RALPH LAUREN CORPORATION

INDEX


			Page
				~~Page~~

PART I. FINANCIAL INFORMATION (Unaudited)
Item 1.		Financial Statements:
		Consolidated Balance Sheets	32
		Consolidated Statements of Operations	43
		Consolidated Statements of Comprehensive Income ~~(Loss)~~	54
		Consolidated Statements of Cash Flows	65
		Consolidated Statements of Equity	6
		Notes to Consolidated Financial Statements	7
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	3934
Item 3.		Quantitative and Qualitative Disclosures about Market Risk	6455
Item 4.		Controls and Procedures	6455

PART II. OTHER INFORMATION
Item 1.		Legal Proceedings	6556
Item 1A.		Risk Factors	6556
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	6656

Item 6.		Exhibits	6757
Signatures			6858

~~EX-12.1~~
~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~
~~EX-32.2~~
~~EX-101~~	~~INSTANCE DOCUMENT~~
~~EX-101~~	~~SCHEMA DOCUMENT~~
~~EX-101~~	~~CALCULATION LINKBASE DOCUMENT~~
~~EX-101~~	~~LABELS LINKBASE DOCUMENT~~
~~EX-101~~	~~PRESENTATION LINKBASE DOCUMENT~~
~~EX-101~~	~~DEFINITION LINKBASE DOCUMENT~~



			21

RALPH LAUREN CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


		December 30, 2017			April 1, 2017				July 2, 2022		April 2, 2022
		(millions) (unaudited)							(millions)
ASSETS	ASSETS							ASSETS
Current assets:								Current assets:
Cash and cash equivalents		$	1,175.7		$	668.3		Cash and cash equivalents	$	1,456.8	$	1,863.8
Short-term investments		862.3			684.7			Short-term investments	320.1		734.6
Accounts receivable, net of allowances of $218.6 million and $214.4 million		295.2			450.2
Accounts receivable, net of allowances of $185.1 million and $214.7 million								Accounts receivable, net of allowances of $185.1 million and $214.7 million	350.4		405.4
Inventories		825.4			791.5			Inventories	1,178.2		977.3
Income tax receivable		69.8			79.4			Income tax receivable	54.8		63.7
Prepaid expenses and other current assets		304.8			280.4			Prepaid expenses and other current assets	217.2		172.5
Total current assets		3,533.2			2,954.5			Total current assets	3,577.5		4,217.3
Property and equipment, net		1,215.9			1,316.0			Property and equipment, net	931.4		969.5
Operating lease right-of-use assets								Operating lease right-of-use assets	1,054.5		1,111.3
Deferred tax assets		133.1			125.9			Deferred tax assets	262.9		303.8
Goodwill		935.0			904.6			Goodwill	886.5		908.7
Intangible assets, net		201.5			219.8			Intangible assets, net	99.0		102.9
Other non-current assets		180.3			131.2			Other non-current assets	139.3		111.2
Total assets		$	6,199.0		$	5,652.0		Total assets	$	6,951.1	$	7,724.7
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Current liabilities:								Current liabilities:

Current portion of long-term debt		$	298.3		$	—		Current portion of long-term debt	$	—	$	499.8
Accounts payable		184.3			147.7			Accounts payable	562.1		448.7
Income tax payable		138.5			29.5
Current income tax payable								Current income tax payable	50.1		53.8
Current operating lease liabilities								Current operating lease liabilities	247.2		262.0
Accrued expenses and other current liabilities		1,089.1			982.7			Accrued expenses and other current liabilities	886.0		991.4
Total current liabilities		1,710.2			1,159.9			Total current liabilities	1,745.4		2,255.7
Long-term debt		290.3			588.2			Long-term debt	1,137.0		1,136.5
Income tax payable		150.8			—
Long-term finance lease liabilities								Long-term finance lease liabilities	331.9		341.6
Long-term operating lease liabilities								Long-term operating lease liabilities	1,075.9		1,132.2
Non-current income tax payable								Non-current income tax payable	98.9		98.9
Non-current liability for unrecognized tax benefits		76.4			62.7			Non-current liability for unrecognized tax benefits	86.5		91.9
Other non-current liabilities		563.8			541.6			Other non-current liabilities	111.4		131.9
Commitments and contingencies (Note 13)								Commitments and contingencies (Note 13)	0		0
Total liabilities		2,791.5			2,352.4			Total liabilities	4,587.0		5,188.7
Equity:								Equity:
Class A common stock, par value $.01 per share; 102.0 million and 101.5 million shares issued; 55.4 million and 55.1 million shares outstanding		1.0			0.9
Class B common stock, par value $.01 per share; 25.9 million shares issued and outstanding		0.3			0.3
Class A common stock, par value $.01 per share; 107.4 million and 106.9 million shares issued; 43.1 million and 45.0 million shares outstanding								Class A common stock, par value $.01 per share; 107.4 million and 106.9 million shares issued; 43.1 million and 45.0 million shares outstanding	1.0		1.0
Class B common stock, par value $.01 per share; 24.9 million shares issued and outstanding								Class B common stock, par value $.01 per share; 24.9 million shares issued and outstanding	0.3		0.3
Additional paid-in-capital		2,365.1			2,308.8			Additional paid-in-capital	2,767.0		2,748.8
Retained earnings		5,751.5			5,751.9			Retained earnings	6,347.3		6,274.9
Treasury stock, Class A, at cost; 46.6 million and 46.4 million shares		(4,579.8		)	(4,563.9		)
Treasury stock, Class A, at cost; 64.3 million and 61.9 million shares								Treasury stock, Class A, at cost; 64.3 million and 61.9 million shares	(6,543.4)		(6,308.7)
Accumulated other comprehensive loss		(130.6		)	(198.4		)	Accumulated other comprehensive loss	(208.1)		(180.3)
Total equity		3,407.5			3,299.6			Total equity	2,364.1		2,536.0
Total liabilities and equity		$	6,199.0		$	5,652.0		Total liabilities and equity	$	6,951.1	$	7,724.7

See accompanying notes.



			32

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Nine Months Ended							Three Months Ended
	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016					July 2, 2022		June 26, 2021
	(millions, except per share data) (unaudited)														(millions, except per share data)
Net revenues	$	1,641.8		$	1,714.6		$	4,653.1		$	5,087.4		Net revenues		$	1,490.6	$	1,376.3
Cost of goods sold^(a)	(645.6		)	(731.4		)	(1,809.9		)	(2,255.4		)
Cost of goods sold													Cost of goods sold		(489.2)		(408.2)
Gross profit	996.2			983.2			2,843.2			2,832.0			Gross profit		1,001.4		968.1
Selling, general, and administrative expenses^(a)	(773.8		)	(771.9		)	(2,248.9		)	(2,389.9		)
Amortization of intangible assets	(6.0		)	(6.0		)	(18.0		)	(18.1		)
Selling, general, and administrative expenses													Selling, general, and administrative expenses		(820.6)		(728.2)
Impairment of assets	(3.9		)	(10.3		)	(24.8		)	(56.7		)	Impairment of assets		—		(18.6)
Restructuring and other charges^(a)	(23.3		)	(66.7		)	(78.7		)	(193.9		)
Restructuring and other charges, net													Restructuring and other charges, net		(5.6)		(0.7)
Total other operating expenses, net	(807.0		)	(854.9		)	(2,370.4		)	(2,658.6		)	Total other operating expenses, net		(826.2)		(747.5)
Operating income	189.2			128.3			472.8			173.4			Operating income		175.2		220.6
Foreign currency gains (losses)	0.6			(2.7		)	2.4			0.8
Interest expense	(4.8		)	(3.6		)	(14.4		)	(11.1		)	Interest expense		(11.8)		(13.3)
Interest and other income, net	2.8			2.5			7.1			5.7
Equity in losses of equity-method investees	(1.5		)	(1.4		)	(3.6		)	(5.2		)
Interest income													Interest income		3.6		1.8
Other income (expense), net													Other income (expense), net		(4.8)		0.9
Income before income taxes	186.3			123.1			464.3			163.6			Income before income taxes		162.2		210.0
Income tax provision	(268.1		)	(41.8		)	(342.8		)	(58.9		)	Income tax provision		(38.8)		(45.3)
Net income (loss)	$	(81.8	)	$	81.3		$	121.5		$	104.7
Net income (loss) per common share:
Net income													Net income		$	123.4	$	164.7
Net income per common share:													Net income per common share:
Basic	$	(1.00	)	$	0.98		$	1.49		$	1.26		Basic		$	1.76	$	2.23
Diluted	$	(1.00	)	$	0.98		$	1.47		$	1.25		Diluted		$	1.73	$	2.18
Weighted average common shares outstanding:
Weighted-average common shares outstanding:													Weighted-average common shares outstanding:
Basic	81.7			82.6			81.7			82.9			Basic		70.1		73.8
Diluted	81.7			83.3			82.5			83.6			Diluted		71.5		75.4
Dividends declared per share	$	0.50		$	0.50		$	1.50		$	1.50		Dividends declared per share		$	0.75	$	0.6875
^(a) Includes total depreciation expense of:	$	(66.7	)	$	(71.9	)	$	(201.4	)	$	(213.8	)

See accompanying notes.



			43

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)


														Three Months Ended
	Three Months Ended						Nine Months Ended								July 2, 2022		June 26, 2021
	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016					(millions)
	(millions) (unaudited)
Net income (loss)	$	(81.8	)	$	81.3		$	121.5		$	104.7
Net income													Net income		$	123.4	$	164.7
Other comprehensive income (loss), net of tax:													Other comprehensive income (loss), net of tax:
Foreign currency translation gains (losses)	3.0			(88.8		)	90.7			(86.7		)	Foreign currency translation gains (losses)		(39.3)		10.6
Net gains (losses) on cash flow hedges	2.3			45.0			(22.0		)	43.2			Net gains (losses) on cash flow hedges		11.6		(1.0)
Net gains (losses) on defined benefit plans	(0.5		)	1.1			(0.9		)	2.0
Net losses on defined benefit plans													Net losses on defined benefit plans		(0.1)		(0.1)
Other comprehensive income (loss), net of tax	4.8			(42.7		)	67.8			(41.5		)	Other comprehensive income (loss), net of tax		(27.8)		9.5
Total comprehensive income (loss)	$	(77.0	)	$	38.6		$	189.3		$	63.2
Total comprehensive income													Total comprehensive income		$	95.6	$	174.2

See accompanying notes.



			54

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended							Three Months Ended
	December 30, 2017			December 31, 2016				July 2, 2022		June 26, 2021
	(millions) (unaudited)							(millions)
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	121.5		$	104.7		Net income	$	123.4	$	164.7
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	219.4			231.9			Depreciation and amortization expense	54.8		57.2
Deferred income tax expense (benefit)	(8.0		)	9.8
Equity in losses of equity-method investees	3.6			5.2
Deferred income tax expense							Deferred income tax expense	26.4		3.8

Non-cash stock-based compensation expense	56.3			46.4			Non-cash stock-based compensation expense	18.2		18.4
Non-cash impairment of assets	24.8			56.7			Non-cash impairment of assets	—		18.6
Non-cash restructuring-related inventory charges	1.3			149.4

Bad debt expense reversals							Bad debt expense reversals	(1.9)		(1.0)
Other non-cash charges	6.7			18.1			Other non-cash charges	5.3		1.1
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable	158.9			214.9			Accounts receivable	43.9		81.6
Inventories	(11.6		)	(36.5		)	Inventories	(226.1)		(67.7)
Prepaid expenses and other current assets	(4.2		)	(72.8		)	Prepaid expenses and other current assets	(70.5)		(20.3)
Accounts payable and accrued liabilities	105.0			98.4			Accounts payable and accrued liabilities	52.2		5.3
Income tax receivables and payables	279.7			(2.6		)	Income tax receivables and payables	8.7		4.7
Deferred income	3.8			(15.5		)

Operating lease right-of-use assets and liabilities, net							Operating lease right-of-use assets and liabilities, net	(11.4)		(11.2)
Other balance sheet changes	(6.1		)	42.6			Other balance sheet changes	22.3		(7.6)
Net cash provided by operating activities	951.1			850.7			Net cash provided by operating activities	45.3		247.6
Cash flows from investing activities:							Cash flows from investing activities:
Capital expenditures	(123.0		)	(225.5		)	Capital expenditures	(39.4)		(28.2)
Purchases of investments	(985.5		)	(460.5		)	Purchases of investments	(141.0)		(368.3)
Proceeds from sales and maturities of investments	795.3			704.8			Proceeds from sales and maturities of investments	552.0		197.7
Acquisitions and ventures	(4.6		)	(2.5		)

Other investing activities							Other investing activities	(6.0)		(0.6)
Net cash provided by (used in) investing activities	(317.8		)	16.3			Net cash provided by (used in) investing activities	365.6		(199.4)
Cash flows from financing activities:							Cash flows from financing activities:
Proceeds from issuance of short-term debt	—			3,735.2
Repayments of short-term debt	—			(3,851.3		)
Payments of capital lease obligations	(21.2		)	(19.4		)

Repayments of long-term debt							Repayments of long-term debt	(500.0)		—
Payments of finance lease obligations							Payments of finance lease obligations	(5.8)		(5.5)
Payments of dividends	(121.7		)	(123.7		)	Payments of dividends	(48.1)		—
Repurchases of common stock, including shares surrendered for tax withholdings	(15.9		)	(115.0		)	Repurchases of common stock, including shares surrendered for tax withholdings	(234.7)		(28.8)
Proceeds from exercise of stock options	0.1			4.7

Net cash used in financing activities	(158.7		)	(369.5		)	Net cash used in financing activities	(788.6)		(34.3)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	36.8			(29.0		)	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(30.0)		3.3
Net increase in cash, cash equivalents, and restricted cash	511.4			468.5
Net increase (decrease) in cash, cash equivalents, and restricted cash							Net increase (decrease) in cash, cash equivalents, and restricted cash	(407.7)		17.2
Cash, cash equivalents, and restricted cash at beginning of period	711.8			502.1			Cash, cash equivalents, and restricted cash at beginning of period	1,872.0		2,588.0
Cash, cash equivalents, and restricted cash at end of period	$	1,223.2		$	970.6		Cash, cash equivalents, and restricted cash at end of period	$	1,464.3	$	2,605.2

See accompanying notes.


			5

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Three Months Ended July 2, 2022
	Common Stock(a)			Additional Paid-in Capital				Treasury Stock at Cost
						Retained Earnings							Total Equity
	Shares	Amount						Shares	Amount		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 income						123.4
Other comprehensive loss											(27.8)
Total comprehensive income													95.6
Dividends declared						(51.0)							(51.0)
Repurchases of common stock								2.4	(234.7)				(234.7)
Stock-based compensation				18.2									18.2
Shares issued pursuant to stock-based compensation plans	0.5	—		—									—

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

	Three Months Ended June 26, 2021
	Common Stock(a)			Additional Paid-in Capital				Treasury Stock at Cost
						Retained Earnings							Total Equity
	Shares	Amount						Shares	Amount		AOCI(b)
	(millions)
Balance at March 27, 2021	131.0	$	1.3	$	2,667.1	$	5,872.9	57.8	$	(5,816.1)	$	(120.8)	$	2,604.4
Comprehensive income:
Net income						164.7
Other comprehensive income											9.5
Total comprehensive income													174.2
Dividends declared						(50.5)							(50.5)
Repurchases of common stock								0.2	(28.8)				(28.8)
Stock-based compensation				18.4									18.4
Shares issued pursuant to stock-based compensation plans	0.6	—		—									—

Balance at June 26, 2021	131.6	$	1.3	$	2,685.5	$	5,987.1	58.0	$	(5,844.9)	$	(111.3)	$	2,717.7

(a)Includes Class A and Class B common stock.

(b)Accumulated other comprehensive income (loss).

See accompanying notes.


			6

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share data and where otherwise indicated)

(Unaudited)


1.	~~Description of Business~~

1. 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, fragrances, and ~~other licensed product categories.~~hospitality. RLC's long-standing reputation and distinctive image have been developed across ~~an expanding number~~a wide range of products, brands, ~~sales~~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, ~~Chaps,~~ and ~~Club Monaco,~~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 ~~channels~~channel of distribution ~~(wholesale, retail,~~(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's wholesale sales are made principally to major department stores and specialty stores around the world. The~~ Company ~~also~~ sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and ~~e-commerce~~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 ~~unrelated~~ third parties for specified periods the right to ~~operate retail stores and/or to use~~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~~3 reportable segments: North America, Europe, and Asia. In addition to these reportable segments, the Company also has other non-reportable segments. See Note 17 for further discussion of the Company's segment reporting structure.


2.	~~Basis of Presentation~~

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, 2017~~2, 2022 (the "Fiscal ~~2017~~2022 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.

Additionally, as discussed in Note 8, the Company completed the sale of its Club Monaco business at the end of its first quarter of Fiscal 2022 (as defined below) on June 26, 2021. As a result, assets and liabilities related to the Club Monaco business were deconsolidated from the consolidated statement of financial position effective June 26, 2021, with Club Monaco's operating results included in the consolidated statements of income (loss), comprehensive income (loss), and cash flows through the end of the first quarter of Fiscal 2022. Financial statements issued prior to this transaction were not affected.


			7

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fiscal Periods

The Company utilizes a 52-53 week fiscal year ending on the Saturday ~~closest to~~immediately before or after March 31. As such, fiscal year ~~2018~~2023 will end on ~~March 31, 2018~~April 1, 2023 and will be a 52-week period ("Fiscal ~~2018~~"2023"). Fiscal year ~~2017~~2022 ended on April ~~1, 2017~~2, 2022 and was ~~also~~ a ~~52-week~~53-week period ("Fiscal ~~2017"~~2022"). The ~~third~~first quarter of Fiscal ~~2018~~2023 ended on ~~December 30, 2017~~July 2, 2022 and was a 13-week period. The ~~third~~first quarter of Fiscal ~~2017~~2022 ended on ~~December 31, 2016~~June 26, 2021 and was also a 13-week period.



	7

~~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 ~~estimated~~ forfeiture rates; and reserves for restructuring ~~activity; and accounting for business combinations,~~activity, among others.

Reclassifications

Certain reclassifications have been made to the prior ~~period's~~periods' financial information in order to conform to the current period's ~~presentation, including the realignment of the Company's segment reporting structure, as further described in Note 17.~~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 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 ~~our~~its retail ~~business.~~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 nine-month periods~~period ended ~~December 30, 2017~~July 2, 2022 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal ~~2018~~.2023.

COVID-19 Pandemic

Beginning in the fourth quarter of the Company's fiscal year ended March 28, 2020, a novel strain of coronavirus commonly referred to as COVID-19 emerged and spread rapidly across the globe, including throughout all major geographies in which the Company operates, resulting in adverse economic conditions and widespread business disruptions. Since then, governments worldwide have periodically imposed varying degrees of preventative and protective actions, such as temporary travel bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus.

As a result of the COVID-19 pandemic, the Company has experienced varying degrees of business disruptions since its beginning, including periods of closure of its stores and corporate-related facilities, as have the Company's wholesale customers, licensing partners, and suppliers. Such disruptions continued throughout Fiscal 2022 in certain regions, although to a lesser extent than the widespread significant disruptions experienced during the Company's fiscal year ended March 27, 2021 ("Fiscal 2021"), and have since extended into the first quarter of Fiscal 2023, most notably in Asia where approximately 50% of the Company's stores in China experienced closures for a significant portion of the quarter. Further, throughout the course of the pandemic, the majority of the Company's stores that were able to remain open have periodically been subject to limited operating hours and/or customer capacity levels in accordance with local health guidelines, with traffic remaining challenged. However, the Company's digital commerce operations have grown significantly from pre-pandemic levels, due in part to its investments and enhanced capabilities, as well as changes in consumer shopping preferences.


3.			~~Summary of Significant Accounting Policies~~8

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The COVID-19 pandemic also continues to adversely impact the Company's distribution, logistic, and sourcing partners, including temporary factory closures, labor shortages, vessel, container and other transportation shortages, and port congestion. Such disruptions have reduced the availability of inventory, delayed timing of inventory receipts, and resulted in increased costs for both the purchase and transportation of such inventory.

Despite the introduction of COVID-19 vaccines, the pandemic remains volatile and continues to evolve, with resurgences and outbreaks occurring in various parts of the world, including those resulting from variants of the virus. Accordingly, the Company cannot predict for how long and to what extent the pandemic will continue to impact its business operations or the overall global economy. The Company will continue to assess its operations location-by-location, considering the guidance of local governments and global health organizations.

3. Summary of Significant Accounting Policies

Revenue Recognition

~~Revenue is recognized~~The Company recognizes revenue across all ~~segments~~channels of the business when ~~there~~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 ~~persuasive evidence of~~subject to an ~~arrangement, delivery has occurred, the price has been fixed or is determinable,~~overall constraint that a significant revenue reversal will not occur in future periods. Sales and ~~collectability is reasonably assured.~~other related taxes collected from customers and remitted to government authorities are excluded from revenue.

Revenue ~~within~~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.

Revenue from the Company's wholesale business is generally recognized upon shipment of products, at ~~the time~~which point title passes and risk of loss is transferred to ~~customers.~~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 ~~costs~~amounts have not differed materially from actual results.

~~Retail store and concession-based shop-within-shop revenue~~Revenue from the Company's licensing arrangements is recognized ~~net~~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 ~~estimated returns at the~~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 sale to consumers. E-commerce revenue from sales of products ordered through the Company's e-commerce sites and third-party digital partner e-commerce sites is recognized upon delivery of the shipment to its customers. Such revenue is also reduced by an estimate of returns.

~~Gift cards issued by the Company are~~receipt, may be recorded as a liability until ~~they are redeemed, at which point revenue is recognized.~~recognized as revenue. The Company recognizes ~~income~~revenue for ~~unredeemed gift cards when~~sales-based royalty arrangements (including those for which the ~~likelihood~~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 ~~redemption by a customer is remote~~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 ~~determines that it does not have a legal obligation~~is entitled to ~~remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property.~~

receive



			89

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in exchange for providing access to its trademarks. As of July 2, 2022, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:

~~Revenue from licensing arrangements is recognized when~~


	Contractually-Guaranteed Minimum Royalties(a)
	(millions)
Remainder of Fiscal 2023	$	78.4
Fiscal 2024	81.4
Fiscal 2025	44.9
Fiscal 2026	25.7
Fiscal 2027	21.9
Fiscal 2028 and thereafter	9.2
Total	$	261.5

(a)Amounts presented do not contemplate potential contract renewals or royalties earned in ~~accordance with the terms~~excess of the ~~underlying agreements, generally based upon~~contractually-guaranteed minimums.

