||||||
Total liabilities | ||||||||
Equity: | ||||||||
Class A common stock, par value $.01 per share; 104.2 million and 102.9 million shares issued; 51.8 million and 52.2 million shares outstanding | ||||||||
Class B common stock, par value $.01 per share; 25.4 million issued and outstanding; 25.9 million shares issued and outstanding | ||||||||
Additional paid-in-capital | ||||||||
Retained earnings | ||||||||
Treasury stock, Class A, at cost; 52.4 million and 50.7 million shares | ( | ) | ( | ) | ||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Total equity | ||||||||
Total liabilities and equity | $ | $ |
2 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions, except per share data) (unaudited) | ||||||||
Net revenues | $ | $ | ||||||
Cost of goods sold | ( | ) | ( | ) | ||||
Gross profit | ||||||||
Selling, general, and administrative expenses | ( | ) | ( | ) | ||||
Impairment of assets | ( | ) | ( | ) | ||||
Restructuring and other charges | ( | ) | ( | ) | ||||
Total other operating expenses, net | ( | ) | ( | ) | ||||
Operating income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Interest income | ||||||||
Other expense, net | ( | ) | ( | ) | ||||
Income before income taxes | ||||||||
Income tax provision | ( | ) | ( | ) | ||||
Net income | $ | $ | ||||||
Net income per common share: | ||||||||
Basic | $ | $ | ||||||
Diluted | $ | $ | ||||||
Weighted average common shares outstanding: | ||||||||
Basic | ||||||||
Diluted | ||||||||
Dividends declared per share | $ | $ |
3 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) (unaudited) | ||||||||
Net income | $ | $ | ||||||
Other comprehensive loss, net of tax: | ||||||||
Foreign currency translation gains (losses) | ( | ) | ||||||
Net gains (losses) on cash flow hedges | ( | ) | ||||||
Net gains (losses) on defined benefit plans | ( | ) | ||||||
Other comprehensive loss, net of tax | ( | ) | ( | ) | ||||
Total comprehensive income | $ | $ |
4 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) (unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense | ||||||||
Deferred income tax expense (benefit) | ( | ) | ||||||
Non-cash stock-based compensation expense | ||||||||
Non-cash impairment of assets | ||||||||
Non-cash restructuring-related inventory charges | ||||||||
Other non-cash charges (benefits) | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ||||||||
Inventories | ( | ) | ( | ) | ||||
Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
Accounts payable and accrued liabilities | ( | ) | ||||||
Income tax receivables and payables | ||||||||
Deferred income | ( | ) | ||||||
Other balance sheet changes | ||||||||
Net cash provided by operating activities | ||||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | ( | ) | ( | ) | ||||
Purchases of investments | ( | ) | ( | ) | ||||
Proceeds from sales and maturities of investments | ||||||||
Acquisitions and ventures | ( | ) | ||||||
Proceeds from sale of property | ||||||||
Net cash provided by (used in) investing activities | ( | ) | ||||||
Cash flows from financing activities: | ||||||||
Repayments of short-term debt | ( | ) | ||||||
Payments of finance lease obligations | ( | ) | ( | ) | ||||
Payments of dividends | ( | ) | ( | ) | ||||
Repurchases of common stock, including shares surrendered for tax withholdings | ( | ) | ( | ) | ||||
Proceeds from exercise of stock options | ||||||||
Net cash used in financing activities | ( | ) | ( | ) | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ) | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ |
5 |
Additional Paid-in Capital | Treasury Stock at Cost | |||||||||||||||||||||||||||||
Common Stock(a) | Retained Earnings | Total Equity | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | AOCI(b) | ||||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||
Other comprehensive loss | ( | ) | ||||||||||||||||||||||||||||
Total comprehensive income | ||||||||||||||||||||||||||||||
Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | ||||||||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||||||||||||
Shares issued pursuant to stock-based compensation plans | ||||||||||||||||||||||||||||||
Cumulative adjustments from adoption of new accounting standards | ( | ) | ( | ) | ||||||||||||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Balance at March 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||
Other comprehensive loss | ( | ) | ||||||||||||||||||||||||||||
Total comprehensive income | ||||||||||||||||||||||||||||||
Dividends declared | ( | ) | ( | ) | ||||||||||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | ||||||||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||||||||||||
Shares issued pursuant to stock-based compensation plans | ||||||||||||||||||||||||||||||
Cumulative adjustments from adoption of new accounting standards (see Note 4) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Balance at June 29, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
(a) | Includes Class A and Class B common stock. During the three months ended June 29, 2019, |
(b) | Accumulated other comprehensive income (loss). |
6 |
1. | Description of Business |
2. | Basis of Presentation |
7 |
3. | Summary of Significant Accounting Policies |
8 |
Contractually-Guaranteed Minimum Royalties(a) | ||||
(millions) | ||||
Remainder of Fiscal 2020 | $ | |||
Fiscal 2021 | ||||
Fiscal 2022 | ||||
Fiscal 2023 | ||||
Fiscal 2024 and thereafter | ||||
Total | $ |
(a) | Amounts presented do not contemplate anticipated contract renewals or royalties earned in excess of the contractually guaranteed minimums. |
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
June 29, 2019 | June 30, 2018 | |||||||||||||||||||||||||||||||||||||||
North America | Europe | Asia | Other | Total | North America | Europe | Asia | Other | Total | |||||||||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||||||||||
Sales Channel(a): | ||||||||||||||||||||||||||||||||||||||||
Wholesale | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Retail | ||||||||||||||||||||||||||||||||||||||||
Licensing | ||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
9 |
(a) | Net revenues from the Company's wholesale and retail businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time. |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Shipping costs | $ | $ | ||||||
Handling costs |
Three Months Ended | ||||||
June 29, 2019 | June 30, 2018 | |||||
(millions) | ||||||
Basic shares | ||||||
Dilutive effect of stock options and RSUs | ||||||
Diluted shares |
10 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Beginning reserve balance | $ | $ | ||||||
Amount charged against revenue to increase reserve | ||||||||
Amount credited against customer accounts to decrease reserve | ( | ) | ( | ) | ||||
Foreign currency translation | ( | ) | ||||||
Ending reserve balance | $ | $ |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Beginning reserve balance | $ | $ | ||||||
Amount recorded to expense to increase reserve(a) | ||||||||
Amount written-off against customer accounts to decrease reserve | ( | ) | ( | ) | ||||
Foreign currency translation | ( | ) | ||||||
Ending reserve balance | $ | $ |
(a) | Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations. |
11 |
12 |
• | Forecasted Inventory Transactions — recognized as part of the cost of the inventory being hedged within cost of goods sold when the related inventory is sold to a third party. |
• | Settlement of Foreign Currency Balances — recognized within other expense, net during the period that the hedged balance is remeasured through earnings, generally through its ultimate settlement when the related payment occurs. |
13 |
4. | Recently Issued Accounting Standards |
14 |
15 |
5. | Property and Equipment |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Land and improvements | $ | $ | ||||||
Buildings and improvements | ||||||||
Furniture and fixtures | ||||||||
Machinery and equipment | ||||||||
Capitalized software | ||||||||
Leasehold improvements | ||||||||
Construction in progress | ||||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
Property and equipment, net | $ | $ |
16 |
6. | Other Assets and Liabilities |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Other taxes receivable | $ | $ | ||||||
Non-trade receivables | ||||||||
Restricted cash | ||||||||
Tenant allowances receivable | ||||||||
Inventory return asset | ||||||||
Prepaid occupancy costs | ||||||||
Prepaid software maintenance | ||||||||
Derivative financial instruments | ||||||||
Prepaid advertising and marketing | ||||||||
Assets held-for-sale(a) | ||||||||
Other prepaid expenses and current assets | ||||||||
Total prepaid expenses and other current assets | $ | $ |
(a) | Assets held-for-sale as of March 30, 2019 related to the estimated fair value, less costs to sell, of the Company's corporate jet. The jet was sold during the first quarter of Fiscal 2020 with |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Non-current investments | $ | $ | ||||||
Security deposits | ||||||||
Derivative financial instruments | ||||||||
Restricted cash | ||||||||
Other non-current assets | ||||||||
Total other non-current assets | $ | $ |
17 |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Accrued operating expenses | $ | $ | ||||||
Accrued inventory | ||||||||
Other taxes payable | ||||||||
Accrued payroll and benefits | ||||||||
Dividends payable | ||||||||
Accrued capital expenditures | ||||||||
Restructuring reserve | ||||||||
Deferred income | ||||||||
Finance lease obligations | ||||||||
Other accrued expenses and current liabilities | ||||||||
Total accrued expenses and other current liabilities | $ | $ |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Finance lease obligations | $ | $ | ||||||
Deferred lease incentives and obligations | ||||||||
Derivative financial instruments | ||||||||
Deferred tax liabilities | ||||||||
Restructuring reserve | ||||||||
Other non-current liabilities | ||||||||
Total other non-current liabilities | $ | $ |
18 |
7. | Impairment of Assets |
8. | Restructuring and Other Charges |
Three Months Ended | ||||||||||||
June 29, 2019 | June 30, 2018 | Cumulative Charges | ||||||||||
(millions) | ||||||||||||
Cash-related restructuring charges: | ||||||||||||
Severance and benefit costs | $ | $ | $ | |||||||||
Lease termination and store closure costs | ||||||||||||
Other cash charges | ||||||||||||
Total cash-related restructuring charges | ||||||||||||
Non-cash charges: | ||||||||||||
Impairment of assets (see Note 7) | ||||||||||||
Inventory-related charges(a) | ||||||||||||
Loss on sale of property(b) | ||||||||||||
Total non-cash charges | ||||||||||||
Total charges | $ | $ | $ |
(a) | Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations. |
(b) | Loss on sale of property, which was recorded within restructuring and other charges in the consolidated statements of operations during the third quarter of Fiscal 2019, was incurred in connection with the sale of one of the Company's distribution centers in North America. Total cash proceeds from the sale were $ |
19 |
Severance and Benefit Costs | Lease Termination and Store Closure Costs | Other Cash Charges | Total | |||||||||||||
(millions) | ||||||||||||||||
Balance at March 30, 2019 | $ | $ | $ | $ | ||||||||||||
Additions charged to expense | ||||||||||||||||
Cash payments charged against reserve | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Non-cash adjustments(a) | ( | ) | ( | ) | ||||||||||||
Balance at June 29, 2019 | $ | $ | $ | $ |
(a) | Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4). |
Severance and Benefit Costs | Lease Termination and Store Closure Costs | Other Cash Charges | Total | |||||||||||||
(millions) | ||||||||||||||||
Balance at March 30, 2019 | $ | $ | $ | $ | ||||||||||||
Additions charged to expense | ||||||||||||||||
Cash payments charged against reserve | ( | ) | ( | ) | ( | ) | ||||||||||
Non-cash adjustments(a) | ( | ) | ( | ) | ||||||||||||
Balance at June 29, 2019 | $ | $ | $ | $ |
(a) | Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4). |
20 |
9. | Income Taxes |
10. | Debt |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
$300 million 2.625% Senior Notes(a) | $ | $ | ||||||
$400 million 3.750% Senior Notes(b) | ||||||||
Total long-term debt | $ | $ |
(a) | The carrying value of the 2.625% Senior Notes as of June 29, 2019 and March 30, 2019 reflects adjustments of $ |
(b) | The carrying value of the 3.750% Senior Notes is presented net of unamortized debt issuance costs and discount of $ |
21 |
22 |
• | China Credit Facility — provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to |
• | South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to |
11. | Fair Value Measurements |
• | Level 1 — inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2 — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable. |
• | Level 3 — inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement. |
23 |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Investments in commercial paper(a)(b) | $ | $ | ||||||
Derivative assets(a) | ||||||||
Derivative liabilities(a) |
(a) | Based on Level 2 measurements. |
(b) | Amount as of June 29, 2019 was included within short-term investments in the consolidated balance sheet. As of March 30, 2019, $ |
June 29, 2019 | March 30, 2019 | |||||||||||||||
Carrying Value(a) | Fair Value(b) | Carrying Value(a) | Fair Value(b) | |||||||||||||
(millions) | ||||||||||||||||
$300 million 2.625% Senior Notes | $ | $ | $ | $ | ||||||||||||
$400 million 3.750% Senior Notes |
(a) | See Note 10 for discussion of the carrying values of the Company's senior notes. |
(b) | Based on Level 2 measurements. |
24 |
Three Months Ended | ||||||||||||||||
June 29, 2019 | June 30, 2018 | |||||||||||||||
Long-Lived Asset Category | Fair Value As of Impairment Date | Total Impairments | Fair Value As of Impairment Date | Total Impairments | ||||||||||||
(millions) | ||||||||||||||||
Property and equipment, net | $ | $ | $ | $ | ||||||||||||
Operating lease right-of-use assets | (a) | N/A | N/A |
(a) | Includes $ |
25 |
12. | Financial Instruments |
Notional Amounts | Derivative Assets | Derivative Liabilities | ||||||||||||||||||||||||||||||
Derivative Instrument(a) | June 29, 2019 | March 30, 2019 | June 29, 2019 | March 30, 2019 | June 29, 2019 | March 30, 2019 | ||||||||||||||||||||||||||
Balance Sheet Line(b) | Fair Value | Balance Sheet Line(b) | Fair Value | Balance Sheet Line(b) | Fair Value | Balance Sheet Line(b) | Fair Value | |||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||
Designated Hedges: | ||||||||||||||||||||||||||||||||
FC — Cash flow hedges | $ | $ | PP | $ | PP | $ | (e) | $ | AE | $ | ||||||||||||||||||||||
IRS — Fixed-rate debt | ONCL | ONCL | ||||||||||||||||||||||||||||||
Net investment hedges(c) | ONCA | ONCA | ONCL | ONCL | ||||||||||||||||||||||||||||
Total Designated Hedges | ||||||||||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||||||||||
FC — Undesignated hedges(d) | PP | PP | AE | AE | ||||||||||||||||||||||||||||
Total Hedges | $ | $ | $ | $ | $ | $ |
(a) | FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts. |
(b) | PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCA = Other non-current assets; ONCL = Other non-current liabilities. |
(c) | Includes cross-currency swaps designated as hedges of the Company's net investment in certain foreign operations. |
(d) | Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances. |
(e) | $ |
June 29, 2019 | March 30, 2019 | |||||||||||||||||||||||
Gross Amounts Presented in the Balance Sheet | Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements | Net Amount | Gross Amounts Presented in the Balance Sheet | Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements | Net Amount | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
Derivative assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Derivative liabilities | ( | ) | ( | ) |
26 |
Gains (Losses) Recognized in OCI | ||||||||
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Designated Hedges: | ||||||||
FC — Cash flow hedges | $ | ( | ) | $ | ||||
Net investment hedges — effective portion | ( | ) | ||||||
Net investment hedges — portion excluded from assessment of hedge effectiveness | ||||||||
Total Designated Hedges | $ | ( | ) | $ |
Location and Amount of Gains (Losses) from Cash Flow Hedges Reclassified from AOCI to Earnings | ||||||||||||||||
Three Months Ended | ||||||||||||||||
June 29, 2019 | June 30, 2018 | |||||||||||||||
Cost of goods sold | Other expense, net | Cost of goods sold | Other expense, net | |||||||||||||
(millions) | ||||||||||||||||
Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Effects of cash flow hedging: | ||||||||||||||||
FC — Cash flow hedges | ( | ) |
Gains (Losses) from Net Investment Hedges Recognized in Earnings | Location of Gains (Losses) Recognized in Earnings | |||||||||
Three Months Ended | ||||||||||
June 29, 2019 | June 30, 2018 | |||||||||
(millions) | ||||||||||
Net Investment Hedges | ||||||||||
Net investment hedges — portion excluded from assessment of hedge effectiveness(a) | $ | $ | Interest expense | |||||||
Total Net Investment Hedges | $ | $ |
(a) | Amounts recognized in other comprehensive income (loss) ("OCI") related to the effective portion of the Company's net investment hedges would be recognized in earnings only upon the sale or liquidation of the hedged net investment. |
27 |
Gains (Losses) Recognized in Earnings | Location of Gains (Losses) Recognized in Earnings | |||||||||
Three Months Ended | ||||||||||
June 29, 2019 | June 30, 2018 | |||||||||
(millions) | ||||||||||
Undesignated Hedges: | ||||||||||
FC — Undesignated hedges | $ | $ | Other expense, net | |||||||
Total Undesignated Hedges | $ | $ |
Carrying Value of the Hedged Item | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item | |||||||||||||||||
Hedged Item | Balance Sheet Line in which the Hedged Item is Included | June 29, 2019 | March 30, 2019 | June 29, 2019 | March 30, 2019 | |||||||||||||
(millions) | ||||||||||||||||||
$300 million 2.625% Senior Notes | Long-term debt | $ | $ | $ | ( | ) | $ | ( | ) |
28 |
29 |
13. | Leases |
June 29, 2019 | Location Recorded on Balance Sheet | |||||
(millions) | ||||||
Assets: | ||||||
Operating leases | $ | Operating lease right-of-use assets | ||||
Finance leases | Property and equipment, net | |||||
Total lease assets | $ | |||||
Liabilities: | ||||||
Operating leases: | ||||||
Current portion | $ | Current portion of operating lease liabilities | ||||
Non-current portion | Long-term operating lease liabilities | |||||
Total operating lease liabilities | ||||||
Finance leases: | ||||||
Current portion | Accrued expenses and other current liabilities | |||||
Non-current portion | Other non-current liabilities | |||||
Total finance lease liabilities | ||||||
Total lease liabilities | $ |
Three Months Ended | ||||||
June 29, 2019 | Location Recorded in Earnings | |||||
(millions) | ||||||
Operating lease cost | $ | (a) | ||||
Finance lease costs: | ||||||
Depreciation of leased assets | SG&A expenses | |||||
Accretion of lease liabilities | Interest expense | |||||
Variable lease cost | (b) | |||||
Short-term lease cost | SG&A expenses | |||||
Sublease income | ( | ) | Restructuring and other charges | |||
Total lease cost | $ |
(a) | $ |
(b) | $ |
30 |
Three Months Ended | ||||
June 29, 2019 | ||||
(millions) | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | |||
Operating cash flows from finance leases | ||||
Financing cash flows from finance leases |
June 29, 2019 | ||||||||
Operating Leases | Finance Leases | |||||||
(millions) | ||||||||
Remainder of Fiscal 2020 | $ | $ | ||||||
Fiscal 2021 | ||||||||
Fiscal 2022 | ||||||||
Fiscal 2023 | ||||||||
Fiscal 2024 | ||||||||
Fiscal 2025 and thereafter | ||||||||
Total lease payments | ||||||||
Less: interest | ( | ) | ( | ) | ||||
Total lease liabilities | $ | $ |
June 29, 2019 | ||||||
Operating Leases | Finance Leases | |||||
Weighted-average remaining lease term (years) | ||||||
Weighted-average discount rate | % | % |
31 |
14. | Commitments and Contingencies |
15. | Equity |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Cost of shares repurchased | $ | $ | ||||||
Number of shares repurchased |
32 |
16. | Accumulated Other Comprehensive Income (Loss) |
Foreign Currency Translation Gains (Losses)(a) | Net Unrealized Gains (Losses) on Cash Flow Hedges(b) | Net Unrealized Gains (Losses) on Defined Benefit Plans(c) | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||
(millions) | ||||||||||||||||
Balance at March 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
OCI before reclassifications | ( | ) | ( | ) | ||||||||||||
Amounts reclassified from AOCI to earnings | ( | ) | ||||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ||||||||||||
Balance at June 30, 2018 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
Balance at March 30, 2019 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
OCI before reclassifications | ( | ) | ( | ) | ||||||||||||
Amounts reclassified from AOCI to earnings | ( | ) | ( | ) | ( | ) | ||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ( | ) | ||||||||||
Balance at June 29, 2019 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
(a) | OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes an income tax benefit of $ |
