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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-13057
Ralph Lauren Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-2622036
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
650 Madison Avenue, 10022
New York,New York(Zip Code)
(Address of principal executive offices) 
(212318-7000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Class A Common Stock, $.01 par valueRLNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
At November 2, 2023, 39,751,805 shares of the registrant's Class A common stock, $.01 par value, and 24,881,276 shares of the registrant's Class B common stock, $.01 par value, were outstanding.


RALPH LAUREN CORPORATION
INDEX
 
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 5.
Item 6.

1


RALPH LAUREN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
2023
April 1,
2023
(millions)
ASSETS
Current assets:
Cash and cash equivalents$1,381.8 $1,529.3 
Short-term investments85.1 36.4 
Accounts receivable, net of allowances of $173.0 million and $175.3 million
461.1 447.7 
Inventories1,195.3 1,071.3 
Income tax receivable50.0 50.7 
Prepaid expenses and other current assets221.2 188.7 
Total current assets
3,394.5 3,324.1 
Property and equipment, net875.6 955.5 
Operating lease right-of-use assets1,088.2 1,134.0 
Deferred tax assets262.7 255.1 
Goodwill883.0 898.9 
Intangible assets, net82.2 88.9 
Other non-current assets136.9 133.0 
Total assets
$6,723.1 $6,789.5 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$460.1 $371.6 
Current income tax payable56.3 59.7 
Current operating lease liabilities270.9 266.7 
Accrued expenses and other current liabilities823.1 795.5 
Total current liabilities
1,610.4 1,493.5 
Long-term debt1,139.5 1,138.5 
Long-term finance lease liabilities266.9 315.3 
Long-term operating lease liabilities1,079.0 1,141.1 
Non-current income tax payable42.2 75.9 
Non-current liability for unrecognized tax benefits100.7 93.8 
Other non-current liabilities115.2 100.9 
Commitments and contingencies (Note 12)
Total liabilities
4,353.9 4,359.0 
Equity:
Class A common stock, par value $.01 per share; 108.7 million and 107.7 million shares issued; 39.8 million and 40.7 million shares outstanding
1.0 1.0 
Class B common stock, par value $.01 per share; 24.9 million shares issued and outstanding
0.3 0.3 
Additional paid-in-capital2,875.0 2,824.3 
Retained earnings6,779.7 6,598.2 
Treasury stock, Class A, at cost; 68.9 million and 67.0 million shares
(7,024.0)(6,797.3)
Accumulated other comprehensive loss(262.8)(196.0)
Total equity
2,369.2 2,430.5 
Total liabilities and equity
$6,723.1 $6,789.5 
See accompanying notes.
2


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
(millions, except per share data)
Net revenues
$1,633.0 $1,579.9 $3,129.5 $3,070.5 
Cost of goods sold(562.9)(556.8)(1,027.4)(1,046.0)
Gross profit
1,070.1 1,023.1 2,102.1 2,024.5 
Selling, general, and administrative expenses(896.3)(809.5)(1,726.3)(1,630.1)
Restructuring and other charges, net(9.3)(6.9)(44.9)(12.5)
Total other operating expenses, net
(905.6)(816.4)(1,771.2)(1,642.6)
Operating income
164.5 206.7 330.9 381.9 
Interest expense(10.0)(9.5)(20.0)(21.3)
Interest income15.8 6.6 31.5 10.2 
Other expense, net(4.8)(3.7)(6.3)(8.5)
Income before income taxes
165.5 200.1 336.1 362.3 
Income tax provision(18.6)(49.6)(57.1)(88.4)
Net income
$146.9 $150.5 $279.0 $273.9 
Net income per common share:
Basic$2.24 $2.21 $4.24 $3.97 
Diluted$2.19 $2.18 $4.15 $3.90 
Weighted-average common shares outstanding:
Basic65.6 68.0 65.7 69.0 
Diluted67.2 69.0 67.3 70.3 
Dividends declared per share$0.75 $0.75 $1.50 $1.50 
See accompanying notes.
3


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
(millions)
Net income
$146.9 $150.5 $279.0 $273.9 
Other comprehensive income (loss), net of tax:
Foreign currency translation losses(38.1)(56.5)(75.6)(95.8)
Net gains on cash flow hedges8.2 7.3 9.0 18.9 
Net losses on defined benefit plans(0.1) (0.2)(0.1)
Other comprehensive loss, net of tax
(30.0)(49.2)(66.8)(77.0)
Total comprehensive income$116.9 $101.3 $212.2 $196.9 
See accompanying notes.
4