Disaggregated Net Revenues

The following table disaggregates the ~~higher~~Company's net revenues into categories that depict how the nature, amount, timing, and uncertainty of ~~(i) contractually guaranteed minimum royalty levels or (ii) actual sales~~revenues and ~~royalty data, or estimates thereof, received~~cash flows are affected by economic factors for the fiscal periods presented:


	Three Months Ended
	July 2, 2022										June 26, 2021
	North America		Europe		Asia		Other		Total		North America		Europe		Asia		Other		Total
	(millions)
Sales Channel(a):
Retail	$	437.8	$	215.9	$	313.9	$	—	$	967.6	$	412.2	$	170.8	$	272.8	$	26.8	$	882.6
Wholesale	262.9		199.7		20.2		—		482.8		249.9		184.1		15.4		5.0		454.4
Licensing	—		—		—		40.2		40.2		—		—		—		39.3		39.3
Total	$	700.7	$	415.6	$	334.1	$	40.2	$	1,490.6	$	662.1	$	354.9	$	288.2	$	71.1	$	1,376.3

(a)Net revenues from the Company's ~~licensees.~~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 licensees. The ~~Company accounts for sales taxes~~Company's deferred income balances were $19.6 million and $16.6 million as of July 2, 2022 and April 2, 2022, respectively, and were primarily recorded within accrued expenses and other ~~related taxes on a net basis, excluding such taxes from revenue.~~current liabilities within the consolidated balance sheets. The majority of the deferred income balance as of July 2, 2022 is expected to be recognized as revenue within the next twelve months.

Shipping and Handling Costs

~~The costs~~Costs associated with shipping goods to 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. ~~The costs~~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.


			10

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of shipping and handling costs ~~recognized during~~for the ~~three-month and nine-month~~fiscal periods ~~ended December 30, 2017 and December 31, 2016~~presented is as follows:


	Three Months Ended				Nine Months Ended					Three Months Ended
	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016				July 2, 2022		June 26, 2021
	(millions)										(millions)
Shipping costs	$	11.7	$	12.8	$	28.4	$	32.2	Shipping costs		$	17.3	$	14.8
Handling costs	39.7		44.1		115.3		127.8		Handling costs		37.0		34.4

Net Income ~~(Loss)~~ per Common Share

Basic net income ~~(loss)~~ per common share is computed by dividing net income ~~(loss)~~ 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 ~~(loss)~~ per common share adjusts basic net income ~~(loss)~~ per common share for the dilutive effects of outstanding ~~stock options,~~ restricted stock units ("RSUs"), stock options, and any other potentially dilutive instruments, only infor the periods in which such effects are dilutive.

The weighted-average number of common shares outstanding used to calculate basic net income ~~(loss)~~ per common share is reconciled to shares used to calculate diluted net income ~~(loss)~~ per common share as follows:


	Three Months Ended
		July 2, 2022	June 26, 2021
		(millions)
Basic shares		70.1	73.8
Dilutive effect of RSUs and stock options		1.4	1.6
Diluted shares		71.5	75.4

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Basic shares 81.7
82.6
81.7
82.9
Dilutive effect of stock options and RSUs —
^(a)
0.7
0.8
0.7
Diluted shares 81.7
83.3
82.5
83.6


^(a)	Incremental shares of 0.9 million attributable to outstanding stock options and RSUs were excluded from the computation of diluted shares for the three months ended December 30, 2017, as such shares would not be dilutive as a result of the net loss incurred during the period.

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 (loss) per common share. In addition, theThe Company has outstanding performance-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance conditions ~~(and applicable market condition modifiers, if any)~~ (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. In addition, options to purchase shares of the Company's Class A common stock at an exercise price greater than the average market price of such common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. As of ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016~~,June 26, 2021, there were ~~2.0~~0.1 million and



	9

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~2.2~~ 0.4 million,, respectively, of additional shares issuable contingent upon vesting of performance-based RSUs and upon exercise of anti-dilutive stock 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 certain defined credit criteria. Payment is generally due within 30 to 120 days and does not involve a significant financing component. Accounts receivable isare recorded at ~~carrying value,~~amortized cost, which approximates fair value, and isare 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.


			11

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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:~~as follows:


	Three Months Ended						Nine Months Ended							Three Months Ended
	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016					July 2, 2022		June 26, 2021
	(millions)														(millions)
Beginning reserve balance	$	231.5		$	228.9		$	202.8		$	239.7		Beginning reserve balance		$	180.7	$	173.7
Amount charged against revenue to increase reserve	125.3			151.8			418.6			479.6			Amount charged against revenue to increase reserve		86.7		87.1
Amount credited against customer accounts to decrease reserve	(155.6		)	(171.8		)	(427.8		)	(511.1		)	Amount credited against customer accounts to decrease reserve		(103.3)		(83.2)
Foreign currency translation	0.4			(7.8		)	8.0			(7.1		)	Foreign currency translation		(6.7)		1.3
Ending reserve balance	$	201.6		$	201.1		$	201.6		$	201.1		Ending reserve balance		$	157.4	$	178.9

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 antheir ability to withstand prolonged periods of adverse economic conditions, and evaluation of the impact of current and forecasted economic and market conditions over the related asset's contractual life, among other factors.

A rollforward of the activity in the Company's allowance for doubtful accounts is presented ~~below:~~as follows:

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Beginning reserve balance $ 17.3
$ 15.8
$ 11.6
$ 14.5
Amount recorded to expense to increase reserve^(a)
0.1
0.1
6.4
6.1
Amount written-off against customer accounts to decrease reserve (0.4 ) (3.3 ) (1.8 ) (7.9 )
Foreign currency translation —
(0.7 ) 0.8
(0.8 )
Ending reserve balance $ 17.0
$ 11.9
$ 17.0
$ 11.9


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Beginning reserve balance		$	34.0	$	40.1
Amount recorded to expense to decrease reserve(a)		(1.9)		(1.0)
Amount written-off against customer accounts to decrease reserve		(3.3)		(0.7)
Foreign currency translation		(1.1)		0.2
Ending reserve balance		$	27.7	$	38.6


^(a)	~~Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.~~



			10

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

(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 ~~and~~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~~3 key wholesale customers that generate significant sales volume. During Fiscal ~~2017~~,2022, the Company's sales to its 3 largest wholesale ~~customer, Macy's, Inc. ("Macy's"),~~customers accounted for approximately ~~10%~~ ~~of total net revenues, and the Company's sales to its~~ ~~three~~ ~~largest wholesale customers (including Macy's) accounted for approximately~~ ~~21%~~16% of total net revenues. Substantially all of the Company's sales to its ~~three~~3 largest wholesale customers related to its North America segment. As of ~~December 30, 2017~~,July 2, 2022, these ~~three~~3 key wholesale customers ~~constituted~~accounted for approximately ~~27%~~30% of ~~the Company's~~ 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, ~~and~~ specialty ~~retail stores. The Company also holds retail inventory that is sold in its own~~ stores, and ~~e-commerce sites directly to consumers.~~third-party digital partners. Substantially all of the Company's inventories ~~are comprised~~consist of finished goods, which are stated at the lower of cost or estimated realizable value, with cost ~~primarily~~ determined on a weighted-average cost basis. Inventory held by the Company totaled ~~$825.4 million, $791.5~~$1.178 billion, $977.3 million, and ~~$984.1~~$803.0 million as of ~~December 30, 2017,~~July 2, 2022, April ~~1, 2017,~~2, 2022, and ~~December 31, 2016,~~June 26, 2021, respectively.


			12

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivative Financial Instruments

The Company records ~~all~~ derivative financial instruments on its consolidated balance sheets at fair value. ~~For~~Changes in the fair value of derivative instruments that are designated and qualify for hedge accounting ~~the effective portion of changes in their fair value is~~are either (i) offset through earnings 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~~instrument is ~~being used to hedge~~hedging 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 ~~at reducing~~in offsetting the risk associated with the ~~exposure being hedged.~~related exposure. 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 ~~prospectively and retrospectively~~ 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 the change~~evaluate how changes in the fair value of the derivative instrument are expected to offset changes in the ~~change in~~ 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 ~~and documented~~ by the Company on at least a quarterly basis.

~~As a result of~~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 ~~this~~such counterparty credit risk, the ~~Company has a~~Company's policy ofis to only ~~entering~~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 ~~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 associated with its derivative instruments.~~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.~~



	11

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

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

~~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.~~

sold.

~~Intercompany Royalties/Settlement of Foreign Currency Balances~~ ~~— recognized within foreign currency gains (losses) during the period that the hedged balance is remeasured through earnings, generally through its settlement when the related payment occurs.~~

~~To the extent that~~If a derivative instrument ~~designated as a cash flow~~is dedesignated or if hedge accounting is discontinued because the instrument is not considered effective, any change in its fair value relating to such ineffectiveness is immediately recognized in earnings within foreign currency gains (losses). If it is determined that a derivative instrument has not been highly effective, and will continue notexpected to be highly effective in hedging the designated exposure, ~~hedge accounting is discontinued and~~any further gains (losses) are ~~immediately~~ recognized in earnings each period within ~~foreign currency gains (losses).~~other income (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 related forecasted transaction is ~~no longer~~ probable of not occurring, in which case the accumulated amount is immediately recognized within other income (expense), net.

Hedges of Net Investments in ~~earnings within foreign currency gains (losses).~~

~~Hedge of a Net Investment in a~~ Foreign ~~Operation~~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, to~~adjustments. In assessing the ~~extent they are effective as a hedge. To assess~~ 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. ~~Accordingly,~~Under this method, changes in the fair value of the hedging instrument other than those due to changes in the spot rate are ~~excluded from the assessment of hedge effectiveness and are~~initially recorded in ~~the consolidated statement of operations with any other ineffectiveness~~AOCI as a translation adjustment and are


			13

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

amortized into earnings as interest ~~expense. Amounts~~expense using a systematic and rational method over the instrument's term. Changes in fair value associated with the effective portion ~~of net investment hedges~~(i.e., those due to changes in the spot rate) are recorded in AOCI as a translation adjustment and are released ~~from AOCI~~ 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. Hedge ineffectiveness is recorded in earnings to the extent that the change in the fair value of the hedged item does not offset the change in the fair value of the hedging instrument.

Undesignated Hedges

~~All of the Company's~~The Company uses undesignated hedges ~~are entered into~~primarily to hedge ~~specific economic risks, particularly~~ foreign currency exchange rate risk related to ~~foreign currency-denominated balances.~~third-party and intercompany balances and exposures. Changes in the fair ~~value~~values of ~~undesignated derivative~~such instruments are ~~immediately~~ recognized in earnings each period within ~~foreign currency gains (losses).~~other income (expense), net.

See Note 12 for further discussion of the Company's derivative financial instruments.

Refer to Note 3 of the Fiscal ~~2017~~2022 10-K for a summary of all of the Company's significant accounting policies.

4. Recently Issued Accounting Standards



	12

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


4.	~~Recently Issued Accounting Standards~~

~~Targeted Improvements to Accounting for Hedging Activities~~Reference Rate Reform

In ~~August 2017,~~March 2020 and January 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. ~~2017-12, "Targeted Improvements~~2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04") and ASU No. 2021-01, "Reference Rate Reform: Scope" ("ASU 2021-01"), respectively. Together, ASU 2020-04 and ASU 2021-01 provide temporary optional expedients and exceptions for the application of U.S. GAAP, if certain criteria are met, to ~~Accounting for Hedging Activities" ("ASU 2017-12"). ASU 2017-12 amends existing hedge accounting guidance~~contract modifications, hedging relationships, and other arrangements that are expected to be impacted by ~~better aligning an entity's financial reporting with its risk management activities and by simplifying its application. Among its provisions, ASU 2017-12 eliminates~~ the ~~requirement to separately measure and report ineffectiveness for instruments that qualify for hedge accounting, and generally requires that the entire change in fair value of~~global transition away from certain reference rates, such ~~instruments ultimately be presented in the same income statement line~~ as the ~~respective hedged item. Additionally,~~London Interbank Offered Rate ("LIBOR") and other interbank offered rates, towards new reference rates, such as the ~~updated~~Secured Overnight Financing Rate ("SOFR"). The guidance ~~reduces complexity~~ in ~~the accounting for certain~~ASU 2020-04 and ASU 2021-01 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships eases documentation and effectiveness assessment requirements, broadens the scope of risk components eligible to qualify for hedge accounting, and modifies certain disclosure requirements. ASU 2017-12 is effective for the Company beginning in its fiscal year ending March 28, 2020 ("Fiscal 2020"), with early adoption permitted, and is to be applied using a modified retrospective transition approach, except for the amended presentation and disclosure requirements, which are to be applied prospectively.through December 31, 2022. The Company is ~~currently~~ evaluating the impact that ~~ASU 2017-12~~the guidance will have on its consolidated financial statements and related ~~disclosures.~~disclosures, if adopted, and currently does not expect that it would be material.

~~Restricted Cash~~

~~In November 2016,~~5. Property and Equipment

Property and equipment, net consists of the ~~FASB issued ASU No. 2016-18, "Restricted Cash"~~following:


	July 2, 2022		April 2, 2022
	(millions)
Land and improvements	$	15.3	$	15.3
Buildings and improvements	469.2		480.4
Furniture and fixtures	577.8		589.6
Machinery and equipment	375.2		375.7
Capitalized software	532.1		532.1
Leasehold improvements	1,156.0		1,170.1
Construction in progress	49.8		55.4
	3,175.4		3,218.6
Less: accumulated depreciation	(2,244.0)		(2,249.1)
Property and equipment, net	$	931.4	$	969.5

Property and equipment, net includes finance lease right-of-use ("~~ASU 2016-18"~~ROU")~~. ASU 2016-18 requires that~~ assets, which are reflected in the ~~statement of cash flows explain the change~~table above based on their nature.

Depreciation expense was $51.4 million and $52.7 million during the ~~period~~three-month periods ended July 2, 2022, and June 26, 2021, respectively, and was recorded primarily within SG&A expenses in the total of cash, cash equivalents, and restricted cash. Accordingly, restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on the statement of cash flows. The Company early-adopted ASU 2016-18 during the first quarter of Fiscal 2018 and applied its provisions retrospectively. Other than the change in presentation within the statement of cash flows, the adoption of ASU 2016-18 did not have an impact on the Company's consolidated financial statements. See Note 18 for a reconciliation of cash, cash equivalents, and restricted cash from the consolidated balance sheets to the consolidated statements of ~~cash flows.~~

~~Improvements to Employee Share-Based Payment Accounting~~

In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). ASU 2016-09 simplifies several aspects related to the accounting for and financial statement presentation of share-based payments, including the accounting for income taxes upon award settlement and forfeitures, and the classification of excess tax benefits and shares surrendered for tax withholdings in the statement of cash flows.

The Company adopted ASU 2016-09 during the first quarter of Fiscal 2018. Among its various provisions, ASU 2016-09 impacts the accounting for income taxes upon award settlement by requiring that all excess tax benefits and shortfalls be reflected in the income tax benefit (provision) in the statement of operations in the period that they are realized. This reflects a change from previous practice, which generally required that such activity be recorded in equity as additional paid-in-capital. This change, which was applied prospectively in the Company's consolidated financial statements, increased the Company's income tax provision by $0.5 million and $16.0 million for the three-month and nine-month periods ended December 30, 2017, respectively. Future impacts of this guidance on the Company's income tax benefit (provision) will depend largely on unpredictable events and other factors, including the timing of both employee stock option exercises and cancellations, if any, and the value realized upon vesting or exercise of shares compared to the grant date fair value of those shares, and will likely result in increased volatility. This increase in volatility is expected to be more pronounced during the first half of the Company's fiscal year due to the timing of annual stock-based compensation award vestings and stock option expirations.

Additionally, ASU 2016-09 changes the classification of excess tax benefits presented in the Company's consolidated statements of cash flows from a financing activity to an operating activity. The Company applied this change in classification on a retrospective basis by reclassifying $0.3 million of excess tax benefits from cash flows from financing activities to cash flows from operating activities for the nine months ended December 31, 2016.

Lastly, as permitted, the Company has elected to continue to estimate the impact of expected forfeitures when determining the amount of compensation cost to be recognized each period, as opposed to reflecting the impact of forfeitures only as they occur.

operations.



			1314

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Other Assets and Liabilities

~~The remaining provisions of ASU 2016-09 did not have a material impact on the Company's consolidated financial statements.~~

~~Leases~~

~~In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). ASU 2016-02 requires that a lessee's rights~~Prepaid expenses and ~~fixed payment obligations under most leases be recognized as right-of-use~~other current assets and lease liabilities on the consolidated balance sheet. ASU 2016-02 retains a dual model for classifying leases as either financing or operating, which governs the pattern of expense recognition to be reflected in the consolidated statement of operations. Variable lease payments based on performance, such as percentage-of-sales-based payments, will not be included in the measurement of right-of-use assets and lease liabilities. Rather, consistent with current practice, such amounts will be recognized as an expense in the period incurred. ASU 2016-02 is effective for the Company beginning in Fiscal 2020, with early adoption permitted, and is to be adopted using a modified retrospective transition approach, which requires applicationconsist of the ~~guidance at the beginning~~following:


	July 2, 2022		April 2, 2022
	(millions)

Non-trade receivables	$	41.8	$	41.4
Other taxes receivable	32.1		26.2
Prepaid software maintenance	21.2		16.4
Derivative financial instruments	20.3		8.7
Prepaid advertising and marketing	19.5		7.9
Prepaid occupancy expense	11.1		6.0
Prepaid insurance	8.2		3.0
Inventory return asset	7.8		8.3
Prepaid logistic services	6.3		6.6
Tenant allowances receivable	5.2		6.1
Cloud computing arrangement implementation costs	4.9		4.0

Other prepaid expenses and current assets	38.8		37.9
Total prepaid expenses and other current assets	$	217.2	$	172.5

Other non-current assets consist of the earliest comparative period presented. However, the FASB recently proposed an optional transition alternative, currently subject to approval, which would allow for application of the guidance at the beginning of the period in which it is adopted, rather than at the beginning of the earliest comparative period presented.following:

The Company is currently in the process of evaluating the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures. The Company's assessment efforts to date have included reviewing the standard's provisions and beginning to gather information to evaluate the landscape of its real estate, personal property, and other arrangements that may meet the definition of a lease. Based on these efforts, the Company currently anticipates that the adoption of ASU 2016-02 will result in a significant increase to its long-term assets and liabilities as, at a minimum, most of its current operating lease commitments will be subject to balance sheet recognition. The standard is also expected to result in enhanced quantitative and qualitative lease-related disclosures. Recognition of lease expense in the consolidated statement of operations is not anticipated to significantly change.

~~Revenue from Contracts with Customers~~

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single, comprehensive accounting model for revenues arising from contracts with customers that will supersede most existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue, representing the amount to which an entity expects to be entitled in exchange for providing promised goods or services (i.e., performance obligations), is recognized upon control of promised goods or services transferring to a customer. ASU 2014-09 also requires enhanced qualitative and quantitative revenue-related disclosures. Since its original issuance, the FASB has issued several additional related ASUs to address implementation concerns and further amend and clarify certain guidance within ASU 2014-09. ASU 2014-09 may be adopted on a full retrospective basis and applied to all prior periods presented, or on a modified retrospective basis through a cumulative adjustment recorded to opening retained earnings in the year of initial application.

The Company is currently in the process of evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company's assessment efforts to date have included reviewing current accounting policies, processes, and arrangements to identify potential differences that could arise from the application of ASU 2014-09. Based on these efforts, the Company currently anticipates that the performance obligations underlying its core revenue streams (i.e., its retail and wholesale businesses), and the timing of recognition thereof, will remain substantially unchanged. Revenues for these businesses are generated through the sale of finished products, and will continue to be recognized at the point in time when merchandise is transferred to the customer and in an amount that considers the impacts of estimated returns, end-of-season markdowns, and other allowances that are variable in nature. For its licensing business, which has historically comprised approximately 2% of total revenues, the Company will continue to recognize the related revenue, including any contractually guaranteed minimum royalty amounts, over time consistent with current practice.

The Company will adopt ASU 2014-09 in its fiscal year ending March 30, 2019 ("Fiscal 2019") and anticipates doing so using the modified retrospective method through a cumulative adjustment recorded to the opening Fiscal 2019 retained earnings balance.


	July 2, 2022		April 2, 2022
	(millions)
Derivative financial instruments	$	58.0	$	23.7
Security deposits	29.8		30.6
Equity method and other investments	12.0		12.0
Cloud computing arrangement implementation costs	7.9		9.7
Restricted cash	6.0		6.6

Deferred rent assets	5.6		5.2
Other non-current assets	20.0		23.4
Total other non-current assets	$	139.3	$	111.2



			1415

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


5.	~~Property and Equipment~~

~~Property and equipment, net consists of the following:~~

December 30,
2017 April 1,
2017
(millions)
Land and improvements $ 16.8
$ 16.8
Buildings and improvements 458.6
457.2
Furniture and fixtures 662.3
687.2
Machinery and equipment 429.9
414.0
Capitalized software 568.6
549.0
Leasehold improvements 1,201.0
1,179.1
Construction in progress 28.9
33.4
3,366.1
3,336.7
Less: accumulated depreciation (2,150.2 ) (2,020.7 )
Property and equipment, net $ 1,215.9
$ 1,316.0


6.	~~Other Assets and Liabilities~~

~~Prepaid~~Accrued expenses and other current ~~assets~~liabilities consist of the following:


	July 2, 2022		April 2, 2022
	(millions)
Accrued inventory	$	303.8	$	250.2
Accrued operating expenses	205.2		223.4
Accrued payroll and benefits	150.6		278.0
Other taxes payable	67.4		60.9
Dividends payable	51.0		48.1
Accrued capital expenditures	40.1		49.6
Restructuring reserve	21.8		30.8
Deferred income	19.5		16.5
Finance lease obligations	18.6		19.8

Other accrued expenses and current liabilities	8.0		14.1
Total accrued expenses and other current liabilities	$	886.0	$	991.4

Other non-current liabilities consist of the following:


	July 2, 2022		April 2, 2022
	(millions)
Deferred lease incentives and obligations	$	50.1	$	52.7
Deferred tax liabilities	13.5		12.5
Accrued benefits and deferred compensation	12.0		12.0

Derivative financial instruments	—		18.1
Other non-current liabilities	35.8		36.6
Total other non-current liabilities	$	111.4	$	131.9

7. Impairment of Assets

December 30,
2017 April 1,
2017
(millions)
Other taxes receivable $ 147.9
$ 127.8
Prepaid rent expense 44.5
37.4
Prepaid samples 14.0
5.9
Restricted cash 13.4
9.8
Prepaid advertising and marketing 10.4
4.1
Prepaid software maintenance 7.4
6.5
Tenant allowances receivable 6.9
16.4
Derivative financial instruments 6.7
23.0
Other prepaid expenses and current assets 53.6
49.5
Total prepaid expenses and other current assets $ 304.8
$ 280.4
No non-cash impairment charges were recorded during the three months ended July 2, 2022. During the three months ended June 26, 2021, the Company recorded non-cash impairment charges of $18.6 million to write-down certain long-lived assets in connection with its restructuring plans (see Note 8).

See Note 11 for further discussion of these impairment charges.

8. Restructuring and Other Charges, Net

A description of significant restructuring and other activities and their related costs is provided below.

Fiscal 2021 Strategic Realignment Plan

The Company has undertaken efforts to realign its resources to support future growth and profitability, and to create a sustainable, enhanced cost structure. The key areas of the Company's initiatives underlying these efforts involve evaluation of its: (i) team organizational structures and ways of working; (ii) real estate footprint and related costs across its corporate offices, distribution centers, and direct-to-consumer retail and wholesale doors; and (iii) brand portfolio.