(b) | OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of an income tax benefit of $ |
(c) | Activity is presented net of taxes, which were immaterial for both periods presented. |
Three Months Ended | Location of Gains (Losses) Reclassified from AOCI to Earnings | |||||||||
June 29, 2019 | June 30, 2018 | |||||||||
(millions) | ||||||||||
Gains (losses) on cash flow hedges(a): | ||||||||||
FC — Cash flow hedges | $ | $ | ( | ) | Cost of goods sold | |||||
FC — Cash flow hedges | Other expense, net | |||||||||
Tax effect | ( | ) | Income tax provision | |||||||
Net of tax | $ | $ | ( | ) |
(a) | FC = Forward foreign currency exchange contracts. |
33 |
17. | Stock-based Compensation |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Compensation expense | $ | $ | ||||||
Income tax benefit | ( | ) | ( | ) |
Number of Options | |||
(thousands) | |||
Options outstanding at March 30, 2019 | |||
Granted | |||
Exercised | |||
Cancelled/Forfeited | ( | ) | |
Options outstanding at June 29, 2019 |
34 |
Number of Shares | ||||||
Restricted Stock | Service-based RSUs | |||||
(thousands) | ||||||
Unvested at March 30, 2019 | ||||||
Granted | ||||||
Vested | ( | ) | ( | ) | ||
Forfeited | ( | ) | ||||
Unvested at June 29, 2019 |
Number of Performance-based RSUs | |||
(thousands) | |||
Unvested at March 30, 2019 | |||
Granted | |||
Change due to performance condition achievement | |||
Vested | ( | ) | |
Forfeited | |||
Unvested at June 29, 2019 |
35 |
Number of Market-based RSUs | |||
(thousands) | |||
Unvested at March 30, 2019 | |||
Granted | |||
Change due to market condition achievement | |||
Vested | |||
Forfeited | |||
Unvested at June 29, 2019 |
18. | Segment Information |
• | North America — The North America segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, the Company's wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. The Company's retail business in North America is comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site, www.RalphLauren.com. |
• | Europe — The Europe segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Europe, the Middle East, and Latin America, excluding Club Monaco. In Europe, the Company's wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. The Company's retail business in Europe is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various digital commerce sites. |
• | Asia — The Asia segment primarily consists of sales of Ralph Lauren branded apparel, footwear, accessories, home furnishings, and related products made through the Company's wholesale and retail businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, the Company sells its products online through various third-party digital partner commerce sites. In Asia, the Company's wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops. |
36 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Net revenues: | ||||||||
North America | $ | $ | ||||||
Europe | ||||||||
Asia | ||||||||
Other non-reportable segments | ||||||||
Total net revenues | $ | $ |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Operating income(a): | ||||||||
North America | $ | $ | ||||||
Europe | ||||||||
Asia | ||||||||
Other non-reportable segments | ||||||||
Unallocated corporate expenses | ( | ) | ( | ) | ||||
Unallocated restructuring and other charges(b) | ( | ) | ( | ) | ||||
Total operating income | $ | $ |
(a) | Segment operating income and unallocated corporate expenses during the three-month periods ended June 29, 2019 and June 30, 2018 included certain restructuring-related inventory charges (see Note 8) and asset impairment charges (see Note 7), which are detailed below: |
Three Months Ended | |||||||||
June 29, 2019 | June 30, 2018 | ||||||||
(millions) | |||||||||
Restructuring-related inventory charges: | |||||||||
Europe | $ | ( | ) | $ | |||||
Asia | ( | ) | |||||||
Total restructuring-related inventory charges | $ | ( | ) | $ |
37 |
Three Months Ended | |||||||||
June 29, 2019 | June 30, 2018 | ||||||||
(millions) | |||||||||
Asset impairment charges: | |||||||||
Europe | $ | $ | ( | ) | |||||
Asia | ( | ) | |||||||
Unallocated corporate expenses | ( | ) | ( | ) | |||||
Total asset impairment charges | $ | ( | ) | $ | ( | ) |
(b) | The three-month periods ended June 29, 2019 and June 30, 2018 included certain unallocated restructuring and other charges (see Note 8), which are detailed below: |
Three Months Ended | |||||||||
June 29, 2019 | June 30, 2018 | ||||||||
(millions) | |||||||||
Unallocated restructuring and other charges: | |||||||||
North America-related | $ | ( | ) | $ | ( | ) | |||
Europe-related | ( | ) | ( | ) | |||||
Asia-related | ( | ) | ( | ) | |||||
Other non-reportable segment-related | ( | ) | |||||||
Corporate-related | ( | ) | ( | ) | |||||
Unallocated restructuring charges | ( | ) | ( | ) | |||||
Other charges (see Note 8) | ( | ) | ( | ) | |||||
Total unallocated restructuring and other charges | $ | ( | ) | $ | ( | ) |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Depreciation and amortization: | ||||||||
North America | $ | $ | ||||||
Europe | ||||||||
Asia | ||||||||
Other non-reportable segments | ||||||||
Unallocated corporate expenses | ||||||||
Unallocated restructuring and other charges (see Note 8) | ||||||||
Total depreciation and amortization | $ | $ |
38 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Net revenues(a): | ||||||||
The Americas(b) | $ | $ | ||||||
Europe(c) | ||||||||
Asia(d) | ||||||||
Total net revenues | $ | $ |
(a) | Net revenues for certain of the Company's licensed operations are included within the geographic location of the reporting subsidiary which holds the respective license. |
(b) | Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the three-month periods ended June 29, 2019 and June 30, 2018 were $ |
(c) | Includes the Middle East. |
(d) | Includes Australia and New Zealand. |
19. | Additional Financial Information |
June 29, 2019 | March 30, 2019 | |||||||
(millions) | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Restricted cash included within prepaid expenses and other current assets | ||||||||
Restricted cash included within other non-current assets | ||||||||
Total cash, cash equivalents, and restricted cash | $ | $ |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income taxes |
39 |
40 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, and our ability to effectively transfer knowledge during periods of transition; |
• | our ability to successfully implement our long-term growth strategy; |
• | our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories; |
• | our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence; |
• | our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers; |
• | our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; |
• | our ability to continue to maintain our brand image and reputation and protect our trademarks; |
• | our ability to competitively price our products and create an acceptable value proposition for consumers; |
• | the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory; |
• | our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; |
• | the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases; |
• | a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other 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, trade and labor restrictions, and related laws that may reduce the flexibility of our business; |
• | the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments with China and the related impact to global stock markets, as well as our ability to implement mitigating sourcing strategies; |
• | the impact to our business resulting from the United Kingdom's decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates; |
41 |
• | the impact to our business resulting from increases in the costs of raw materials, transportation, and labor, including wages, healthcare, and other benefit-related costs; |
• | our ability to secure our facilities and systems and those of our third-party service providers from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, or similar Internet or email events; |
• | our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms; |
• | changes in our tax obligations and effective tax rate due to a variety of other factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated; |
• | our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; |
• | the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; |
• | the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders; |
• | the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible; |
• | the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters; |
• | the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation; |
• | our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; |
• | the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors' expectations; |
• | our ability to maintain our credit profile and ratings within the financial community; |
• | our intention to introduce new products or brands, or enter into or renew alliances; |
• | changes in the business of, and our relationships with, major department store customers and licensing partners; |
• | our ability to achieve our goals regarding environmental, social, and governance practices; and |
• | our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations. |
42 |
• | Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month period ended June 29, 2019. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends. |
• | Results of operations. This section provides an analysis of our results of operations for the three-month period ended June 29, 2019 as compared to the three-month period ended June 30, 2018. |
• | Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of June 29, 2019, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the three months ended June 29, 2019 as compared to the three months ended June 30, 2018; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, and our outstanding debt and covenant compliance; and (iv) a description of any material changes in our contractual and other obligations since March 30, 2019. |
• | Market risk management. This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since March 30, 2019. |
• | Critical accounting policies. This section discusses any significant changes in our critical accounting policies since March 30, 2019. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal 2019 10-K. |
• | Recently issued accounting standards. This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued or proposed. |
43 |
• | North America — Our North America segment, representing approximately 51% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. In North America, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. Our retail business in North America is comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com. |
• | Europe — Our Europe segment, representing approximately 26% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Europe, the Middle East, and Latin America, excluding Club Monaco. In Europe, our wholesale business is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country. Our retail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites. |
• | Asia — Our Asia segment, representing approximately 17% of our Fiscal 2019 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesale and retail businesses in Asia, Australia, and New Zealand. Our retail business in Asia is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our digital commerce site, www.RalphLauren.cn, which launched in September 2018. In addition, we sell our products online through various third-party digital partner commerce sites. In Asia, our wholesale business is comprised primarily of sales to department stores, with related products distributed through shop-within-shops. |
44 |
45 |
46 |
Three Months Ended | ||||||||
June 29, 2019 | June 30, 2018 | |||||||
(millions) | ||||||||
Impairment of assets (see Note 7) | $ | (1.2 | ) | $ | (1.3 | ) | ||
Restructuring and other charges (see Note 8) | (29.6 | ) | (22.4 | ) | ||||
Restructuring-related inventory charges (see Note 8)(a) | (0.6 | ) | — | |||||
Total charges | $ | (31.4 | ) | $ | (23.7 | ) |
(a) | Non-cash restructuring-related inventory charges are recorded within cost of goods sold in the consolidated statements of operations. |
47 |
Three Months Ended | |||||||||||||||
June 29, 2019 | June 30, 2018 | $ Change | % / bps Change | ||||||||||||
(millions, except per share data) | |||||||||||||||
Net revenues | $ | 1,428.8 | $ | 1,390.6 | $ | 38.2 | 2.7 | % | |||||||
Cost of goods sold | (508.0 | ) | (494.9 | ) | (13.1 | ) | 2.6 | % | |||||||
Gross profit | 920.8 | 895.7 | 25.1 | 2.8 | % | ||||||||||
Gross profit as % of net revenues | 64.4 | % | 64.4 | % | — | ||||||||||
Selling, general, and administrative expenses | (746.7 | ) | (741.9 | ) | (4.8 | ) | 0.7 | % | |||||||
SG&A expenses as % of net revenues | 52.3 | % | 53.3 | % | (100 bps) | ||||||||||
Impairment of assets | (1.2 | ) | (1.3 | ) | 0.1 | (6.8 | %) | ||||||||
Restructuring and other charges | (29.6 | ) | (22.4 | ) | (7.2 | ) | 31.6 | % | |||||||
Operating income | 143.3 | 130.1 | 13.2 | 10.1 | % | ||||||||||
Operating income as % of net revenues | 10.0 | % | 9.4 | % | 60 bps | ||||||||||
Interest expense | (4.2 | ) | (4.4 | ) | 0.2 | (3.0 | %) | ||||||||
Interest income | 11.6 | 9.2 | 2.4 | 26.7 | % | ||||||||||
Other expense, net | (4.1 | ) | (2.0 | ) | (2.1 | ) | 104.8 | % | |||||||
Income before income taxes | 146.6 | 132.9 | 13.7 | 10.3 | % | ||||||||||
Income tax provision | (29.5 | ) | (23.9 | ) | (5.6 | ) | 23.1 | % | |||||||
Effective tax rate(a) | 20.1 | % | 18.0 | % | 210 bps | ||||||||||
Net income | $ | 117.1 | $ | 109.0 | $ | 8.1 | 7.5 | % | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 1.50 | $ | 1.33 | $ | 0.17 | 12.8 | % | |||||||
Diluted | $ | 1.47 | $ | 1.31 | $ | 0.16 | 12.2 | % |
(a) | Effective tax rate is calculated by dividing the income tax provision by income before income taxes. |
% Change | |||
Digital commerce comparable store sales | 4 | % | |
Comparable store sales excluding digital commerce | 2 | % | |
Total comparable store sales | 2 | % |
48 |
June 29, 2019 | June 30, 2018 | |||||
Freestanding Stores: | ||||||
North America | 224 | 220 | ||||
Europe | 92 | 83 | ||||
Asia | 119 | 107 | ||||
Other non-reportable segments | 75 | 74 | ||||
Total freestanding stores | 510 | 484 | ||||
Concession Shops: | ||||||
North America | 3 | 2 | ||||
Europe | 29 | 25 | ||||
Asia | 624 | 604 | ||||
Other non-reportable segments | 5 | 2 | ||||
Total concession shops | 661 | 633 | ||||
Total stores | 1,171 | 1,117 |
Three Months Ended | $ Change | Foreign Exchange Impact | $ Change | % Change | ||||||||||||||||||||||
June 29, 2019 | June 30, 2018 | As Reported | Constant Currency | As Reported | Constant Currency | |||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||
North America | $ | 719.4 | $ | 697.6 | $ | 21.8 | $ | (1.1 | ) | $ | 22.9 | 3.1 | % | 3.3 | % | |||||||||||
Europe | 360.8 | 355.3 | 5.5 | (19.8 | ) | 25.3 | 1.5 | % | 7.1 | % | ||||||||||||||||
Asia | 258.6 | 248.0 | 10.6 | (8.7 | ) | 19.3 | 4.3 | % | 7.8 | % | ||||||||||||||||
Other non-reportable segments | 90.0 | 89.7 | 0.3 | (0.1 | ) | 0.4 | 0.3 | % | 0.5 | % | ||||||||||||||||
Total net revenues | $ | 1,428.8 | $ | 1,390.6 | $ | 38.2 | $ | (29.7 | ) | $ | 67.9 | 2.7 | % | 4.9 | % |
• | a $15.7 million net increase related to our North America retail business, inclusive of net unfavorable foreign currency effects of $0.6 million. On a constant currency basis, net revenues increased by $16.3 million driven by increases of $14.5 million in non-comparable store sales and $1.8 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business: |
49 |
% Change | |||
Digital commerce comparable store sales | — | % | |
Comparable store sales excluding digital commerce | 1 | % | |
Total comparable store sales | 1 | % |
• | a $6.1 million net increase related to our North America wholesale business, due in part to a shift in timing of certain shipments. |
• | a $5.9 million net increase related to our Europe retail business, inclusive of net unfavorable foreign currency effects of $11.9 million. On a constant currency basis, net revenues increased by $17.8 million driven by increases of $10.4 million in non-comparable store sales and $7.4 million in comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business: |
% Change | |||
Digital commerce comparable store sales | 22 | % | |
Comparable store sales excluding digital commerce | 2 | % | |
Total comparable store sales | 4 | % |
• | an $11.0 million net increase related to our Asia retail business, inclusive of net unfavorable foreign currency effects of $8.3 million. On a constant currency basis, net revenues increased by $19.3 million, reflecting increases of $10.0 million in comparable store sales and $9.3 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business: |
% Change | |||
Digital commerce comparable store sales | 26 | % | |
Comparable store sales excluding digital commerce | 4 | % | |
Total comparable store sales | 5 | % |
50 |
Three Months Ended June 29, 2019 Compared to Three Months Ended June 30, 2018 | ||||
(millions) | ||||
SG&A expense category: | ||||
Marketing and advertising expenses | $ | 8.3 | ||
Compensation-related expenses | 3.3 | |||
Consulting fees | (4.4 | ) | ||
Other | (2.4 | ) | ||
Total change in SG&A expenses | $ | 4.8 |
51 |
Three Months Ended | ||||||||||||||||||
June 29, 2019 | June 30, 2018 | |||||||||||||||||
Operating Income | Operating Margin | Operating Income | Operating Margin | $ Change | Margin Change | |||||||||||||
(millions) | (millions) | (millions) | ||||||||||||||||
Segment: | ||||||||||||||||||
North America | $ | 157.9 | 21.9% | $ | 159.9 | 22.9% | $ | (2.0 | ) | (100 bps) | ||||||||
Europe | 79.4 | 22.0% | 73.7 | 20.8% | 5.7 | 120 bps | ||||||||||||
Asia | 48.1 | 18.6% | 42.7 | 17.2% | 5.4 | 140 bps | ||||||||||||
Other non-reportable segments | 32.9 | 36.5% | 31.0 | 34.6% | 1.9 | 190 bps | ||||||||||||
318.3 | 307.3 | 11.0 | ||||||||||||||||
Unallocated corporate expenses | (145.4 | ) | (154.8 | ) | 9.4 | |||||||||||||
Unallocated restructuring and other charges | (29.6 | ) | (22.4 | ) | (7.2 | ) | ||||||||||||
Total operating income | $ | 143.3 | 10.0% | $ | 130.1 | 9.4% | $ | 13.2 | 60 bps |
52 |
June 29, 2019 | March 30, 2019 | $ Change | ||||||||||
(millions) | ||||||||||||
Cash and cash equivalents | $ | 648.4 | $ | 584.1 | $ | 64.3 | ||||||
Short-term investments | 1,280.7 | 1,403.4 | (122.7 | ) | ||||||||
Non-current investments(a) | 34.1 | 44.9 | (10.8 | ) | ||||||||
Long-term debt(b) | (692.1 | ) | (689.1 | ) | (3.0 | ) | ||||||
Net cash and investments(c) | $ | 1,271.1 | $ | 1,343.3 | $ | (72.2 | ) | |||||
Equity | $ | 3,012.8 | $ | 3,287.2 | $ | (274.4 | ) |
(a) | Recorded within other non-current assets in our consolidated balance sheets. |
(b) | See Note 10 to the accompanying consolidated financial statements for discussion of the carrying values of our debt. |
(c) | "Net cash and investments" is defined as cash and cash equivalents, plus short-term and non-current investments, less total debt. |
53 |
Three Months Ended | ||||||||||||
June 29, 2019 | June 30, 2018 | $ Change | ||||||||||
(millions) | ||||||||||||
Net cash provided by operating activities | $ | 197.4 | $ | 230.6 | $ | (33.2 | ) | |||||
Net cash provided by (used in) investing activities | 107.2 | (827.1 | ) | 934.3 | ||||||||
Net cash used in financing activities | (244.8 | ) | (164.4 | ) | (80.4 | ) | ||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 5.1 | (18.8 | ) | 23.9 | ||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 64.9 | $ | (779.7 | ) | $ | 844.6 |
• | an unfavorable change related to our accounts receivable, largely driven by the timing of cash receipts; |
• | a year-over-year increase in our inventory levels largely to support revenue growth, as well as the timing of inventory receipts; and |
• | an unfavorable change related to our prepaid expenses and other current assets, largely driven by the timing of cash payments. |
• | a favorable change related to our accounts payable, largely driven by the timing of cash payments. |
• | a $915.2 million increase in proceeds from sales and maturities of investments, less purchases of investments. During the three months ended June 29, 2019, we received net proceeds from sales and maturities of investments of $134.9 million, as compared to making net investment purchases of $780.3 million during the three months ended June 30, 2018; and |
• | net cash proceeds of $20.8 million received from the sale of our corporate jet during the three months ended June 29, 2019. These proceeds were donated to the Polo Ralph Lauren Foundation, which is reflected within cash flows from operating activities for the three months ended June 29, 2019. |
• | a $7.1 million increase in capital expenditures. During the three months ended June 29, 2019, we spent $49.4 million on capital expenditures, as compared to $42.3 million during the three months ended June 30, 2018. Our capital expenditures during the three months ended June 29, 2019 primarily related to new store openings, retail and department store renovations, and enhancements to our information technology systems. |
54 |