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
 September 30,
2023
October 1,
2022
(millions)
Cash flows from operating activities:
Net income$279.0 $273.9 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense116.8 108.1 
Deferred income tax expense6.1 36.1 
Stock-based compensation expense50.7 40.7 
Bad debt expense0.3 0.6 
Other non-cash charges16.3 13.3 
Changes in operating assets and liabilities:
Accounts receivable(26.5)(113.8)
Inventories(151.0)(345.8)
Prepaid expenses and other current assets(37.8)(59.6)
Accounts payable and accrued liabilities154.7 31.8 
Income tax receivables and payables(41.8)28.9 
Operating lease right-of-use assets and liabilities, net(18.2)(12.3)
Other balance sheet changes(5.0) 
Net cash provided by operating activities
343.6 1.9 
Cash flows from investing activities:
Capital expenditures(82.4)(83.9)
Purchases of investments(158.6)(431.2)
Proceeds from sales and maturities of investments108.1 849.2 
Other investing activities (6.0)
Net cash provided by (used in) investing activities
(132.9)328.1 
Cash flows from financing activities:
Repayments of long-term debt (500.0)
Payments of finance lease obligations(11.2)(10.8)
Payments of dividends(98.2)(99.1)
Repurchases of common stock, including shares surrendered for tax withholdings(225.7)(417.3)
Net cash used in financing activities
(335.1)(1,027.2)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(23.9)(60.6)
Net decrease in cash, cash equivalents, and restricted cash(148.3)(757.8)
Cash, cash equivalents, and restricted cash at beginning of period1,536.9 1,872.0 
Cash, cash equivalents, and restricted cash at end of period$1,388.6 $1,114.2 
See accompanying notes.
5


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended September 30, 2023
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at July 1, 2023
132.8 $1.3 $2,845.7 $6,681.3 67.5 $(6,854.5)$(232.8)$2,441.0 
Comprehensive income:
Net income146.9 
Other comprehensive loss(30.0)
Total comprehensive income116.9 
Dividends declared(48.5)(48.5)
Repurchases of common stock, including excise tax1.4 (169.5)(169.5)
Stock-based compensation29.3 29.3 
Shares issued pursuant to stock-based
compensation plans
0.8    
Balance at September 30, 2023
133.6 $1.3 $2,875.0 $6,779.7 68.9 $(7,024.0)$(262.8)$2,369.2 
Three Months Ended October 1, 2022
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at July 2, 2022
132.3 $1.3 $2,767.0 $6,347.3 64.3 $(6,543.4)$(208.1)$2,364.1 
Comprehensive income:
Net income150.5 
Other comprehensive loss(49.2)
Total comprehensive income101.3 
Dividends declared(49.7)(49.7)
Repurchases of common stock2.0 (182.6)(182.6)
Stock-based compensation22.5 22.5 
Shares issued pursuant to stock-based
compensation plans
0.3    
Balance at October 1, 2022
132.6 $1.3 $2,789.5 $6,448.1 66.3 $(6,726.0)$(257.3)$2,255.6 
(a)Includes Class A and Class B common stock.
(b)Accumulated other comprehensive income (loss).
6


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(Unaudited)
Six Months Ended September 30, 2023
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at April 1, 2023
132.6 $1.3 $2,824.3 $6,598.2 67.0 $(6,797.3)$(196.0)$2,430.5 
Comprehensive income:
Net income279.0 
Other comprehensive loss(66.8)
Total comprehensive income212.2 
Dividends declared(97.5)(97.5)
Repurchases of common stock, including excise tax1.9 (226.7)(226.7)
Stock-based compensation50.7 50.7 
Shares issued pursuant to stock-based compensation plans
1.0    
Balance at September 30, 2023
133.6 $1.3 $2,875.0 $6,779.7 68.9 $(7,024.0)$(262.8)$2,369.2 
Six Months Ended October 1, 2022
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at April 2, 2022
131.8 $1.3 $2,748.8 $6,274.9 61.9 $(6,308.7)$(180.3)$2,536.0 
Comprehensive income:
Net income273.9 
Other comprehensive loss(77.0)
Total comprehensive income196.9 
Dividends declared(100.7)(100.7)
Repurchases of common stock4.4 (417.3)(417.3)
Stock-based compensation40.7 40.7 
Shares issued pursuant to stock-based compensation plans0.8    
Balance at October 1, 2022
132.6 $1.3 $2,789.5 $6,448.1 66.3 $(6,726.0)$(257.3)$2,255.6 
(a)Includes Class A and Class B common stock.
(b)Accumulated other comprehensive income (loss).
See accompanying notes.
7




RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share data and where otherwise indicated)
(Unaudited)

1.    Description of Business
Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, fragrances, and hospitality. RLC's long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others. RLC and its subsidiaries are collectively referred to herein as the "Company," "we," "us," "our," and "ourselves," unless the context indicates otherwise.
The Company diversifies its business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows the Company to maintain a dynamic balance as its operating results do not depend solely on the performance of any single geographic area or channel of distribution. The Company sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and digital commerce operations around the world. The Company's wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which the Company has licensed the right to operate in defined geographic territories using its trademarks. In addition, the Company licenses to third parties for specified periods the right to access its various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home.
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 16 for further discussion of the Company's segment reporting structure.
2.    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 (loss), comprehensive income (loss), 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 April 1, 2023 (the "Fiscal 2023 10-K").
Basis of Consolidation
These unaudited interim consolidated financial statements present the consolidated financial position, income (loss), comprehensive income (loss), 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 immediately before or after March 31. As such, fiscal year 2024 will end on March 30, 2024 and will be a 52-week period ("Fiscal 2024"). Fiscal year 2023 ended on April 1, 2023 and was also a 52-week period ("Fiscal 2023"). The second quarter of Fiscal 2024 ended on September 30, 2023 and was a 13-week period. The second quarter of Fiscal 2023 ended on October 1, 2022 and was also a 13-week period.
8