In connection with the first initiative, on September 17, 2020, the Company's Board of Directors approved a restructuring plan (the "Fiscal 2021 Strategic Realignment Plan") to reduce its global workforce. Additionally, during a preliminary review of its store portfolio during the second quarter of Fiscal 2021, the Company made the decision to close its Polo store on Regent Street in London.



			1516

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Other non-current assets consist~~Shortly thereafter, on October 29, 2020, the Company announced the planned transition of its Chaps brand to a fully licensed business model, consistent with its long-term brand elevation strategy and in connection with its third initiative. Specifically, the Company entered into a multi-year licensing partnership, which took effect on August 1, 2021 following a transition period, with an affiliate of 5 Star Apparel LLC, a division of the ~~following:~~OVED Group, to manufacture, market, and distribute Chaps menswear and womenswear. This agreement is expected to create incremental value for the Company by enabling an even greater focus on elevating its core brands in the marketplace, reducing its direct exposure to the North America department store channel, and setting up Chaps to deliver on its potential with an experienced partner that is focused on nurturing the brand.

Later, on February 3, 2021, the Company's Board of Directors approved additional actions related to its real estate initiative. Specifically, the Company is in the process of further rightsizing and consolidating its global corporate offices to better align with its organizational profile and new ways of working. The Company also has closed, and may continue to close, certain of its stores to improve overall profitability. Additionally, the Company further consolidated its North America distribution centers in order to drive greater efficiencies, improve sustainability, and deliver a better consumer experience.

December 30,
2017 April 1,
2017
(millions)
Non-current investments $ 83.3
$ 21.4
Restricted cash 34.1
33.7
Security deposits 28.9
26.5
Derivative financial instruments 0.2
9.6
Other non-current assets 33.8
40.0
Total other non-current assets $ 180.3
$ 131.2
Finally, on June 26, 2021, in connection with its brand portfolio initiative, the Company sold its former Club Monaco business to Regent, L.P. ("Regent"), a global private equity firm, with no resulting gain or loss on sale realized during the first quarter of Fiscal 2022. Regent acquired Club Monaco's assets and liabilities in exchange for potential future cash consideration payable to the Company, including earn-out payments based on Club Monaco meeting certain defined revenue thresholds over a five-year period. Accordingly, the Company may realize amounts in the future related to the receipt of such contingent consideration (as discussed further below). Additionally, in connection with this divestiture, the Company is providing Regent with certain operational support for a transitional period of approximately one year, varying by functional area.

~~Accrued expenses~~Actions associated with the Fiscal 2021 Strategic Realignment Plan were substantially completed by the end Fiscal 2022, with certain remaining actions expected to be completed during Fiscal 2023. The Company now expects total charges of up to $300 million to be incurred in connection with this plan, consisting of cash-related charges of approximately $180 million and non-cash charges of approximately $120 million.

A summary of the charges recorded in connection with the Fiscal 2021 Strategic Realignment Plan during the fiscal periods presented, as well as the cumulative charges recorded since its inception (inclusive of immaterial other restructuring-related charges previously recorded during the first quarter of Fiscal 2021), is as follows:


	Three Months Ended
		July 2, 2022		June 26, 2021		Cumulative Charges
		(millions)
Cash-related restructuring charges:
Severance and benefit costs (reversals)		$	—	$	(4.0)	$	138.5

Other cash charges		0.7		1.9		23.3
Total cash-related restructuring charges (reversals)		0.7		(2.1)		161.8
Non-cash charges:
Impairment of assets (see Note 7)		—		18.6		90.7
Inventory-related charges(a)		—		—		8.3
Accelerated stock-based compensation expense(b)		—		2.0		2.0
Total non-cash charges		—		20.6		101.0
Total charges		$	0.7	$	18.5	$	262.8

(a)Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.

(b)Accelerated stock-based compensation expense, which was recorded within restructuring and other ~~current liabilities consist~~charges, net in the consolidated statements of ~~the following:~~

December 30,
2017 April 1,
2017
(millions)
Accrued operating expenses $ 223.9
$ 188.0
Accrued payroll and benefits 215.6
173.5
Other taxes payable 202.4
172.2
Accrued inventory 179.9
154.9
Restructuring reserve 84.0
140.8
Derivative financial instruments 46.5
12.3
Dividends payable 40.6
40.5
Accrued capital expenditures 33.9
45.7
Deferred income 33.9
29.7
Capital lease obligations 22.1
22.6
Other accrued expenses and current liabilities 6.3
2.5
Total accrued expenses and other current liabilities $ 1,089.1
$ 982.7

~~Other non-current liabilities consist of the following:~~

December 30,
2017 April 1,
2017
(millions)
Capital lease obligations $ 238.3
$ 250.9
Deferred rent obligations 203.7
211.1
Derivative financial instruments 37.8
9.4
Deferred tax liabilities 7.5
11.8
Deferred compensation 6.9
7.8
Other non-current liabilities 69.6
50.6
Total other non-current liabilities $ 563.8
$ 541.6

operations, related to vesting provisions associated with certain separation agreements.



			1617

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


7.	~~Impairment of Assets~~

~~The~~In addition to the charges summarized in the table above, the Company ~~recorded non-cash impairment charges of $2.2~~recognized $3.1 million and ~~$14.0~~$0.9 million during the three-month and nine-month periods ended December 30, 2017, respectively, and $10.3 million and $56.7 million during the three-month and nine-month periods ended December 31, 2016, respectively, to write off certain fixed assets related to its domestic and international stores, shop-within-shops, and corporate offices in connection with the Way Forward Plan (see Note 8).

~~Additionally, during the three-month and nine-month periods ended December 30, 2017, the Company recorded non-cash impairment charges~~ of ~~$1.7 million and $10.8 million, respectively, to write off certain fixed assets related to underperforming stores and shop-within-shops as a result of its on-going store portfolio evaluation.~~

~~See Note 11 for further discussion of the non-cash impairment charges recorded by the Company during the fiscal periods presented.~~


8.	~~Restructuring and Other Charges~~

~~A description of significant~~income within restructuring and other ~~activities~~charges, net in the consolidated statements of operations during the third and fourth quarters of Fiscal 2022, respectively, primarily related ~~costs is included below.~~

~~Way Forward Plan~~

~~On June 2, 2016,~~to a certain revenue share clause in its agreement with Regent that entitled it to receive a portion of the ~~Company's Board of Directors approved~~sales generated by the Club Monaco business during a ~~restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan").~~four-month business transition period. The Company ~~is refocusing on its core brands and evolving its product, marketing, and shopping experience~~donated this income to increase desirability and relevance. It is also evolving its operating model to enable sustainable, profitable sales growth by significantly improving quality of sales, reducing supply chain lead times, improving its sourcing, and executing a disciplined multi-channel distribution and expansion strategy. As part of the Way Forward Plan, the Company is rightsizing its cost structure and implementing a return on investment-driven financial model to free up resources to invest in the brand and drive high-quality sales. The Way Forward Plan includes strengthening the Company's leadership team and creating a more nimble organization by moving from an average of nine to six layers of management. The Way Forward Plan also includes the discontinuance of the Company's Denim & Supply brand and the integration of its denim product offerings into its Polo Ralph Lauren ~~brand. Collectively, these actions,~~Corporate Foundation, a non-profit, charitable foundation, which ~~were substantially completed during Fiscal 2017,~~ resulted in a ~~reduction in workforce~~related offsetting $4.0 million donation expense recorded within restructuring and ~~the closure of certain stores and shop-within-shops.~~

On March 30, 2017, the Company's Board of Directors approved the following additional restructuring-related activities associated with the Way Forward Plan: (i) the restructuring of its in-house global e-commerce platform which was in development and shifting to a more cost-effective, flexible e-commerce platform through a new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of its Polo store at 711 Fifth Avenue in New York City; and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Company's Way Forward Plan. Together, these actions are an important part of the Company's efforts to achieve its stated objective to return to sustainable, profitable growth and investcharges, net in the ~~future. These additional restructuring-related activities will result in a further reduction in workforce and the closure~~consolidated statements of certain corporate office and store locations, and are expected to be largely completed by the end of Fiscal 2018. The remaining activities, which are primarily lease-related, are expected to shift into Fiscal 2019.

In connection with the Way Forward Plan, the Company currently expects to incur total estimated charges of approximately $770 million, comprised of cash-related restructuring charges of approximately $450 million and non-cash charges of approximately $320 million. Cumulative cash and non-cash charges incurred since inception were $352.1 million and $293.3 million, respectively. Of the remaining charges yet to be incurred, the Company expects approximately $50 million will be recordedoperations during the fourth quarter of Fiscal 2018 and approximately $75 million to $85 million will be recorded during Fiscal 2019. In addition to these charges, the Company also incurred an additional non-cash charge of $155.2 million during Fiscal 2017 associated with the destruction of inventory out of current liquidation channels in line with its Way Forward Plan.2022.



	17

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

A summary of the charges recorded in connection with the Way Forward Plan during the three-month and nine-month periods ended December 30, 2017 and December 31, 2016, as well as the cumulative charges recorded since its inception, is as follows:

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016 Cumulative Charges
(millions)
Cash-related restructuring charges:
Severance and benefit costs $ 7.4
$ 14.1
$ 25.3
$ 115.7
$ 208.0
Lease termination and store closure costs 10.9
49.5
28.5
64.2
115.8
Other cash charges 0.8
3.1
9.2
9.1
28.3
Total cash-related restructuring charges 19.1
66.7
63.0
189.0
352.1
Non-cash charges:
Impairment of assets (see Note 7) 2.2
10.3
14.0
56.7
248.6
Inventory-related charges^(a)
—
14.4
1.3
149.4
199.2
Accelerated stock-based compensation
expense^(b)
0.7
—
0.7
—
0.7
Total non-cash charges 2.9
24.7
16.0
206.1
448.5
Total charges $ 22.0
$ 91.4
$ 79.0
$ 395.1
$ 800.6


^(a)	Cumulative inventory-related charges include $155.2 million associated with the destruction of inventory out of current liquidation channels, of which $10.9 million and $124.7 million was recorded during the three-month and nine-month periods ended December 31, 2016, respectively. Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.


^(b)	Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements of operations, was recorded in connection with vesting provisions associated with certain separation agreements.

A summary of current period activity in the restructuring reserve related to the ~~Way Forward~~Fiscal 2021 Strategic Realignment Plan is as follows:

Severance and Benefit Costs
Lease Termination
and Store
Closure Costs
Other Cash Charges Total
(millions)
Balance at April 1, 2017 $ 94.3
$ 34.3
$ 6.6
$ 135.2
Additions charged to expense 25.3
28.5
9.2
63.0
Cash payments charged against reserve (74.7 ) (18.0 ) (9.0 ) (101.7 )
Non-cash adjustments 0.6
7.8
—
8.4
Balance at December 30, 2017 $ 45.5
$ 52.6
$ 6.8
$ 104.9



	18

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Global Reorganization Plan~~

On May 12, 2015, the Company's Board of Directors approved a reorganization and restructuring plan comprised of the following major actions: (i) the reorganization of the Company's operating structure in order to streamline the Company's business processes to better align its cost structure with its long-term growth strategy; (ii) a strategic store and shop-within-shop performance review conducted by region and brand; (iii) a targeted corporate functional area review; and (iv) the consolidation of certain of the Company's luxury lines (collectively, the "Global Reorganization Plan"). The Global Reorganization Plan resulted in a reduction in workforce and the closure of certain stores and shop-within-shops.

Actions associated with the Global Reorganization Plan were completed by the end of the first quarter of Fiscal 2017 and no additional charges are expected to be incurred in relation to this plan. A summary of the charges recorded in connection with the Global Reorganization Plan during the three-month and nine-month periods ended December 31, 2016, as well as the cumulative charges recorded since its inception, is as follows:

December 31, 2016
Three Months Ended Nine Months Ended
Cumulative
Charges
(millions)
Cash-related restructuring charges:
Severance and benefit costs $ —
$ 4.7
$ 69.1
Lease termination and store closure costs —
0.2
8.0
Other cash charges —
—
13.8
Total cash-related restructuring charges —
4.9
90.9
Non-cash charges:
Impairment of assets —
—
27.2
Inventory-related charges^(a)
—
—
20.4
Accelerated stock-based compensation expense^(b)
—
—
8.9
Total non-cash charges —
—
56.5
Total charges $ —
$ 4.9
$ 147.4


^(a)	~~Inventory-related charges are recorded within cost of goods sold in the consolidated statements of operations.~~


^(b)	Accelerated stock-based compensation expense, which is recorded within restructuring and other charges in the consolidated statements of operations, was recorded in connection with vesting provisions associated with certain separation agreements.

~~A summary of current period activity in the restructuring reserve related to the Global Reorganization Plan is as follows:~~

Severance and Benefit Costs
Lease Termination
and Store
Closure Costs
Other Cash Charges Total
(millions)
Balance at April 1, 2017 $ 8.6
$ 3.4
$ 0.2
$ 12.2
Cash payments charged against reserve (4.6 ) (1.9 ) —
(6.5 )
Balance at December 30, 2017 $ 4.0
$ 1.5
$ 0.2
$ 5.7



	19

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


	Severance and Benefit Costs		Other Cash Charges		Total
	(millions)
Balance at April 2, 2022	$	30.6	$	0.1	$	30.7
Additions charged to expense	—		0.7		0.7
Cash payments applied against reserve	(8.4)		(0.8)		(9.2)
Non-cash adjustments	(0.4)		—		(0.4)
Balance at July 2, 2022	$	21.8	$	—	$	21.8

Other Charges

~~During the three-month and nine-month periods ended December 30, 2017, the~~The Company recorded other charges of ~~$3.5~~$4.9 million and ~~$10.5~~$0.8 million ~~respectively, related to depreciation expense associated with the Company's former Polo store at 711 Fifth Avenue in New York City, recorded after the store closed~~ during the first quarter of Fiscal 2018 in connection with the Way Forward Plan. Although the Company is no longer generating revenue or has any other economic activity associated with its former Polo store, it continues to incur depreciation expense due to its involvement at the time of construction.

~~Additionally, during the first quarter of Fiscal 2018, the Company recorded other charges of $6.7 million (inclusive of accelerated stock-based compensation expense of $2.1 million),~~three-month periods ended July 2, 2022 and June 26, 2021, respectively, primarily related to ~~the departure of Mr. Stefan Larsson as the Company's President~~rent and ~~Chief Executive Officer and as a member of its Board of Directors, effective as of May 1, 2017. Refer to Note 10 of the Fiscal 2017 10-K for additional discussion regarding Mr. Larsson's departure.~~

~~These other charges were partially offset by the favorable impact of $2.2 million related to the reversal of reserves~~occupancy costs associated with ~~the settlement of~~ certain ~~non-income tax issues during the second quarter of Fiscal 2018.~~


9.	~~Income Taxes~~

~~U.S. Tax Reform~~

On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), which became effective January 1, 2018. The TCJA significantly revises U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21%, creating a territorial tax system that includes a mandatory one-time transition tax on previously ~~deferred foreign earnings, and eliminating or reducing certain income tax deductions.~~

~~ASC Topic 740, "Income Taxes," requires the effects of changes in tax laws to be recognized in the period in~~exited real estate locations for which the legislation is enacted. However, due to the complexity and significance of the TCJA's provisions, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017, which allows companies to record the tax effects of the TCJA on a provisional basis based on a reasonable estimate, and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment.related lease agreements have not yet expired.

During the third quarter of Fiscal 2018, the Company recorded one-time charges of $231.3 million within its income tax provision in connection with the TCJA, of which $215.5 million related to the mandatory transition tax, which it expects to pay over an eight-year period (see Note 13). The remaining charge of $15.8 million related to the revaluation of the Company's deferred tax assets and liabilities. Collectively, these one-time charges, which were recorded on a provisional basis, negatively impacted the Company's effective tax rate by 12,410 basis points and 4,980 basis points during the three-month and nine-month periods ended December 30, 2017, respectively, and lowered its diluted earnings per share by $2.80 during each of these periods. The provisional amounts were based on the Company's present interpretations of the TCJA and current available information, including assumptions and expectations about future events, such as its projected financial performance, and are subject to further refinement as additional information becomes available (including the Company's actual full Fiscal 2018 results of operations and financial condition, as well as potential new or interpretative guidance issued by the FASB or the Internal Revenue Service and other tax agencies) and further analyses are completed.

9. Income Taxes

Effective Tax Rate

The Company's effective tax rate, which is calculated by dividing each fiscal period's income tax ~~provision~~benefit (provision) by pretax income (loss), was ~~143.9%~~23.9% and ~~73.8%~~21.6% during the three-month ~~and nine-month~~ periods ended ~~December 30, 2017, respectively,~~July 2, 2022 and ~~34.0% and 36.0% during the three-month and nine-month periods ended December 31, 2016,~~June 26, 2021, respectively.

The effective tax ~~rates~~rate for the ~~three-month and nine-month periods~~three months ended ~~December 30, 2017 were~~July 2, 2022 was higher than the U.S. federal statutory income tax rate of ~~35%~~21% primarily ~~as a result~~due to state taxes and the unfavorable impact of ~~the one-time charges recorded in connection with the TCJA, as previously discussed,~~certain audit related adjustments, partially offset by the favorable tax impact ~~of the proportion~~ of earnings generated in lower taxed foreign jurisdictions versus the U.S. ~~and foreign income tax reserve releases. Additionally, the~~The effective tax rate for the ~~nine~~three months ended



	20

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 30, 2017 reflected~~ June 26, 2021 was slightly higher than the ~~negative impact~~U.S. federal statutory income tax rate of ~~the adoption of ASU 2016-09 (see Note 4), as well as~~21% primarily due to the unfavorable impact of additional income tax reserves associated with certain income tax ~~audits.~~

The effective tax rates for the three-month and nine-month periods ended December 31, 2016 reflected the favorable impact of the proportion of earnings generated in lower taxed foreign jurisdictions versus the U.S., partiallyaudits, largely offset by ~~valuation allowances and~~tax benefits related to adjustments recorded onfor deferred tax ~~assets, certain nondeductible expenses,~~liabilities and ~~unrecognized tax benefits recorded on current year tax positions. The effective tax rate~~favorable adjustments for ~~the nine months ended December 31, 2016 was also unfavorably impacted by additional tax reserves associated with an income tax settlement and certain income tax audits.~~stock-based compensation.

Uncertain Income Tax Benefits

The Company classifies interest and penalties related to unrecognized tax benefits as part of its income tax ~~provision.~~benefit (provision). The total amount of unrecognized tax benefits, including interest and penalties, was ~~$76.4~~$86.5 million and ~~$62.7~~$91.9 million as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017,~~2, 2022, respectively, and iswas included within the non-current liability for unrecognized tax benefits in the consolidated balance sheets. ~~The net addition of $13.7 million in unrecognized tax benefits, including interest and penalties, primarily related to additional unrecognized tax benefits recorded.~~

The total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate was ~~$60.5~~$57.7 million and ~~$46.7~~$60.1 million as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017,~~2, 2022, 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 ~~income~~examinations by the relevant tax ~~examinations~~authorities for years prior to its fiscal year ended ~~April 3, 2010.~~March 30, 2013.


~~10.~~	~~Debt~~

10. Debt

Debt consists of the following:

December 30,
2017 April 1,
2017
(millions)
$300 million 2.125% Senior Notes^(a)
$ 298.3
$ 298.1
$300 million 2.625% Senior Notes^(b)
290.3
290.1
Total debt 588.6
588.2
Less: current portion of long-term debt 298.3
—
Long-term debt $ 290.3
$ 588.2

^(a)

During its fiscal year ended April 2, 2016 ("Fiscal 2016"), the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate 2.125% Senior Notes, as defined below (see Note 12). Accordingly, the carrying value of the 2.125% Senior Notes as of December 30, 2017 and April 1, 2017 reflects adjustments of $1.3 million and $1.2 million, respectively, for the change in fair value attributable to the benchmark interest rate. The carrying value of the 2.125% Senior Notes is also net of unamortized debt issuance costs and discount of $0.4 million and $0.7 million as of December 30, 2017 and April 1, 2017, respectively.


^(b)	During Fiscal 2016, the Company entered into an interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate 2.625% Senior Notes, as defined below (see Note 12). Accordingly, the carrying


	July 2, 2022		April 2, 2022
	(millions)
$400 million 3.750% Senior Notes(a)	$	397.9	$	397.7
$500 million 1.700% Senior Notes(b)	—		499.8
$750 million 2.950% Senior Notes(c)	739.1		738.8
Total debt	1,137.0		1,636.3
Less: current portion of long-term debt	—		499.8
Total long-term debt	$	1,137.0	$	1,136.5



			21

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

value of the 2.625% Senior Notes as of December 30, 2017 and April 1, 2017 reflects adjustments of $8.4 million and $8.2 million, respectively, for the change in fair value attributable to the benchmark interest rate. (a)The carrying value of the ~~2.625%~~3.750% Senior Notes is ~~also~~presented net of unamortized debt issuance costs and original issue discount of ~~$1.3~~$2.1 million and ~~$1.7~~$2.3 million as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017,~~2, 2022, respectively.

(b)The carrying value of the 1.700% Senior Notes is presented net of unamortized debt issuance costs and original issue discount of $0.2 million as of April 2, 2022.

(c)The carrying value of the 2.950% Senior Notes is presented net of unamortized debt issuance costs and original issue discount of $10.9 million and $11.2 million as of July 2, 2022 and April 2, 2022, respectively.

Senior Notes

In ~~September 2013,~~August 2018, the Company completed a registered public debt offering and issued ~~$300~~$400 million aggregate principal amount of unsecured senior notes due September ~~26, 2018,~~15, 2025, which bear interest at a fixed rate of ~~2.125%~~3.750%, payable semi-annually (the ~~"2.125%~~"3.750% Senior Notes"). The ~~2.125%~~3.750% Senior Notes were issued at a price equal to ~~99.896%~~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 ~~€209~~$300 million principal amount of ~~4.5% Euro-denominated~~2.125% unsecured senior notes ~~which~~that matured ~~on October 4, 2013.~~September 26, 2018.

In ~~August 2015,~~June 2020, the Company completed ~~a second~~another registered public debt offering and issued an additional ~~$300~~$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 ~~August 18, 2020,~~June 15, 2030, which bear interest at a fixed rate of ~~2.625%~~2.950%, payable semi-annually (the ~~"2.625%~~"2.950% Senior Notes"). The ~~2.625%~~1.700% Senior Notes and 2.950% Senior Notes were issued at ~~a price~~prices equal to ~~99.795%~~99.880% and 98.995% of their principal ~~amount.~~amounts, respectively. The proceeds from ~~this offering~~these offerings were used for general corporate ~~purposes.~~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 ~~2.125%~~3.750% Senior Notes and ~~2.625%~~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

~~In May 2014, the~~The Company ~~initiated~~has a commercial paper borrowing program ~~(the "Commercial Paper Program")~~ that ~~allowed~~allows it to issue up to ~~$300~~$500 million of unsecured commercial paper notes through private placement using third-party ~~broker-dealers. In May 2015, the Company expanded its Commercial~~broker-dealers (the "Commercial Paper ~~Program to allow for a total issuance of up to $500 million of unsecured commercial paper notes.~~Program").