• | a $61.1 million increase in cash used to repurchase shares of our Class A common stock. During the three months ended June 29, 2019, we used $150.0 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $41.1 million in shares of Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during the three months ended June 30, 2018, we used $100.0 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional$30.0 million in shares of Class A common stock were surrendered or withheld for taxes; |
• | a $21.8 million decrease in proceeds from exercise of stock options; and |
• | an $8.2 million increase in payments of dividends, driven by an increase to the quarterly cash dividend per share. Dividends paid amounted to $48.8 million and $40.6 million during the three-month periods ended June 29, 2019 and June 30, 2018, respectively. |
• | a $9.9 million decrease in debt repayments. During the three months ended June 29, 2019, we did not repay any debt, as compared to debt repayments of $9.9 million during the three months ended June 30, 2018 related to borrowings previously outstanding under our credit facilities. |
June 29, 2019 | ||||||||||||
Description(a) | Total Availability | Borrowings Outstanding | Remaining Availability | |||||||||
(millions) | ||||||||||||
Global Credit Facility and Commercial Paper Program(b) | $ | 500 | $ | 9 | (c) | $ | 491 | |||||
Pan-Asia Credit Facilities | 33 | — | 33 |
(a) | As defined in Note 10 to the accompanying consolidated financial statements. |
(b) | Borrowings under the Commercial Paper Program are supported by the Global Credit Facility. Accordingly, we do not expect combined borrowings outstanding under the Commercial Paper Program and the Global Credit Facility to exceed $500 million. |
(c) | Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of June 29, 2019. |
55 |
56 |
57 |
58 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk. |
Item 4. | Controls and Procedures. |
59 |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
(a) | Sales of Unregistered Securities |
Stockholder That Converted Class B Common Stock to Class A Common Stock | Date of Conversion | Number of Shares Converted/ Received | |||
Lauren Family, L.L.C. | May 17, 2019 | 499,996 |
(b) | Not Applicable |
60 |
(c) | Stock Repurchases |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(a) | ||||||||||
(millions) | |||||||||||||
March 31, 2019 to April 27, 2019 | 3,174 | (b) | $ | 129.73 | — | $ | 630 | ||||||
April 28, 2019 to May 25, 2019 | 1,079,481 | (c) | 114.03 | 950,415 | 1,122 | ||||||||
May 26, 2019 to June 29, 2019 | 624,900 | (d) | 108.50 | 386,868 | 1,080 | ||||||||
1,707,555 | 1,337,283 |
(a) | On May 13, 2019, the Company's Board of Directors approved an expansion of the common stock repurchase program that allows it to repurchase up to an additional $600 million of Class A common stock. Repurchases of shares of Class A common stock are subject to overall business and market conditions. |
(b) | Represents shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans. |
(c) | Includes 129,066 shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans. |
(d) | Includes 238,032 shares surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards issued under its long-term stock incentive plans. |
61 |
Item 6. | Exhibits. |
3.1 | |
3.2 | |
3.3 | |
10.1 | |
10.2* | |
10.3* | |
10.4* | |
31.1* | |
31.2* | |
32.1* | |
32.2* | |
101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* | XBRL Taxonomy Extension Schema Document. |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith. |
† | Management contract or compensatory plan or arrangement. |
62 |
RALPH LAUREN CORPORATION | ||
By: | /S/ JANE HAMILTON NIELSEN | |
Jane Hamilton Nielsen | ||
Chief Operating Officer and Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
Date: August 1, 2019 |
63 |
1. | Attract and retain exceptional individuals of superior talent |
2. | Motivate such individuals to achieve longer-range performance |
3. | Enable such individuals to participate in the long-term growth and financial success of the Company |
2 | ||
Fiscal 2020 PSU Overview |
An eligible employee who receives an Unsatisfactory (U) rating | ||||
on their annual performance appraisal is not eligible for an equity award | ||||
in the fiscal year following that performance appraisal period. An employee who receives a Below | ||||
Expectations (B) performance rating will be eligible for an equity award based on manager discretion. |
▪ | Net Earnings or Net Income (before or after taxes) |
▪ | Basic or Diluted Earnings Per Share (before or after taxes) |
▪ | Net Operating Profit (before or after taxes) |
▪ | Net Revenue or Net Revenue Growth |
▪ | Gross Profit or Gross Profit Growth |
▪ | Return Measures (including but not limited to Return on Assets, Investments, Capital) |
▪ | Other measures of economic value added or other value creation metrics |
Performance Level | % of Goal Achieved | Goal | % of Target PSUs Vested |
Threshold | 90% | [ ]% | 50% |
Target | 100% | [ ]% | 100% |
Maximum | 110% | [ ]% | 200% |
3 | ||
Fiscal 2020 PSU Overview |
Comparator Group for TSR | ||
Capri Holdings Limited (formerly Michael Kors Holdings Limited) | Nordstrom, Inc. | Tiffany & Co. |
Dillard’s, Inc. | PVH Corp. | Under Armour, Inc. |
The Gap, Inc. | RH (Restoration Hardware, Inc.) | Urban Outfitters, Inc. |
L Brands, Inc. | Tapestry, Inc. | V.F. Corporation |
Macy’s, Inc. | The TJX Companies, Inc. | Williams-Sonoma, Inc. |
Nike, Inc. |
Performance Level | Relative TSR Performance | % of Target PSUs Vested |
Below Threshold | <30th Percentile | 0% |
Threshold | 30th Percentile | 50% |
Target | 50th Percentile | 100% |
Stretch | 70th Percentile | 150% |
Maximum | 90th Percentile | 200% |
4 | ||
Fiscal 2020 PSU Overview |
Grant Date | # PSUs Granted | Performance Period | Vesting Date1 | Performance Level 2 | Vested Percentage2 | # Shares Vested |
FY20 (August 2019) | 1,500 | FY20 - FY22 | FY22 (June 2022) | 110% | 200% | 3,000 |
100% | 100% | 1,500 | ||||
90% | 50% | 750 |
Grant Date | # PSUs Granted | Performance Period | Vesting Date1 | Performance Level 2 | Vested Percentage2 | # Shares Vested |
FY20 (August 2019) | 1,000 | FY20 - FY22 | FY22 (June 2022) | 90th Percentile | 200% | 2,000 |
50th Percentile | 100% | 1,000 | ||||
30th Percentile | 50% | 500 |
▪ | Receive shares of RL Class A Common Stock without paying any exercise price |
▪ | The number of PSUs vesting can range from 50% (Threshold) to 200% (Maximum) of the target shares granted |
▪ | Any increases in the Company’s Class A Common Stock price above the price on the grant date increases the value of the award |
5 | ||
Fiscal 2020 PSU Overview |
If Stock Price Reaches: | |||||
Value At: | # of Shares | $120 | $130 | $140 | $150 |
Threshold Performance | 1,250 | $150,000 | $162,500 | $175,000 | $187,500 |
Target Performance | 2,500 | $300,000 | $325,000 | $350,000 | $375,000 |
Maximum Performance | 5,000 | $600,000 | $650,000 | $700,000 | $750,000 |
6 | ||
Fiscal 2020 PSU Overview |
Termination as a result of: | Status of PSU Awards |
Retirement 1 Long-Term Disability (LTD) 2 Death | If retirement date is more than one year from the date of grant, participant is entitled to full award on the scheduled vesting date. Payout is based on performance achievement. If retirement date is within the first year following the grant date, participant is entitled to one-third of award on the scheduled vesting date. Payout is based on performance achievement. All remaining PSUs are forfeited. The above is subject to the terms and conditions in the On-Line Grant Agreement. |
Voluntary Resignation Involuntary Termination | All unvested PSUs are forfeited. |
7 | ||
Fiscal 2020 PSU Overview |
▪ | Earnings or other financial information |
▪ | Changes in dividend policy |
▪ | Stock splits |
▪ | Mergers and acquisitions |
▪ | Major new contracts or product-line introductions |
▪ | Litigation involving substantial amounts of money |
▪ | Changes in management |
▪ | “In and out” trading in securities of the Company. Any Company stock purchased in the market must be held for a minimum of six months and ideally longer. Note that the Securities and Exchange Commission (SEC) has a “short-swing profit recapture” rule that effectively prohibits Executive Officers and members of the Board of Directors from selling any Company stock within six months of a purchase. The Company has extended this prohibition to all employees. The receipt of shares pursuant to the vesting of PSU awards is not considered a purchase under the SEC’s rule. |
8 | ||
Fiscal 2020 PSU Overview |
▪ | Purchases of stock of the Company on margin. |
▪ | Short sales (i.e., selling stock one does not own and then borrowing the shares to make delivery). |
▪ | “Hedging” and Pledging of Company Stock. No insider, including any director, officer or employee of the Company, shall purchase or sell, or make any offer to purchase or offer to sell derivative securities relating to the Company’s securities, whether or not issued by the Company, such as exchange traded options to purchase or sell the Company’s securities (so called “puts” and “calls”) or financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s securities. In addition, no director or Section 16 Officer of the Company shall hold the Company’s securities in a margin account, or maintain or enter into any arrangement that, directly or indirectly, involves pledging the Company’s securities as collateral for a loan. |
For employees at the Senior Vice President level or above (“Officers”) and for all employees in the Finance, | ||||
Legal and People and Development departments, all transactions in the Company’s securities (including, | ||||
but not limited to purchases, sales, transfers, etc.) must be conducted during an open trading window and | ||||
pre-cleared with the Corporate Counsel, or their designee. If contemplating a transaction, please provide a | ||||
written request via e-mail to RLTrading@ralphlauren.com, specifying the number of shares you wish to | ||||
sell before contacting Merrill Lynch or any other broker, or taking any other step to initiate a transaction. |
9 | ||
Fiscal 2020 PSU Overview |
(a) | the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; |
(b) | the grant of PSU awards is voluntary and occasional and does not create any contractual or other right to receive future PSU awards, or benefits in lieu of these awards, even if PSU awards have been granted in the past; |
(c) | all decisions with respect to future PSU awards, if any, will be at the sole discretion of the Compensation Committee; |
(d) | the Participant's participation in the Plan shall not create a right to further employment or service with the Company or, if different, the employing Subsidiary and shall not interfere with the ability of the Company or employing Subsidiary to terminate the Participant's employment or service relationship at any time with or without cause; |
(e) | the Participant is voluntarily participating in the Plan; |
(f) | any PSU awards and the Company's Class A Common Stock subject to awards, and the income and value of same, are not part of the Participant's normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments; and |
(g) | no claim or entitlement to compensation or damages shall arise from the forfeiture of a PSU award resulting from the Participant's termination of employment or service (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or rendering services or the terms of the Participant's employment or service agreement, if any), and in consideration of the grant of a PSU award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any Subsidiary. |
10 | ||
Fiscal 2020 PSU Overview |
11 | ||
Fiscal 2020 PSU Overview |
Award Type | Number of Shares |
PSUs | [_____] |
• | Vest after end of Fiscal 2022 based on achievement of cumulative performance during Fiscal 2020-2022 as certified by the Compensation and Organizational Development Committee based on performance goal and payout range shown below: |
Performance Level | % of Goal Achieved | FY20-FY22 Cumulative Earnings Per Share Goal | % of Target Award Earned |
Threshold | 90% | $[ ] | 50% |
Target | 100% | $[ ] | 100% |
Maximum | 110% | $[ ] | 200% |
2 | ||
Fiscal 2020 RSU Overview |
An eligible employee who receives an Unsatisfactory (U) rating on their annual performance | ||||
appraisal is not eligible for an equity award in the fiscal year following that performance appraisal period. | ||||
An eligible employee who receives a Below Expectations (B) performance rating will be eligible for an | ||||
equity award based on manager discretion. |
Grant Date | RSUs Eligible to Vest | Vesting Date |
May 15, 2019 | 70 | May 15, 2020 |
May 15, 2019 | 70 | May 15, 2021 |
May 15, 2019 | 70 | May 15, 2022 |
Total | 210 |
Year Granted | RSUs Granted | 1/3 of RSUs Eligible to Vest | ||
May 2019 | May 2020 | May 2021 | ||
May 2018 | 300 | 100 | 100 | 100 |
May 2019 | 210 | 0 | 70 | 70 |
May 2020 | 270 | 0 | 0 | 90 |
Total RSUs | 780 | 100 | 170 | 260 |
3 | ||
Fiscal 2020 RSU Overview |
If Stock Price Reaches: | |||||
# of Shares | $110 | $120 | $130 | $140 | |
Value (assumes shares vest) | 210 | $23,100 | $25,200 | $27,300 | $29,400 |
4 | ||
Fiscal 2020 RSU Overview |
Termination as a result of: | Status of RSU Awards |
Retirement 1 Long-Term Disability (LTD) 2 Death | If retirement date is more than one year from the date of grant, participant is entitled to full award on scheduled vesting dates. If retirement date is within the first year following the Grant date, participant is entitled to one-third of award on the first scheduled vesting date. All remaining RSUs are forfeited. The above is subject to the terms and conditions in the On-Line Grant Agreement. |
Voluntary Resignation Involuntary Termination | All unvested RSUs are forfeited. |
5 | ||
Fiscal 2020 RSU Overview |
▪ | Earnings or other financial information |
▪ | Changes in dividend policy |
▪ | Stock splits |
▪ | Mergers and acquisitions |
▪ | Major new contracts or product-line introductions |
▪ | Litigation involving substantial amounts of money |
▪ | Changes in management |
▪ | “In and out” trading in securities of the Company. Any Company stock purchased in the market must be held for a minimum of six months and ideally longer. Note that the Securities and Exchange Commission (SEC) has a “short-swing profit recapture” rule that effectively prohibits Executive Officers and members of the Board of Directors from selling any Company stock within six months of a purchase. The Company has extended this prohibition to all employees. The receipt of shares pursuant to the vesting of RSU awards is not considered a purchase under the SEC’s rule. |
6 | ||
Fiscal 2020 RSU Overview |
▪ | Purchases of stock of the Company on margin. |
▪ | Short sales (i.e., selling stock one does not own and then borrowing the shares to make delivery). |
▪ | “Hedging” and Pledging of Company Stock. No insider, including any director, officer or employee of the Company, shall purchase or sell, or make any offer to purchase or offer to sell derivative securities relating to the Company’s securities, whether or not issued by the Company, such as exchange traded options to purchase or sell the Company’s securities (so called “puts” and “calls”) or financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s securities. |
For employees at the Senior Vice President level or above and for all employees in the Finance, Legal and | ||||
People and Development departments, all transactions in the Company’s securities (including, but not | ||||
limited to purchases, sales, transfers, etc.) must be conducted during an open trading window and pre- | ||||
cleared with the Corporate and Securities Counsel, or their designee. If contemplating a transaction, | ||||
please provide a written request via e-mail to RLTrading@ralphlauren.com, specifying the number of | ||||
shares you wish to sell before contacting Merrill Lynch or any other broker, or taking any other step to | ||||
initiate a transaction. |
7 | ||
Fiscal 2020 RSU Overview |
(a) | the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; |
(b) | the grant of RSU awards is voluntary and occasional and does not create any contractual or other right to receive future RSU awards, or benefits in lieu of these awards, even if RSU awards have been granted in the past; |
(c) | all decisions with respect to future RSU awards, if any, will be at the sole discretion of the Compensation Committee; |
(d) | the Participant's participation in the Plan shall not create a right to further employment or service with the Company or, if different, the employing Subsidiary and shall not interfere with the ability of the Company or employing Subsidiary to terminate the Participant's employment or service relationship at any time with or without cause; |
(e) | the Participant is voluntarily participating in the Plan; |
(f) | any RSU awards and the Company's Class A Common Stock subject to awards, and the income and value of same, are not part of the Participant's normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments; and |
(g) | no claim or entitlement to compensation or damages shall arise from the forfeiture of a RSU award resulting from the Participant's termination of employment or service (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or rendering services or the terms of the Participant's employment or service agreement, if any), and in consideration of the grant of a RSU award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any Subsidiary. |
8 | ||
Fiscal 2020 RSU Overview |
9 | ||
Fiscal 2020 RSU Overview |
/s/ PATRICE LOUVET | |
Patrice Louvet | |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
Date: August 1, 2019 |
/s/ JANE HAMILTON NIELSEN | |
Jane Hamilton Nielsen | |
Chief Operating Officer and Chief Financial Officer | |
(Principal Financial and Accounting Officer) | |
Date: August 1, 2019 |
/s/ PATRICE LOUVET | |
Patrice Louvet | |
Date: August 1, 2019 |
/s/ JANE HAMILTON NIELSEN | |
Jane Hamilton Nielsen | |
Date: August 1, 2019 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Jun. 29, 2019 |
Mar. 30, 2019 |
---|---|---|
Allowance on accounts receivable | $ 180.5 | $ 192.2 |
Class A common stock, par value $.01 per share; 104.2 million and 102.9 million shares issued; 51.8 million and 52.2 million shares outstanding | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued | 104.2 | 102.9 |
Common stock, shares outstanding | 51.8 | 52.2 |
Treasury stock, shares | 52.4 | 50.7 |
Class B common stock, par value $.01 per share; 25.4 million issued and outstanding; 25.9 million shares issued and outstanding | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued | 25.4 | 25.9 |
Common stock, shares outstanding | 25.4 | 25.9 |
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||
Net revenues | $ 1,428.8 | $ 1,390.6 |
Cost of goods sold | (508.0) | (494.9) |
Gross profit | 920.8 | 895.7 |
Other costs and expenses | ||
Selling, general, and administrative expenses | (746.7) | (741.9) |
Impairment of assets | (1.2) | (1.3) |
Restructuring and other charges | (29.6) | (22.4) |
Total other operating expenses, net | (777.5) | (765.6) |
Operating income | 143.3 | 130.1 |
Interest expense | (4.2) | (4.4) |
Interest income | 11.6 | 9.2 |
Other expense, net | (4.1) | (2.0) |
Income before income taxes | 146.6 | 132.9 |
Income tax provision | (29.5) | (23.9) |
Net income | $ 117.1 | $ 109.0 |
Net income per common share: | ||
Basic | $ 1.50 | $ 1.33 |
Diluted | $ 1.47 | $ 1.31 |
Weighted average common shares outstanding: | ||
Basic | 78.2 | 81.9 |
Diluted | 79.9 | 83.3 |
Dividends declared per share | $ 0.6875 | $ 0.625 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 117.1 | $ 109.0 |
Other Comprehensive Loss, Net of Tax [Abstract] | ||
Foreign currency translation gains (losses) | 4.0 | (30.7) |
Net gains (losses) on cash flow hedges | (9.7) | 27.7 |
Net gains (losses) on defined benefit plans | (0.1) | 0.1 |
Other comprehensive loss, net of tax | (5.8) | (2.9) |
Total comprehensive income | $ 111.3 | $ 106.1 |
Consolidated Statements of Equity (Unaudited) - USD ($) shares in Millions, $ in Millions |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
AOCI [Member] |
[2] | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance, shares at Mar. 31, 2018 | 127.9 | [1] | 46.6 | ||||||||||
Beginning balance at Mar. 31, 2018 | $ 3,457.4 | $ 1.3 | [1] | $ 2,383.4 | $ 5,752.2 | $ (4,581.0) | $ (98.5) | ||||||
Comprehensive Income | |||||||||||||
Net income | 109.0 | 109.0 | |||||||||||
Other comprehensive loss | (2.9) | (2.9) | |||||||||||
Total comprehensive income | 106.1 | ||||||||||||
Dividends declared | (50.7) | (50.7) | |||||||||||
Repurchases of common stock, shares | 0.9 | ||||||||||||
Repurchases of common stock | (130.0) | $ (130.0) | |||||||||||
Stock-based compensation | 21.5 | 21.5 | |||||||||||
Shares issued pursuant to stock-based compensation plans, shares | [1] | 0.8 | |||||||||||
Shares issued pursuant to stock-based compensation plans | 21.8 | $ 0.0 | [1] | 21.8 | |||||||||
Cumulative adjustment from adoption of new accounting standards | (5.1) | (5.1) | |||||||||||
Ending balance, shares at Jun. 30, 2018 | 128.7 | [1] | 47.5 | ||||||||||
Ending balance at Jun. 30, 2018 | 3,421.0 | $ 1.3 | [1] | 2,426.7 | 5,805.4 | $ (4,711.0) | (101.4) | ||||||