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Actual results could differ materially from those estimates.
Significant estimates inherent in the preparation of the consolidated financial statements include reserves for bad debt, customer returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; fair value measurements; accounting for income taxes and related uncertain tax positions; valuation of stock-based compensation awards and related forfeiture rates; and reserves for restructuring activity, among others.
Reclassifications
Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation.
Seasonality of Business
The Company's business is typically affected by seasonal trends, with higher levels of retail sales in its second and third fiscal quarters and higher wholesale sales in its second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting its retail business and the timing of seasonal wholesale shipments. As a result of changes in its business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly operating trends and working capital requirements may not be indicative of the Company's future performance. In addition, fluctuations in sales, operating income (loss), and cash flows in any fiscal quarter may be affected 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 and six-month periods ended September 30, 2023 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2024.
3.    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 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 own retail stores and shop-within-shop locations, 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 purchased by customers are recorded as a liability until they are redeemed for products sold by the Company's retail business, 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.
9


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Revenue from the Company's wholesale business is generally recognized upon shipment of products, at which point title passes and risk of loss is transferred to the customer. In certain arrangements where the Company retains the risk of loss during shipment, revenue is recognized upon receipt of products by the customer. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends. The Company reviews and refines these estimates on at least a quarterly basis. The Company's historical estimates of these amounts have not differed materially from actual results.
Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks (i.e., symbolic intellectual property) and benefit from such access through their own sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for most arrangements, may be subject to a contractually-guaranteed minimum royalty amount. Payments are generally due quarterly and, depending on time of receipt, may be recorded as a liability until recognized as revenue. The Company recognizes revenue for sales-based royalty arrangements (including those for which the royalty exceeds any contractually-guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-based royalty is not ultimately expected to exceed a contractually-guaranteed minimum royalty amount, the minimum is generally recognized as revenue ratably over the respective 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 September 30, 2023, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:
Contractually-Guaranteed
Minimum Royalties(a)
(millions)
Remainder of Fiscal 2024$46.8 
Fiscal 202564.5 
Fiscal 202647.9 
Fiscal 202746.0 
Fiscal 202811.8 
Fiscal 2029 and thereafter 
Total$217.0 
(a)Amounts presented do not contemplate potential contract renewals or royalties earned in excess of the contractually-guaranteed minimums.
Disaggregated Net Revenues
The following tables disaggregate 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:
Three Months Ended
September 30, 2023October 1, 2022
North AmericaEuropeAsiaOtherTotalNorth AmericaEuropeAsiaOtherTotal
(millions)
Sales Channel(a):
Retail$437.8 $238.4 $318.1 $ $994.3 $424.0 $204.8 $288.2 $ $917.0 
Wholesale280.0 288.4 30.3  598.7 302.6 288.7 28.2  619.5 
Licensing   40.0 40.0    43.4 43.4 
Total$717.8 $526.8 $348.4 $40.0 $1,633.0 $726.6 $493.5 $316.4 $43.4 $1,579.9 
10


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Six Months Ended
September 30, 2023October 1, 2022
North AmericaEuropeAsiaOtherTotalNorth AmericaEuropeAsiaOtherTotal
(millions)
Sales Channel(a):
Retail$848.8 $465.1 $670.2 $ $1,984.1 $861.8 $420.7 $602.1 $ $1,884.6 
Wholesale500.7 512.2 55.7  1,068.6 565.5 488.4 48.4  1,102.3 
Licensing   76.8 76.8    83.6 83.6 
Total$1,349.5 $977.3 $725.9 $76.8 $3,129.5 $1,427.3 $909.1 $650.5 $83.6 $3,070.5 
(a)Net revenues from the Company's retail and wholesale businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time.
Deferred Income
Deferred income represents cash payments received in advance of the Company's transfer of control of products or services to its customers and generally consists of unredeemed gift cards (net of breakage) and advance royalty payments from its licensees. The Company's deferred income balances were $15.1 million and $14.1 million as of September 30, 2023 and April 1, 2023, respectively, and were primarily recorded within accrued expenses and other current liabilities within the consolidated balance sheets. The majority of the deferred income balance as of September 30, 2023 is expected to be recognized as revenue within the next twelve months.
Shipping and Handling Costs
Costs associated with shipping goods to customers are accounted for as fulfillment activities and reflected as selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations. Costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs"), are also included in SG&A expenses. Shipping and handling costs billed to customers are included in revenue.
A summary of shipping and handling costs for the fiscal periods presented is as follows:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Shipping costs$19.2 $17.7 $36.1 $35.0 
Handling costs41.5 39.7 80.7 76.7 
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 restricted stock units ("RSUs") and any other potentially dilutive instruments, only for the periods in which such effects are dilutive.
11