Borrowings under the Commercial Paper Program are supported by the Global Credit Facility as(as defined ~~below.~~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 in seniority with the Company's other forms of unsecured indebtedness. As of ~~December 30, 2017~~,both July 2, 2022 and April 2, 2022, there were no borrowings outstanding under the Commercial Paper Program.

Revolving Credit Facilities

Global Credit Facility

In ~~February 2015,~~August 2019, the Company replaced its then existing credit facility and entered into ~~an amended and restated~~a new credit facility ~~(which was further amended in March 2016)~~ that provides for a ~~$500~~$500 million senior unsecured revolving line of credit through ~~February 11, 2020~~August 12, 2024 (the "Global Credit Facility") under terms and conditions substantially similar to those ~~previously in effect.~~of the previous facility. 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 certain other currencies, including Euros, Hong Kong Dollars, and Japanese ~~Yen. The~~Yen, and are guaranteed by all of the Company's domestic 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 ~~$750 million~~,$1 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. Since August 2019, the Company entered into several amendments of its Global Credit Facility, including one amendment that temporarily eased certain preexisting requirements and imposed certain new restrictions in response to the COVID-19 pandemic (all of which have since been lifted), and other amendments related to the cessation of LIBOR. Refer to Note 11 of the Fiscal 2022 10-K for additional discussion regarding such amendments.As of ~~December 30, 2017~~,both July 2, 2022 and April 2, 2022, there were no borrowings outstanding under the Global Credit ~~Facility and~~Facility. However, the Company was contingently liable for ~~$9.3~~$9.5 million of outstanding letters of ~~credit.~~credit as of both July 2, 2022 and April 2, 2022.



	22

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

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~~4.25 as of the date of measurement for the ~~four~~4 most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding, including finance lease obligations, plus ~~four times consolidated rent expense for the four most recent consecutive fiscal quarters.~~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) ~~consolidated rent expense,~~operating lease cost, (v) restructuring and other non-recurring expenses, and (vi) acquisition-related costs. As of ~~December 30, 2017~~, July 2, 2022, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit ~~Facility~~.Facility.


			20

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pan-Asia ~~Credit~~Borrowing 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~~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 ~~and corporate~~ needs of the Company's operations in the respective countries. Borrowings under the Pan-Asia ~~Credit~~Borrowing Facilities are guaranteed by the parent company and are granted at the sole discretion of the ~~Banks,~~respective banks, subject to availability of the ~~Banks'~~banks' funds and satisfaction of certain regulatory requirements. The Pan-Asia ~~Credit~~Borrowing Facilities do not contain any financial covenants. ~~The~~A summary of the Company's Pan-Asia ~~Credit~~Borrowing Facilities by country ~~are~~is as follows:

•China Credit Facility — provides Ralph Lauren Trading (Shanghai) Co., Ltd. with a revolving line of credit of up to 50100 million Chinese Renminbi (approximately ~~$7 million~~)$15 million) through April ~~5, 2018, and may~~3, 2023, 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 4730 billion South Korean Won (approximately ~~$44~~$23 million) through October ~~31, 2018.~~

28, 2022.

•Japan Overdraft Facility — provides Ralph Lauren Corporation Japan with an overdraft amount of up to 5 billion Japanese Yen (approximately $37 million) through April 28, 2023.

As of ~~December 30, 2017~~,both July 2, 2022 and April 2, 2022, there were no borrowings outstanding under the Pan-Asia ~~Credit~~Borrowing Facilities.

Refer to Note 1211 of the Fiscal ~~2017~~2022 10-K for additional discussion of the terms and conditions of the Company's debt and credit facilities.


~~11.~~	~~Fair Value Measurements~~

11. Fair Value Measurements

U.S. GAAP ~~establishes~~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.



	23

~~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:


	July 2, 2022		April 2, 2022
	(millions)
Derivative assets(a)	$	78.3	$	32.4
Derivative liabilities(a)	0.1		18.3

December 30,
2017 April 1,
2017
(millions)
Investments in commercial paper^(a)(b)
$ 154.4
$ —
Derivative assets^(a)
6.9
32.6
Derivative liabilities^(a)
84.3
21.7

(a)Based on Level 2 measurements.


^(a)			~~Based on Level 2 measurements.~~

21
^(b)

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~$25.0 million included within cash and cash equivalents and $129.4 million included within short-term investments in the consolidated balance sheets.~~

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.

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 ~~carrying values~~amortized cost in its consolidated balance sheets, which may differ from their respective fair values. The fair values of the ~~Senior Notes~~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:


	July 2, 2022				April 2, 2022
	Carrying Value(a)		Fair Value(b)		Carrying Value(a)		Fair Value(b)
	(millions)
$400 million 3.750% Senior Notes	$	397.9	$	399.3	$	397.7	$	407.9
$500 million 1.700% Senior Notes	—		N/A		499.8		500.5
$750 million 2.950% Senior Notes	739.1		663.2		738.8		721.0

December 30, 2017 April 1, 2017

Carrying Value^(a)

Fair Value^(b)

Carrying Value^(a)

Fair Value^(b)
(millions)
$300 million 2.125% Senior Notes $ 298.3
$ 300.2
$ 298.1
$ 302.2
$300 million 2.625% Senior Notes 290.3
302.2
290.1
302.8

(a)See Note 10 for discussion of the carrying values of the Company's senior notes.


^(a) (b)Based on Level 2 measurements.	~~See Note 10 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.



	24

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Non-financial Assets and Liabilities

The Company's non-financial assets, which primarily consist of goodwill, other intangible assets, ~~and~~ 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.~~their amortized or depreciated cost in its consolidated balance sheet. However, on a periodic basis or whenever events or changes in circumstances indicate that ~~their carrying value~~they may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), the respective carrying value of non-financial ~~instruments~~assets are assessed for impairment and, if ~~applicable,~~ultimately considered impaired, are adjusted and written down to ~~and recorded at~~their fair value, ~~considering~~as estimated based on consideration of external market participant ~~assumptions.~~assumptions and discounted cash flows.

During the ~~nine-month periods~~three months ended ~~December 30, 2017 and December 31, 2016,~~June 26, 2021, the Company recorded non-cash impairment charges ~~of $24.8 million and $56.7 million, respectively,~~ to ~~fully write off~~reduce the carrying values of certain long-lived assets ~~based upon~~to their ~~assumed~~estimated fair ~~values of zero.~~values. The fair values of these assets were determined based on Level 3 ~~measurements. Inputs to these fair value~~ 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 for lease-related ROU assets), based on historical experience and consideration of current trends, market conditions, and ~~market conditions. See Note 7 for further discussion of the~~comparable sales, as applicable.


			22

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes non-cash impairment charges recorded by the Company during the fiscal periods presented to reduce the carrying values of certain long-lived assets to their estimated fair values as of the assessment date:


	Three Months Ended
	July 2, 2022			June 26, 2021
Long-Lived Asset Category	Total Impairments		Fair Value as of Impairment Date	Total Impairments		Fair Value as of Impairment Date
	(millions)
Property and equipment, net	$	—	N/A	$	0.4	$	—
Operating lease right-of-use assets	—		N/A	18.2		16.8

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 ~~goodwill~~ impairment charges associated with goodwill or other intangible assets were recorded during either of the ~~nine-month~~three-month periods ended ~~December 30, 2017~~July 2, 2022 or December 31, 2016. The Company performed its annual goodwill impairment assessment using a qualitative approach as of the beginning of the second quarter of Fiscal 2018. In performing the assessment, the Company identified and considered the significance of relevant key factors, events, and circumstances that affected the fair values and/or carrying amounts of its reporting units with allocated goodwill. These factors included external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as the Company's actual and expected financial performance. Additionally, the results of the Company's most recent quantitative goodwill impairment test indicated that the fair values of these reporting units significantly exceeded their respective carrying values. Based on the results of its qualitative goodwill impairment assessment, the Company concluded that it is not more likely than not that the fair values of its reporting units are less than their respective carrying values, and there were no reporting units at risk of impairment.June 26, 2021.


~~12.~~	~~Financial Instruments~~

12. 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 ~~the~~ benchmark interest ~~rate. Consequently,~~rates. Accordingly, based on its assessment thereof, the Company ~~uses~~may use derivative financial instruments to manage and mitigate such risks. The Company does not ~~enter into derivative transactions~~use derivatives for speculative or trading purposes.

The following table summarizes the Company's outstanding derivative instruments ~~on a gross basis as~~ recorded inon its consolidated balance sheets as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017~~:2, 2022:


	Notional Amounts				Derivative Assets						Derivative Liabilities
Derivative Instrument(a)	July 2, 2022		April 2, 2022		July 2, 2022			April 2, 2022			July 2, 2022			April 2, 2022
					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	$	259.4	$	236.5	(e)	$	19.4	PP	$	6.6		$	—		$	—

Net investment hedges(c)	700.0		700.0		ONCA	57.1		ONCA	23.7			—		ONCL	18.1
Total Designated Hedges	959.4		936.5			76.5			30.3			—			18.1
Undesignated Hedges:
FC — Undesignated hedges(d)	218.9		225.0		PP	1.8		PP	2.1		AE	0.1		AE	0.2
Total Hedges	$	1,178.3	$	1,161.5		$	78.3		$	32.4		$	0.1		$	18.3

Notional Amounts Derivative Assets Derivative Liabilities
Derivative Instrument^(a)
December 30,
2017 April 1,
2017 December 30,
2017 April 1,
2017 December 30,
2017 April 1,
2017

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 $ 509.2
$ 533.2

^(d)
$ 3.0
PP $ 17.7

^(e)
$ 8.5
AE $ 3.7
IRS — Fixed-rate debt 600.0
600.0
—
—

^(f)
9.8
ONCL 9.4
CCS — NI 658.4
591.2
—
ONCA 9.6

^(g)
65.2
—
Total Designated Hedges 1,767.6
1,724.4
3.0
27.3
83.5
13.1
Undesignated Hedges:
FC — Undesignated hedges^(c)
455.8
375.1
PP 3.9
PP 5.3
AE 0.8
AE 8.6
Total Hedges $ 2,223.4
$ 2,099.5
$ 6.9
$ 32.6
$ 84.3
$ 21.7

(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; ONCL = Other non-current liabilities.

(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.

(e)$18.5 million included within prepaid expenses and other current assets and $0.9 million included within other non-current assets.



			2523

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


^(a)	~~FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts; CCS = Cross-currency swap contracts; NI = Net investment hedges.~~


^(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)	~~Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.~~


^(d)	~~$2.8 million included within prepaid expenses and other current assets and $0.2 million included within other non-current assets.~~


^(e)	~~$8.2 million included within accrued expenses and other current liabilities and $0.3 million included within other non-current liabilities.~~


^(f)	~~$1.4 million included within accrued expenses and other current liabilities and $8.4 million included within other non-current liabilities.~~


^(g)	~~$36.1 million included within accrued expenses and other current liabilities and $29.1 million included within other non-current liabilities.~~

The Company ~~records and~~ presents the fair values ~~of all~~ of its derivative assets and liabilities inrecorded 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~~9 separate counterparties, the amounts presented in the consolidated balance sheets as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017~~2, 2022 would be adjusted from the current gross presentation as detailed in the following table:


	July 2, 2022						April 2, 2022
	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	$	78.3	$	(0.1)	$	78.2	$	32.4	$	(0.2)	$	32.2
Derivative liabilities	0.1		(0.1)		—		18.3		(0.2)		18.1

December 30, 2017 April 1, 2017
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 $ 6.9
$ (3.1 ) $ 3.8
$ 32.6
$ (18.3 ) $ 14.3
Derivative liabilities 84.3
(3.1 ) 81.2
21.7
(18.3 ) 3.4

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 the effective portion~~ of gains and losses from the Company's designated derivative instruments on its consolidated financial statements for the three-month ~~and nine-month~~ periods ended~~December 30, 2017~~ July 2, 2022 and ~~December 31, 2016~~:June 26, 2021:


		Gains (Losses) Recognized in OCI
	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Designated Hedges:
FC — Cash flow hedges		$	16.3	$	(1.4)
Net investment hedges — effective portion		39.7		(9.2)
Net investment hedges — portion excluded from assessment of hedge effectiveness		11.8		10.6
Total Designated Hedges		$	67.8	$	—

Gains (Losses)
Recognized in OCI

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Designated Hedges:
FC — Cash flow hedges $ (2.9 ) $ 58.2
$ (28.8 ) $ 46.7

CCS — NI^(a)
(10.4 ) 38.1
(73.1 ) 45.2

Total Designated Hedges $ (13.3 ) $ 96.3
$ (101.9 ) $ 91.9

Location and Amount of
Gains (Losses) from
Cash Flow Hedges Reclassified from AOCI to Earnings

Three Months Ended

July 2,
2022

June 26,
2021

Cost of
goods sold

(millions)

Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded

(489.2)

(408.2)

Effects of cash flow hedging:

FC — Cash flow hedges

2.8

(0.1)



			2624

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Gains (Losses) Reclassified
from AOCI to Earnings

Location of Gains (Losses)
Reclassified from
AOCI to Earnings
Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Designated Hedges:
FC — Cash flow hedges $ (5.9 ) $ (2.7 ) $ (4.3 ) $ (4.2 ) Cost of goods sold
FC — Cash flow hedges 0.6
9.3
(0.4 ) 3.3
Foreign currency gains (losses)
Total Designated Hedges $ (5.3 ) $ 6.6
$ (4.7 ) $ (0.9 )


		Gains (Losses) from Net Investment Hedges Recognized in Earnings				Location of Gains (Losses) Recognized in Earnings
	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Net Investment Hedges
Net investment hedges — portion excluded from assessment of hedge effectiveness(a)		$	3.2	$	2.8	Interest expense
Total Net Investment Hedges		$	3.2	$	2.8


^(a) (a)Amounts recognized in other comprehensive income (loss) ("OCI") relating 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.	~~Amounts recognized in other comprehensive income (loss) ("OCI") would be recognized in earnings only upon the sale or liquidation of the hedged net investment.~~

As of ~~December 30, 2017,~~July 2, 2022, it is ~~expected~~estimated that ~~$8.0~~$22.6 million of pretax net ~~losses~~gains on both outstanding and matured derivative instruments designated and qualifying as cash flow hedges deferred in AOCI will be recognized in earnings over the next twelve months. ~~The amounts~~Amounts ultimately recognized in earnings will depend on exchange rates in effect when outstanding derivative instruments are settled. ~~No material gains or losses relating to ineffective cash flow hedges were recognized during any of the fiscal periods presented.~~

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 ~~and nine-month~~ periods ended~~December 30, 2017~~ July 2, 2022 and ~~December 31, 2016~~:June 26, 2021:


	Gains (Losses) Recognized in Earnings									Location of Gains (Losses) Recognized in Earnings			Gains (Losses) Recognized in Earnings				Location of Gains (Losses) Recognized in Earnings
	Three Months Ended					Nine Months Ended						Three Months Ended			Location of Gains (Losses) Recognized in Earnings
	December 30, 2017			December 31, 2016		December 30, 2017		December 31, 2016					July 2, 2022
	(millions)												(millions)
Undesignated Hedges:											Undesignated Hedges:
FC — Undesignated hedges	$	(1.9	)	$	14.2	$	0.2	$	2.9	Foreign currency gains (losses)	FC — Undesignated hedges		$	11.5	$	(1.0)	Other income (expense), net
Total Undesignated Hedges	$	(1.9	)	$	14.2	$	0.2	$	2.9		Total Undesignated Hedges		$	11.5	$	(1.0)

Risk Management Strategies

Forward Foreign Currency Exchange Contracts

The Company uses forward foreign currency exchange contracts to ~~reduce~~mitigate its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, ~~intercompany royalty payments made by certain of its international operations, and~~ the settlement of foreign currency-denominated ~~balances.~~balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of its overall strategy ~~to manage~~for managing the level of exposure to ~~the risk of foreign currency~~such exchange rate ~~fluctuations,~~risk, relating 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,~~and the Chinese ~~Yuan,~~Renminbi, the ~~New Taiwan Dollar, and the Hong Kong Dollar, the~~ Company generally hedges a portion of its ~~foreign currency~~related exposures anticipated over a ~~two-year period. In doing so,~~ the ~~Company uses~~next twelve months using forward foreign currency exchange contracts ~~that generally have~~with maturities of two months to ~~two years~~one year to provide continuing coverage ~~throughout~~over the ~~hedging~~ period of the respective exposure.

~~Interest Rate Swap Contracts~~

During Fiscal 2016, the Company entered into two pay-floating rate, receive-fixed rate interest rate swap contracts which it designated as hedges against changes in the respective fair values of its fixed-rate 2.125% Senior Notes and its fixed-rate 2.625% Senior Notes attributed to changes in the benchmark interest rate (the "Interest Rate Swaps"). The Interest Rate Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, both have notional amounts of $300 million and swap the fixed interest rates on the Company's 2.125% Senior Notes and 2.625% Senior Notes for variable interest rates based on the 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread. Changes in the fair values of the Interest Rate Swaps were offset



	27

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

by changes in the fair values of the 2.125% Senior Notes and 2.625% Senior Notes attributed to changes in the benchmark interest rate, with no resulting ineffectiveness recognized in earnings during any of the fiscal periods presented.

Cross-Currency Swap Contracts

~~During Fiscal 2016, the~~The Company ~~entered into two pay-floating~~periodically designates pay-fixed rate, ~~receive-floating rate~~receive fixed-rate cross-currency swap contracts ~~with notional amounts of €280 million and €274 million, which it designated~~ as hedges of its net investment in certain of its European ~~subsidiaries (the "Cross-Currency Swaps").~~ subsidiaries.

The ~~Cross-Currency Swaps, which mature on September 26, 2018 and August 18, 2020, respectively,~~Company's pay-fixed rate, receive-fixed rate cross-currency swap ~~the~~contracts swap U.S. Dollar-denominated ~~variable interest rate payments based on 3-month LIBOR plus a~~ fixed ~~spread (as paid under the Interest Rate Swaps described above) for Euro-denominated variable~~ interest rate payments based on the ~~3-month Euro Interbank Offered Rate plus a~~contract's notional amount and the fixed ~~spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest Rate Swaps, economically convert~~rate of interest payable on certain of the Company's ~~$300 million~~senior notes for Euro-denominated fixed interest rate payments, thereby economically converting a portion of its fixed-rate ~~2.125% and $300 million fixed-rate 2.625%~~U.S. Dollar-denominated senior note obligations to ~~€280 million and €274 million floating-rate~~fixed-rate Euro-denominated liabilities, respectively. No material gains or losses related to the ineffective portion, or the amount excluded from effectiveness testing, were recognized in interest expense within the consolidated statements of operations during any of the fiscal periods presented.obligations.

See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments.


			25

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investments

~~As of December 30, 2017, the~~The Company's short-term investments ~~consisted~~as of ~~$732.9 million of time deposits~~July 2, 2022 and ~~$129.4 million of commercial paper, and its non-current investments consisted of $83.3 million of time deposits. As of~~ April ~~1, 2017, the Company held short-term investments of $684.7~~2, 2022 were $320.1 million and ~~non-current investments of $21.4~~$734.6 million, ~~both consisting~~respectively, and consisted 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 ~~2017~~2022 10-K for further discussion of the Company's accounting policies relating to its investments.


~~13.~~	13. Commitments and Contingencies

~~U.S. Tax Reform~~

In connection with the TCJA's provision that subjects previously deferred foreign earnings to a one-time mandatory transition tax (as described in Note 9), the Company recorded a charge of $215.5 million within its income tax provision during the third quarter of Fiscal 2018, together with a corresponding current and non-current income tax payable obligation within its consolidated balance sheets based upon the estimated timing of payments. This obligation, which was recorded on a provisional basis and is subject to change, is expected to be paid over an eight-year period as follows:

Mandatory Transition
Tax Payments^(a)
(millions)
Fiscal 2019 $ 27.3
Fiscal 2020 14.0
Fiscal 2021 14.0
Fiscal 2022 14.0
Fiscal 2023 23.2
Fiscal 2024 and thereafter 85.5
Total mandatory transition tax payments $ 178.0



	28

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


^(a)	The expected mandatory transition tax payments have been presented net of previously available foreign tax credit carryovers of $37.5 million, which the Company expects to utilize to partially reduce this tax obligation.

~~See Note 9 for further discussion of the TCJA and its enactment-related impacts on the Company's consolidated financial statements.~~

~~Customs Audit~~

In September 2014, one of the Company's international subsidiaries received a pre-assessment notice from the relevant customs officials concerning the method used to determine the dutiable value of imported inventory. The notice communicated the customs officials' assertion that the Company should have applied an alternative duty method, which could result in up to $46 million in incremental duty and non-creditable value-added tax, including $11 million in interest and penalties. The Company believes that the alternative duty method claimed by the customs officials is not applicable to the Company's facts and circumstances and is vigorously contesting their asserted methodology.

In October 2014, the Company filed an appeal of the pre-assessment notice in accordance with the standard procedures established by the relevant customs authorities. In response to the filing of the Company's appeal of the pre-assessment notice, the review committee instructed the customs officials to reconsider their assertion of the alternative duty method and conduct a re-audit to evaluate the facts and circumstances noted in the pre-assessment notice. In December 2015, the Company received the results of the re-audit conducted and a customs audit assessment notice in the amount of $34.1 million, which the Company recorded within restructuring and other charges in its consolidated statements of operations during the third quarter of Fiscal 2016. Although the Company disagrees with the assessment notice, in order to secure the Company's rights, the Company was required to pay the assessment amount and then subsequently file an appeal with the customs authorities. In October 2017, the tax tribunal presiding over the Company's appeal instructed the customs officials to reconsider their assertions under the alternative duty method and conduct a second re-audit to evaluate the facts and circumstances noted in the pre-assessment notice.

The Company continues to maintain its original filing position and will vigorously contest any other proposed methodology asserted by the customs officials. Should the Company be successful in its merits, a full refund for the amounts paid plus interest will be required to be paid by the customs authorities. If the Company is unsuccessful in its current appeal with the customs authorities, it may further appeal this decision within the courts. At this time, while the Company believes that the customs officials' claims are not meritorious and that the Company should prevail, the outcome of the appeals process is subject to risk and uncertainty.

~~Other Matters~~

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, leases, 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~~may enter into certain guarantees or other 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.



	29

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


~~14.~~	14. Equity

~~Summary of Changes in Equity~~

~~A reconciliation of the beginning and ending amounts of equity is presented below:~~

Nine Months Ended
December 30,
2017 December 31,
2016
(millions)
Balance at beginning of period $ 3,299.6
$ 3,743.5
Comprehensive income 189.3
63.2
Dividends declared (121.9 ) (123.2 )
Repurchases of common stock, including shares surrendered for tax withholdings (15.9 ) (115.0 )
Stock-based compensation 56.3
46.4
Shares issued and tax benefits (shortfalls) recognized pursuant to stock-based compensation arrangements 0.1
(4.3 )
Balance at end of period $ 3,407.5
$ 3,610.6

Common Stock Repurchase Program

~~In June 2016, as part~~Repurchases of its common stock repurchase program, the Company entered into an accelerated share repurchase program with a third-party financial institution under which it made an upfront payment of $100 million in exchange for an initial delivery of 0.9 million shares of its Class A common stock, representing 90% of the total shares that were ultimately expected to be delivered over the program's term (the "ASR Program"). The initial shares received, which had an aggregate cost of $90 million based on the June 20, 2016 closing share price, were immediately retired and recorded as an increase to treasury stock.