Beginning balance, shares at Mar. 30, 2019 | 128.8 | [1] | 50.7 | ||||||||||
Beginning balance at Mar. 30, 2019 | 3,287.2 | $ 1.3 | [1] | 2,493.8 | 5,979.1 | $ (5,083.6) | (103.4) | ||||||
Comprehensive Income | |||||||||||||
Net income | 117.1 | 117.1 | |||||||||||
Other comprehensive loss | (5.8) | (5.8) | |||||||||||
Total comprehensive income | 111.3 | ||||||||||||
Dividends declared | (53.1) | (53.1) | |||||||||||
Repurchases of common stock, shares | 1.7 | ||||||||||||
Repurchases of common stock | (191.1) | $ (191.1) | |||||||||||
Stock-based compensation | 23.0 | 23.0 | |||||||||||
Shares issued pursuant to stock-based compensation plans, shares | [1] | 0.8 | |||||||||||
Shares issued pursuant to stock-based compensation plans | 0.0 | $ 0.0 | [1] | 0.0 | |||||||||
Cumulative adjustment from adoption of new accounting standards | (164.5) | (164.5) | |||||||||||
Ending balance, shares at Jun. 29, 2019 | 129.6 | [1] | 52.4 | ||||||||||
Ending balance at Jun. 29, 2019 | $ 3,012.8 | $ 1.3 | [1] | $ 2,516.8 | $ 5,878.6 | $ (5,274.7) | $ (109.2) | ||||||
|
Consolidated Statements of Equity (Unaudited) (Parenthetical) shares in Millions |
3 Months Ended |
---|---|
Jun. 29, 2019
shares
| |
Statement of Stockholders' Equity [Abstract] | |
Conversion of Stock, Shares Converted | 0.5 |
Description of Business |
3 Months Ended |
---|---|
Jun. 29, 2019 | |
Description of Business [Abstract] | |
Description of Business | Description of Business Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, footwear, accessories, home furnishings, and other licensed product categories. RLC's long-standing reputation and distinctive image have been developed across an expanding number of products, brands, sales channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, 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 (wholesale, retail, 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's wholesale sales are made principally to major department stores and specialty stores 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. The Company also 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. 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 organizes its business into the following three reportable segments: North America, Europe, and Asia. In addition to these reportable segments, the Company also has other non-reportable segments. See Note 18 for further discussion of the Company's segment reporting structure.
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Basis of Presentation |
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Jun. 29, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Interim Financial Statements These interim consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") and are unaudited. In the opinion of management, these consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position, income, comprehensive income, and cash flows of the Company for the interim periods presented. In addition, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") and the notes thereto have been condensed or omitted from this report as is permitted by the SEC's rules and regulations. However, the Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading. This report should be read in conjunction with the Company's Annual Report on Form 10-K filed with the SEC for the fiscal year ended March 30, 2019 (the "Fiscal 2019 10-K"). Basis of Consolidation These unaudited interim consolidated financial statements present the consolidated financial position, income, comprehensive income, and cash flows of the Company, including all entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. Fiscal Periods The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2020 will end on March 28, 2020 and will be a 52-week period ("Fiscal 2020"). Fiscal year 2019 ended on March 30, 2019 and was also a 52-week period ("Fiscal 2019"). The first quarter of Fiscal 2020 ended on June 29, 2019 and was a 13-week period. The first quarter of Fiscal 2019 ended on June 30, 2018 and was also a 13-week period. 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 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 pre-vesting forfeiture rates; reserves for restructuring activity; and accounting for business combinations, among others. Reclassifications Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation, including a change to the Company's segment reporting structure as further described in Note 18. Seasonality of Business The Company's business is typically affected by seasonal trends, with higher levels of wholesale sales in its second and fourth fiscal quarters and higher retail sales in its second and third fiscal quarters. These trends result primarily from the timing of seasonal wholesale shipments and key vacation travel, back-to-school, and holiday shopping periods impacting its retail business. As a result of changes in its business, consumer spending patterns, and the macroeconomic environment, 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, and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes in weather patterns. Accordingly, the Company's operating results and cash flows for the three-month period ended June 29, 2019 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2020.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Revenue Recognition The Company recognizes revenue across all channels of the business when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized considers terms of sale that create variability in the amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or services, and is subject to an overall constraint that a significant revenue reversal will not occur in future periods. Sales and other related taxes collected from customers and remitted to government authorities are excluded from revenue. 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 retail business is recognized when the customer takes physical possession of the products, which occurs either at the point of sale for merchandise purchased at the Company's retail stores and concession-based shop-within-shops, or upon receipt of shipment for merchandise ordered through direct-to-consumer digital commerce sites. Such revenues are recorded net of estimated returns based on historical trends. Payment is due at the point of sale. Gift cards issued to customers by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed (referred to as "breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions. 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 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-based royalty is not ultimately expected to exceed a contractually-guaranteed minimum royalty amount, the minimum is recognized as revenue ratably over the contractual period. This sales-based output measure of progress and pattern of recognition best represents the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for providing access to its trademarks. As of June 29, 2019, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:
Disaggregated Net Revenues The following table disaggregates the Company's net revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors for the fiscal periods presented:
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 is generally comprised of unredeemed gift cards, net of breakage, and advance royalty payments from licensees. The Company's deferred income balances were $16.7 million and $14.8 million as of June 29, 2019 and March 30, 2019, respectively, and were primarily recorded within accrued expenses and other current liabilities within the consolidated balance sheets. During the three months ended June 29, 2019, the Company recognized $5.7 million of net revenues from amounts recorded as deferred income as of March 30, 2019. The majority of the deferred income balance as of June 29, 2019 is expected to be recognized as revenue within the next twelve months. Shipping and Handling Costs Costs associated with shipping goods to the Company's customers are accounted for as fulfillment activities and reflected as a component of 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:
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 stock options, restricted stock units ("RSUs"), and any other potentially dilutive instruments, only in the periods in which such effects are dilutive. The weighted-average number of common shares outstanding used to calculate basic net income per common share is reconciled to shares used to calculate diluted net income per common share as follows:
All earnings per share amounts have been calculated using unrounded numbers. Options to purchase shares of the Company's Class A common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. In addition, the Company has outstanding performance-based and market-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance or market conditions (i) have been satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive. As of June 29, 2019 and June 30, 2018, there were 1.0 million and 1.6 million, respectively, of additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based RSUs that were excluded from the diluted shares calculations. Accounts Receivable In the normal course of business, the Company extends credit to wholesale customers that satisfy defined credit criteria. Payment is generally due within 30 to 120 days and does not include a significant financing component. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's 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 below:
An allowance for doubtful accounts is determined through an analysis of accounts receivable aging, assessments of collectability based on an evaluation of historical and anticipated trends, the financial condition of the Company's customers, and an evaluation of the impact of economic conditions, among other factors. A rollforward of the activity in the Company's allowance for doubtful accounts is presented below:
Concentration of Credit Risk The Company sells its wholesale merchandise primarily to major department and specialty stores around the world, and extends credit based on an evaluation of each customer's financial capacity and condition, usually without requiring collateral. In the Company's wholesale business, concentration of credit risk is relatively limited due to the large number of customers and their dispersion across many geographic areas. However, the Company has three key wholesale customers that generate significant sales volume. During Fiscal 2019, the Company's sales to its three largest wholesale customers accounted for approximately 19% of total net revenues. Substantially all of the Company's sales to its three largest wholesale customers related to its North America segment. As of June 29, 2019, these three key wholesale customers constituted approximately 26% of total gross accounts receivable. Inventories The Company holds inventory that is sold through wholesale distribution channels to major department stores and specialty retail stores. The Company also holds retail inventory that is sold in its own stores and digital commerce sites directly to consumers. Substantially all of the Company's inventories are comprised of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-average cost basis. Inventory held by the Company totaled $988.6 million, $817.8 million, and $890.0 million as of June 29, 2019, March 30, 2019, and June 30, 2018, respectively. Leases As discussed in Note 4, the Company adopted a new lease accounting standard as of the beginning of the first quarter of Fiscal 2020. The Company's lease arrangements primarily relate to real estate, including its retail stores, concession-based shop-within-shops, corporate offices, and warehouse facilities, and to a lesser extent, certain equipment and other assets. The Company's leases generally have initial terms ranging from 3 to 15 years and may include renewal or early-termination options, rent escalation clauses, and/or lease incentives in the form of construction allowances and rent abatements. Renewal rent payment terms generally reflect market rates prevailing at the time of renewal. The Company is typically required to make fixed minimum rent payments, variable rent payments based on performance (e.g., percentage-of-sales-based payments), or a combination thereof, directly related to its right to use an underlying leased asset. The Company is also often required to pay for certain other costs that do not relate specifically to its right to use an underlying leased asset, but that are associated with the asset, including real estate taxes, insurance, common area maintenance fees, and/or certain other costs (referred to collectively herein as "non-lease components"), which may be fixed or variable in amount, depending on the terms of the respective lease agreement. The Company's leases do not contain significant residual value guarantees or restrictive covenants. The Company determines whether an arrangement contains a lease at the arrangement's inception. If a lease is determined to exist, its related term is assessed at lease commencement, once the underlying asset is made available by the lessor for the Company's use. The Company's assessment of the lease term reflects the non-cancellable period of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options for which the Company is reasonably certain of not exercising, as well as periods covered by renewal options for which it is reasonably certain of exercising. The Company also determines lease classification as either operating or finance (formerly referred to as "capital") at lease commencement, which governs the pattern of expense recognition and the presentation thereof reflected in the consolidated statements of operations over the lease term. For leases with a lease term exceeding 12 months, a lease liability is recorded on the Company's consolidated balance sheet at lease commencement reflecting the present value of its fixed payment obligations over the lease term. A corresponding right-of-use ("ROU") asset equal to the initial lease liability is also recorded, increased by any prepaid rent and/or initial direct costs incurred in connection with execution of the lease, and reduced by any lease incentives received. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as it elects to account for lease and non-lease components together as a single lease component. Variable lease payments are not included in the measurement of ROU assets and liabilities. ROU assets associated with finance leases are presented separate from those associated with operating leases, and are included within property and equipment, net on the Company's consolidated balance sheet. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the lease. For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments as they are made. For leases with a lease term of 12 months or less (referred to as a "short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the consolidated balance sheet. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment (see Note 11). To the extent that an ROU asset and any related long-lived assets are determined to be impaired, they are written down accordingly on a relative carrying amount basis, with the ROU asset written down to an amount no lower than its estimated fair value. Subsequent to the recognition of any such impairment, total remaining lease cost is recognized on a front-loaded basis over the remaining lease term. See Note 13 for further discussion of the Company's leases. Derivative Financial Instruments The Company records all derivative financial instruments on its consolidated balance sheets at fair value. Changes in the fair value of derivative instruments that qualify for hedge accounting are either (i) offset against the changes in fair value of the related hedged assets, liabilities, or firm commitments through earnings or (ii) recognized in equity as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge against changes in fair value or cash flows and net investments, respectively. Each derivative instrument that qualifies for hedge accounting is expected to be highly effective in reducing and offsetting the risk associated with the related exposure being hedged. For each derivative instrument that is designated as a hedge, the Company formally documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item, and the risk exposure, as well as how hedge effectiveness will be assessed over the instrument's term. To assess hedge effectiveness at the inception of a hedging relationship, the Company generally uses regression analysis, a statistical method, to compare changes in the fair value of the derivative instrument to changes in the fair value or cash flows of the related hedged item. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed by the Company on at least a quarterly basis. As a result of its use of derivative instruments, the Company is exposed to the risk that counterparties to such contracts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. The Company's established policies and procedures for mitigating credit risk from derivative transactions include ongoing review and assessment of its counterparties' creditworthiness. The Company also enters into master netting arrangements with counterparties, when possible, to further mitigate credit risk. In the event of default or termination (as such terms are defined within the respective master netting arrangement), these arrangements allow the Company to net-settle amounts payable and receivable related to multiple derivative transactions with the same counterparty. The master netting arrangements specify a number of events of default and termination, including, among others, the failure to make timely payments. The fair values of the Company's derivative instruments are recorded on its consolidated balance sheets on a gross basis. For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a derivative instrument are classified in the same manner as the related item being hedged, primarily within cash flows from operating activities. Cash Flow Hedges The Company uses forward foreign currency exchange contracts to mitigate its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency and the settlement of foreign currency-denominated balances. To the extent forward foreign currency exchange contracts are designated as qualifying cash flow hedges, the related gains or losses are initially deferred in equity as a component of AOCI and are subsequently recognized in the consolidated statements of operations as follows:
If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are immediately recognized in earnings within other expense, net. Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative instrument previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the originally-documented hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within other expense, net. Hedges of Net Investments in Foreign Operations The Company periodically uses cross-currency swap contracts and forward foreign currency exchange contracts to reduce risk associated with exchange rate fluctuations on certain of its net investments in foreign subsidiaries. Changes in the fair values of such derivative instruments that are designated as qualifying hedges of net investments in foreign operations are recorded in equity as a component of AOCI in the same manner as foreign currency translation adjustments. In assessing the effectiveness of such hedges, the Company uses a method based on changes in spot rates to measure the impact of foreign currency exchange rate fluctuations on both its foreign subsidiary net investment and the related derivative hedging instrument. Under this method, changes in the fair value of the hedging instrument other than those due to changes in the spot rate are initially recorded in AOCI as a translation adjustment, and are amortized into earnings as interest expense using a systematic and rational method over the instrument's term. Changes in fair value associated with the effective portion (i.e., those due to changes in the spot rate) are recorded in AOCI as a translation adjustment and are released and recognized in earnings only upon the sale or liquidation of the hedged net investment. Fair Value Hedges Changes in the fair value of a derivative instrument that is designated as a fair value hedge, along with offsetting changes in the fair value of the related hedged item attributable to the hedged risk, are recorded in earnings. To the extent that the change in the fair value of the hedged item does not fully offset the change in the fair value of the hedging instrument, the resulting net impact is reflected in earnings within the income statement line item associated with the hedged item. Undesignated Hedges All of the Company's undesignated hedges are entered into to hedge specific economic risks, particularly foreign currency exchange rate risk related to foreign currency-denominated balances. Changes in the fair value of undesignated derivative instruments are immediately recognized in earnings within other expense, net. See Note 12 for further discussion of the Company's derivative financial instruments. Refer to Note 3 of the Fiscal 2019 10-K for a summary of all of the Company's significant accounting policies.