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Basic shares65.6 68.0 65.7 69.0 
Dilutive effect of RSUs1.6 1.0 1.6 1.3 
Diluted shares67.2 69.0 67.3 70.3 
All earnings per share amounts have been calculated using unrounded numbers. The Company has outstanding performance-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance 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 September 30, 2023 and October 1, 2022, there were 0.3 million and 0.4 million, respectively, of additional shares issuable contingent upon 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 certain defined credit criteria. Payment is generally due within 30 to 120 days and does not involve a significant financing component. Accounts receivable are recorded at amortized cost, which approximates fair value, and are presented in the consolidated balance sheets net of certain reserves and allowances. These reserves and allowances consist of (i) reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances (see the "Revenue Recognition" section above for further discussion of related accounting policies) and (ii) allowances for doubtful accounts.
A rollforward of the activity in the Company's reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances is presented as follows:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Beginning reserve balance$135.2 $157.4 $148.1 $180.7 
Amount charged against revenue to increase reserve122.4 115.5 218.0 202.2 
Amount credited against customer accounts to decrease reserve
(108.5)(99.4)(216.0)(202.7)
Foreign currency translation(2.5)(6.7)(3.5)(13.4)
Ending reserve balance$146.6 $166.8 $146.6 $166.8 
An allowance for doubtful accounts is determined through analysis of accounts receivable aging, assessments of collectability based on evaluation of historical trends, the financial condition of the Company's customers and their ability to withstand prolonged periods of adverse economic conditions, and evaluation of the impact of current and forecasted economic and market conditions over the related asset's contractual life, among other factors.
12


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A rollforward of the activity in the Company's allowance for doubtful accounts is presented as follows:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Beginning reserve balance$25.6 $27.7 $27.2 $34.0 
Amount recorded to expense to increase reserve(a)
1.1 2.5 0.3 0.6 
Amount written-off against customer accounts to decrease reserve
 (1.6)(0.6)(4.9)
Foreign currency translation(0.3)(0.9)(0.5)(2.0)
Ending reserve balance$26.4 $27.7 $26.4 $27.7 
(a)Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.
Concentration of Credit Risk
The Company sells its wholesale merchandise primarily to major department stores, specialty stores, and third-party digital partners 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 2023, the Company's sales to its three largest wholesale customers accounted for approximately 16% 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 September 30, 2023, these three key wholesale customers accounted for approximately 31% of total gross accounts receivable.
Inventories
The Company holds inventory that is sold in its retail stores and digital commerce sites directly to consumers. The Company also holds inventory that is to be sold through wholesale distribution channels to major department stores, specialty stores, and third-party digital partners. Substantially all of the Company's inventories consist of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-average cost basis. Inventory held by the Company totaled $1.195 billion, $1.071 billion, and $1.261 billion as of September 30, 2023, April 1, 2023, and October 1, 2022, respectively.
Supplier Finance Program
The Company supports a voluntary supplier finance program which provides certain of its inventory suppliers the opportunity, at their sole discretion, to sell their receivables due from the Company (which are generally due within 90 days) to a participating financial institution in exchange for receipt of a discounted payment amount made earlier than the payment term stipulated between the Company and the supplier. The Company's vendor payment terms and amounts due are not impacted by a supplier's decision to participate in the program. The Company has not pledged any assets and does not provide guarantees under the supplier finance program. The Company's payment obligations outstanding under its supplier finance program were $177.5 million and $122.2 million as of September 30, 2023 and April 1, 2023, respectively, and were recorded within accounts payable in the consolidated balance sheets.
Derivative Financial Instruments
The Company records derivative financial instruments on its consolidated balance sheets at fair value. Changes in the fair value of derivative instruments that are designated and qualify for hedge accounting are either (i) offset through earnings against the changes in fair value of the related hedged assets, liabilities, or firm commitments 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 instrument is hedging against changes in fair value or cash flows and net investments, respectively.
13


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Each derivative instrument that qualifies for hedge accounting is expected to be highly effective in offsetting the risk associated with the related exposure. For each instrument that is designated as a hedge, the Company 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 evaluate how changes in the fair value of the derivative instrument are expected to offset 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.
Given 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 such counterparty credit risk, the Company's policy is to only enter 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 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, 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 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 for its forward foreign exchange contracts and within cash flows from investing activities for its cross-currency swap contracts, both as discussed below.
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. To the extent designated as cash flow hedges, related gains or losses on such instruments are initially deferred in equity as a component of AOCI and are subsequently recognized within cost of goods sold in the consolidated statements of operations when the related inventory is sold.
If a derivative instrument is dedesignated or if hedge accounting is discontinued because the instrument is not expected to be highly effective in hedging the designated exposure, any further gains (losses) are recognized in earnings each period within other income (expense), net. Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative instrument recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the hedging strategy, unless the related forecasted transaction is probable of not occurring, in which case the accumulated amount is immediately recognized within other income (expense), net.
Hedges of Net Investments in Foreign Operations
The Company periodically uses cross-currency swap 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 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 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.
14