In September 2016, at the ASR Program's conclusion, the Company received 0.1 million additional shares and accordingly recorded a related $10 million increase to treasury stock. The number of additional shares delivered was based on the volume-weighted average price per share of the Company's Class A common stock ~~over~~are subject to overall business and market conditions, as well as other potential factors such as the ~~term~~temporary restrictions previously in place under the Company's Global Credit Facility. Accordingly, in response to business disruptions related to the COVID-19 pandemic, effective beginning in the first quarter of Fiscal 2021, the Company temporarily suspended its common stock repurchase program as a preemptive action to preserve cash and strengthen its liquidity position. However, the Company resumed activities under its Class A common stock repurchase program during the third quarter of Fiscal 2022 as restrictions under its Global Credit Facility were lifted (see Note 11 of the ~~ASR Program, less an agreed upon discount. The average price per share paid for all of~~Fiscal 2022 10-K) and overall business and market conditions have improved since the ~~shares delivered under the ASR Program was $98.48.~~COVID-19 pandemic first emerged.

A summary of the Company's repurchases of Class A common stock under its common stock repurchase program ~~including the ASR Program,~~ is as follows:


	Three Months Ended
	July 2, 2022		June 26, 2021
	(millions)
Cost of shares repurchased	$	213.3	$	—
Number of shares repurchased	2.2		—

Nine Months Ended
December 30,
2017 December 31,
2016
(millions)
Cost of shares repurchased $ —
$ 100.0
Number of shares repurchased —
1.0

On February 2, 2022, 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 $1.500 billion of its Class A common stock. As of ~~December 30, 2017,~~July 2, 2022, the remaining availability under the Company's Class A common stock repurchase program was approximately ~~$100 million. Repurchases of shares of Class A common stock are subject to overall business and market conditions.~~$1.416 billion.


			26

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, during each of the ~~nine-month~~three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016,~~ June 26, 2021, 0.2 million shares of the Company's Class A common stock, at a cost of ~~$15.9~~$21.4 million and ~~$15.0~~$28.8 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").~~long-term stock incentive plans.

Repurchased and surrendered shares are accounted for as treasury stock at cost and held in treasury for future use.



	30

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Dividends

~~Since 2003,~~Except as discussed below, the Company has maintained a regular quarterly cash dividend program on its common ~~stock.~~stock since 2003.

In response to business disruptions related to the COVID-19 pandemic, effective beginning in the first quarter of Fiscal 2021 the Company temporarily suspended its quarterly cash dividend program as a preemptive action to preserve cash and strengthen its liquidity position. On May 19, 2021, the Company's Board of Directors approved the reinstatement of its quarterly cash dividend program at the pre-pandemic amount of $0.6875 per share.

On May 18, 2022, the Company's Board of Directors approved an increase to the Company's quarterly cash dividend on its common stock from $0.6875 to $0.75 per share. The ~~third quarter Fiscal~~ ~~2018~~first quarterly dividend of ~~$0.50~~ ~~per share was~~ declared ~~on December 14, 2017,~~to reflect this increase was payable to ~~stockholders~~shareholders of record at the close of business on ~~December 29, 2017,~~July 1, 2022 and was paid on ~~January 12, 2018. Dividends paid amounted~~July 15, 2022.

The Company intends to ~~$121.7 million~~continue to pay regular dividends on outstanding shares of its common stock. However, any decision to declare and ~~$123.7 million during~~pay dividends in the ~~nine-month periods ended December 30, 2017~~future will ultimately be made at the discretion of the Company's Board of Directors and ~~December 31, 2016, respectively.~~will depend on the Company's results of operations, cash requirements, financial condition, and other factors that the Board of Directors may deem relevant, including economic and market conditions.


~~15.~~	~~Accumulated Other Comprehensive Income (Loss)~~

15. Accumulated Other Comprehensive Income (Loss)

The following table presents OCI activity, net of tax, accumulated in equity:

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 April 2, 2016 $ (157.6 ) $ (12.0 ) $ (11.9 ) $ (181.5 )
Other comprehensive income (loss), net of tax:
OCI before reclassifications (86.7 ) 42.1
1.0
(43.6 )
Amounts reclassified from AOCI to earnings —
1.1
1.0
2.1
Other comprehensive income (loss), net of tax (86.7 ) 43.2
2.0
(41.5 )
Balance at December 31, 2016 $ (244.3 ) $ 31.2
$ (9.9 ) $ (223.0 )

Balance at April 1, 2017 $ (206.2 ) $ 14.6
$ (6.8 ) $ (198.4 )
Other comprehensive income (loss), net of tax:
OCI before reclassifications 90.7
(26.4 ) (1.0 ) 63.3
Amounts reclassified from AOCI to earnings —
4.4
0.1
4.5
Other comprehensive income (loss), net of tax 90.7
(22.0 ) (0.9 ) 67.8
Balance at December 30, 2017 $ (115.5 ) $ (7.4 ) $ (7.7 ) $ (130.6 )


	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 April 2, 2022	$	(189.7)	$	9.0	$	0.4	$	(180.3)
Other comprehensive income (loss), net of tax:
OCI before reclassifications	(39.3)		14.0		—		(25.3)
Amounts reclassified from AOCI to earnings	—		(2.4)		(0.1)		(2.5)
Other comprehensive income (loss), net of tax	(39.3)		11.6		(0.1)		(27.8)
Balance at July 2, 2022	$	(229.0)	$	20.6	$	0.3	$	(208.1)

Balance at March 27, 2021	$	(123.2)	$	4.6	$	(2.2)	$	(120.8)
Other comprehensive income (loss), net of tax:
OCI before reclassifications	10.6		(1.1)		(0.1)		9.4
Amounts reclassified from AOCI to earnings	—		0.1		—		0.1
Other comprehensive income (loss), net of tax	10.6		(1.0)		(0.1)		9.5
Balance at June 26, 2021	$	(112.6)	$	3.6	$	(2.3)	$	(111.3)

^(a)

OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes an income tax benefit of $23.4 million for the nine months ended December 30, 2017, and is presented net of an income tax provision of $19.1 million for the nine months ended December 31, 2016. OCI before reclassifications to earnings for the nine-month periods ended December 30, 2017 and December 31, 2016 include a loss of $45.5 million (net of a $27.6 million income tax benefit) and a gain of $27.8 million (net of a $17.4 million income tax provision), respectively, related to the effective portion of changes in the fair values of the Cross-Currency Swaps designated as hedges of the Company's net investment in certain of its European subsidiaries (see Note 12).


^(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 $2.4 million and an income tax provision of $4.6 million for the nine-month periods ended December 30, 2017 and December 31, 2016, respectively. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.


^(c)	~~Activity is presented net of taxes, which were immaterial for both periods presented.~~

(a)OCI before reclassifications to earnings related to foreign currency translation gains (losses) includes income tax provisions of $17.5 million and $1.0 million for the three-month periods ended July 2, 2022 and June 26, 2021, respectively. OCI before reclassifications to earnings for the three-month periods ended July 2, 2022 and June 26, 2021 includes gains of $39.1 million (net of a $12.4 million income tax provision) and $1.1 million (net of a $0.3



			3127

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

million income tax provision), respectively, related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations (see Note 12).

(b)OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of an income tax provision of $2.3 million and an income tax benefit of $0.3 million for the three-month periods ended July 2, 2022 and June 26, 2021, respectively. The tax effects on amounts reclassified from AOCI to earnings are presented in a table below.

(c)Activity is presented net of taxes, which were immaterial for both periods presented.

The following table presents reclassifications from AOCI to earnings for cash flow hedges, by component:


	Three Months Ended						Nine Months Ended						Location of Gains (Losses) Reclassified from AOCI to Earnings		Three Months Ended			Location of Gains (Losses) Reclassified from AOCI to Earnings
	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016						July 2, 2022				June 26, 2021
	(millions)															(millions)
Gains (losses) on cash flow hedges^(a):														Gains (losses) on cash flow hedges(a):
FC — Cash flow hedges	$	(5.9	)	$	(2.7	)	$	(4.3	)	$	(4.2	)	Cost of goods sold	FC — Cash flow hedges		$	2.8	$	(0.1)		Cost of goods sold
FC — Cash flow hedges	0.6			9.3			(0.4		)	3.3			Foreign currency gains (losses)

Tax effect	0.5			(1.4		)	0.3			(0.2		)	Income tax benefit (provision)	Tax effect		(0.4)		—			Income tax provision
Net of tax	$	(4.8	)	$	5.2		$	(4.4	)	$	(1.1	)		Net of tax		$	2.4	$	(0.1)

(a)FC = Forward foreign currency exchange contracts.


^(a) 16. Stock-based Compensation	~~FC = Forward foreign currency exchange contracts.~~


~~16.~~	~~Stock-based Compensation~~

The Company's stock-based compensation awards are currently issued under the ~~2010~~2019 Incentive Plan, which was approved by its stockholders on August ~~5, 2010.~~1, 2019. However, any prior awards granted under either the Company's 2010 Incentive Plan or 1997 Incentive Plan remain subject to the terms of ~~that plan.~~those plans, as applicable. Any awards that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes are available for issuance under the ~~2010~~2019 Incentive Plan.

Refer to Note 18 of the Fiscal ~~2017~~2022 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service, performance, and ~~performance~~market conditions and payout percentages.

Impact on Results

A summary of total stock-based compensation expense and the related income tax benefits recognized during the three-month ~~and nine-month~~ periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016~~June 26, 2021 is as follows:

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Compensation expense $ 16.9
^(a)
$ 14.5
$ 56.3
^(a)
$ 46.4
Income tax benefit (6.3 ) (5.3 ) (20.9 ) (17.0 )


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Compensation expense		$	18.2	$	18.4	(a)
Income tax benefit		(2.8)		(3.0)


^(a) (a)Includes $2.0 million of accelerated stock-based compensation expense recorded within restructuring and other charges, net in the consolidated statements of operations (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.	The three-month and nine-month periods ended December 30, 2017 include $0.7 million and $2.8 million, respectively, of accelerated stock-based compensation expense recorded within restructuring and other charges in the consolidated statements of operations (see Note 8). All other stock-based compensation expense was recorded within SG&A expenses.

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.



			3228

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Stock Options~~

~~A summary of stock option activity under all plans during the~~ ~~nine months endedDecember 30, 2017~~ ~~is as follows:~~



	~~Number of Options~~
	~~(thousands)~~
~~Options outstanding at April 1, 2017~~	~~1,720~~
~~Granted~~	—
~~Exercised~~	—
~~Cancelled/Forfeited~~	~~(537~~	)
~~Options outstanding at December 30, 2017~~	~~1,183~~

~~Restricted Stock Awards and~~ Service-based RSUs

The fair values of ~~restricted stock awards~~service-based RSUs granted to certain of the Company's senior executives and other employees, as well as 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~~grant, adjusted to reflect the absence of dividends for any awards for which dividend equivalent amounts do not accrue to the holder while outstanding and unvested. The weighted-average grant date fair values of service-based RSU awards granted were ~~granted~~$89.99 and $114.84 per share during the ~~nine-month~~three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016.~~June 26, 2021, respectively.

A summary of service-based RSU activity during the three months ended July 2, 2022 is as follows:


						Number of Service-based RSUs
						(thousands)
Unvested at April 2, 2022						1,566
Granted						2
Vested						(251)
Forfeited						(13)
Unvested at July 2, 2022						1,304

Performance-based RSUs

The fair values of ~~service-based~~the Company's performance-based RSUs granted to ~~certain of the Company's~~its senior executives ~~as well as to certain of its~~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 ~~entitled~~accrue to ~~accrue dividend equivalents~~the holder while ~~outstanding. The weighted-average grant date fair values of service-based RSU~~outstanding and unvested. No such awards ~~granted~~ were ~~$73.32 and $83.92 per share~~granted during the ~~nine-month periods ended December 30, 2017 and December 31, 2016, respectively.~~

~~A summary of restricted stock and service-based RSU activity during the~~ ~~nine~~three months ended ~~December 30, 2017~~ ~~is as follows:~~

Number of Shares
Restricted Stock Service-based RSUs
(thousands)
Nonvested at April 1, 2017 19
922
Granted —
695
Vested —
(325 )
Forfeited —
(140 )
Nonvested at December 30, 2017 19
1,152

~~Performance-based RSUs~~

The fair values of the Company's performance-based RSUs that are not subject to a market condition in the form of a total shareholder return ("TSR") modifier 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 not entitled to accrue dividend equivalents while outstanding.July 2, 2022. The weighted-average grant date fair values of performance-based ~~RSUs that do not contain a TSR modifier~~RSU awards granted was $113.57 during the ~~nine-month periods~~three months ended ~~December 30, 2017 and December 31, 2016 were $69.40 and $86.15 per share, respectively.~~June 26, 2021.

Market-based RSUs

The Company grants market-based RSUs, which are based on total shareholder return ("TSR") performance, to its senior executives and other key employees. The Company estimates the fair ~~values~~value of ~~the Company's performance-based RSUs with a~~its TSR ~~modifier are determined~~awards on the date of grant using a Monte Carlo simulation, ~~valuation model. This pricing model uses~~which models multiple ~~simulations~~stock price paths of the Company's Class A common stock and that of its peer group to evaluate ~~the probability of the Company achieving various stock price levels to~~and determine its ultimate expected relative TSR performance ranking. Compensation expense, net of estimated forfeitures, is recorded regardless of whether, and the extent to which, the market condition is ultimately satisfied. No such awards were granted during the ~~nine-month~~three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016.~~June 26, 2021.

A summary of performance-based RSU activity including TSR awards during the three months ended July 2, 2022 is as follows:


						Number of Performance-based RSUs
						(thousands)
Unvested at April 2, 2022						542
Granted						—
Change due to performance and/or market condition achievement						(58)
Vested						(269)
Forfeited						—
Unvested at July 2, 2022						215



			3329

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Segment Information

~~A summary of performance-based RSU activity during the nine months ended December 30, 2017 is as follows:~~

Number of Shares

Performance-based
RSUs — without
TSR Modifier

Performance-based
RSUs — with
TSR Modifier
(thousands)
Nonvested at April 1, 2017 788
61
Granted 585
—
Change due to performance/market condition achievement (12 ) (21 )
Vested (149 ) (40 )
Forfeited (28 ) —
Nonvested at December 30, 2017 1,184
—


~~17.~~	~~Segment Information~~

The Company has ~~three~~3 reportable segments based on its business activities and organization:

•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~~retail and ~~retail~~wholesale businesses in the U.S. and ~~Canada, excluding Club Monaco.~~Canada. In North America, the Company's retail business is primarily comprised of its Ralph Lauren stores, its factory stores, and its digital commerce site, www.RalphLauren.com. The Company's wholesale business in North America 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 e-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~~retail and ~~retail~~wholesale businesses in Europe and ~~the Middle East, excluding Club Monaco.~~emerging markets. In Europe, the Company's retail business is primarily comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various digital commerce sites. The Company's wholesale business in Europe is comprised primarily of a varying mix of sales to both department stores and specialty stores, depending on the ~~country.~~country, as well as to various third-party digital partners.

•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 retail and wholesale businesses in Asia, Australia, and New Zealand. The Company's retail business in ~~Europe~~Asia is primarily comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and its various ~~e-commerce~~digital commerce sites.

~~Asia~~ — The Asia segment primarily consists of sales of Ralph Lauren branded apparel, 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, and its concession-based shop-within-shops. In addition, the Company sells its products online through various third-party digital partner ~~e-commerce~~commerce sites. ~~In Asia, the~~The Company's wholesale business in Asia is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.

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)~~Ralph Lauren and Chaps branded royalty revenues earned through its global licensing alliances. In addition, prior to its disposition at the end of the Company's first quarter of Fiscal 2022, other non-reportable segments also included sales of Club Monaco branded products made through ~~its~~the Company's retail and wholesale businesses in the U.S., Canada, and Europe, and its licensing alliances in ~~Europe and Asia, (ii) sales~~Asia. Refer to Note 8 for additional discussion regarding the disposition of ~~Ralph Lauren branded products made through~~the Company's former Club Monaco business, as well as the transition of its ~~wholesale~~Chaps business ~~in Latin America, and (iii) royalty revenues earned through its global licensing alliances, excluding Club Monaco.~~to a fully licensed business model.

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 ~~2017~~2022 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~~restructuring-related charges, impairment of assets, and certain other one-time items, ~~such as legal charges,~~ 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.



			3430

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the fourth quarter of Fiscal 2017, the Company realigned its segment reporting structure as a result of significant organizational changes implemented in connection with the Way Forward Plan. Refer to Note 20 of the Company's Fiscal 2017 Form 10-K for further discussion. All prior period segment information has been recast to reflect the realignment of the Company's segment reporting structure on a comparative basis.

Net revenues ~~and operating income (loss)~~ for each of the Company's segments are as follows:


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Net revenues:
North America		$	700.7	$	662.1
Europe		415.6		354.9
Asia		334.1		288.2
Other non-reportable segments		40.2		71.1
Total net revenues		$	1,490.6	$	1,376.3

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Net revenues:
North America $ 886.4
$ 1,000.8
$ 2,471.7
$ 2,901.2
Europe 378.5
349.2
1,165.0
1,172.6
Asia 251.0
235.2
676.9
662.8
Other non-reportable segments 125.9
129.4
339.5
350.8
Total net revenues $ 1,641.8
$ 1,714.6
$ 4,653.1
$ 5,087.4
Operating income for each of the Company's segments is as follows:

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Operating income (loss)^(a):

North America $ 196.6
$ 206.4
$ 549.3
$ 574.6
Europe 81.0
63.8
273.6
239.2
Asia 44.3
23.3
101.0
(80.3 )
Other non-reportable segments 37.1
33.2
96.9
91.0
359.0
326.7
1,020.8
824.5
Unallocated corporate expenses (146.5 ) (131.7 ) (469.3 ) (457.2 )
Unallocated restructuring and other charges^(b)
(23.3 ) (66.7 ) (78.7 ) (193.9 )
Total operating income $ 189.2
$ 128.3
$ 472.8
$ 173.4


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Operating income(a):
North America		$	132.8	$	186.3
Europe		73.2		94.5
Asia		78.7		60.4
Other non-reportable segments		37.2		35.4
		321.9		376.6
Unallocated corporate expenses		(141.1)		(155.3)
Unallocated restructuring and other charges, net(b)		(5.6)		(0.7)
Total operating income		$	175.2	$	220.6

(a)Segment operating income and unallocated corporate expenses during the three months ended June 26, 2021 also included asset impairment charges (see Note 7), which are detailed below. No asset impairment charges were recorded during the three months ended July 2, 2022.


^(a)	~~Segment operating income (loss) and unallocated~~	Three Months Ended
			July 2, 2022		June 26, 2021
			(millions)
	Asset impairment charges:


	Asia		$	—	$	(1.1)

	Unallocated corporate expenses ~~during the three-month and nine-month periods ended December 30, 2017 and December 31, 2016 included certain restructuring-related inventory charges (see Note 8) and~~		—		(17.5)
	Total asset impairment charges ~~(see Note 7), which are detailed below:~~		$	—	$	(18.6)

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Restructuring-related inventory charges:
North America $ —
$ (0.6 ) $ (0.8 ) $ (25.4 )
Europe —
(1.3 ) (0.1 ) (13.8 )
Asia —
(12.4 ) —
(106.5 )
Other non-reportable segments —
(0.1 ) (0.4 ) (3.7 )
Total restructuring-related inventory charges $ —
$ (14.4 ) $ (1.3 ) $ (149.4 )



			3531

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(b)The three-month periods ended July 2, 2022 and June 26, 2021 included certain unallocated restructuring and other charges, net (see Note 8), which are detailed below:

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Asset impairment charges:
North America $ (1.7 ) $ (1.7 ) $ (2.6 ) $ (9.4 )
Europe —
(0.3 ) (1.2 ) (1.9 )
Asia (0.2 ) (2.6 ) (1.1 ) (38.1 )
Other non-reportable segments (0.1 ) (5.5 ) (8.7 ) (6.5 )
Unallocated corporate expenses (1.9 ) (0.2 ) (11.2 ) (0.8 )
Total asset impairment charges $ (3.9 ) $ (10.3 ) $ (24.8 ) $ (56.7 )


^(b)	~~The three-month and nine-month periods ended December 30, 2017 and December 31, 2016 included certain unallocated restructuring and other charges (see Note 8), which are detailed below:~~

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Unallocated restructuring and other charges:
North America-related $ (1.3 ) $ (5.3 ) $ (14.5 ) $ (27.8 )
Europe-related (0.5 ) (1.1 ) (5.6 ) (17.5 )
Asia-related 0.1
(49.2 ) 1.0
(57.5 )
Other non-reportable segment-related —
0.2
(6.8 ) (2.9 )
Corporate-related (18.1 ) (11.3 ) (37.8 ) (88.2 )
Unallocated restructuring charges (19.8 ) (66.7 ) (63.7 ) (193.9 )
Other charges (see Note 8) (3.5 ) —
(15.0 ) —
Total unallocated restructuring and other charges $ (23.3 ) $ (66.7 ) $ (78.7 ) $ (193.9 )


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Unallocated restructuring and other charges, net:
North America-related		$	—	$	0.1
Europe-related		1.1		1.0
Asia-related		0.2		0.1
Other non-reportable segment-related		—		(0.1)
Corporate operations-related		(2.0)		(1.0)
Unallocated restructuring charges		(0.7)		0.1
Other charges (see Note 8)		(4.9)		(0.8)
Total unallocated restructuring and other charges, net		$	(5.6)	$	(0.7)

Depreciation and amortization expense for the Company's segments is as follows:

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Depreciation and amortization:
North America $ 19.5
$ 27.8
$ 61.1
$ 84.0
Europe 9.1
8.6
25.7
23.5
Asia 12.1
11.3
35.7
36.8
Other non-reportable segments 2.6
3.5
8.2
11.1
Unallocated corporate expenses 25.9
26.7
78.2
76.5
Unallocated restructuring and other charges (see Note 8) 3.5
—
10.5
—
Total depreciation and amortization $ 72.7
$ 77.9
$ 219.4
$ 231.9



	36

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Depreciation and amortization expense:
North America		$	18.2	$	18.0
Europe		7.8		7.8
Asia		12.1		12.9
Other non-reportable segments		—		0.4
Unallocated corporate		16.7		18.1

Total depreciation and amortization expense		$	54.8	$	57.2

Net revenues by geographic location of the reporting subsidiary are as follows:


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Net revenues(a):
The Americas(b)		$	746.2	$	735.4
Europe(c)		410.4		352.5
Asia(d)		334.0		288.4
Total net revenues		$	1,490.6	$	1,376.3

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Net revenues^(a):

The Americas^(b)
$ 1,009.5
$ 1,126.7
$ 2,801.8
$ 3,242.4
Europe^(c)
381.0
352.3
1,173.3
1,181.0
Asia^(d)
251.3
235.6
678.0
664.0
Total net revenues $ 1,641.8
$ 1,714.6
$ 4,653.1
$ 5,087.4

(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 July 2, 2022 and June 26, 2021 were $712.1 million and $708.0 million, respectively.