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Recently Issued Accounting Standards |
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Jun. 29, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Implementation Costs in Cloud Computing Arrangements In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU 2018-15"). ASU 2018-15 addresses diversity in practice surrounding the accounting for costs incurred to implement a cloud computing hosting arrangement that is a service contract by establishing a model for capitalizing or expensing such costs, depending on their nature and the stage of the implementation project during which they are incurred. Any capitalized costs are to be amortized over the reasonably certain term of the hosting arrangement and presented in the same line within the statement of operations as the related service arrangement's fees. ASU 2018-15 also requires enhanced qualitative and quantitative disclosures surrounding hosting arrangements that are service contracts. ASU 2018-15 is effective for the Company beginning in its fiscal year ending March 27, 2021 ("Fiscal 2021"), with early adoption permitted, and may be adopted on either a retrospective or prospective basis. Although the impact of adopting ASU 2018-15 will depend on the composition of its cloud computing arrangements in place at that time, other than the new disclosure requirements, the Company does not currently expect that it will have a material impact on its consolidated financial statements. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"). Existing accounting guidance requires the remeasurement of deferred tax assets and liabilities resulting from a change in tax laws and rates to be presented within net income, including deferred taxes related to items recorded within AOCI. ASU 2018-02 provides an entity with the option to adjust AOCI for the "stranded" tax effect of such remeasurements resulting from the reduction in the U.S. federal statutory income tax rate under the 2017 Tax Cuts and Jobs Act (the "TCJA") through a reclassification to retained earnings. The Company adopted ASU 2018-02 as of the beginning of the first quarter of Fiscal 2020 and elected to reclassify the income tax effect stranded in AOCI related to the TCJA, inclusive of state income tax-related effects, resulting in a $4.9 million increase to its opening retained earnings balance. The Company generally releases income tax effects from AOCI when the corresponding pretax AOCI items are reclassified to earnings. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). ASU 2016-13, which was further updated and clarified by the FASB through issuance of additional related ASUs, amends the guidance surrounding measurement and recognition of credit losses on financial assets measured at amortized cost, including trade receivables and investments in debt securities, by requiring recognition of an allowance for credit losses expected to be incurred over an asset's lifetime based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectibility. This "expected loss" model will result in earlier recognition of credit losses than the current "as incurred" model, under which losses are recognized only upon an occurrence of an event that gives rise to the incurrence of a probable loss. ASU 2016-13 is effective for the Company beginning in its Fiscal 2021, with early adoption permitted, and is to be adopted on a modified retrospective basis. The Company is currently evaluating the impact that ASU 2016-13 will have on its consolidated financial statements, if any. Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases." ASU No. 2016-02, along with certain other ASUs that were subsequently issued to clarify and modify certain of its provisions (collectively "ASU 2016-02"), supersedes historical lease accounting guidance and requires that, among its provisions, a lessee's rights and fixed payment obligations under most leases be recognized as ROU assets and lease liabilities on its balance sheet, initially measured based on the present value of its fixed payment obligations over the lease term. Under historical guidance, only those leases classified as capital were recognized on a lessee's balance sheet; operating leases were not recognized on the balance sheet. ASU 2016-02 retains a dual model for classifying leases as either finance (formerly referred to as "capital") or operating, consistent with historical guidance, which governs the pattern of expense recognition reflected in the statement of operations over the lease term. Accordingly, recognition of lease expense in the statement of operations will not significantly change. Additionally, variable lease payments based on performance, such as percentage-of-sales-based payments, are not included in the measurement of ROU assets and lease liabilities and, consistent with historical practice, are recognized as an expense in the period incurred. The standard also requires enhanced quantitative and qualitative lease-related disclosures. The Company adopted ASU 2016-02 as of the beginning of the first quarter of Fiscal 2020 using a modified retrospective approach under which the cumulative effect of initially applying the standard was recognized as an adjustment to its opening retained earnings (discussed further below), with no restatement of prior year amounts. In connection therewith, the Company applied an optional package of practical expedients intended to ease transition to the standard for existing leases by, among its provisions, carrying forward its original lease classification conclusions without reassessment. Upon adoption of ASU 2016-02, the Company recognized initial ROU asset and lease liability balances of approximately $1.60 billion and $1.75 billion, respectively, on its consolidated balance sheet. Additionally, in connection with its adoption of ASU 2016-02, the Company recorded an adjustment to reduce its opening retained earnings balance by $131.6 million, net of related income tax benefits, reflecting the impairment of an ROU asset for a certain real estate lease of which, under historical accounting guidance, the Company was previously deemed the owner for accounting purposes (commonly referred to as a "build-to-suit" lease arrangement). Specifically, although the Company no longer generates revenue or other cash flows from its rights underlying the leased asset given it no longer actively uses the space for commercial purposes, the asset was previously not considered impaired under historical accounting guidance as its fair value, assessed from an ownership perspective (and not from that of a lessee), exceeded its carrying value. However, in accordance with and upon transitioning to ASU 2016-02, the Company derecognized the remaining asset and liability balances previously recognized solely as a result of the arrangement's build-to-suit designation, as the related construction activities that originally gave rise to such designation have since ended, and established initial ROU asset and lease liability balances measured based on the Company's remaining fixed payment obligations under the lease. The initial ROU asset was then assessed for impairment based on the aggregate estimated cash flows that could be generated by transferring the lease to a market participant sublessee for the remainder of its term, which were lower than the aggregate remaining lease payments underlying the measurement of the initial ROU asset. Accordingly, the Company impaired the initial ROU asset by $175.4 million to its estimated fair value which was recorded as a reduction to its opening retained earnings balance, net of related income tax benefits of $43.8 million, upon adoption of ASU 2016-02, as previously noted. The Company also recorded other initial ROU asset impairment adjustments to reduce its opening retained earnings balance upon adoption of the standard related to leases of certain underperforming retail locations for which the carrying value of the respective store's initial operating lease ROU asset exceeded its fair value. These impairments of $49.7 million were recorded as adjustments to reduce the Company's opening retained earnings balance by $37.8 million, net of related income tax effects. Leasehold improvements related to these underperforming retail locations were previously fully-impaired prior to the adoption of ASU 2016-02. See Notes 3 and 13 for further discussion of the Company's lease accounting policy and other related disclosures.
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment, net consists of the following:
Depreciation expense was $60.3 million and $64.4 million during the three-month periods ended June 29, 2019 and June 30, 2018, respectively, and is recorded primarily within SG&A expenses in the consolidated statements of operations.
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Other Assets and Liabilities |
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Balance Sheet Related Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets and Liabilities | Other Assets and Liabilities Prepaid expenses and other current assets consist of the following:
Other non-current assets consist of the following:
Accrued expenses and other current liabilities consist of the following:
Other non-current liabilities consist of the following:
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Impairment of Assets |
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Jun. 29, 2019 | |
Asset Impairment Charges [Abstract] | |
Impairment of Assets | Impairment of Assets During the three-month periods ended June 29, 2019 and June 30, 2018, the Company recorded non-cash impairment charges of $1.2 million and $1.3 million, respectively, to write off certain long-lived assets in connection with its restructuring plans (see Note 8). See Note 11 for further discussion of these impairment charges.
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Restructuring and Other Charges |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges | Restructuring and Other Charges A description of significant restructuring and other activities and their related costs is provided below. Fiscal 2019 Restructuring Plan On June 4, 2018, the Company's Board of Directors approved a restructuring plan associated with the Company's strategic objective of operating with discipline to drive sustainable growth (the "Fiscal 2019 Restructuring Plan"). The Fiscal 2019 Restructuring Plan includes the following restructuring-related activities: (i) rightsizing and consolidation of the Company's global distribution network and corporate offices; (ii) targeted severance-related actions; and (iii) closure of certain of its stores and shop-within-shops. Actions associated with the Fiscal 2019 Restructuring Plan were largely completed during Fiscal 2019, with certain activities shifting into Fiscal 2020. In connection with the Fiscal 2019 Restructuring Plan, the Company expects to incur total estimated charges of approximately $125 million to $150 million, comprised of cash-related charges of approximately $90 million to $110 million and non-cash charges of approximately $35 million to $40 million. A summary of charges recorded in connection with the Fiscal 2019 Restructuring Plan during the fiscal periods presented, as well as the cumulative charges recorded since its inception, is as follows:
A summary of current period activity in the restructuring reserve related to the Fiscal 2019 Restructuring Plan is as follows:
Other Restructuring Plans The Company recorded restructuring-related charges of $6.5 million during the three months ended June 30, 2018 related to certain other restructuring plans initiated prior to Fiscal 2019, primarily consisting of severance and benefit costs. Actions associated with these other plans were completed in previous fiscal years. A summary of current period activity in the restructuring reserve related to these other plans is as follows:
Refer to Note 9 of the Fiscal 2019 10-K for additional discussion regarding these other restructuring plans. Other Charges The Company recorded other charges of $20.8 million during the three months ended June 29, 2019 related to the donation of net cash proceeds received from the sale of its corporate jet. This donation was made to the Polo Ralph Lauren Foundation, a non-profit, charitable foundation that supports various philanthropic programs. Additionally, during the three months ended June 29, 2019, the Company recorded other charges of $1.8 million primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. The Company recorded other charges of $3.5 million during the three months ended June 30, 2018 related to depreciation expense associated with its former Polo store at 711 Fifth Avenue in New York City, recorded after the store closed during the first quarter of Fiscal 2018. Additionally, during the three months ended June 30, 2018, the Company recorded other charges of $4.2 million primarily related to a customs audit. Refer to Note 14 of the Fiscal 2019 10-K for additional discussion regarding the Company's customs audit.
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Income Taxes |
3 Months Ended |
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Jun. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective Tax Rate The Company's effective tax rate, which is calculated by dividing each fiscal period's income tax provision by pretax income, was 20.1% and 18.0% during the three-month periods ended June 29, 2019 and June 30, 2018, respectively. The effective tax rates for the three-month periods ended June 29, 2019 and June 30, 2018 were lower than the U.S. federal statutory income tax rate of 21% primarily due to the favorable impact of the proportion of earnings generated in lower taxed foreign jurisdictions versus the U.S. Uncertain Income Tax Benefits The Company classifies interest and penalties related to unrecognized tax benefits as part of its income tax provision. The total amount of unrecognized tax benefits, including interest and penalties, was $77.9 million and $78.8 million as of June 29, 2019 and March 30, 2019, respectively, and is included within non-current liability for unrecognized tax benefits in the consolidated balance sheets. The total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate was $69.7 million and $70.7 million as of June 29, 2019 and March 30, 2019, respectively. Future Changes in Unrecognized Tax Benefits The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, will change significantly during the next twelve months. However, changes in the occurrence, expected outcomes, and timing of such events could cause the Company's current estimate to change materially in the future. The Company files a consolidated U.S. federal income tax return, as well as tax returns in various state, local, and foreign jurisdictions. The Company is generally no longer subject to examinations by the relevant tax authorities for years prior to its fiscal year ended March 30, 2013.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt consists of the following:
Senior Notes In August 2015, the Company completed a registered public debt offering and issued $300 million aggregate principal amount of unsecured senior notes due August 18, 2020, which bear interest at a fixed rate of 2.625%, payable semi-annually (the "2.625% Senior Notes"). The 2.625% Senior Notes were issued at a price equal to 99.795% of their principal amount. The proceeds from this offering were used for general corporate purposes. In August 2018, the Company completed another registered public debt offering and issued an additional $400 million aggregate principal amount of unsecured senior notes due September 15, 2025, which bear interest at a fixed rate of 3.750%, payable semi-annually (the "3.750% Senior Notes"). The 3.750% Senior Notes were issued at a price equal to 99.521% of their principal amount. The proceeds from this offering were used for general corporate purposes, including repayment of the Company's previously outstanding $300 million principal amount of unsecured 2.125% senior notes that matured September 26, 2018 (the "2.125% Senior Notes"). The Company has the option to redeem the 2.625% Senior Notes and 3.750% Senior Notes (collectively, the "Senior Notes"), in whole or in part, at any time at a price equal to accrued and unpaid interest on the redemption date, plus the greater of (i) 100% of the principal amount of the series of Senior Notes to be redeemed or (ii) the sum of the present value of Remaining Scheduled Payments, as defined in the supplemental indentures governing such Senior Notes (together with the indenture governing the Senior Notes, the "Indenture"). The Indenture contains certain covenants that restrict the Company's ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate or merge with another party; or sell, lease, or convey all or substantially all of the Company's property or assets to another party. However, the Indenture does not contain any financial covenants. Commercial Paper The Company has a commercial paper borrowing program that allows it to issue up to $500 million of unsecured commercial paper notes through private placement using third-party broker-dealers (the "Commercial Paper Program"). Borrowings under the Commercial Paper Program are supported by the Global Credit Facility, as defined below. Accordingly, the Company does not expect combined borrowings outstanding under the Commercial Paper Program and Global Credit Facility to exceed $500 million. Commercial Paper Program borrowings may be used to support the Company's general working capital and corporate needs. Maturities of commercial paper notes vary, but cannot exceed 397 days from the date of issuance. Commercial paper notes issued under the Commercial Paper Program rank equally with the Company's other forms of unsecured indebtedness. As of June 29, 2019, there were no borrowings outstanding under the Commercial Paper Program. Revolving Credit Facilities Global Credit Facility In February 2015, the Company entered into an amended and restated credit facility (which was further amended in March 2016) that provides for a $500 million senior unsecured revolving line of credit through February 11, 2020 (the "Global Credit Facility") under terms and conditions substantially similar to those previously in effect. The Global Credit Facility is also used to support the issuance of letters of credit and the maintenance of the Commercial Paper Program. Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and other currencies, including Euros, Hong Kong Dollars, and Japanese Yen. The Company has the ability to expand its borrowing availability under the Global Credit Facility to $750 million, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments. There are no mandatory reductions in borrowing ability throughout the term of the Global Credit Facility. As of June 29, 2019, there were no borrowings outstanding under the Global Credit Facility and the Company was contingently liable for $9.0 million of outstanding letters of credit. The Global Credit Facility contains a number of covenants that, among other things, restrict the Company's ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve itself; engage in businesses that are not in a related line of business; make loans, advances, or guarantees; engage in transactions with affiliates; and make certain investments. The Global Credit Facility also requires the Company to maintain a maximum ratio of Adjusted Debt to Consolidated EBITDAR (the "leverage ratio") of no greater than 3.75 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding plus four times consolidated rent expense for the four most recent consecutive fiscal quarters. Consolidated EBITDAR is defined generally as consolidated net income plus (i) income tax expense, (ii) net interest expense, (iii) depreciation and amortization expense, (iv) consolidated rent expense, (v) restructuring and other non-recurring expenses, and (vi) acquisition-related costs. As of June 29, 2019, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit Facility. Pan-Asia Credit Facilities Certain of the Company's subsidiaries in Asia have uncommitted credit facilities with regional branches of JPMorgan Chase (the "Banks") in China and South Korea (the "Pan-Asia Credit Facilities"). These credit facilities are subject to annual renewal and may be used to fund general working capital and corporate needs of the Company's operations in the respective countries. Borrowings under the Pan-Asia Credit Facilities are guaranteed by the parent company and are granted at the sole discretion of the Banks, subject to availability of the Banks' funds and satisfaction of certain regulatory requirements. The Pan-Asia Credit Facilities do not contain any financial covenants. The Company's Pan-Asia Credit Facilities by country are as follows:
As of June 29, 2019, there were no borrowings outstanding under the Pan-Asia Credit Facilities. Refer to Note 11 of the Fiscal 2019 10-K for additional discussion of the terms and conditions of the Company's debt and credit facilities.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements U.S. GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy for a particular asset or liability depends on the inputs used in its valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally-derived (unobservable). A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
The following table summarizes the Company's financial assets and liabilities that are measured and recorded at fair value on a recurring basis, excluding accrued interest components:
The Company's investments in commercial paper are classified as available-for-sale and recorded at fair value in its consolidated balance sheets using external pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's investments. To the extent the Company invests in bonds, such investments are also classified as available-for-sale and recorded at fair value in its consolidated balance sheets based on quoted prices in active markets. The Company's derivative financial instruments are recorded at fair value in its consolidated balance sheets and are valued using pricing models that are primarily based on market observable external inputs, including spot and forward currency exchange rates, benchmark interest rates, and discount rates consistent with the instrument's tenor, and consider the impact of the Company's own credit risk, if any. Changes in counterparty credit risk are also considered in the valuation of derivative financial instruments. The Company's cash and cash equivalents, restricted cash, and time deposits are recorded at carrying value, which generally approximates fair value based on Level 1 measurements. The Company's debt instruments are recorded at their carrying values in its consolidated balance sheets, which may differ from their respective fair values. The fair values of the Senior Notes are estimated based on external pricing data, including available quoted market prices, and with reference to comparable debt instruments with similar interest rates, credit ratings, and trading frequency, among other factors. The fair values of the Company's commercial paper notes and borrowings outstanding under its credit facilities, if any, are estimated using external pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's outstanding borrowings. Due to their short-term nature, the fair values of the Company's commercial paper notes and borrowings outstanding under its credit facilities, if any, generally approximate their carrying values. The following table summarizes the carrying values and the estimated fair values of the Company's debt instruments:
Unrealized gains or losses resulting from changes in the fair value of the Company's debt do not result in the realization or expenditure of cash, unless the debt is retired prior to its maturity. Non-financial Assets and Liabilities The Company's non-financial assets, which primarily consist of goodwill, other intangible assets, property and equipment, and lease-related ROU assets, are not required to be measured at fair value on a recurring basis, and instead are reported at carrying value in its consolidated balance sheet. However, on a periodic basis or whenever events or changes in circumstances indicate that they may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), the respective carrying values of non-financial assets are assessed for impairment and, if ultimately considered impaired, are adjusted and written down to their fair value, as estimated based on consideration of external market participant assumptions. During the three-month periods ended June 29, 2019 and June 30, 2018, the Company recorded non-cash impairment adjustments to reduce the carrying values of certain long-lived assets to their estimated fair values. The fair values of these assets were determined based on Level 3 measurements, the related inputs of which included estimates of the amount and timing of the assets' net future discounted cash flows (including any potential sublease income), based on historical experience and consideration of current trends, market conditions, and comparable sales, as applicable. The following table summarizes non-cash impairment adjustments recorded by the Company during the fiscal periods presented in order to reduce the carrying values of certain long-lived assets to their estimated fair values as of the assessment date:
See Note 7 for additional discussion regarding non-cash impairment charges recorded by the Company within the consolidated statements of operations during the fiscal periods presented. No impairment charges associated with goodwill or other intangible assets were recorded during either of the three-month periods ended June 29, 2019 or June 30, 2018.