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Undesignated Hedges
The Company uses undesignated hedges primarily to hedge foreign currency exchange rate risk related to third-party and intercompany balances and exposures. Changes in the fair values of such instruments are recognized in earnings each period within other income (expense), net.
See Note 11 for further discussion of the Company's derivative financial instruments.
Refer to Note 3 of the Fiscal 2023 10-K for a summary of all of the Company's significant accounting policies.
4.    Recently Issued Accounting Standards

Disclosure of Supplier Finance Program Obligations
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-04, "Disclosure of Supplier Finance Program Obligations" ("ASU 2022-04"). ASU 2022-04 requires entities to disclose the key terms of supplier finance programs they use in connection with the purchase of goods and services, along with the amount of obligations outstanding at the end of each period and an annual rollforward of such obligations. This standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. ASU 2022-04 is effective for the Company beginning in its Fiscal 2024 and is to be applied retrospectively to all periods in which a balance sheet is presented. The annual rollforward disclosure is not required to be made until the Company's fiscal year ending March 29, 2025 ("Fiscal 2025") and is to be applied prospectively. The Company adopted ASU 2022-04 as of the beginning of Fiscal 2024. Other than the new disclosure requirements, ASU 2022-04 did not have an impact on the Company's consolidated financial statements. See Note 3 for further discussion of the Company's supplier finance program.
5.    Property and Equipment
Property and equipment, net consists of the following:
September 30,
2023
April 1,
2023
 (millions)
Land and improvements$15.3 $15.3 
Buildings and improvements416.3 471.9 
Furniture and fixtures615.6 608.8 
Machinery and equipment381.7 375.9 
Capitalized software546.6 541.1 
Leasehold improvements1,226.1 1,216.1 
Construction in progress50.1 60.9 
3,251.7 3,290.0 
Less: accumulated depreciation(2,376.1)(2,334.5)
Property and equipment, net$875.6 $955.5 
Property and equipment, net includes finance lease right-of-use ("ROU") assets, which are reflected in the table above based on their nature.
Depreciation expense was $55.2 million and $110.1 million during the three-month and six-month periods ended September 30, 2023, respectively, and $49.6 million and $101.0 million during the three-month and six-month periods ended October 1, 2022, respectively, and was recorded primarily within SG&A expenses in the consolidated statements of operations.
15


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.    Other Assets and Liabilities
Prepaid expenses and other current assets consist of the following:
September 30,
2023
April 1,
2023
 (millions)
Other taxes receivable$46.1 $46.7 
Non-trade receivables27.2 30.7 
Prepaid software maintenance23.3 18.5 
Prepaid advertising and marketing22.7 10.4 
Derivative financial instruments13.5 1.7 
Inventory return asset12.3 10.5 
Prepaid occupancy expense11.8 5.8 
Prepaid insurance7.0 4.1 
Cloud computing arrangement implementation costs6.9 6.2 
Prepaid logistic services6.3 6.5 
Tenant allowances receivable3.4 3.9 
Other prepaid expenses and current assets40.7 43.7 
Total prepaid expenses and other current assets$221.2 $188.7 
Other non-current assets consist of the following:
September 30,
2023
April 1,
2023
 (millions)
Derivative financial instruments$41.8 $42.8 
Security deposits31.7 33.0 
Cloud computing arrangement implementation costs15.1 10.1 
Equity method and other investments9.7 10.6 
Deferred rent assets6.6 6.8 
Restricted cash5.4 6.1 
Other non-current assets26.6 23.6 
Total other non-current assets$136.9 $133.0 
16


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accrued expenses and other current liabilities consist of the following:
September 30,
2023
April 1,
2023
 (millions)
Accrued inventory$239.3 $212.3 
Accrued operating expenses193.5 194.4 
Accrued payroll and benefits164.0 198.1 
Other taxes payable65.2 32.8 
Dividends payable48.5 49.2 
Restructuring reserve36.9 20.8 
Accrued capital expenditures31.5 37.2 
Finance lease obligations18.6 20.3 
Deferred income15.1 14.0 
Other accrued expenses and current liabilities10.5 16.4 
Total accrued expenses and other current liabilities$823.1 $795.5 
Other non-current liabilities consist of the following:
September 30,
2023
April 1,
2023
 (millions)
Deferred lease incentives and obligations$42.4 $43.2 
Deferred tax liabilities15.7 7.2 
Accrued benefits and deferred compensation15.2 12.4 
Restructuring reserve5.1 0.1 
Other non-current liabilities36.8 38.0 
Total other non-current liabilities$115.2 $100.9 
7.    Restructuring and Other Charges, Net
A description of significant restructuring and other activities and their related costs is provided below.
Fiscal 2024 Restructuring Activities
During the three-month and six-month periods ended September 30, 2023, the Company recorded $6.8 million and $37.3 million, respectively, of cash-related restructuring charges, primarily associated with severance and benefit costs. As of September 30, 2023, the remaining restructuring liability related to these charges was $30.5 million, reflecting cash payments of $6.8 million made during the six months ended September 30, 2023.
Fiscal 2023 Restructuring Activities
The Company recorded total restructuring charges of $4.9 million and $5.6 million during the three-month and six-month periods ended October 1, 2022, respectively, related to its restructuring plan initiated during its fiscal year ended March 27, 2021 (the "Fiscal 2021 Strategic Realignment Plan"). Total restructuring charges included cash-related charges of $1.4 million and $2.1 million during the three-month and six-month periods ended October 1, 2022, respectively, and non-cash charges of $3.5 million during both the three-month and six-month periods ended October 1, 2022.
In addition to these charges, the Company recognized $2.0 million and $3.5 million of income within restructuring and other charges, net in the consolidated statements of operations during the second quarters of Fiscal 2024 and Fiscal 2023, respectively, related to consideration received from Regent, L.P. in connection with the Company's previously sold Club Monaco business.
17