(c)Includes the Middle East.

(d)Includes Australia and New Zealand.


^(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.~~

32
^(b)

RALPH LAUREN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. Additional Financial Information

Includes the U.S., Canada, and Latin America. Net revenues earned in the U.S. during the three-month and nine-month periods ended December 30, 2017 were $946.3 million and $2.629 billion, respectively, and $1.064 billion and $3.066 billion during the three-month and nine-month periods ended December 31, 2016, respectively.


^(c)	~~Includes the Middle East.~~


^(d)	~~Includes Australia and New Zealand.~~


~~18.~~	~~Additional Financial Information~~

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

A reconciliation of cash, cash equivalents, and restricted cash as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017~~2, 2022 from the consolidated balance sheets to the consolidated statements of cash flows is as follows:


	July 2, 2022		April 2, 2022
	(millions)
Cash and cash equivalents	$	1,456.8	$	1,863.8
Restricted cash included within prepaid expenses and other current assets	1.5		1.6
Restricted cash included within other non-current assets	6.0		6.6
Total cash, cash equivalents, and restricted cash	$	1,464.3	$	1,872.0

December 30,
2017 April 1,
2017
(millions)
Cash and cash equivalents $ 1,175.7
$ 668.3
Restricted cash included within prepaid expenses and other current assets 13.4
9.8
Restricted cash included within other non-current assets 34.1
33.7
Total cash, cash equivalents, and restricted cash $ 1,223.2
$ 711.8

~~Amounts included in restricted~~Restricted cash ~~relate~~relates to cash ~~placed~~held in escrow with certain banks as collateral, primarily to secure guarantees in connection with certain international tax ~~matters.~~matters and real estate leases.

Cash Paid for Interest and Taxes

Cash paid for interest and income taxes is as follows:


	Three Months Ended
		July 2, 2022		June 26, 2021
		(millions)
Cash paid for interest		$	17.0	$	17.7
Cash paid for income taxes, net of refunds		24.1		35.5

Three Months Ended Nine Months Ended
December 30,
2017 December 31,
2016 December 30,
2017 December 31,
2016
(millions)
Cash paid for interest $ 3.6
$ 2.9
$ 9.2
$ 9.7
Cash paid for income taxes 19.4
19.2
47.7
69.5
Cash Paid for Leases

The following table summarizes certain cash flow information related to the Company's leases:



	37

~~RALPH LAUREN CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~


	Three Months Ended
	July 2, 2022		June 26, 2021
	(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	85.7	$	90.7
Operating cash flows for finance leases	2.9		3.2
Financing cash flows for finance leases	5.8		5.5

Non-cash Transactions

Operating lease ROU assets recorded in connection with the recognition of new lease liabilities were $54.2 million and $98.6 million during the three-month periods ended July 2, 2022 and June 26, 2021, respectively.

Non-cash investing activities also included capital expenditures incurred but not yet paid of ~~$33.9~~$40.1 million and ~~$55.9~~$17.6 million for the ~~nine-month~~three-month periods ended ~~December 30, 2017~~July 2, 2022 and December 31, 2016, respectively. Additionally, the Company recorded capital lease assets and corresponding capital lease obligations of $3.3 million and $5.5 million within its consolidated balance sheet during the nine-month periods ended December 30, 2017 and December 31, 2016,June 26, 2021, respectively.

There were no other significant non-cash investing or financing activities for any of the fiscal periods presented.



			3833

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


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

Special Note Regarding Forward-Looking Statements

Various statements in this Form 10-Q, or incorporated by reference into this Form 10-Q, in future filings by us with the Securities and Exchange Commission (the "SEC"), in our press releases, and in oral statements made from time to time by us or on our behalf constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our future operating results and sources of liquidity (especially in light of the COVID-19 pandemic), the implementation and impact of our strategic plans, initiatives and capital expenses, our plans regarding our quarterly cash dividend and Class A common stock repurchase programs, and our ability to meet environmental, social, and governance goals. Forward-looking statements are based on current expectations and are indicated by words or phrases such as "anticipate," "outlook," "estimate," "expect," "project," ~~"we believe,~~"believe," ~~"is or remains optimistic,~~"envision," ~~"currently envisions,~~"goal," "target," "can," "will," and similar words or phrases and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others:

•the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, including those resulting from the recent reduction to our global workforce in connection with our long-term growth strategy, and our ability to effectively transfer knowledge and maintain adequate controls and procedures during periods of transition;

~~the potential impact to our business and future strategic direction resulting from our transition to our new Chief Executive Officer;~~

~~our ability to successfully implement our long-term growth strategy and achieve anticipated operating enhancements and cost reductions from our restructuring plans;~~

•the impact to our business resulting from ~~investments~~the COVID-19 pandemic, including periods of reduced operating hours and capacity limits and/or temporary closure of our stores, distribution centers, and corporate facilities, as well as those of our customers, suppliers, and vendors, and potential changes to consumer behavior, spending levels, and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations;

•the potential impact to our business resulting from inflationary pressures, including increases in the costs of raw materials, transportation, wages, healthcare, and other ~~costs incurred in connection with~~ benefit-related costs;

•the ~~execution~~impact of economic, political, and other conditions on us, our ~~long-term growth strategy,~~customers, suppliers, vendors, and lenders, including ~~restructuring-related charges, which may be dilutive~~potential business disruptions related to the war between Russia and Ukraine, civil and political unrest, and diplomatic tensions between the U.S. and other countries;

•the potential impact to our ~~earnings~~business resulting from supply chain disruptions, including those caused by capacity constraints, closed factories and/or labor shortages (stemming from pandemic diseases, labor disputes, strikes, or otherwise), scarcity of raw materials, and port congestion, which could result in ~~the short term;~~inventory shortages and lost sales;

•our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;

•our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;

•our ability to recruit and retain employees to operate our retail stores, distribution centers, and various corporate functions;

•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 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;


			34

•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 competitively price our products and create an acceptable value proposition for consumers;

•our ability to continue to maintain our brand image and reputation and protect our trademarks;

•our ability to achieve our goals regarding environmental, social, and governance practices, including those related to climate change and our human capital;

•our ability and the ability of our third-party service providers to secure our respective facilities and systems from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, ransomware, or similar Internet or email events;

•our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms;

•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 man-made or natural disasters, including pandemic diseases such as COVID-19, severe weather, geological events, and other catastrophic events;

•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 or temporary closure of our stores or termination of our long-term, non-cancellable leases;

~~our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and e-commerce platform;~~

•our ability to ~~secure~~maintain adequate levels of liquidity to provide for our ~~facilities~~cash needs, including our debt obligations, tax obligations, capital expenditures, and ~~systems~~potential payment of dividends and ~~those~~repurchases of our ~~third-party service providers from, among other things, cybersecurity breaches, acts~~Class A common stock, as well as the ability of ~~vandalism, computer viruses, or similar Internet or email events;~~our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs;

•the potential impact to our business resulting from the ~~recently enacted U.S. tax legislation commonly referred to as~~financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the ~~Tax Cuts and Jobs Act, including related changes to our tax obligations and effective tax rate in future periods,~~retail industry, as well as the one-time enactment-related charges that were recorded during the third quarter of Fiscal 2018 on a provisional basis based on a reasonable estimate and are subject to change, all of which could differ materially from our current expectations and/or investors' expectations;

other changes in the competitive marketplace, including the introduction of new products or pricing changes by our ~~tax obligations~~competitors;

•our ability to access capital markets and effective tax rate due to a variety of other factors, including potential additional 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;maintain compliance with covenants associated with our existing debt instruments;

•a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products ~~tariffs, and other trade barriers~~ 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;

~~our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;~~

~~the impact to our business resulting from increases in the costs of raw materials, transportation, and labor;~~



	39

•the potential impact to our business resulting from the ~~financial difficulties~~imposition of ~~certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings,~~additional duties, tariffs, taxes, and other ~~ownership changes in~~charges or barriers to trade, including those resulting from trade developments between the ~~retail industry,~~U.S. and China, and any related impact to global stock markets, as well as ~~other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors;~~

~~the impact to our business resulting from changes in consumers' ability or preferences to purchase premium lifestyle products that we offer for sale and~~ our ability to ~~forecast consumer demand, which could result~~implement mitigating sourcing strategies;

•changes in ~~either a build-up or shortage of inventory;~~

our ~~ability to maintain our credit profile and ratings within the financial community;~~

~~our ability to access sources of liquidity to provide for our cash needs, including our debt obligations,~~ tax obligations ~~payment~~and effective tax rate due to a variety of ~~dividends, capital expenditures,~~factors, including potential changes in U.S. or foreign tax laws and ~~potential repurchases~~regulations, accounting rules, or the mix and level 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;~~earnings by jurisdiction in future periods that are not currently known or anticipated;

~~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;~~

~~the impact of the volatile state of the global economy, stock markets, and other global economic conditions on us, our customers, suppliers, vendors, and lenders;~~

•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;


			35

•the potential impact to the trading prices of our securities if our operating results, Class A common stock share repurchase activity, and/or cash dividend payments differ from investors' expectations;

•our ability to ~~open new retail stores, concession shops, and e-commerce sites in an effort to expand our direct-to-consumer presence;~~

~~our ability to continue to expand or grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result;~~

~~our ability to continue to~~ maintain our ~~brand image~~credit profile and ~~reputation and protect our trademarks;~~ratings within the financial community;

•our intention to introduce new products or brands, or enter into or renew ~~alliances and exclusive relationships;~~alliances;

•changes in the business of, and our relationships with, major ~~department store~~wholesale customers and licensing partners; and

~~the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters;~~

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; and

•our ability to make ~~certain~~ strategic acquisitions and successfully integrate the acquired businesses into our existing operations.

These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is included in our Annual Report on Form 10-K for the fiscal year ended April ~~1, 2017~~2, 2022 (the "Fiscal ~~2017~~2022 10-K"). There are no material changes to such risk factors, ~~other than~~nor have we identified any previously undisclosed risks that could materially adversely affect our business, operating results, and/or financial condition, as set forth in Part II, Item 1A — "Risk Factors" of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

In this Form 10-Q, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise. We utilize a 52-53 week fiscal year ending on the Saturday ~~closest to~~immediately before or after March 31. As such, fiscal year ~~2018~~2023 will end on ~~March 31, 2018~~April 1, 2023 and will be a 52-week period ("Fiscal ~~2018"~~2023"). Fiscal year ~~2017~~2022 ended on April ~~1, 2017~~2, 2022 and was ~~also~~ a ~~52-week~~53-week period ("Fiscal ~~2017"~~2022"). The ~~third~~first quarter of Fiscal ~~2018~~2023 ended on ~~December 30, 2017~~July 2, 2022 and was a 13-week period. The ~~third~~first quarter of Fiscal ~~2017~~2022 ended on ~~December 31, 2016~~June 26, 2021 and was also a 13-week period.



	40

INTRODUCTION

Management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of our results of operations, financial condition, and liquidity. MD&A is organized as follows:

•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 ~~and nine-month periods~~period ended ~~December 30, 2017.~~July 2, 2022. 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 ~~and nine-month periods~~period ended ~~December 30, 2017~~July 2, 2022 as compared to the three-month ~~and nine-month periods~~period ended ~~December 31, 2016.~~

June 26, 2021.

•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of ~~December 30, 2017~~,July 2, 2022, 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 ~~nine~~three months ended ~~December 30, 2017~~July 2, 2022 as compared to the ~~nine~~three months ended ~~December 31, 2016;~~June 26, 2021; (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;~~compliance, common stock repurchases, and payments of dividends; and (iv) a description of any material changes in our ~~contractual and other obligations~~material cash requirements since April ~~1, 2017.~~

2, 2022.

•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 April ~~1, 2017.~~

2, 2022.

•Critical accounting policies. This section discusses any significant changes in our critical accounting policies since April ~~1, 2017.~~2, 2022. 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 ~~2017~~2022 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.~~issued.


			36

OVERVIEW

Our Business

Our Company is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, footwear, accessories, home furnishings, fragrances, and ~~other licensed product categories.~~hospitality. Our long-standing reputation and distinctive image have been developed across ~~an expanding number~~a wide range of products, brands, ~~sales~~distribution channels, and international markets. Our 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,~~Chaps, among others.

We diversify our business by geography (North America, Europe, and Asia, among other regions) and ~~channels~~channel of distribution ~~(wholesale, retail,~~(retail, wholesale, and licensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area or channel of distribution. ~~Our wholesale sales are made principally to major department stores and specialty stores around the world.~~ We ~~also~~ sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and ~~e-commerce~~digital commerce operations around the world. Our 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 we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to ~~unrelated~~ third parties for specified periods the right to ~~operate retail stores and/or to use~~access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.



	41

We organize our business into the following three reportable segments:

•North America — Our North America segment, representing approximately ~~57%~~48% of our Fiscal ~~2017~~2022 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our ~~wholesale~~retail and ~~retail~~wholesale businesses in the U.S. and ~~Canada, excluding Club Monaco.~~Canada. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com. Our wholesale business in North America 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 e-commerce site, www.RalphLauren.com.~~

•Europe — Our Europe segment, representing approximately ~~23%~~28% of our Fiscal ~~2017~~2022 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our ~~wholesale~~retail and ~~retail~~wholesale businesses in Europe and ~~the Middle East, excluding Club Monaco.~~emerging markets. In Europe, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites. Our wholesale business in Europe is comprised primarily of a varying mix of sales to both department stores and specialty stores, depending on the ~~country.~~country, as well as to various third-party digital partners.

•Asia — Our Asia segment, representing approximately 21% of our Fiscal 2022 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in ~~Europe~~Asia is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various ~~e-commerce~~digital commerce sites.

~~Asia~~ — Our Asia segment, representing approximately 13% of our Fiscal 2017 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, and our concession-based shop-within-shops. In addition, we sell our products online through various third-party digital partner ~~e-commerce~~commerce sites. ~~In Asia, our~~Our wholesale business in Asia is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.

No operating segments were aggregated to form our reportable segments. In addition to these reportable segments, we also have other non-reportable segments, representing approximately 7%3% of our Fiscal ~~2017~~2022 net revenues, which primarily consist of ~~(i)~~Ralph Lauren and Chaps branded royalty revenues earned through our global licensing alliances. In addition, prior to its disposition at the end of our first quarter of Fiscal 2022, our other non-reportable segments also included sales of ~~our~~ Club Monaco branded products made through our retail and wholesale businesses in the U.S., Canada, and Europe, and our licensing alliances in ~~Europe and Asia, (ii) sales~~Asia. Refer to "Recent Developments" for additional discussion regarding the disposition of our ~~Ralph Lauren branded products made through~~former Club Monaco business, as well as the transition of our ~~wholesale~~Chaps business ~~in Latin America, and (iii) royalty revenues earned through our global licensing alliances, excluding Club Monaco.~~to a fully licensed business model.

During the fourth quarter of Fiscal 2017, we realigned our segment reporting structure as a result of significant organizational changes implemented in connection with the Way Forward Plan, as defined within "~~Recent Developments~~"~~below. Refer to Note 20~~Approximately 51% of our Fiscal ~~2017 Form 10-K for further discussion. All prior period segment information has been recast to reflect the realignment of our segment reporting structure on a comparative basis.~~

~~Approximately 40% of our Fiscal 2017~~2022 net revenues were earned outside of the U.S. See Note 17 to the accompanying consolidated financial statements for ~~a summary~~further discussion of ~~net revenues and operating income (loss) by~~our segment ~~as well as net revenues by geographic location.~~reporting structure.

Our business is typically affected by seasonal trends, with higher levels of retail sales in our second and third fiscal quarters and higher wholesale sales in our second and fourth ~~fiscal quarters and higher retail sales in our 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 our retail ~~business.~~business and timing of seasonal wholesale shipments. As a result of changes in our 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 our future performance. In addition, fluctuations in ~~net~~ sales, operating


			37

income (loss), and cash flows in any fiscal quarter may be affected by other events ~~impacting~~affecting retail sales, such as changes in weather patterns. Accordingly, our operating results and cash flows for the three-month ~~and nine-month periods~~period ended~~December 30, 2017~~ July 2, 2022 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal ~~2018~~.2023.

~~Global Economic Conditions and Industry Trends~~

~~The global economy and our industry are impacted by many different influences. Most recently, the U.S. enacted new tax legislation known as the TCJA (as defined in "~~Recent Developments~~" below), which is intended to stimulate economic growth and capital investment~~

COVID-19 Pandemic

Beginning in the ~~U.S. by, among its other provisions, lowering tax rates for both corporations~~fourth quarter of our fiscal year ended March 28, 2020, a novel strain of coronavirus commonly referred to as COVID-19 emerged and ~~individuals alike. Certain other~~spread rapidly across the globe, including throughout all major geographies in which we operate, resulting in adverse economic conditions and widespread business disruptions. Since then, governments worldwide ~~events, including political unrest, acts~~have periodically imposed varying degrees of ~~terrorism, monetary policy changes,~~preventative and ~~currency~~protective actions, such as temporary travel bans, forced business closures, and ~~commodity price changes, increase volatility~~stay-at-home orders, all in an effort to reduce the global economy. In addition, the current domestic and international political environment, including potential changes to other U.S. policies related to global trade, immigration, and healthcare, have also resulted in uncertainty surrounding the future statespread of the ~~global economy.~~ virus.

As a result of the COVID-19 pandemic, we have experienced varying degrees of business disruptions since its beginning, including periods of closure of our ~~international business continues~~stores and corporate-related facilities, as have our wholesale customers, licensing partners, and suppliers. Such disruptions continued throughout Fiscal 2022 in certain regions, although to ~~grow,~~a lesser extent than the widespread significant disruptions experienced during our fiscal year ended March 27, 2021, and ~~because~~have since extended into the first quarter of Fiscal 2023, most notably in Asia where approximately 50% of our stores in China experienced closures for a significant portion of the quarter. Further, throughout the course of the pandemic, the majority of our ~~products are produced outside~~stores that were able to remain open have periodically been subject to limited operating hours and/or customer capacity levels in accordance with local health guidelines, with traffic remaining challenged. However, our digital commerce operations have grown significantly from pre-pandemic levels, due in part to our investments and enhanced capabilities, as well as changes in consumer shopping preferences.

The COVID-19 pandemic also continues to adversely impact our distribution, logistic, and sourcing partners, including temporary factory closures, labor shortages, vessel, container and other transportation shortages, and port congestion. Such disruptions have reduced the availability of inventory, delayed timing of inventory receipts, and resulted in increased costs for both the purchase and transportation of such inventory.

Despite the introduction of COVID-19 vaccines, the pandemic remains volatile and continues to evolve, with resurgences and outbreaks occurring in various parts of the ~~U.S., major changes in~~world, including those resulting from variants of the virus. Accordingly, we cannot predict for how long and to what extent the pandemic will continue to impact our business operations or the overall global ~~tax policies or trade relations~~economy. We will continue to assess our operations location-by-location, considering the guidance of local governments and global health organizations. See Item 1A — "Risk Factors — Risks Related to Macroeconomic Conditions — Infectious disease outbreaks, such as the COVID-19 pandemic, could have a material adverse effect on our business ~~or operating results. Our results also~~" in the Fiscal 2022 10-K for additional discussion regarding risks to our business associated with the COVID-19 pandemic.

Fiscal 2021 Strategic Realignment Plan

We have ~~been,~~undertaken efforts to realign our resources to support future growth and profitability, and to create a sustainable, enhanced cost structure. The key initiatives underlying these efforts involve evaluation of our: (i) team organizational structures and ways of working; (ii) real estate footprint and related costs across our corporate offices, distribution centers, and direct-to-consumer retail and wholesale doors; and (iii) brand portfolio.

In connection with the first initiative, on September 17, 2020, our Board of Directors approved a restructuring plan (the "Fiscal 2021 Strategic Realignment Plan") to reduce our global workforce. Additionally, during a preliminary review of our store portfolio during the second quarter of Fiscal 2021, we made the decision to close our Polo store on Regent Street in London.

Shortly thereafter, on October 29, 2020, we announced the planned transition of our Chaps brand to a fully licensed business model, consistent with our long-term brand elevation strategy and in connection with our third initiative. Specifically, we have entered into a multi-year licensing partnership, which took effect on August 1, 2021 following a transition period, with an affiliate of 5 Star Apparel LLC, a division of the OVED Group, to manufacture, market, and distribute Chaps menswear and womenswear. The products are ~~expected~~being sold at existing channels of distribution with opportunities for expansion into additional channels and markets globally. This agreement created incremental value for the Company by enabling an even greater focus on elevating our core brands in the marketplace, reducing our direct exposure to ~~continue~~the North America department store channel, and setting up Chaps to ~~be, impacted by foreign exchange rate fluctuations.~~

deliver on its potential with an experienced partner that is focused on nurturing the brand.



			4238

Later, on February 3, 2021, our Board of Directors approved additional actions related to our real estate initiative. Specifically, we are in the process of further rightsizing and consolidating our global corporate offices to better align with our organizational profile and new ways of working. We also have closed, and may continue to close, certain of our stores to improve overall profitability. Additionally, we further consolidated our North America distribution centers in order to drive greater efficiencies, improve sustainability, and deliver a better consumer experience.

Finally, on June 26, 2021, in connection with our brand portfolio initiative, we sold our former Club Monaco business to Regent, L.P. ("Regent"), a global private equity firm, with no resulting gain or loss on sale realized during the first quarter of Fiscal 2022. Regent acquired Club Monaco's assets and liabilities in exchange for potential future cash consideration payable to us, including earn-out payments based on Club Monaco meeting certain defined revenue thresholds over a five-year period. Accordingly, we may realize amounts in the future related to the receipt of such contingent consideration. Additionally, in connection with this divestiture, we are providing Regent with certain operational support for a transitional period of approximately one year, varying by functional area.

In ~~addition,~~connection with the Fiscal 2021 Strategic Realignment Plan, we have recorded cumulative pre-tax charges of $262.8 million, of which $0.7 million and $18.5 million were recorded during the three-month periods ended July 2, 2022 and June 26, 2021, respectively. Actions associated with the Fiscal 2021 Strategic Realignment Plan were substantially completed by the end of Fiscal 2022, with certain remaining actions expected to be completed during Fiscal 2023. We expect total charges of up to $300 million to be incurred in connection with this plan, consisting of cash-related charges of approximately $180 million and non-cash charges of approximately $120 million. Actions associated with this plan are expected to result in gross annualized pre-tax expense savings of approximately $200 million, a portion of which is being reinvested back into the business.

See Note 8 to our accompanying consolidated financial statements for additional discussion regarding charges recorded in connection with the Fiscal 2021 Strategic Restructuring Plan.