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Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Derivative Financial Instruments The Company is exposed to changes in foreign currency exchange rates, primarily relating to certain anticipated cash flows and the value of the reported net assets of its international operations, as well as changes in the fair value of its fixed-rate debt obligations attributed to changes in a benchmark interest rate. Consequently, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not enter into derivative transactions for speculative or trading purposes. The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as of June 29, 2019 and March 30, 2019:
The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, even when they are subject to master netting arrangements. However, if the Company were to offset and record the asset and liability balances of all of its derivative instruments on a net basis in accordance with the terms of each of its master netting arrangements, spread across eight separate counterparties, the amounts presented in the consolidated balance sheets as of June 29, 2019 and March 30, 2019 would be adjusted from the current gross presentation as detailed in the following table:
The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. See Note 3 for further discussion of the Company's master netting arrangements. The following tables summarize the pretax impact of gains and losses from the Company's designated derivative instruments on its consolidated financial statements for the three-month periods ended June 29, 2019 and June 30, 2018:
As of June 29, 2019, it is estimated that $13.6 million of pretax net gains on both outstanding and matured derivative instruments designated as qualifying cash flow hedges deferred in AOCI will be recognized in earnings over the next twelve months. Amounts ultimately recognized in earnings will depend on exchange rates in effect when outstanding derivative instruments are settled. The following table summarizes the pretax impact of gains and losses from the Company's undesignated derivative instruments on its consolidated financial statements for the three-month periods ended June 29, 2019 and June 30, 2018:
Risk Management Strategies Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to mitigate its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. dollars. As part of its overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily to changes in the value of the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, the Swedish Krona, the Chinese Renminbi, the New Taiwan Dollar, and the Hong Kong Dollar, the Company hedges a portion of its foreign currency exposures anticipated over a two-year period. In doing so, the Company uses forward foreign currency exchange contracts that generally have maturities of two months to two years to provide continuing coverage throughout the hedging period of the respective exposure. Interest Rate Swap Contract During Fiscal 2016, the Company entered into a pay-floating rate, receive-fixed rate interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate 2.625% Senior Notes, attributed to changes in a benchmark interest rate (the "2.625% Interest Rate Swap"). The 2.625% Interest Rate Swap, which matures on August 18, 2020 and has a notional amount of $300 million, swaps the fixed interest rate on the 2.625% Senior Notes for a variable interest rate based on the 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread. Changes in the fair value of the 2.625% Interest Rate Swap were offset by changes in the fair value of the 2.625% Senior Notes attributed to changes in the benchmark interest rate, with no resulting net impact reflected in earnings during any of the fiscal periods presented. The following table summarizes the carrying value of the 2.625% Senior Notes and the impacts of the related fair value hedging adjustments as of June 29, 2019 and March 30, 2019:
Cross-Currency Swap Contracts During Fiscal 2016, the Company entered into a pay-floating rate, receive-floating rate cross-currency swap contract with a notional amount of €274 million that was designated as a hedge of its net investment in certain of its European subsidiaries. This cross-currency swap, which matures on August 18, 2020, swaps the U.S. Dollar-denominated variable interest rate payments based on 3-month LIBOR plus a fixed spread (as paid under the 2.625% Interest Rate Swap discussed above) for Euro-denominated variable interest rate payments based on 3-month Euro Interbank Offered Rate ("EURIBOR") plus a fixed spread, which, in conjunction with the 2.625% Interest Rate Swap, economically converts the Company's $300 million fixed-rate 2.625% Senior Notes obligation to a €274 million floating-rate Euro-denominated obligation. Additionally, in August 2018, the Company entered into pay-fixed rate, receive-fixed rate cross-currency swap contracts with an aggregate notional amount of €346 million that were designated as hedges of its net investment in certain of its European subsidiaries. These contracts, which mature on September 15, 2025, swap the U.S. Dollar-denominated fixed interest rate payments on the Company's 3.750% Senior Notes for Euro-denominated 1.29% fixed interest rate payments, thereby economically converting the Company's $400 million fixed-rate 3.750% Senior Notes obligation to a €346 million fixed-rate 1.29% Euro-denominated obligation. See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments. Investments As of June 29, 2019, the Company's short-term investments consisted of $1.093 billion of time deposits and $187.7 million of commercial paper, and its non-current investments consisted of $34.1 million of time deposits. As of March 30, 2019, the Company's short-term investments consisted of $1.167 billion of time deposits and $236.0 million of commercial paper, and its non-current investments consisted of $44.9 million of time deposits. No significant realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded during any of the fiscal periods presented. Refer to Note 3 of the Fiscal 2019 10-K for further discussion of the Company's accounting policies relating to its investments.
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Leases |
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Lessee Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The following table summarizes ROU assets and lease liabilities recorded on the Company's consolidated balance sheet as of June 29, 2019:
The following table summarizes the composition of net lease cost for the three months ended June 29, 2019:
In accordance with lease accounting guidance in effect prior to its adoption of ASU 2016-02, the Company recognized rent expense of approximately $112 million, net of insignificant sublease income, related to its operating leases during the three months ended June 30, 2018, which included contingent rental charges of approximately $48 million. Such amounts do not include expense recognized related to non-lease components. The following table summarizes certain cash flow information related to the Company's leases for the three months ended June 29, 2019:
See Note 19 for supplemental non-cash information related to ROU assets obtained in exchange for new lease liabilities. The following table provides a maturity analysis summary of the Company's lease liabilities recorded on the consolidated balance sheet as of June 29, 2019:
Additionally, the Company had approximately $92 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of June 29, 2019. The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating and finance leases recorded on the consolidated balance sheet as of June 29, 2019:
See Note 3 for discussion of the Company's accounting policies related to its leasing activities.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is involved, from time to time, in litigation, other legal claims, and proceedings involving matters associated with or incidental to its business, including, among other things, matters involving credit card fraud, trademark and other intellectual property, licensing, importation and exportation of its products, taxation, unclaimed property, and employee relations. The Company believes at present that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on its consolidated financial statements. However, the Company's assessment of any current litigation or other legal claims could potentially change in light of the discovery of facts not presently known or determinations by judges, juries, or other finders of fact which are not in accord with management's evaluation of the possible liability or outcome of such litigation or claims. In the normal course of business, the Company enters into agreements that provide general indemnifications. The Company has not made any significant indemnification payments under such agreements in the past, and does not currently anticipate incurring any material indemnification payments.
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity Class B Common Stock Conversion During the three months ended June 29, 2019, the Lauren Family, L.L.C., a limited liability company managed by the children of Mr. Ralph Lauren, converted 0.5 million shares of Class B common stock into an equal number of shares of Class A common stock pursuant to the terms of the security. These conversions occurred in advance of a sales plan providing for the sale of such shares of Class A common stock pursuant to Rule 10b5-1 subject to the conditions set forth therein. These transactions resulted in a reclassification within equity and had no effect on the Company's consolidated balance sheets. Common Stock Repurchase Program A summary of the Company's repurchases of Class A common stock under its common stock repurchase program is as follows:
On May 13, 2019, the Company's Board of Directors approved an expansion of the Company's existing common stock repurchase program that allows it to repurchase up to an additional $600 million of Class A Common stock. As of June 29, 2019, the remaining availability under the Company's Class A common stock repurchase program was approximately $1.080 billion. Repurchases of shares of Class A common stock are subject to overall business and market conditions. In addition, during the three-month periods ended June 29, 2019 and June 30, 2018, 0.4 million and 0.2 million shares of Class A common stock, respectively, at a cost of $41.1 million and $30.0 million, respectively, were surrendered to or withheld by the Company in satisfaction of withholding taxes in connection with the vesting of awards under the Company's 1997 Long-Term Stock Incentive Plan, as amended (the "1997 Incentive Plan"), and its Amended and Restated 2010 Long-Term Stock Incentive Plan (the "2010 Incentive Plan"). Repurchased and surrendered shares are accounted for as treasury stock at cost and held in treasury for future use. Dividends Since 2003, the Company has maintained a regular quarterly cash dividend program on its common stock. On May 13, 2019, the Company's Board of Directors approved an increase to the Company's quarterly cash dividend on its common stock from $0.625 to $0.6875 per share. The first quarter Fiscal 2020 dividend of $0.6875 per share was declared on May 14, 2019, was payable to stockholders of record at the close of business on June 28, 2019, and was paid on July 12, 2019. Dividends paid amounted to $48.8 million and $40.6 million during the three-month periods ended June 29, 2019 and June 30, 2018, respectively.
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents OCI activity, net of tax, which is accumulated in equity:
The following table presents reclassifications from AOCI to earnings for cash flow hedges, by component:
(a) FC = Forward foreign currency exchange contracts.
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Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation On August 1, 2019, the Company's shareholders approved the 2019 Long-Term Stock Incentive Plan (the "2019 Incentive Plan"), which replaced the Company's Amended and Restated 2010 Long-Term Stock Incentive Plan (the "2010 Incentive Plan"). The 2019 Incentive Plan provides for 1.2 million of new shares authorized for issuance to the participants, in addition to the approximately 3.0 million shares that remained available for issuance under the 2010 Incentive Plan. In addition, any outstanding awards under the 2010 Incentive Plan or the Company's 1997 Long-Term Stock Incentive Plan (the "1997 Incentive Plan") that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes, will become available for issuance under the 2019 Incentive Plan. The 2019 Incentive Plan became effective August 1, 2019 and no further grants will be made under the 2010 Incentive Plan. Outstanding awards issued prior to August 1, 2019 will continue to remain subject to the terms of the 2010 Incentive Plan or 1997 Incentive Plan, as applicable. Stock-based compensation awards that may be made under the 2019 Incentive Plan include, but are not limited to, (i) stock options, (ii) restricted stock, and (iii) RSUs. Refer to Note 17 of the Fiscal 2019 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service, performance and market conditions, and payout percentages. Impact on Results A summary of total stock-based compensation expense recorded within SG&A expenses and the related income tax benefits recognized during the three-month periods ended June 29, 2019 and June 30, 2018 is as follows:
The Company issues its annual grants of stock-based compensation awards in the first half of each fiscal year. Due to the timing of the annual grants and other factors, including the timing and magnitude of forfeiture and performance goal achievement adjustments, as well as changes to the size and composition of the eligible employee population, stock-based compensation expense recognized during any given fiscal period is not indicative of the level of compensation expense expected to be incurred in future periods. Stock Options A summary of stock option activity under all plans during the three months ended June 29, 2019 is as follows:
Restricted Stock Awards and Service-based RSUs The fair values of restricted stock awards granted to non-employee directors are determined based on the fair value of the Company's Class A common stock on the date of grant. No such awards were granted during the three-month periods ended June 29, 2019 and June 30, 2018. Effective beginning Fiscal 2019, non-employee directors are now granted service-based RSUs in lieu of restricted shares. The fair values of service-based RSUs granted to certain of the Company's senior executives and other employees, as well as non-employee directors, are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested. The weighted-average grant date fair values of service-based RSU awards granted were $109.72 and $107.38 per share during the three-month periods ended June 29, 2019 and June 30, 2018, respectively. A summary of restricted stock and service-based RSU activity during the three months ended June 29, 2019 is as follows:
Performance-based RSUs The fair values of the Company's performance-based RSUs granted to its senior executives and other key employees are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested. The weighted-average grant date fair values of performance-based RSUs granted was $102.69 per share during the three months ended June 29, 2019. No such awards were granted during the three months ended June 30, 2018. A summary of performance-based RSU activity during the three months ended June 29, 2019 is as follows:
Market-based RSUs The Company grants market-based RSUs, which are based on TSR performance, to its senior executives and other key employees. The Company estimates the fair value of its TSR awards on the date of grant using a Monte Carlo simulation, which models multiple stock price paths of the Company's Class A common stock and that of its peer group to evaluate and determine its ultimate expected relative TSR performance ranking, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue while outstanding and unvested. The weighted-average grant date fair values of market-based RSUs granted was $139.02 per share during the three months ended June 29, 2019. No such awards were granted during the three months ended June 30, 2018. A summary of market-based RSU activity during the three months ended June 29, 2019 is as follows:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has three reportable segments based on its business activities and organization:
No operating segments were aggregated to form the Company's reportable segments. In addition to these reportable segments, the Company also has other non-reportable segments, which primarily consist of (i) sales of Club Monaco branded products made through its retail businesses in the U.S., Canada, and Europe, and its licensing alliances in Europe and Asia, and (ii) royalty revenues earned through its global licensing alliances, excluding Club Monaco. The Company's segment reporting structure is consistent with how it establishes its overall business strategy, allocates resources, and assesses performance of its business. The accounting policies of the Company's segments are consistent with those described in Notes 2 and 3 of the Fiscal 2019 10-K. Sales and transfers between segments are generally recorded at cost and treated as transfers of inventory. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. Each segment's performance is evaluated based upon net revenues and operating income before restructuring-related charges, impairment of assets, and certain other one-time items, if any. Certain corporate overhead expenses related to global functions, most notably the Company's executive office, information technology, finance and accounting, human resources, and legal departments, largely remain at corporate. Additionally, other costs that cannot be allocated to the segments based on specific usage are also maintained at corporate, including corporate advertising and marketing expenses, depreciation and amortization of corporate assets, and other general and administrative expenses resulting from corporate-level activities and projects. Effective beginning in the first quarter of Fiscal 2020, operating results related to the Company's business in Latin America are included within its Europe segment due to a change in the way in which the Company manages this business. Previously, such results were included within the Company's other non-reportable segments. All prior period segment information has been recast to reflect this change on a comparative basis. Net revenues and operating income for each of the Company's segments are as follows:
Depreciation and amortization expense for the Company's segments is as follows:
Net revenues by geographic location of the reporting subsidiary are as follows:
(d) Includes Australia and New Zealand.
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Additional Financial Information |
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Additional Financial Information | Additional Financial Information Reconciliation of Cash, Cash Equivalents, and Restricted Cash A reconciliation of cash, cash equivalents, and restricted cash as of June 29, 2019 and March 30, 2019 from the consolidated balance sheets to the consolidated statements of cash flows is as follows:
Amounts included in restricted cash relate to cash held in escrow with certain banks as collateral, primarily to secure guarantees in connection with certain international tax matters and real estate leases. Cash Interest and Taxes Cash paid for interest and income taxes is as follows:
Non-cash Transactions Operating and finance lease ROU assets obtained in exchange for new lease liabilities were $17.7 million and $64.0 million, respectively, during the three months ended June 29, 2019. Non-cash investing activities also included capital expenditures incurred but not yet paid of $44.2 million and $29.1 million for the three-month periods ended June 29, 2019 and June 30, 2018, respectively. Non-cash financing activities included the conversion of 0.5 million shares of Class B common stock into an equal number of shares of Class A common stock during the three months ended June 29, 2019, as discussed in Note 15. There were no other significant non-cash investing or financing activities for any of the fiscal periods presented.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||
Basis of Consolidation | Basis of Consolidation These unaudited interim consolidated financial statements present the consolidated financial position, income, comprehensive income, and cash flows of the Company, including all entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.
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Fiscal Periods | Fiscal Periods The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2020 will end on March 28, 2020 and will be a 52-week period ("Fiscal 2020"). Fiscal year 2019 ended on March 30, 2019 and was also a 52-week period ("Fiscal 2019"). The first quarter of Fiscal 2020 ended on June 29, 2019 and was a 13-week period. The first quarter of Fiscal 2019 ended on June 30, 2018 and was also a 13-week period.
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Use of Estimates | 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 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 pre-vesting forfeiture rates; reserves for restructuring activity; and accounting for business combinations, among others.
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Reclassifications | Reclassifications Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation, including a change to the Company's segment reporting structure as further described in Note 18.
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Revenue Recognition | Revenue Recognition The Company recognizes revenue across all channels of the business when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized considers terms of sale that create variability in the amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or services, and is subject to an overall constraint that a significant revenue reversal will not occur in future periods. Sales and other related taxes collected from customers and remitted to government authorities are excluded from revenue. 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 retail business is recognized when the customer takes physical possession of the products, which occurs either at the point of sale for merchandise purchased at the Company's retail stores and concession-based shop-within-shops, or upon receipt of shipment for merchandise ordered through direct-to-consumer digital commerce sites. Such revenues are recorded net of estimated returns based on historical trends. Payment is due at the point of sale. Gift cards issued to customers by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed (referred to as "breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions. 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 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-based royalty is not ultimately expected to exceed a contractually-guaranteed minimum royalty amount, the minimum is recognized as revenue ratably over the contractual period. This sales-based output measure of progress and pattern of recognition best represents the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for providing access to its trademarks.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 is generally comprised of unredeemed gift cards, net of breakage, and advance royalty payments from licensees.
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Shipping and Handling Costs | Shipping and Handling Costs Costs associated with shipping goods to the Company's customers are accounted for as fulfillment activities and reflected as a component of 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.
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Net Income per Common Share | 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 stock options, restricted stock units ("RSUs"), and any other potentially dilutive instruments, only in the periods in which such effects are dilutive. Options to purchase shares of the Company's Class A common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. In addition, the Company has outstanding performance-based and market-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance or market conditions (i) have been satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive.
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Accounts Receivable | Accounts Receivable In the normal course of business, the Company extends credit to wholesale customers that satisfy defined credit criteria. Payment is generally due within 30 to 120 days and does not include a significant financing component. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's 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. An allowance for doubtful accounts is determined through an analysis of accounts receivable aging, assessments of collectability based on an evaluation of historical and anticipated trends, the financial condition of the Company's customers, and an evaluation of the impact of economic conditions, among other factors.
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Inventories | Inventories The Company holds inventory that is sold through wholesale distribution channels to major department stores and specialty retail stores. The Company also holds retail inventory that is sold in its own stores and digital commerce sites directly to consumers. Substantially all of the Company's inventories are comprised of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-average cost basis.