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Actions associated with the Fiscal 2021 Strategic Realignment Plan are complete and no additional charges are expected to be incurred in connection with this plan. As of September 30, 2023 and April 1, 2023, the remaining restructuring liability related to this plan was $11.5 million and $20.7 million, respectively, reflecting $8.9 million of cash payments and $0.3 million of non-cash adjustments made during the six months ended September 30, 2023.
Refer to Note 9 of the Fiscal 2023 10-K for additional discussion regarding the Fiscal 2021 Strategic Realignment Plan.
Other Charges
The Company recorded other charges of $4.5 million and $9.6 million during the three-month and six-month periods ended September 30, 2023, respectively, and $5.7 million and $10.6 million during the three-month and six-month periods ended October 1, 2022, respectively, 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.
8.    Income Taxes
Inflation Reduction Act of 2022
On August 16, 2022, President Biden signed the Inflation Reduction Act ("IRA") into law. The IRA enacted a 15% corporate minimum tax rate (subject to certain thresholds being met) that became effective for the Company beginning in its Fiscal 2024, a 1% excise tax on share repurchases made after December 31, 2022 (which may be reduced for the fair value of certain share issuances), and created and extended certain tax-related energy incentives. The tax-related provisions of the IRA have not had a material impact on the Company's consolidated financial statements to date, but could in the future if the Company's facts and circumstances were to change. See Note 13 for additional information relating to the Company's stock repurchase program.
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 11.2% and 17.0% during the three-month and six-month periods ended September 30, 2023, respectively, and 24.8% and 24.4% during the three-month and six-month periods ended October 1, 2022, respectively. The effective tax rates for the three-month and six-month periods ended September 30, 2023 were lower than the U.S. federal statutory income tax rate of 21% primarily due to favorable adjustments related to the revaluation of deferred tax assets arising from Swiss tax reform and favorable deferred tax adjustments related to the European Union's anti-tax avoidance directive. The lower effective tax rates were also driven by favorable remeasurements of net deferred tax assets as a result of recently enacted changes in tax legislation. The effective tax rates for the three-month and six-month periods ended October 1, 2022 were higher than the U.S. federal statutory income tax rate of 21% primarily due to state taxes and the unfavorable impact of certain audit related adjustments, partially offset by the favorable tax impact 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 $100.7 million and $93.8 million as of September 30, 2023 and April 1, 2023, respectively, and was included within the 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 $63.1 million and $59.6 million as of September 30, 2023 and April 1, 2023, 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
18


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
9.    Debt
Debt consists of the following:
September 30,
2023
April 1,
2023
(millions)
$400 million 3.750% Senior Notes(a)
$398.7 $398.4 
$750 million 2.950% Senior Notes(b)
740.8 740.1 
Total long-term debt$1,139.5 $1,138.5 
 
(a)The carrying value of the 3.750% Senior Notes is presented net of unamortized debt issuance costs and original issue discount of $1.3 million and $1.6 million as of September 30, 2023 and April 1, 2023, respectively.
(b)The carrying value of the 2.950% Senior Notes is presented net of unamortized debt issuance costs and original issue discount of $9.2 million and $9.9 million as of September 30, 2023 and April 1, 2023, respectively.
Senior Notes
In August 2018, the Company completed a registered public debt offering and issued $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 2.125% unsecured senior notes that matured September 26, 2018.
In June 2020, the Company completed another registered public debt offering and issued an additional $500 million aggregate principal amount of unsecured senior notes that were due and repaid on June 15, 2022 with cash on hand, which bore interest at a fixed rate of 1.700%, payable semi-annually (the "1.700% Senior Notes"), and $750 million aggregate principal amount of unsecured senior notes due June 15, 2030, which bear interest at a fixed rate of 2.950%, payable semi-annually (the "2.950% Senior Notes"). The 1.700% Senior Notes and 2.950% Senior Notes were issued at prices equal to 99.880% and 98.995% of their principal amounts, respectively. The proceeds from these offerings were used for general corporate purposes, which included the repayment of $475 million previously outstanding under the Company's Global Credit Facility (as defined below) on June 3, 2020 and repayment of its previously outstanding $300 million principal amount of 2.625% unsecured senior notes that matured August 18, 2020.
The Company has the option to redeem the 3.750% Senior Notes and 2.950% 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.
19