Global Economic Conditions and Industry Trends

The global economy and retail industry are impacted by many different factors. As discussed in "Recent Developments," governments worldwide have periodically imposed varying degrees of preventative and protective actions throughout the course of the COVID-19 pandemic, such as temporary travel bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus. Such actions, together with changes in consumers' willingness to congregate in populated areas and lower levels of disposal income due to higher unemployment rates, have resulted in significant business disruptions across a wide array of industries since the outbreak of the pandemic. The COVID-19 pandemic has also significantly disrupted distribution, logistic, and supply chain operations globally, including temporary factory closures, labor shortages, vessel, container and other transportation shortages, and port congestion. Such disruptions have reduced the availability of inventory, delayed timing of inventory receipts, and resulted in increased costs for both the purchase and transportation of such inventory. Despite the introduction of COVID-19 vaccines, resurgences and outbreaks continue to occur in certain geographic locations, including those resulting from variants of the virus. Accordingly, it is not clear at this time how much longer and to what extent the pandemic will last.

The global economy has also been negatively impacted by the war between Russia and Ukraine. Several countries, including the U.S., have imposed significant economic sanctions against Russia, including export controls and other trade restrictions with Russian entities. Various companies, including Ralph Lauren, have also voluntarily elected to suspend operations in Russia in protest of the conflict. The Russia-Ukraine war has adversely impacted consumer sentiment and confidence, particularly in Eastern Europe. It is not clear at this time how long the conflict will endure, or if it will escalate further with additional countries declaring war against each other, which could further compound the adverse impact to the global economy. Certain other worldwide events and factors, such as international trade relations, new legislation and regulations, taxation or monetary policy changes, political and civil unrest, and significant inflationary pressures, including increases in the cost of raw materials, transportation, wages, healthcare and other benefit-related costs, among other factors, have also adversely impacted the global economy.

The retail landscape in which we operate ~~is evolving, with consumers continuing~~continues to ~~diversify~~be disrupted by the ~~channels in which they transact~~COVID-19 pandemic, including periods of temporary closures of stores and shifting their shopping preference from physical stores to online. This, along with other factors, has resulted in many retailers, including certain of our large wholesale customers, becoming highly promotionaldistribution centers and ~~aggressively marking down their merchandise in an attempt to offset~~ declines in ~~physical store traffic.~~retail traffic, tourism, and consumer spending on discretionary items. The retail industry, particularly in the U.S., has also experienced numerous bankruptcies, restructurings, and ownership changes in recent years. ~~Certain of our operations, including our North America wholesale business, have been negatively impacted by these dynamics.~~Supply chain-related risks also continue to exist as manufacturers and transportation providers alike are finding it difficult to meet increased consumer demand. The continuation of these industry trends ~~could further impact consumer spending and consumption behavior in our industry, which~~ could have a material adverse effect on our business or operating results. Additionally, changes in economic conditions, including ~~those that~~recent inflationary pressures and the growing concerns of a potential recession, may ~~result from the TCJA, can~~ further impact consumer discretionary income levels, ~~and spending. While we are optimistic that the TCJA will stimulate economic growth, it is still too early to determine the resulting impact on consumer~~ spending, and ~~consumption behavior.~~sentiment.


			39

We have implemented various ~~operating~~ strategies globally to help address many of these current challenges and continue to build a foundation for long-term profitable growth centered around strengthening our consumer-facing areas of product, stores, and marketing across channels and driving a more efficient operating model. ~~In connection~~Throughout the course of the COVID-19 pandemic, our priority has been to ensure the safety and well-being of our employees, customers, and the communities in which we operate around the world. We continue to consider the guidance of local governments and global health organizations and have implemented health and safety protocols in our stores, distribution centers, and corporate facilities. Investing in our digital ecosystem remains a primary focus and is a key component of our integrated global omni-channel strategy and driving consumer engagement, particularly in light of the current COVID-19 pandemic, which has and could continue to reshape consumer shopping preferences. During the first quarter of Fiscal 2023, we launched additional digital sites in key markets globally, including India and Israel. We also continue to drive consumer engagement and global brand awareness through our sports sponsorships, with ~~these strategies,~~recent events including the Wimbledon and PGA Championship, as well as through our special product releases and limited collections and celebrity dressings at highly publicized events, such as the recent Met Gala. Additionally, we ~~are taking~~have accelerated our marketing investments, with a focus on supporting new customer acquisition, digitally-amplified brand campaigns, and resumption of in-store programs as markets continue to reopen worldwide. We also continue to take deliberate actions to ensure promotional consistency across channels and to enhance the overall brand and shopping experience, including ~~reducing~~better aligning shipments ~~to better align~~and inventory levels with underlying ~~demand and lower inventory levels. Additionally, we are~~demand. We also remain committed to optimizing our wholesale distribution channel ~~by closing 20% to 25% of~~and enhancing our ~~underperforming U.S.~~ department store points of distribution by the end of Fiscal 2018. Further, in October 2017, we began to shift to a more cost-effective and flexible e-commerce platform for our directly operated digital businesses, which is expected to deliver a more brand-enhancing and consistent customer experience across our global digital ecosystem. See our restructuring activities as described within "~~Recent Developments~~" below for further discussion. Although the investments that we are making in our business and our quality of sales initiatives may create operating profit pressure in the near-term, we expect that these initiatives will create longer-term shareholder value.consumer experience.

We will continue to monitor these conditions and trends and will evaluate and adjust our operating strategies and foreign currency and cost management opportunities to help mitigate the related ~~impact~~impacts on our results of operations, while remaining focused on the long-term growth of our business and protecting and elevating the value of our brand.

For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A — "Risk Factors" in our Fiscal ~~2017 10-K, as well as Part II, Item 1A — "Risk Factors" of this Form 10-Q.~~2022 10-K.

Summary of Financial Performance

Operating Results

During the three months ended ~~December 30, 2017,~~July 2, 2022, we reported net revenues of ~~$1.642 billion, a net loss of $81.8 million, and net loss per diluted share of $1.00, as compared to net revenues of $1.715~~$1.491 billion, net income of ~~$81.3~~$123.4 million, and net income per diluted share of ~~$0.98 during the three months ended December 31, 2016. During the nine months ended December 30, 2017, we reported~~$1.73, as compared to net revenues of ~~$4.653~~$1.376 billion, net income of ~~$121.5~~$164.7 million, and net income per diluted share of ~~$1.47, as compared to net revenues of $5.087 billion, net income of $104.7 million, and net income per diluted share of $1.25~~$2.18 during the ~~nine~~three months ended ~~December 31, 2016.~~June 26, 2021. The comparability of our operating results has been affected by ~~one-time charges recorded during the third quarter of Fiscal 2018 in connection with the TCJA, as well as~~net restructuring-related charges, impairment of assets, and certain other ~~charges,~~benefits (charges), as well as the impacts of the disposition of our former Club Monaco business at the end of the first quarter of Fiscal 2022 and the transition of our Chaps business to a fully licensed business model during the second quarter of Fiscal 2022, as discussed further below. We also continue to experience varying degrees of business disruptions resulting from the COVID-19 pandemic, including periods of temporary closures of our stores, as well as sourcing and distribution-related delays.

Our operating performance for the ~~three-month and nine-month periods~~three months ended ~~December 30, 2017~~July 2, 2022 reflected ~~declines in net revenues~~revenue increases of ~~4.2% and 8.5%, respectively,~~8.3% on a reported basis and ~~6.1% and 8.9%, respectively,~~13.4% on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition"below. The ~~declines~~increase in ~~reported~~ net revenues ~~for the three-month and nine-month periods ended December 30, 2017 were primarily due to lower sales from our North America segment driven by the impact~~reflected growth across all of our ~~quality of distribution~~reportable segments and sales ~~initiatives, including lower levels~~channels, despite revenue declines associated with the disposition of ~~promotional activity~~our former Club Monaco business at the end of the first quarter of Fiscal 2022 and the transition of our Chaps business to a ~~strategic reduction in shipments,~~fully licensed business model during the second quarter of Fiscal 2022, as ~~well as brand discontinuances and lower consumer demand.~~discussed further below.

Our gross profit as a percentage of net revenues ~~increased~~declined by ~~340~~310 basis points to ~~60.7%~~67.2% during the three months ended ~~December 30, 2017, and~~July 2, 2022, primarily driven by ~~540 basis points to 61.1%~~higher non-routine inventory charges recorded during the ~~nine~~three months ended ~~December 30, 2017. These increases were primarily driven~~July 2, 2022 as compared to the prior fiscal year period, higher product and freight costs, and net unfavorable foreign currency effects, partially offset by improved pricing and lower levels of promotional activity in connection with our long-term growth strategy, favorable geographic and channel mix, and lower sourcing costs, as well as lower non-cash inventory-related charges recorded in connection with the Way Forward Plan.



	43

activity.

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues during the three months ended July 2, 2022 increased by 210 basis points to ~~47.1% during~~55.0%, primarily driven by the ~~three months ended December 30, 2017,~~return to a more normalized level of marketing investments, as well as higher compensation and ~~by 130 basis points~~selling-related expenses to 48.3% during the nine months ended December 30, 2017. These increases were primarily due to operating deleverage on lower net revenues and the unfavorable impact attributable to geographic and channel mix, as a greater portion of our revenue was generated by our international retail businesses (which typically carry higher operating expense margins). These increases were largely offset by our operational discipline and cost savings associated with our restructuring activities.drive strategic growth.

Net income decreased by ~~$163.1~~$41.3 million to $123.4 million during the three months ended ~~December 30, 2017 to a loss of $81.8 million~~July 2, 2022 as compared to the three months ended ~~December 31, 2016,~~June 26, 2021, primarily due to a ~~$226.3~~$45.4 million ~~increase~~decline in our income tax provision largely driven by one-time charges recorded in connection with the TCJA, partially offset by a $60.9 million increase in operating income. Net income increased by $16.8 million during the nine months ended December 30, 2017 to $121.5 million as compared to the nine months ended December 31, 2016, primarily due to a $299.4 million increase in operating income, partially offset by a ~~$283.9~~$6.5 million ~~increase~~decrease in our income tax ~~provision largely driven by one-time charges recorded in connection with the TCJA.~~

provision. Net income per diluted share ~~declined~~decreased by ~~$1.98~~$0.45 to ~~a loss of $1.00~~$1.73 per share during the three months ended ~~December 30, 2017, due to~~July 2, 2022 driven by the lower level of net income, ~~and lower weighted-average diluted shares outstanding. Net income per diluted share increased~~partially offset by ~~$0.22 to $1.47 per share during the nine months ended December 30, 2017, due to the higher level of net income and~~ lower weighted-average diluted shares outstanding.

~~Net income for~~


			40

During the three-month ~~and nine-month~~ periods ended ~~December 30, 2017 reflected one-time charges of $231.3 million, or $2.80 per diluted share, recorded in connection with the TCJA. Our~~July 2, 2022 and June 26, 2021, our operating results ~~during the three-month and nine-month periods ended December 30, 2017~~ were ~~also~~ negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling ~~$27.2~~$14.8 million and ~~$104.8~~$10.4 million, respectively, which had an after-tax effect of reducing net income by ~~$17.9~~$11.2 million, or ~~$0.23~~$0.15 per diluted share, and ~~$69.8~~$7.7 million, or $0.85 per diluted share, respectively. Our operating results during the three-month and nine-month periods ended December 31, 2016 were negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling $91.4 million and $400.0 million, respectively, which had an after-tax effect of reducing net income by $73.6 million, or $0.88 per diluted share, and $298.0 million, or $3.57$0.11 per diluted share, respectively.

Financial Condition and Liquidity

We ended the ~~third~~first quarter of Fiscal ~~2018~~2023 in a net cash and short-term investments position ~~(cash~~(calculated as cash and cash equivalents, plus short-term ~~and non-current~~ investments, less total debt) of ~~$1.533 billion,~~$639.9 million, as compared to ~~$786.2~~$962.1 million as of the end of Fiscal ~~2017.~~2022. The ~~increase~~decrease in our net cash and short-term investments position ~~at December 30, 2017 as compared to April 1, 2017~~ was primarily due to our ~~operating cash flows of $951.1 million, partially offset by our~~ use of cash to support Class A common stock repurchases of $234.7 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $48.1 million, and to invest in our business through ~~$123.0~~$39.4 million in capital expenditures, as well as the unfavorable effect of exchange rate changes on our cash, cash equivalents, and ~~to make dividend payments~~restricted cash of ~~$121.7~~$30.0 million, partially offset by operating cash flows of $45.3 million.

~~We generated $951.1 million of~~Net cash ~~from operations during the nine months ended December 30, 2017, compared to $850.7~~provided by operating activities was $45.3 million during the ~~nine~~three months ended ~~December 31, 2016.~~July 2, 2022, as compared to $247.6 million during the three months ended June 26, 2021. The ~~increase~~net decrease in ~~our~~cash provided by operating ~~cash flows~~activities was due to a net ~~favorable~~unfavorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period, ~~partially offset by~~as well as a ~~decline~~decrease in net income before non-cash charges.

Our equity ~~increased~~decreased to ~~$3.408~~$2.364 billion as of ~~December 30, 2017~~July 2, 2022 compared to ~~$3.300~~$2.536 billion as of April ~~1, 2017, primarily attributable~~2, 2022, due to our share repurchase activity and dividends declared during the three months ended July 2, 2022, partially offset by our comprehensive income and the net impact of stock-based compensation ~~arrangements, partially offset by our dividends declared during the nine months ended December 30, 2017.~~

~~Recent Developments~~

~~U.S. Tax Reform~~

On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), which became effective January 1, 2018. The TCJA significantly revises U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21%, creating a territorial tax system that includes a mandatory one-time transition tax on previously deferred foreign earnings, and eliminating or reducing certain income tax deductions.

During the third quarter of Fiscal 2018, we recorded one-time charges of $231.3 million within our income tax provision in connection with the TCJA, of which $215.5 million related to the mandatory transition tax, which we expect to pay over an



	44

eight-year period. The remaining charge of $15.8 million related to the revaluation of our deferred tax assets and liabilities. Collectively, these one-time charges, which were recorded on a provisional basis as permitted by SEC Staff Accounting Bulletin No. 118 ("SAB 118"), negatively impacted our effective tax rate by 12,410 basis points and 4,980 basis points during the three-month and nine-month periods ended December 30, 2017, respectively, and lowered our diluted earnings per share by $2.80 during each of these periods. The provisional amounts were based on our present interpretations of the TCJA and current available information, including assumptions and expectations about future events, such as our projected financial performance, and are subject to further refinement as additional information becomes available (including our actual full Fiscal 2018 results of operations and financial condition, as well as potential new or interpretative guidance issued by the Financial Accounting Standards Board or the Internal Revenue Service and other tax agencies) and further analyses are completed.

Despite these one-time charges, we expect the TCJA will ultimately benefit our results of operations and financial condition in future periods, primarily due to the lower U.S. federal statutory income tax rate.

~~See Note 9 to the accompanying consolidated financial statements and Part II, Item 1A — "Risk Factors" of this Form 10-Q for additional discussion.~~

~~Change in Chief Executive Officer~~

Consistent with our announcement on February 2, 2017, Mr. Stefan Larsson departed as the Company's President and Chief Executive Officer and as a member of our Board of Directors, effective as of May 1, 2017. In connection with Mr. Larsson's departure, we recorded cumulative other charges of $17.0 million, of which $5.6 million and $11.4 million was recorded during the first quarter of Fiscal 2018 and fourth quarter of Fiscal 2017, respectively. We do not expect to incur additional charges related to Mr. Larsson's departure. See Note 8 to our accompanying consolidated financial statements for further discussion of the charges recorded in connection with Mr. Larsson's departure.

~~Subsequent to Mr. Larsson's departure, Mr. Patrice Louvet was appointed as the Company's new President and Chief Executive Officer and as a member of our Board of Directors, effective in July 2017.~~

~~Way Forward Plan~~

On June 2, 2016, our Board of Directors approved a restructuring plan with the objective of delivering sustainable, profitable sales growth and long-term value creation for shareholders (the "Way Forward Plan"). We are refocusing on our core brands and evolving our product, marketing, and shopping experience to increase desirability and relevance. We are also evolving our operating model to enable sustainable, profitable sales growth by significantly improving quality of sales, reducing supply chain lead times, improving our sourcing, and executing a disciplined multi-channel distribution and expansion strategy. As part of the Way Forward Plan, we are rightsizing our cost structure and implementing a return on investment-driven financial model to free up resources to invest in the brand and drive high-quality sales. The Way Forward Plan includes strengthening our leadership team and creating a more nimble organization by moving from an average of nine to six layers of management. The Way Forward Plan also includes the discontinuance of our Denim & Supply brand and the integration of our denim product offerings into our Polo Ralph Lauren brand. Collectively, these actions, which were substantially completed during Fiscal 2017, resulted in a reduction in workforce and the closure of certain stores and shop-within-shops, and are expected to result in gross annualized expense savings of approximately $180 million to $220 million.

On March 30, 2017, our Board of Directors approved the following additional restructuring-related activities associated with the Way Forward Plan: (i) the restructuring of our in-house global e-commerce platform which was in development and shifting to a more cost-effective, flexible e-commerce platform through a new agreement with Salesforce's Commerce Cloud, formerly known as Demandware; (ii) the closure of our Polo store at 711 Fifth Avenue in New York City; and (iii) the further streamlining of the organization and the execution of other key corporate actions in line with the Way Forward Plan. These actions, which are expected to result in additional gross annualized expense savings of approximately $140 million, are an important part of our efforts to achieve our stated objective to return to sustainable, profitable growth and invest in the future. These additional restructuring-related activities will result in a further reduction in workforce and the closure of certain corporate office and store locations, and are expected to be largely completed by the end of Fiscal 2018. The remaining activities, which are primarily lease-related, are expected to shift into Fiscal 2019.

In connection with the Way Forward Plan, we currently expect to incur total estimated charges of approximately $770 million, comprised of cash-related restructuring charges of approximately $450 million and non-cash charges of approximately $320 million. Cumulative charges incurred since inception were $645.4 million, of which $22.0 million and $79.0 million were recorded during the three-month and nine-month periods ended December 30, 2017, respectively. Of the remaining charges yet



	45

to be incurred, we expect approximately $50 million will be recorded during the fourth quarter of Fiscal 2018 and approximately $75 million to $85 million will be recorded during Fiscal 2019. In addition to these charges, we also incurred an additional non-cash charge of $155.2 million during Fiscal 2017 associated with the destruction of inventory out of current liquidation channels in line with our Way Forward Plan. See Notes 7 and 8 to our accompanying consolidated financial statements for detailed discussions of the charges recorded in connection with the Way Forward Plan.arrangements.

Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition

The comparability of our operating results for the three-month ~~and nine-month~~ periods ended~~December 30, 2017~~ July 2, 2022 and ~~December 31, 2016~~June 26, 2021 has been affected by ~~restructuring-related~~certain events, including:

•pretax charges ~~impairment of assets, and~~incurred in connection with our restructuring activities, as well as certain other ~~charges,~~benefits (charges), as summarized below (references to "Notes" are to the notes to the accompanying consolidated financial statements):


	Three Months Ended						Nine Months Ended							Three Months Ended
	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016					July 2, 2022		June 26, 2021
	(millions)														(millions)
Impairment of assets (see Note 7)	$	(3.9	)	$	(10.3	)	$	(24.8	)	$	(56.7	)	Impairment of assets (see Note 7)		$	—	$	(18.6)
Restructuring and other charges (see Note 8)	(23.3		)	(66.7		)	(78.7		)	(193.9		)
Restructuring-related inventory charges (see Note 8)^(a)	—			(14.4		)	(1.3		)	(149.4		)
Restructuring and other charges, net (see Note 8)													Restructuring and other charges, net (see Note 8)		(5.6)		(0.7)
Non-routine inventory benefits (charges)(a)													Non-routine inventory benefits (charges)(a)		(11.6)		8.0
Non-routine bad debt expense reversals(b)													Non-routine bad debt expense reversals(b)		2.4		0.9
Total charges	$	(27.2	)	$	(91.4	)	$	(104.8	)	$	(400.0	)	Total charges		$	(14.8)	$	(10.4)


^(a)	~~Non-cash restructuring-related~~ (a)Non-routine inventory benefits (charges) are recorded within cost of goods sold in the consolidated statements of operations. The charges ~~are~~ recorded ~~within cost of goods sold in the consolidated statements of operations.~~

~~Additionally,~~ during the ~~third quarter~~three months ended July 2, 2022 primarily related to the Russia-Ukraine war. The benefits recorded during the three months ended June 26, 2021 related to reversals of ~~Fiscal 2018, we recorded one-time charges of $231.3 million within our income tax provision~~amounts previously recognized in connection with the ~~TCJA, which negatively impacted our effective tax rate by 12,410 basis points and 4,980 basis points~~COVID-19 pandemic.

(b)Non-routine bad debt expense reversals are recorded within SG&A expenses in the consolidated statements of operations. The reversals recorded during the three-month ~~and nine-month~~ periods ended ~~December 30, 2017,~~July 2, 2022 and June 26, 2021 related to charges previously recognized in connection with the Russia-Ukraine war and COVID-19 pandemic, respectively. ~~See Note 9~~

•the disposition of our former Club Monaco business at the end of the first quarter of Fiscal 2022. We did not recognize any net revenues during the three months ended July 2, 2022 in connection with our former Club Monaco business, whereas in comparison we recognized net revenues of approximately $34 million during the prior fiscal year period;

•the transition of our Chaps business to a fully licensed business model during the second quarter of Fiscal 2022, which resulted in an overall decline in net revenues of approximately $16 million during the three months ended July 2, 2022 as compared to the ~~accompanying consolidated financial statements for further discussion of~~prior fiscal year period; and


			41

•other adverse impacts related to COVID-19 business disruptions during the ~~TCJA.~~three-month periods ended July 2, 2022 and June 26, 2021.

~~Since~~Because we are a global company, the comparability of our operating results reported in U.S. Dollars is also affected by foreign currency exchange rate fluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. ~~These rate~~Such fluctuations can have a significant effect on our reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), our discussions often contain references to constant currency measures, which are calculated by translating ~~the~~ current-year and prior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency. We present constant currency financial information, which is a non-U.S. GAAP financial measure, as a supplement to our reported operating results. We use constant currency information to provide a framework ~~to assess~~for assessing how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe this information is useful to investors ~~to facilitate~~for facilitating comparisons of operating results and better ~~identify~~identifying trends in our businesses. The constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with U.S. GAAP. Reconciliations between this non-U.S. GAAP financial measure and the most directly comparable U.S. GAAP measure are included in the "Results of Operations" section where applicable.