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Leases | Leases As discussed in Note 4, the Company adopted a new lease accounting standard as of the beginning of the first quarter of Fiscal 2020. The Company's lease arrangements primarily relate to real estate, including its retail stores, concession-based shop-within-shops, corporate offices, and warehouse facilities, and to a lesser extent, certain equipment and other assets. The Company's leases generally have initial terms ranging from 3 to 15 years and may include renewal or early-termination options, rent escalation clauses, and/or lease incentives in the form of construction allowances and rent abatements. Renewal rent payment terms generally reflect market rates prevailing at the time of renewal. The Company is typically required to make fixed minimum rent payments, variable rent payments based on performance (e.g., percentage-of-sales-based payments), or a combination thereof, directly related to its right to use an underlying leased asset. The Company is also often required to pay for certain other costs that do not relate specifically to its right to use an underlying leased asset, but that are associated with the asset, including real estate taxes, insurance, common area maintenance fees, and/or certain other costs (referred to collectively herein as "non-lease components"), which may be fixed or variable in amount, depending on the terms of the respective lease agreement. The Company's leases do not contain significant residual value guarantees or restrictive covenants. The Company determines whether an arrangement contains a lease at the arrangement's inception. If a lease is determined to exist, its related term is assessed at lease commencement, once the underlying asset is made available by the lessor for the Company's use. The Company's assessment of the lease term reflects the non-cancellable period of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options for which the Company is reasonably certain of not exercising, as well as periods covered by renewal options for which it is reasonably certain of exercising. The Company also determines lease classification as either operating or finance (formerly referred to as "capital") at lease commencement, which governs the pattern of expense recognition and the presentation thereof reflected in the consolidated statements of operations over the lease term. For leases with a lease term exceeding 12 months, a lease liability is recorded on the Company's consolidated balance sheet at lease commencement reflecting the present value of its fixed payment obligations over the lease term. A corresponding right-of-use ("ROU") asset equal to the initial lease liability is also recorded, increased by any prepaid rent and/or initial direct costs incurred in connection with execution of the lease, and reduced by any lease incentives received. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as it elects to account for lease and non-lease components together as a single lease component. Variable lease payments are not included in the measurement of ROU assets and liabilities. ROU assets associated with finance leases are presented separate from those associated with operating leases, and are included within property and equipment, net on the Company's consolidated balance sheet. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the lease. For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments as they are made. For leases with a lease term of 12 months or less (referred to as a "short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the consolidated balance sheet. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment (see Note 11). To the extent that an ROU asset and any related long-lived assets are determined to be impaired, they are written down accordingly on a relative carrying amount basis, with the ROU asset written down to an amount no lower than its estimated fair value. Subsequent to the recognition of any such impairment, total remaining lease cost is recognized on a front-loaded basis over the remaining lease term.
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Derivative Financial Instruments | Derivative Financial Instruments The Company records all derivative financial instruments on its consolidated balance sheets at fair value. Changes in the fair value of derivative instruments that qualify for hedge accounting are either (i) offset against the changes in fair value of the related hedged assets, liabilities, or firm commitments through earnings or (ii) recognized in equity as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge against changes in fair value or cash flows and net investments, respectively. Each derivative instrument that qualifies for hedge accounting is expected to be highly effective in reducing and offsetting the risk associated with the related exposure being hedged. For each derivative instrument that is designated as a hedge, the Company formally documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item, and the risk exposure, as well as how hedge effectiveness will be assessed over the instrument's term. To assess hedge effectiveness at the inception of a hedging relationship, the Company generally uses regression analysis, a statistical method, to compare changes in the fair value of the derivative instrument to changes in the fair value or cash flows of the related hedged item. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed by the Company on at least a quarterly basis. As a result of its use of derivative instruments, the Company is exposed to the risk that counterparties to such contracts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. The Company's established policies and procedures for mitigating credit risk from derivative transactions include ongoing review and assessment of its counterparties' creditworthiness. The Company also enters into master netting arrangements with counterparties, when possible, to further mitigate credit risk. In the event of default or termination (as such terms are defined within the respective master netting arrangement), these arrangements allow the Company to net-settle amounts payable and receivable related to multiple derivative transactions with the same counterparty. The master netting arrangements specify a number of events of default and termination, including, among others, the failure to make timely payments. The fair values of the Company's derivative instruments are recorded on its consolidated balance sheets on a gross basis. For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a derivative instrument are classified in the same manner as the related item being hedged, primarily within cash flows from operating activities. Cash Flow Hedges The Company uses forward foreign currency exchange contracts to mitigate its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency and the settlement of foreign currency-denominated balances. To the extent forward foreign currency exchange contracts are designated as qualifying cash flow hedges, the related gains or losses are initially deferred in equity as a component of AOCI and are subsequently recognized in the consolidated statements of operations as follows:
If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are immediately recognized in earnings within other expense, net. Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative instrument previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the originally-documented hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within other expense, net. Hedges of Net Investments in Foreign Operations The Company periodically uses cross-currency swap contracts and forward foreign currency exchange contracts to reduce risk associated with exchange rate fluctuations on certain of its net investments in foreign subsidiaries. Changes in the fair values of such derivative instruments that are designated as qualifying hedges of net investments in foreign operations are recorded in equity as a component of AOCI in the same manner as foreign currency translation adjustments. In assessing the effectiveness of such hedges, the Company uses a method based on changes in spot rates to measure the impact of foreign currency exchange rate fluctuations on both its foreign subsidiary net investment and the related derivative hedging instrument. Under this method, changes in the fair value of the hedging instrument other than those due to changes in the spot rate are initially recorded in AOCI as a translation adjustment, and are amortized into earnings as interest expense using a systematic and rational method over the instrument's term. Changes in fair value associated with the effective portion (i.e., those due to changes in the spot rate) are recorded in AOCI as a translation adjustment and are released and recognized in earnings only upon the sale or liquidation of the hedged net investment. Fair Value Hedges Changes in the fair value of a derivative instrument that is designated as a fair value hedge, along with offsetting changes in the fair value of the related hedged item attributable to the hedged risk, are recorded in earnings. To the extent that the change in the fair value of the hedged item does not fully offset the change in the fair value of the hedging instrument, the resulting net impact is reflected in earnings within the income statement line item associated with the hedged item. Undesignated Hedges All of the Company's undesignated hedges are entered into to hedge specific economic risks, particularly foreign currency exchange rate risk related to foreign currency-denominated balances. Changes in the fair value of undesignated derivative instruments are immediately recognized in earnings within other expense, net.
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Summary of Significant Accounting Policies (Tables) |
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Summary of Significant Accounting Policies (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractually-Guaranteed Minimum Royalties | As of June 29, 2019, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:
(a) Amounts presented do not contemplate anticipated contract renewals or royalties earned in excess of the contractually guaranteed minimums.
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Disaggregation of Revenue | The following table disaggregates the Company's net revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors for the fiscal periods presented:
(a) Net revenues from the Company's wholesale and retail businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time.
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Shipping and Handling Charges | A summary of shipping and handling costs for the fiscal periods presented is as follows:
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Summary of Basic and Diluted shares | The weighted-average number of common shares outstanding used to calculate basic net income per common share is reconciled to shares used to calculate diluted net income per common share as follows:
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Sales Returns and Allowances [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of activity in the Company's allowance for doubtful accounts and its aggregate reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances | 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 below:
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Allowance for Doubtful Accounts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of activity in the Company's allowance for doubtful accounts and its aggregate reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances | A rollforward of the activity in the Company's allowance for doubtful accounts is presented below:
(a) Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment, net consists of the following:
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Other Assets and Liabilities (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following:
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Schedule of other non-current assets | Other non-current assets consist of the following:
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Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following:
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Schedule of non-current liabilities | Other non-current liabilities consist of the following:
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Restructuring and Other Charges (Tables) |
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Jun. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal 2019 Restructuring Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | A summary of charges recorded in connection with the Fiscal 2019 Restructuring Plan during the fiscal periods presented, as well as the cumulative charges recorded since its inception, is as follows:
(b) Loss on sale of property, which was recorded within restructuring and other charges in the consolidated statements of operations during the third quarter of Fiscal 2019, was incurred in connection with the sale of one of the Company's distribution centers in North America. Total cash proceeds from the sale were $20.0 million.
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Schedule of Restructuring Reserve by Type of Cost | A summary of current period activity in the restructuring reserve related to the Fiscal 2019 Restructuring Plan is as follows:
(a) Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4).
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Other Restructuring Plans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | A summary of current period activity in the restructuring reserve related to these other plans is as follows:
(a) Certain lease-related liabilities previously recognized in connection with the Company's closure and cessation of use of real estate locations were reclassified and reflected as reductions of the respective operating lease ROU assets initially recognized upon adoption of ASU 2016-02 (see Note 4).
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Instruments | Debt consists of the following:
(b) The carrying value of the 3.750% Senior Notes is presented net of unamortized debt issuance costs and discount of $4.1 million and $4.3 million as of June 29, 2019 and March 30, 2019, respectively.
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of financial assets and liabilities measured and recorded at fair value on recurring basis | The following table summarizes the Company's financial assets and liabilities that are measured and recorded at fair value on a recurring basis, excluding accrued interest components:
(b) Amount as of June 29, 2019 was included within short-term investments in the consolidated balance sheet. As of March 30, 2019, $54.7 million was included within cash and cash equivalents and $236.0 million was included within short-term investments in the consolidated balance sheet.
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Carrying value and the estimated fair value of the Company's debt obligations | The following table summarizes the carrying values and the estimated fair values of the Company's debt instruments:
(b) Based on Level 2 measurements.
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Fair value measurements, nonrecurring | The following table summarizes non-cash impairment adjustments recorded by the Company during the fiscal periods presented in order to reduce the carrying values of certain long-lived assets to their estimated fair values as of the assessment date:
(a) Includes $225.1 million recorded in connection with the Company's adoption of ASC 2016-02 as of the beginning of the first quarter of Fiscal 2020, which, net of related income tax benefits, reduced its opening retained earnings balance by $169.4 million (see Note 4).
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Financial Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company's outstanding derivative instruments on a gross basis as recorded on its consolidated balance sheets | The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as of June 29, 2019 and March 30, 2019:
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Offsetting Assets | The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, even when they are subject to master netting arrangements. However, if the Company were to offset and record the asset and liability balances of all of its derivative instruments on a net basis in accordance with the terms of each of its master netting arrangements, spread across eight separate counterparties, the amounts presented in the consolidated balance sheets as of June 29, 2019 and March 30, 2019 would be adjusted from the current gross presentation as detailed in the following table:
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Gains (losses) recognized in AOCI or earnings from derivatives designated as hedging instruments | The following tables summarize the pretax impact of gains and losses from the Company's designated derivative instruments on its consolidated financial statements for the three-month periods ended June 29, 2019 and June 30, 2018:
(a) Amounts recognized in other comprehensive income (loss) ("OCI") related to the effective portion of the Company's net investment hedges would be recognized in earnings only upon the sale or liquidation of the hedged net investment.
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Gains (losses) recognized in earnings from derivatives not designated as hedging instruments | The following table summarizes the pretax impact of gains and losses from the Company's undesignated derivative instruments on its consolidated financial statements for the three-month periods ended June 29, 2019 and June 30, 2018:
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Fair Value Hedging Adjustments | The following table summarizes the carrying value of the 2.625% Senior Notes and the impacts of the related fair value hedging adjustments as of June 29, 2019 and March 30, 2019:
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ROU Assets and Lease Liabilities | The following table summarizes ROU assets and lease liabilities recorded on the Company's consolidated balance sheet as of June 29, 2019:
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Lease Cost | The following table summarizes the composition of net lease cost for the three months ended June 29, 2019:
(b) $1.6 million included within cost of goods sold, $75.9 million included within SG&A expenses, and $0.5 million included within restructuring and other charges.
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Cash paid for amounts included in the measurement of lease liabilities | The following table summarizes certain cash flow information related to the Company's leases for the three months ended June 29, 2019:
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Lease Liability Maturity | The following table provides a maturity analysis summary of the Company's lease liabilities recorded on the consolidated balance sheet as of June 29, 2019:
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Supplemental lease information | The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating and finance leases recorded on the consolidated balance sheet as of June 29, 2019:
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Equity (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Repurchased Common Stock | A summary of the Company's repurchases of Class A common stock under its common stock repurchase program is as follows:
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Accumulated Other Comrehensive Income (Loss) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents OCI activity, net of tax, which is accumulated in equity:
(c) Activity is presented net of taxes, which were immaterial for both periods presented.
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Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following table presents reclassifications from AOCI to earnings for cash flow hedges, by component:
(a) FC = Forward foreign currency exchange contracts.
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Stock-based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the total compensation expense and the associated income tax benefits recognized related to stock-based compensation arrangements | A summary of total stock-based compensation expense recorded within SG&A expenses and the related income tax benefits recognized during the three-month periods ended June 29, 2019 and June 30, 2018 is as follows:
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Summary of the stock option activity under all plans | A summary of stock option activity under all plans during the three months ended June 29, 2019 is as follows:
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Restricted Stock And Service Based Restricted Stock Units [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock and restricted stock unit activity | A summary of restricted stock and service-based RSU activity during the three months ended June 29, 2019 is as follows:
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Performance-based restricted stock units [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock and restricted stock unit activity | A summary of performance-based RSU activity during the three months ended June 29, 2019 is as follows:
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Market-based restricted stock units [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock and restricted stock unit activity | A summary of market-based RSU activity during the three months ended June 29, 2019 is as follows:
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Segment Information (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenues by segment | Net revenues and operating income for each of the Company's segments are as follows:
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Net operating income by segment |
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Restructuring-related inventory charges and asset impairment charges by segment | Segment operating income and unallocated corporate expenses during the three-month periods ended June 29, 2019 and June 30, 2018 included certain restructuring-related inventory charges (see Note 8) and asset impairment charges (see Note 7), which are detailed below:
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Schedule of unallocated restructuring and related costs | The three-month periods ended June 29, 2019 and June 30, 2018 included certain unallocated restructuring and other charges (see Note 8), which are detailed below:
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Depreciation and amortization by segment | Depreciation and amortization expense for the Company's segments is as follows:
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Net revenues by geographic location | Net revenues by geographic location of the reporting subsidiary are as follows:
(d) Includes Australia and New Zealand.