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Commercial Paper
The Company has a commercial paper borrowing program that allows it to issue up to $750 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 $750 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 in seniority with the Company's other forms of unsecured indebtedness. As of both September 30, 2023 and April 1, 2023, there were no borrowings outstanding under the Commercial Paper Program.
Revolving Credit Facilities
Global Credit Facility
In June 2023, the Company terminated its then existing credit facility and entered into a new credit facility that provides for a $750 million senior unsecured revolving line of credit through June 30, 2028 (the "Global Credit Facility") under terms and conditions substantially similar to those of the previous facility. The Global Credit Facility may be used for working capital needs, capital expenditures, certain investments, general corporate purposes, and for funding of acquisitions. The Global Credit Facility may also be used to support the issuance of letters of credit and maintenance of the Commercial Paper Program. Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and certain other currencies, including Euros, Hong Kong Dollars, and Japanese Yen, and are guaranteed by some of the Company's domestic subsidiaries, including all of the Company's significant subsidiaries. In accordance with the terms of the agreement governing the Global Credit Facility, the Company has the ability to expand its borrowing availability under the Global Credit Facility to $1.500 billion, 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.
Borrowings under the Global Credit Facility bear interest at a rate per annum equal to, at the Company's option, either (a) an alternate base rate or (b) an adjusted term Secured Overnight Financing Rate ("SOFR") rate or the applicable currency in which the loans are made (the "Term Benchmark Rate") plus an applicable margin. The applicable margin for Term Benchmark Rate loans will be adjusted by reference to a grid (the "Pricing Grid"), which is included in the definition of "Applicable Rate" within the Global Credit Facility agreement and is based on ratings for the Company's senior, unsecured long-term indebtedness provided by established ratings agencies. In addition to paying interest on any outstanding borrowings under the Global Credit Facility, the Company is required to pay a commitment fee, calculated at a rate per annum determined in accordance with the Pricing Grid, on the average daily unused amount of the Facility, payable quarterly in arrears, and certain fees with respect to Letters of Credit that are issued. The current commitment fee rate of 8 basis points is subject to adjustment based on the Company's credit ratings. As of September 30, 2023, there were no borrowings outstanding under the Global Credit Facility, nor were there any borrowings outstanding as of April 1, 2023 under the Company's previous facility. However, the Company was contingently liable for $11.8 million and $11.9 million of outstanding letters of credit as of September 30, 2023 and April 1, 2023, respectively.
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 4.25 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding, including finance lease obligations, plus all operating lease obligations. Consolidated EBITDAR is defined generally as consolidated net income plus (i) income tax expense, (ii) net interest expense, (iii) depreciation and amortization expense, (iv) operating lease cost, (v) restructuring and other non-recurring expenses, and (vi) acquisition-related costs.
20


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Upon the occurrence of an Event of Default under the Global Credit Facility, the lenders may cease making loans, terminate the Global Credit Facility, and declare all amounts outstanding to be immediately due and payable. The Global Credit Facility specifies various events of default (many of which are subject to applicable grace periods), including, among others, the failure to make timely principal, interest, and fee payments or to satisfy the covenants, including the financial covenant described above. Additionally, the Global Credit Facility provides that an Event of Default will occur if Mr. Ralph Lauren, the Company's Executive Chairman and Chief Creative Officer, and entities controlled by the Lauren family fail to maintain a specified minimum percentage of the voting power of the Company's common stock. As of September 30, 2023, 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 Borrowing Facilities
Certain of the Company's subsidiaries in Asia have uncommitted credit facilities with regional branches of JPMorgan Chase in China and South Korea (the "Pan-Asia Credit Facilities"). Additionally, the Company's Japan subsidiary has an uncommitted overdraft facility with Sumitomo Mitsui Banking Corporation (the "Japan Overdraft Facility"). The Pan-Asia Credit Facilities and Japan Overdraft Facility (collectively, the "Pan-Asia Borrowing Facilities") are subject to annual renewal and may be used to fund general working capital needs of the Company's operations in the respective countries. Borrowings under the Pan-Asia Borrowing Facilities are guaranteed by the parent company and are granted at the sole discretion of the respective banks, subject to availability of the banks' funds and satisfaction of certain regulatory requirements. The Pan-Asia Borrowing Facilities do not contain any financial covenants.
A summary of the Company's Pan-Asia Borrowing Facilities by country is as follows:
China Credit Facility — provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to 100 million Chinese Renminbi (approximately $13 million) through April 3, 2024, which is also able to be used to support bank guarantees.
South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 30 billion South Korean Won (approximately $22 million) through October 25, 2024.
Japan Overdraft Facility — provides Ralph Lauren Corporation Japan with an overdraft amount of up to 5 billion Japanese Yen (approximately $34 million) through April 30, 2024.
As of both September 30, 2023 and April 1, 2023, there were no borrowings outstanding under the Pan-Asia Borrowing Facilities.
Refer to Note 11 of the Fiscal 2023 10-K for additional discussion of the terms and conditions of the Company's debt and credit facilities.
10.    Fair Value Measurements
U.S. GAAP prescribes 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:
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.
21