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Additional Financial Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents, and Restricted Cash | A reconciliation of cash, cash equivalents, and restricted cash as of June 29, 2019 and March 30, 2019 from the consolidated balance sheets to the consolidated statements of cash flows is as follows:
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Cash Interest and Taxes | Cash paid for interest and income taxes is as follows:
|
Description of Business (Details) |
3 Months Ended |
---|---|
Jun. 29, 2019
Segment
| |
Description of Business [Abstract] | |
Number of reportable segments | 3 |
Summary of Significant Accounting Policies (Details) $ in Millions |
Jun. 29, 2019
USD ($)
|
---|---|
Accounting Policies [Abstract] | |
Contractually-Guaranteed Minimum Royalties - Remainder of Fiscal 2020 | $ 90.2 |
Contractually-Guaranteed Minimum Royalties - Fiscal 2021 | 114.9 |
Contractually-Guaranteed Minimum Royalties - Fiscal 2022 | 77.0 |
Contractually-Guaranteed Minimum Royalties - Fiscal 2023 | 41.9 |
Contractually-Guaranteed Minimum Royalties - Fiscal 2024 and Thereafter | 25.6 |
Contractually-Guaranteed Minimum Royalties - Total | $ 349.6 |
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Accounting Policies [Abstract] | ||
Shipping Costs | $ 9.9 | $ 8.7 |
Handling Costs | $ 36.2 | $ 35.7 |
Summary of Significant Accounting Policies (Details 3) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Summary of basic and diluted shares | ||
Basic shares | 78.2 | 81.9 |
Dilutive effect of stock options and RSUs | 1.7 | 1.4 |
Diluted shares | 79.9 | 83.3 |
Summary of Significant Accounting Policies (Textual) [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1.0 | 1.6 |
Summary of Significant Accounting Policies (Details Textual) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 29, 2019
USD ($)
Customer
|
Mar. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
|
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Deferred income | $ 16.7 | $ 14.8 | |
Amount of revenue recognized that was previously reported as deferred income | $ 5.7 | ||
Wholesale customer payment terms | 30 to 120 days | ||
Number Of Key Department Store Customers | Customer | 3 | ||
Inventory, Net | $ 988.6 | $ 817.8 | $ 890.0 |
Total Net Revenue [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Contribution of Key Wholesale Customers | 19.00% | ||
Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Contribution of Key Wholesale Customers | 26.00% | ||
Minimum [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Initial lease term | 3 years | ||
Maximum [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Initial lease term | 15 years |
Property and Equipment (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Mar. 30, 2019 |
|
Property and equipment, net | |||
Land and improvements | $ 15.3 | $ 15.3 | |
Buildings and improvements | 313.3 | 387.8 | |
Furniture and fixtures | 630.0 | 626.4 | |
Machinery and equipment | 353.1 | 350.4 | |
Capitalized software | 547.5 | 534.0 | |
Leasehold improvements | 1,177.7 | 1,169.4 | |
Construction in progress | 62.3 | 58.7 | |
Property and equipment, gross | 3,099.2 | 3,142.0 | |
Less: accumulated depreciation | (2,112.2) | (2,102.8) | |
Property and equipment, net | 987.0 | $ 1,039.2 | |
Operating costs and expenses | |||
Depreciation expense | $ 60.3 | $ 64.4 |
Impairment of Assets (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Impaired Assets to be Disposed of by Method Other than Sale [Line Items] | ||
Asset Impairment Charges | $ 1.2 | $ 1.3 |
Restructuring plan-related [Member] | ||
Impaired Assets to be Disposed of by Method Other than Sale [Line Items] | ||
Asset Impairment Charges | $ 1.2 | $ 1.3 |
Income Taxes (Details Textual) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Mar. 30, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 20.10% | 18.00% | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | |
Non-current liability for unrecognized tax benefits | $ 77.9 | $ 78.8 | |
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | $ 69.7 | $ 70.7 |
Debt (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Mar. 30, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 692.1 | $ 689.1 |
2.625% Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 296.2 | 293.4 |
Cumulative amount of fair value hedging adjustment included in carrying value of hedged item | (3.2) | (5.9) |
Unamortized Debt Issuance Costs | (0.6) | (0.7) |
3.750% Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Senior Notes | 395.9 | 395.7 |
Unamortized Debt Issuance Costs | $ (4.1) | $ (4.3) |
Debt (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 26, 2018 |
Jun. 29, 2019 |
|
2.125% Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 300 | |
Debt Instrument, Maturity Date | Sep. 26, 2018 | |
Interest Rate on Debt | 2.125% | |
2.625% Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 300 | |
Debt Instrument, Maturity Date | Aug. 18, 2020 | |
Long-term debt, net of discount | 99.795% | |
Interest Rate on Debt | 2.625% | |
3.750% Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 400 | |
Debt Instrument, Maturity Date | Sep. 15, 2025 | |
Long-term debt, net of discount | 99.521% | |
Interest Rate on Debt | 3.75% | |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 100.00% | |
Debt Instrument, Restrictive Covenants | The Indenture contains certain covenants that restrict the Company's ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate or merge with another party; or sell, lease, or convey all or substantially all of the Company's property or assets to another party. However, the Indenture does not contain any financial covenants. |
Debt (Details Textual 1) - 3 months ended Jun. 29, 2019 ¥ in Millions, $ in Millions, ₩ in Billions |
USD ($)
Quarter
|
KRW (₩) |
CNY (¥) |
---|---|---|---|
Credit Facilities (Textual) [Abstract] | |||
Commercial Paper | $ 0.0 | ||
Maximum expected combined borrowings outstanding - Commercial Paper Program and Global Credit Facility | 500.0 | ||
Commercial Paper [Member] | |||
Credit Facilities (Textual) [Abstract] | |||
Maximum borrowing capacity | $ 500.0 | ||
Commercial Paper [Member] | Maximum [Member] | |||
Credit Facilities (Textual) [Abstract] | |||
Short-term Debt, Terms | 397 days | ||
Global Credit Facility [Member] | |||
Credit Facilities (Textual) [Abstract] | |||
Maximum borrowing capacity | $ 750.0 | ||
Borrowing capacity under unsecured revolving line of credit | $ 500.0 | ||
Line of credit facility, expiration date | Feb. 11, 2020 | ||
Borrowings outstanding under revolving credit facilities | $ 0.0 | ||
Line of credit facility, contingent liability for outstanding LOCs | $ 9.0 | ||
Credit facility covenant terms | The Global Credit Facility contains a number of covenants that, among other things, restrict the Company's ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve itself; engage in businesses that are not in a related line of business; make loans, advances, or guarantees; engage in transactions with affiliates; and make certain investments. The Global Credit Facility also requires the Company to maintain a maximum ratio of Adjusted Debt to Consolidated EBITDAR (the "leverage ratio") of no greater than 3.75 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding plus four times consolidated rent expense for the four most recent consecutive fiscal quarters. Consolidated EBITDAR is defined generally as consolidated net income plus (i) income tax expense, (ii) net interest expense, (iii) depreciation and amortization expense, (iv) consolidated rent expense, (v) restructuring and other non-recurring expenses, and (vi) acquisition-related costs. | ||
Credit Facility covenant compliance | no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit Facility | ||
Maximum Ratio Of Adjusted Debt To Consolidated EBITDAR As Of Date Of Measurement For Four Consecutive Quarters | 3.75 | ||
Leverage Ratio Number Of Consecutive Fiscal Quarters Used | Quarter | 4 | ||
Leverage Ratio Rent Expense Multiplier | 4 | ||
China Credit Facility [Member] | |||
Credit Facilities (Textual) [Abstract] | |||
Maximum borrowing capacity | $ 7.0 | ¥ 50 | |
Line of credit facility, expiration date | Apr. 03, 2020 | ||
South Korea Credit Facility [Member] | |||
Credit Facilities (Textual) [Abstract] | |||
Maximum borrowing capacity | $ 26.0 | ₩ 30 | |
Line of credit facility, expiration date | Oct. 31, 2019 | ||
Pan-Asia Credit Facilities [Member] | |||
Credit Facilities (Textual) [Abstract] | |||
Borrowings outstanding under revolving credit facilities | $ 0.0 |
Fair Value Measurements (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Fair Value Disclosures [Abstract] | ||
Goodwill and other intangible asset impairment charges | $ 0.0 | $ 0.0 |
Financial Instruments (Details 1) - USD ($) $ in Millions |
Jun. 29, 2019 |
Mar. 30, 2019 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative asset, gross amount in the balance sheet | $ 24.0 | $ 32.0 |
Gross amount of derivatives assets subject to master netting arrangements not offset | (7.9) | (4.8) |
Derivative asset, net basis | 16.1 | 27.2 |
Derivative liability, gross amount in the balance sheet | 19.4 | 15.5 |
Gross amount of derivative liabilities subject to master netting arrangements not offset | (7.9) | (4.8) |
Derivative liability, net basis | $ 11.5 | $ 10.7 |
Financial Instruments (Details 3) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | $ 1.9 | $ 3.1 |
Foreign Exchange Forward [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | $ 1.9 | $ 3.1 |
Financial Instruments (Details 4) - 2.625% Senior Notes [Member] - USD ($) $ in Millions |
Jun. 29, 2019 |
Mar. 30, 2019 |
---|---|---|
Schedule of Fair Value Hedging Adjustments [Line Items] | ||
Senior Notes, Carrying Value | $ 296.2 | $ 293.4 |
Cumulative amount of fair value hedging adjustment included in carrying value of hedged item | $ (3.2) | $ (5.9) |
Financial Instruments (Details Textual 1) - USD ($) $ in Millions |
Jun. 29, 2019 |
Mar. 30, 2019 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Non-current investments | $ 34.1 | $ 44.9 |
Bank Time Deposits [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term Investments | 1,093.0 | 1,167.0 |
Non-current investments | 34.1 | 44.9 |
Commercial Paper [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term Investments | $ 187.7 | $ 236.0 |
Leases (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Mar. 30, 2019 |
---|---|---|
Assets and Liabilities, Lessee [Abstract] | ||
Operating lease right-of-use assets | $ 1,415.8 | $ 0.0 |
Finance lease right-of-use assets | 181.2 | |
Total lease assets | 1,597.0 | |
Current portion of operating lease liabilities | 293.8 | 0.0 |
Long-term operating lease liabilities | 1,483.9 | 0.0 |
Total operating lease liabilities | 1,777.7 | |
Current portion of finance lease liabilities | 11.0 | 22.3 |
Long-term finance lease liabilities | 199.4 | $ 212.6 |
Total finance lease liabilities | 210.4 | |
Total lease liabilities | $ 1,988.1 |
Leases (Details 1) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Lease, Cost [Abstract] | ||
Operating lease cost | $ 78.6 | |
Variable lease cost | 78.0 | |
Total lease cost | 163.5 | |
Rent expense | $ 112.0 | |
Contingent rent | $ 48.0 | |
Cost of goods sold | ||
Lease, Cost [Abstract] | ||
Operating lease cost | 0.8 | |
Variable lease cost | 1.6 | |
SG&A expenses | ||
Lease, Cost [Abstract] | ||
Operating lease cost | 76.0 | |
Variable lease cost | 75.9 | |
Short-term lease cost | 1.7 | |
Finance Lease, Cost [Abstract] | ||
Depreciation of finance lease assets | 4.2 | |
Restructuring and other charges | ||
Lease, Cost [Abstract] | ||
Operating lease cost | 1.8 | |
Variable lease cost | 0.5 | |
Sublease income | (0.9) | |
Interest expense | ||
Finance Lease, Cost [Abstract] | ||
Accretion of finance lease liabilities | $ 1.9 |
Leases (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Lessee Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 96.8 | |
Operating cash flows from finance leases | 1.8 | |
Financing cash flows from finance leases | $ 4.9 | $ 5.7 |
Leases (Details 3) $ in Millions |
Jun. 29, 2019
USD ($)
|
---|---|
Operating Lease Liabilities, Payments Due [Abstract] | |
Remainder of Fiscal 2020 | $ 242.1 |
Fiscal 2021 | 329.3 |
Fiscal 2022 | 287.7 |
Fiscal 2023 | 252.1 |
Fiscal 2024 | 225.8 |
Fiscal 2025 and thereafter | 596.4 |
Total lease payments | 1,933.4 |
Less: interest | (155.7) |
Total lease liabilities | 1,777.7 |
Finance Lease Liabilities, Payments, Due [Abstract] | |
Remainder of Fiscal 2020 | 14.1 |
Fiscal 2021 | 18.7 |
Fiscal 2022 | 23.3 |
Fiscal 2023 | 22.5 |
Fiscal 2024 | 22.5 |
Fiscal 2025 and thereafter | 176.1 |
Total lease payments | 277.2 |
Less: interest | (66.8) |
Total lease liabilities | 210.4 |
Future payment obligation for leases not commenced | $ 92.0 |
Leases (Details 4) |
Jun. 29, 2019 |
---|---|
Lessee Disclosure [Abstract] | |
Operating leases - weighted-average remaining lease term (years) | 7 years |
Operating leases - weighted-average discount rate | 2.10% |
Finance leases - weighted-average remaining lease term (years) | 13 years 1 month 6 days |
Finance leases - weighted-average discount rate | 4.10% |
Equity (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Equity, Class of Treasury Stock [Line Items] | ||
Cost of shares repurchased | $ 191.1 | $ 130.0 |
Stock Repurchase Program, Authorized Amount | 600.0 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | 1,080.0 | |
General repurchase program [Member] | ||
Equity, Class of Treasury Stock [Line Items] | ||
Cost of shares repurchased | $ 150.0 | $ 100.0 |
Number of shares repurchased | 1.3 | 0.7 |
Withholding in satisfaction of taxes on vested equity award [Member] | ||
Equity, Class of Treasury Stock [Line Items] | ||
Cost of shares repurchased | $ 41.1 | $ 30.0 |
Number of shares repurchased | 0.4 | 0.2 |
Equity (Details Textual) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Equity [Abstract] | ||
Conversion of Stock, Shares Converted | 0.5 | |
Dividends (Textual) [Abstract] | ||
Dividends declared per share | $ 0.6875 | $ 0.625 |
Dividends Payable, Date Declared | May 14, 2019 | |
Dividends Payable, Date of Record | Jun. 28, 2019 | |
Dividends Payable, Date to be Paid | Jul. 12, 2019 | |
Dividends paid | $ 48.8 | $ 40.6 |
Accumulated Other Comprehensive Income (Loss) (Details 1) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) on Derivatives [Line Items] | ||
Cost of goods sold | $ (508.0) | $ (494.9) |
Other expense, net | (4.1) | (2.0) |
Income tax provision | (29.5) | (23.9) |
Net income | 117.1 | 109.0 |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) on Derivatives [Line Items] | ||
Income tax provision | (0.6) | 0.4 |
Net income | 5.8 | (4.4) |
Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Cash Flow Hedging [Member] | Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) on Derivatives [Line Items] | ||
Cost of goods sold | 6.2 | (6.2) |
Other expense, net | $ 0.2 | $ 1.4 |
Stock-based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Summary of the total compensation expense and the associated income tax benefits recognized related to stock-based compensation arrangements | ||
Compensation expense | $ 23.0 | $ 21.5 |
Income tax benefit | $ (3.6) | $ (3.2) |
Stock-based Compensation (Details 1) shares in Thousands |
3 Months Ended |
---|---|
Jun. 29, 2019
shares
| |
Summary of the stock option activity | |
Options beginning outstanding | 834 |
Granted | 0 |
Exercised | 0 |
Cancelled/Forfeited | (59) |
Options ending outstanding | 775 |
Stock-based Compensation (Details 2) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Restricted Stock [Member] | ||
Summary of RSU activity | ||
Nonvested beginning balance | 10 | |
Granted | 0 | 0 |
Vested | (6) | |
Forfeited | 0 | |
Nonvested ending balance | 4 | |
Service-based restricted stock units [Member] | ||
Summary of RSU activity | ||
Nonvested beginning balance | 1,112 | |
Granted | 375 | |
Vested | (380) | |
Forfeited | (39) | |
Nonvested ending balance | 1,068 |
Stock-based Compensation (Details 3) - Performance-based restricted stock units [Member] - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Summary of RSU activity | ||
Nonvested beginning balance | 1,011 | |
Granted | 31 | 0 |
Change due to performance condition achievement | 123 | |
Vested | (482) | |
Forfeited | 0 | |
Nonvested ending balance | 683 |
Stock-based Compensation (Details 4) - Market-based restricted stock units [Member] - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Summary of RSU activity | ||
Nonvested beginning balance | 76 | |
Granted | 3 | 0 |
Change due to market condition achievement | 0 | |
Vested | 0 | |
Forfeited | 0 | |
Nonvested ending balance | 79 |
Stock-based Compensation (Details Textual) - $ / shares shares in Millions |
3 Months Ended | |||
---|---|---|---|---|
Sep. 28, 2019 |
Jun. 29, 2019 |
Jun. 30, 2018 |
Aug. 01, 2019 |
|
Service-based restricted stock units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average grant date fair value of equity awards other than options | $ 109.72 | $ 107.38 | ||
Performance-based restricted stock units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average grant date fair value of equity awards other than options | 102.69 | |||
Market-based restricted stock units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average grant date fair value of equity awards other than options | $ 139.02 | |||
Subsequent Event [Member] | 2019 Long-Term Stock Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 1.2 | |||
Subsequent Event [Member] | 2010 Long-Term Stock Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 3.0 |
Segment Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Net revenues by segment | ||
Net revenues | $ 1,428.8 | $ 1,390.6 |
North America segment [Member] | ||
Net revenues by segment | ||
Net revenues | 719.4 | 697.6 |
Europe segment [Member] | ||
Net revenues by segment | ||
Net revenues | 360.8 | 355.3 |
Asia segment [Member] | ||
Net revenues by segment | ||
Net revenues | 258.6 | 248.0 |
Other non-reportable segments [Member] | ||
Net revenues by segment | ||
Net revenues | $ 90.0 | $ 89.7 |
Segment Information (Details 1) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Operating income by segment | ||
Operating income | $ 143.3 | $ 130.1 |
Restructuring and other charges | (29.6) | (22.4) |
Unallocated charges [Member] | ||
Operating income by segment | ||
Unallocated corporate expenses | (145.4) | (154.8) |
Restructuring and other charges | (29.6) | (22.4) |
North America segment [Member] | ||
Operating income by segment | ||
Operating income | 157.9 | 159.9 |
Europe segment [Member] | ||
Operating income by segment | ||
Operating income | 79.4 | 73.7 |
Asia segment [Member] | ||
Operating income by segment | ||
Operating income | 48.1 | 42.7 |
Other non-reportable segments [Member] | ||
Operating income by segment | ||
Operating income | 32.9 | 31.0 |
Operating Segments [Member] | ||
Operating income by segment | ||
Operating income | $ 318.3 | $ 307.3 |
Segment Information (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||
Inventory-Related Charges | $ (0.6) | $ 0.0 |
Europe segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Inventory-Related Charges | (0.1) | 0.0 |
Asia segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Inventory-Related Charges | $ (0.5) | $ 0.0 |
Segment Information (Details 3) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||
Asset Impairment Charges | $ (1.2) | $ (1.3) |
Unallocated corporate expenses [Member] | ||
Segment Reporting Information [Line Items] | ||
Asset Impairment Charges | (1.2) | (0.1) |
Europe segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Asset Impairment Charges | 0.0 | (1.0) |
Asia segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Asset Impairment Charges | $ 0.0 | $ (0.2) |
Segment Information (Details 4) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||
Unallocated restructuring charges | $ (7.0) | $ (14.7) |
Other Charges | (22.6) | (7.7) |
Restructuring and other charges | (29.6) | (22.4) |
North America-Related [Member] | ||
Segment Reporting Information [Line Items] | ||
Unallocated restructuring charges | (0.7) | (2.9) |
Europe-Related [Member] | ||
Segment Reporting Information [Line Items] | ||
Unallocated restructuring charges | (1.8) | (5.0) |
Asia-Related [Member] | ||
Segment Reporting Information [Line Items] | ||
Unallocated restructuring charges | (0.5) | (0.1) |
Other Non-Reportable Segment-Related [Member] | ||
Segment Reporting Information [Line Items] | ||
Unallocated restructuring charges | 0.0 | (0.8) |
Corporate-Related [Member] | ||
Segment Reporting Information [Line Items] | ||
Unallocated restructuring charges | $ (4.0) | $ (5.9) |
Segment Information (Details 5) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | $ 66.2 | $ 70.3 |
North America segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | 18.9 | 19.8 |
Europe segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | 7.6 | 8.4 |
Asia segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | 15.0 | 12.6 |
Other non-reportable segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | 1.3 | 1.9 |
Unallocated corporate expenses [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | 23.4 | 24.1 |
Unallocated restructuring and other charges [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation and amortization expense | $ 0.0 | $ 3.5 |
Segment Information (Details 6) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Revenues from External Customers [Line Items] | ||
Net revenues | $ 1,428.8 | $ 1,390.6 |
Americas [Member] | ||
Revenues from External Customers [Line Items] | ||
Net revenues | 810.4 | 789.4 |
Europe Member] | ||
Revenues from External Customers [Line Items] | ||
Net revenues | 359.5 | 352.8 |
Asia [Member] | ||
Revenues from External Customers [Line Items] | ||
Net revenues | 258.9 | 248.4 |
U.S. [Member] | ||
Revenues from External Customers [Line Items] | ||
Net revenues | $ 760.1 | $ 738.9 |
Segment Information (Details Textual) |
3 Months Ended |
---|---|
Jun. 29, 2019
Segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Additional Financial Information (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Mar. 30, 2019 |
Mar. 31, 2018 |
|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||
Cash and Cash Equivalents | $ 648.4 | $ 584.1 | ||
Restricted cash, current | 34.9 | 11.9 | ||
Restricted cash, noncurrent | 8.1 | 30.5 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 691.4 | $ 575.8 | $ 626.5 | $ 1,355.5 |
Cash Interest and Taxes | ||||
Cash paid for interest | 2.4 | 3.0 | ||
Cash paid for income taxes | 22.3 | 3.3 | ||
Additional Financial Information (Textual) [Abstract] | ||||
Right-of-use asset obtained in exchange for operating lease liability | 17.7 | |||
Right-of-use asset obtained in exchange for finance lease liability | 64.0 | |||
Capital expenditures incurred but not yet paid | $ 44.2 | $ 29.1 | ||
Conversion of Stock, Shares Converted | 0.5 |
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