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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:
September 30,
2023
April 1,
2023
 (millions)
Derivative assets(a)
$55.3 $44.5 
Derivative liabilities(a)
0.3 5.7 
(a)Based on Level 2 measurements.
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.
To the extent the Company invests in commercial paper, such investments 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 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 amortized cost in its consolidated balance sheets, which may differ from their respective fair values. The fair values of the Company's 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 amortized cost carrying values.
The following table summarizes the carrying values and the estimated fair values of the Company's debt instruments:
 September 30, 2023April 1, 2023
 
Carrying Value(a)
Fair Value(b)
Carrying Value(a)
Fair Value(b)
 (millions)
$400 million 3.750% Senior Notes$398.7 $385.6 $398.4 $393.6 
$750 million 2.950% Senior Notes740.8 641.6 740.1 677.1 
 
(a)See Note 9 for discussion of the carrying values of the Company's senior notes.
(b)Based on Level 2 measurements.
Unrealized gains or losses resulting from changes in the fair value of the Company's debt instruments 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 their amortized or depreciated cost in its consolidated balance sheet. However, on a periodic basis or whenever
22


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 value 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 and discounted cash flows.
During both the three-month and six-month periods ended October 1, 2022, the Company recorded impairment charges of $0.2 million within SG&A expenses in the consolidated statements of operations to reduce the carrying values of certain property and equipment, net to their estimated fair values of zero. 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, based on historical experience and consideration of current trends, market conditions, and comparable sales, as applicable. No impairment charges were recorded during the three-month and six-month periods ended September 30, 2023.
No impairment charges associated with goodwill or other intangible assets were recorded during either of the six-month periods ended September 30, 2023 or October 1, 2022. The Company performed its annual assessment of the recoverability of goodwill assigned to its reporting units using a quantitative approach as of the beginning of the second quarter of Fiscal 2024. The estimated fair values of the Company's reporting units were determined with the assistance of an independent third-party valuation firm using discounted cash flows and market comparisons. Based on the results of the quantitative impairment assessment, the Company concluded that the fair values of its reporting units significantly exceeded their respective carrying values and were not at risk of impairment. Accordingly, no goodwill impairment charges were recorded.
11.    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 benchmark interest rates. Accordingly, based on its assessment thereof, the Company may use derivative financial instruments to manage and mitigate such risks. The Company does not use derivatives for speculative or trading purposes.
The following table summarizes the Company's outstanding derivative instruments recorded on its consolidated balance sheets as of September 30, 2023 and April 1, 2023:
 Notional AmountsDerivative AssetsDerivative Liabilities
Derivative Instrument(a)
September 30,
2023
April 1,
2023
September 30,
2023
April 1,
2023
September 30,
2023
April 1,
2023
   
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$281.7 $345.1 PP$12.0 PP$1.4 $ AE$5.0 
Net investment hedges(c)
700.0 700.0 ONCA41.8 ONCA42.8   
Total Designated Hedges981.7 1,045.1 53.8 44.2  5.0 
Undesignated Hedges:
FC — Undesignated hedges(d)
211.4 164.8 PP1.5 PP0.3 AE0.3 AE0.7 
Total Hedges$1,193.1 $1,209.9 $55.3 $44.5 $0.3 $5.7 
(a)FC = Forward foreign currency exchange contracts.
(b)PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCA = Other non-current assets.
(c)Includes cross-currency swaps designated as hedges of the Company's net investment in certain foreign operations.
(d)Relates to third-party and intercompany foreign currency-denominated exposures and balances.
23


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company presents the fair values of its derivative assets and liabilities recorded on 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 September 30, 2023 and April 1, 2023 would be adjusted from the current gross presentation as detailed in the following table:
September 30, 2023April 1, 2023
Gross Amounts Presented in the Balance SheetGross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting AgreementsNet
Amount
Gross Amounts Presented in the Balance SheetGross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting AgreementsNet
Amount
(millions)
Derivative assets$55.3 $(0.3)$55.0 $44.5 $(4.5)$40.0 
Derivative liabilities0.3 (0.3) 5.7 (4.5)1.2 
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 and six-month periods ended September 30, 2023 and October 1, 2022:
 Gains (Losses)
Recognized in OCI
 Three Months EndedSix Months Ended
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Designated Hedges:
FC — Cash flow hedges$10.7 $12.2 $16.6 $28.5 
Net investment hedges — effective portion20.1 36.0 17.1 75.7 
Net investment hedges — portion excluded from assessment of hedge effectiveness
(8.4)(0.4)(18.2)11.4 
Total Designated Hedges$22.4 $47.8 $15.5 $115.6 
 Location and Amount of
Gains (Losses) from
Cash Flow Hedges Reclassified from AOCI to Earnings
 Three Months EndedSix Months Ended