Our discussion also includes reference to comparable store sales. Comparable store sales refer to the ~~growth~~change in sales of ~~sales in~~our stores that ~~are~~have been open for at least ~~one~~13 full fiscal ~~year.~~months. Sales from our digital commerce sites are also included within comparable sales for those geographies that have been serviced by the related site for at least 13 full fiscal months. Sales for stores or digital commerce sites that are closed or shut down during ~~a fiscal~~the year are excluded from the calculation of comparable store sales. Sales for stores that are either relocated, enlarged (as defined by gross square footage expansion of 25% or greater), or generally closed for 30 or more consecutive days for renovation are also excluded from the calculation of comparable store sales until such stores have been operating in their new location or in their newly renovated state for at least ~~one~~13 full fiscal ~~year. Sales from our e-commerce sites are included within~~months. All comparable store sales ~~for those geographies that have been serviced by the related site for at least one full fiscal year. Sales for e-commerce sites that~~metrics are ~~shut down during~~calculated on a fiscal year are excluded from the calculation of comparable store sales. We use an integrated omni-channel strategy to operate our retail business, in which our e-commerce operations are interdependent with our physical stores.constant currency basis.

Our "Results of Operations" discussion that follows includes the significant changes in operating results arising from these items affecting comparability. However, unusual items or transactions may occur in any period. Accordingly, investors and other financial statement users should consider the types of events and transactions that have affected operating trends.



			4642

RESULTS OF OPERATIONS

Three Months Ended ~~December 30, 2017~~July 2, 2022 Compared to Three Months Ended ~~December 31, 2016~~June 26, 2021

The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers.

Three Months Ended
December 30,
2017 December 31,
2016
$
Change

% / bps
Change
(millions, except per share data)
Net revenues $ 1,641.8
$ 1,714.6
$ (72.8 ) (4.2 %)
Cost of goods sold^(a)
(645.6 ) (731.4 ) 85.8
(11.7 %)
Gross profit 996.2
983.2
13.0
1.3 %
Gross profit as % of net revenues 60.7 % 57.3 % 340 bps
Selling, general, and administrative expenses^(a)
(773.8 ) (771.9 ) (1.9 ) 0.2 %
SG&A expenses as % of net revenues 47.1 % 45.0 % 210 bps
Amortization of intangible assets (6.0 ) (6.0 ) —
(0.6 %)
Impairment of assets (3.9 ) (10.3 ) 6.4
(62.3 %)
Restructuring and other charges^(a)
(23.3 ) (66.7 ) 43.4
(65.1 %)
Operating income 189.2
128.3
60.9
47.5 %
Operating income as % of net revenues 11.5 % 7.5 % 400 bps
Foreign currency gains (losses) 0.6
(2.7 ) 3.3
(120.8 %)
Interest expense (4.8 ) (3.6 ) (1.2 ) 37.2 %
Interest and other income, net 2.8
2.5
0.3
13.6 %
Equity in losses of equity-method investees (1.5 ) (1.4 ) (0.1 ) 5.2 %
Income before income taxes 186.3
123.1
63.2
51.4 %
Income tax provision (268.1 ) (41.8 ) (226.3 ) 540.9 %
Effective tax rate^(b)
143.9 % 34.0 % 10,990 bps
Net income (loss) $ (81.8 ) $ 81.3
$ (163.1 ) (200.7 %)
Net income (loss) per common share:
Basic $ (1.00 ) $ 0.98
$ (1.98 ) (202.0 %)
Diluted $ (1.00 ) $ 0.98
$ (1.98 ) (202.0 %)


	Three Months Ended
	July 2, 2022			June 26, 2021			$ Change		% / bps Change
	(millions, except per share data)
Net revenues	$	1,490.6		$	1,376.3		$	114.3	8.3	%
Cost of goods sold	(489.2)			(408.2)			(81.0)		19.9	%
Gross profit	1,001.4			968.1			33.3		3.4	%
Gross profit as % of net revenues	67.2		%	70.3		%			(310 bps)
Selling, general, and administrative expenses	(820.6)			(728.2)			(92.4)		12.7	%
SG&A expenses as % of net revenues	55.0		%	52.9		%			210 bps
Impairment of assets	—			(18.6)			18.6		(100.0	%)
Restructuring and other charges, net	(5.6)			(0.7)			(4.9)		758.2	%
Operating income	175.2			220.6			(45.4)		(20.6	%)
Operating income as % of net revenues	11.8		%	16.0		%			(420 bps)
Interest expense	(11.8)			(13.3)			1.5		(11.7	%)
Interest income	3.6			1.8			1.8		102.7	%
Other income (expense), net	(4.8)			0.9			(5.7)		NM
Income before income taxes	162.2			210.0			(47.8)		(22.8	%)
Income tax provision	(38.8)			(45.3)			6.5		(14.3	%)
Effective tax rate(a)	23.9		%	21.6		%			230 bps
Net income	$	123.4		$	164.7		$	(41.3)	(25.1	%)
Net income per common share:
Basic	$	1.76		$	2.23		$	(0.47)	(21.1	%)
Diluted	$	1.73		$	2.18		$	(0.45)	(20.6	%)


^(a)	~~Includes total depreciation expense of $66.7 million and $71.9 million for the three-month periods ended December 30, 2017 and December 31, 2016, respectively.~~


^(b)	~~Effective tax rate is calculated by dividing the income tax provision by income before income taxes.~~

(a)Effective tax rate is calculated by dividing the income tax provision by income before income taxes.

NM Not meaningful.

Net Revenues. Net revenues ~~decreased~~increased by ~~$72.8~~$114.3 million, or ~~4.2%~~8.3%, to ~~$1.642~~$1.491 billion during the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the three months ended ~~December 31, 2016,~~June 26, 2021, including net ~~favorable~~unfavorable foreign currency effects of ~~$31.3~~$69.5 million. On a constant currency basis, net revenues ~~decreased~~increased by ~~$104.1~~$183.8 million, or ~~6.1%~~13.4%. The increase in net revenues reflected growth across all of our reportable segments and sales channels, despite revenue declines associated with the disposition of our former Club Monaco business at the end of the first quarter of Fiscal 2022 and the transition of our Chaps business to a fully licensed business model during the second quarter of Fiscal 2022.

The following table summarizes the percentage change in our consolidated comparable store sales for the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the prior fiscal year ~~period on both a reported and constant currency basis:~~period:

As
Reported

Constant
Currency
E-commerce comparable store sales (19 %) (20 %)
Comparable store sales excluding e-commerce (1 %) (3 %)
Total comparable store sales (5 %) (6 %)


	% Change
Digital commerce	7	%
Brick and mortar	16	%
Total comparable store sales	15	%



			4743

Our global average store count ~~decreased~~increased by 686 stores and concession shops during the three months ended ~~December 30, 2017~~July 2, 2022 compared with the three months ended ~~December 31, 2016, primarily due to global store closures primarily associated with the Way Forward Plan,~~June 26, 2021, largely ~~offset~~driven by new ~~concession shop~~ openings primarily in Asia. The following table details our retail store presence by segment as of the periods presented:


	December 30, 2017	December 31, 2016		July 2, 2022	June 26, 2021
Freestanding Stores:			Freestanding Stores:
North America	218	222	North America	238	233
Europe	82	87	Europe	97	94
Asia	103	93	Asia	191	155
Other non-reportable segments	78	83
Total freestanding stores	481	485	Total freestanding stores	526	482

Concession Shops:			Concession Shops:
North America	2	1	North America	1	1
Europe	25	34	Europe	29	29
Asia	599	598	Asia	678	617
Other non-reportable segments	2	2
Total concession shops	628	635	Total concession shops	708	647
Total stores	1,109	1,120	Total stores	1,234	1,129

In addition to our stores, we sell products online in North America, Europe, and ~~Europe~~Asia through our various ~~e-commerce~~digital commerce sites, ~~which include www.RalphLauren.com~~as well as through our Polo mobile apps in North America and ~~www.ClubMonaco.com, among others. In Asia, we~~the United Kingdom. We also sell products online through ~~e-commerce sites of~~ various third-party digital ~~partners.~~partner commerce sites, primarily in Asia.

Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior fiscal year period, are provided below:


	Three Months Ended				$ Change		Foreign Exchange Impact		$ Change		% Change
	July 2, 2022		June 26, 2021		As Reported				Constant Currency		As Reported		Constant Currency
	(millions)
Net Revenues:
North America	$	700.7	$	662.1	$	38.6	$	(0.3)	$	38.9	5.8	%	5.9	%
Europe	415.6		354.9		60.7		(40.2)		100.9		17.1	%	28.4	%
Asia	334.1		288.2		45.9		(28.9)		74.8		15.9	%	26.0	%
Other non-reportable segments(a)	40.2		71.1		(30.9)		(0.1)		(30.8)		(43.4	%)	(43.2	%)
Total net revenues	$	1,490.6	$	1,376.3	$	114.3	$	(69.5)	$	183.8	8.3	%	13.4	%

Three Months Ended $ Change Foreign Exchange Impact $ Change % Change
December 30,
2017 December 31,
2016
As
Reported

Constant
Currency

As
Reported

Constant
Currency
(millions)
Net Revenues:
North America $ 886.4
$ 1,000.8
$ (114.4 ) $ 1.3
$ (115.7 ) (11.4 %) (11.6 %)
Europe 378.5
349.2
29.3
28.1
1.2
8.4 % 0.3 %
Asia 251.0
235.2
15.8
0.3
15.5
6.7 % 6.6 %
Other non-reportable segments 125.9
129.4
(3.5 ) 1.6
(5.1 ) (2.7 %) (4.0 %)
Total net revenues $ 1,641.8
$ 1,714.6
$ (72.8 ) $ 31.3
$ (104.1 ) (4.2 %) (6.1 %)
(a)Reflects the disposition of our former Club Monaco business at the end of the first quarter of Fiscal 2022.

North America net revenues — Net revenues ~~decreased~~increased by ~~$114.4~~$38.6 million, or ~~11.4%~~5.8%, during the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the three months ended ~~December 31, 2016, including net favorable foreign currency effects of $1.3 million.~~June 26, 2021. On a constant currency basis, net revenues ~~decreased~~increased by ~~$115.7~~$38.9 million, or ~~11.6%~~5.9%.

The ~~$114.4~~$38.6 million net ~~decline~~increase in North America net revenues was driven by:

•a ~~$66.6~~$25.6 million net ~~decrease~~increase related to our North America ~~wholesale~~retail business, ~~largely driven~~reflecting growth in both our brick and mortar and digital commerce operations. On a constant currency basis, net revenues increased by ~~a strategic reduction~~$25.8 million, reflecting increases of shipments (including within the off-price channel) and points of distribution in connection with our long-term growth strategy, the impact of brand discontinuances, and the continued challenging department store traffic trends; and



	48

~~a $48.2~~$20.7 million ~~net decrease~~ in comparable store sales ~~primarily driven by lower sales from our Ralph Lauren e-commerce operations~~ and ~~certain of our retail stores due~~$5.1 million in ~~part to a decline in traffic, as well as lower levels of promotional activity and a planned reduction in inventory in connection with our long-term growth strategy.~~non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail ~~business on both a reported and constant currency basis:~~business:

As
Reported

Constant
Currency
E-commerce comparable store sales (27 %) (27 %)
Comparable store sales excluding e-commerce (3 %) (3 %)
Total comparable store sales (10 %) (10 %)

~~These decreases were partially offset by~~


			44


	% Change
Digital commerce	2	%
Brick and mortar	5	%
Total comparable store sales	5	%

•a ~~$0.4~~$13.0 million net increase ~~in non-comparable store sales.~~related to our North America wholesale business largely driven by overall stronger consumer demand. This increase was realized despite the transition of our Chaps business to a fully licensed business model during the second quarter of Fiscal 2022.

Europe net revenues — Net revenues increased by ~~$29.3~~$60.7 million, or ~~8.4%~~17.1%, during the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the three months ended ~~December 31, 2016, including~~June 26, 2021. On a constant currency basis, net ~~favorable~~revenues increased by $100.9 million, or 28.4%.

The $60.7 million net increase in Europe net revenues was driven by:

•a $45.1 million net increase related to our Europe retail business, reflecting growth in both our brick and mortar and digital commerce operations, partially offset by net unfavorable foreign currency effects of ~~$28.1~~$19.4 million. On a constant currency basis, net revenues increased by ~~$1.2~~$64.5 million, ~~or 0.3%.~~

~~The $29.3~~reflecting increases of $48.3 million ~~net increase in Europe net revenues was driven by:~~

a $21.9 million net increase related to our Europe wholesale business, primarily driven by net favorable foreign currency effects of $11.7 million and a shift in the timing of certain shipments that occurred during the prior fiscal year period; and

~~an $8.8 million net increase in non-comparable store sales, primarily driven by new store openings and net favorable foreign currency effects of $3.9 million.~~

~~These increases were partially offset by:~~

~~a $1.4 million net decrease~~ in comparable store sales ~~including net favorable foreign currency effects of $12.5 million. Our comparable~~and $16.2 million in non-comparable store sales decreased by $13.9 million on a constant currency basis, primarily driven by lower sales from certain of our retail stores due in part to lower levels of promotional activity in connection with our long-term growth strategy.sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:


	% Change
Digital commerce	7	%
Brick and mortar	45	%
Total comparable store sales	34	%

•a $15.6 million net increase related to our Europe wholesale business ~~on both a reported and constant~~largely driven by overall stronger consumer demand, partially offset by net unfavorable foreign currency ~~basis:~~effects of $20.8 million.

As
Reported

Constant
Currency
E-commerce comparable store sales 8 % (1 %)
Comparable store sales excluding e-commerce (2 %) (9 %)
Total comparable store sales (1 %) (8 %)

Asia net revenues — Net revenues increased by ~~$15.8~~$45.9 million, or ~~6.7%~~15.9%, during the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the three months ended ~~December 31, 2016, including~~June 26, 2021, despite approximately 50% of our stores in China experiencing COVID-19-related closures for a significant portion of the current fiscal year period. On a constant currency basis, net ~~favorable~~revenues increased by $74.8 million, or 26.0%.

The $45.9 million net increase in Asia net revenues was driven by:

•a $41.1 million net increase related to our Asia retail business, reflecting growth in both our brick and mortar and digital commerce operations, partially offset by net unfavorable foreign currency effects of ~~$0.3~~$27.6 million. On a constant currency basis, net revenues increased by ~~$15.5~~$68.7 million, ~~or 6.6%.~~

~~The $15.8~~reflecting increases of $42.6 million ~~net increase in Asia net revenues was driven by:~~

a $5.8 million net increase in non-comparable store sales, primarily driven by new concession shop openings and net favorable foreign currency effects of $0.4 million, partially offset by the strategic closure of certain of our retail stores;

~~a $5.7 million net increase related to our Asia wholesale business, primarily driven by our expansion in Japan and net favorable foreign currency effects of $0.1 million; and~~

~~a $4.3 million net increase~~ in comparable store sales ~~including net unfavorable foreign currency effects of $0.2 million. Our comparable~~and $26.1 million in non-comparable store sales increased by $4.5 million on a constant currency basis, primarily driven by higher sales from certain of our retail locations due in part to improved conversion, partially offset by the impact of lower levels of promotional activity in connection with our long-term growth strategy.sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail ~~business on both a reported and constant currency basis:~~

business:



	49	% Change
Digital commerce		37	%
Brick and mortar		17	%
Total comparable store sales		19	%

•a $4.8 million net increase related to our Asia wholesale business, reflecting increases most notably in South Korea and Australia.

As
Reported

Constant
Currency
Total comparable store sales^(a)
3 % 3 %


^(a)	~~Comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.~~

Gross Profit. Gross profit increased by ~~$13.0~~$33.3 million, or ~~1.3%~~3.4%, to ~~$996.2 million~~$1.001 billion for the three months ended December 30, 2017. Gross profit during the three months ended December 31, 2016 reflected non-cash inventory-related charges of $14.4 million recorded in connection with the Way Forward Plan. The increase in gross profit also included aJuly 2, 2022, including net ~~favorable~~unfavorable foreign currency ~~effect~~effects of ~~$23.7~~$62.9 million. Gross profit as a percentage of net revenues ~~increased~~declined to ~~60.7%~~67.2% for the three months ended ~~December 30, 2017~~July 2, 2022 from ~~57.3%~~70.3% for the three months ended ~~December 31, 2016.~~June 26, 2021. The ~~340~~310 basis point ~~increase~~ decline was primarily driven by lower levels of promotional activity in connection with our long-term growth strategy, favorable geographic and channel mix, and lower sourcing costs, as well as the absence of non-cash inventory-relatedhigher non-routine inventory charges recorded ~~in connection with the Way Forward Plan~~ during the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the ~~comparable~~ prior fiscal year ~~period.~~period, higher product and freight costs, and net unfavorable foreign currency effects, partially offset by improved pricing and lower levels of promotional activity.


			45

Gross profit as a percentage of net revenues is dependent upon a variety of factors, including changes in the relative sales mix among distribution channels, changes in the mix of products sold, pricing, the timing and level of promotional activities, foreign currency exchange rates, and fluctuations in material costs. These factors, among others, may cause gross profit as a percentage of net revenues to fluctuate from period to period.

Selling, General, and Administrative Expenses. SG&A expenses ~~primarily~~ include costs relating to compensation and benefits, advertising and marketing, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, ~~information technology, facilities, legal,~~ and other ~~costs associated with finance~~selling and ~~administration.~~administrative costs. SG&A expenses increased by ~~$1.9~~$92.4 million, or ~~0.2%~~12.7%, to ~~$773.8~~$820.6 million for the three months ended ~~December 30, 2017. This increase included a~~July 2, 2022, including net ~~unfavorable~~favorable foreign currency ~~effect~~effects of ~~$12.3~~$33.1 million. SG&A expenses as a percentage of net revenues increased to ~~47.1%~~55.0% for the three months ended ~~December 30, 2017~~July 2, 2022 from ~~45.0%~~52.9% for the three months ended ~~December 31, 2016.~~June 26, 2021. The 210 basis point increase was primarily ~~due~~driven by the return to ~~operating deleverage on lower net revenues,~~a more normalized level of marketing investments, as ~~previously discussed,~~well as higher compensation and ~~the unfavorable impact attributable~~selling-related expenses to geographic and channel mix, as a greater portion of our revenue was generated by our international retail businesses (which typically carry higher operating expense margins). These increases were partially offset by our operational discipline and cost savings associated with our restructuring activities.drive strategic growth.

The ~~$1.9~~$92.4 million ~~net~~ increase in SG&A expenses was driven by:

Three Months Ended December 30, 2017
Compared to
Three Months Ended December 31, 2016
(millions)
SG&A expense category:
Marketing and advertising expenses $ 13.2
Compensation-related expenses 9.2
Depreciation expense (8.7 )
Shipping and handling costs (5.5 )
Selling-related expenses (3.3 )
Other (3.0 )
Total change in SG&A expenses $ 1.9

During the fourth quarter of Fiscal 2018, we continue to expect a certain amount of operating expense deleverage driven by the anticipated decline in sales associated with our quality of sale initiatives outpacing the decline in our operating expenses, as we anniversary certain cost savings initiatives executed during Fiscal 2017 in connection with the Way Forward Plan. In addition, we will continue to invest in our key strategic initiatives, including our marketing and advertising programs, as well as expansion and renovations of our retail stores and concession shops.

~~Amortization of Intangible Assets.~~ ~~Amortization of intangible assets remained flat at $6.0 million during the three-month periods ended December 30, 2017 and December 31, 2016.~~


		Three Months Ended July 2, 2022 Compared to Three Months Ended June 26, 2021
	50	(millions)
SG&A expense category:
Marketing and advertising expenses		$	31.8
Compensation-related expenses		21.3
Selling-related expenses		11.6
Staff-related expenses		10.1
Rent and occupancy costs		5.3
Shipping and handling costs		5.1
Other		7.2
Total increase in SG&A expenses		$	92.4

Impairment of Assets. No non-cash impairment charges were recorded during the three months ended July 2, 2022. During the ~~three-month periods~~three months ended ~~December 30, 2017 and December 31, 2016,~~June 26, 2021, we recorded non-cash impairment charges of $2.2 million and $10.3 million, respectively, to write off certain fixed assets related to our domestic and international stores, shop-within-shops, and corporate offices in connection with the Way Forward Plan. Additionally, during the three months ended December 30, 2017, we recorded non-cash impairment charges of $1.7$18.6 million to ~~write off~~write-down certain ~~fixed assets related to underperforming shop-within-shops as a result of our on-going store portfolio evaluation.~~long-lived assets. See Note 7 to the accompanying consolidated financial statements.

Restructuring and Other ~~Charges.~~ Charges, Net. During the three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016,~~June 26, 2021, we recorded net restructuring charges and benefits of ~~$19.8~~$0.7 million ~~and $66.7~~and $0.1 million, ~~respectively, in connection with the Way Forward Plan,~~respectively, primarily consisting of severance and ~~benefit~~benefits costs ~~lease termination~~(reversals) and ~~store closure costs,~~ other cash charges, ~~and non-cash accelerated stock-based compensation expense. In addition, during the three months ended December 30, 2017, we recorded~~as well as other charges of ~~$3.5~~$4.9 million and $0.8 million, respectively, primarily related to ~~depreciation expense~~rent and occupancy costs associated with ~~our former Polo store at 711 Fifth Avenue in New York City recorded after~~certain previously exited real estate locations for which the ~~store closed during the first quarter of Fiscal 2018 in connection with the Way Forward Plan.~~related lease agreements have not yet expired. See Note 8 to the accompanying consolidated financial statements.

Operating Income. Operating income ~~increased~~decreased by $45.4 million, or 20.6%, to ~~$189.2~~$175.2 million for the three months ended ~~December 30, 2017, from $128.3 million for the three months ended December 31, 2016.~~July 2, 2022. Our operating results during the three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016~~ June 26, 2021 were negatively impacted by net restructuring-related ~~charges,~~charges, impairment of assets, and certain other charges (benefits) totaling ~~$27.2~~$14.8 million and ~~$91.4~~$10.4 million, ~~respectively, as previously discussed.~~respectively. The ~~increase~~decline in operating income also ~~included a~~reflects net ~~favorable~~unfavorable foreign currency ~~effect~~effects of ~~$11.4~~$29.8 million. Operating income as a percentage of net revenues ~~increased to 11.5%~~was 11.8% for the three months ended ~~December 30, 2017 from 7.5% for the three months ended December 31, 2016. The 400~~July 2, 2022, reflecting a 420 basis point ~~increase~~decline from the prior fiscal year period. The decline in operating income as a percentage of net revenues was primarily driven by the ~~net decline in~~ ~~restructuring-related charges, impairment of assets, and certain other charges and the increase~~decrease in our gross ~~profit~~ margin ~~partially offset by~~and the increase in SG&A expenses as a percentage of net revenues, ~~all~~ as previously discussed.


			46

Operating income ~~(loss)~~ and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:


	Three Months Ended
	July 2, 2022			June 26, 2021
	Operating Income		Operating Margin	Operating Income		Operating Margin	$ Change		Margin Change
	(millions)			(millions)			(millions)
Segment:
North America	$	132.8	19.0%	$	186.3	28.1%	$	(53.5)	(910 bps)
Europe	73.2		17.6%	94.5		26.6%	(21.3)		(900 bps)
Asia	78.7		23.5%	60.4		20.9%	18.3		260 bps
Other non-reportable segments(a)	37.2		92.4%	35.4		49.8%	1.8		4,260 bps
	321.9			376.6			(54.7)
Unallocated corporate expenses	(141.1)			(155.3)			14.2
Unallocated restructuring and other charges, net	(5.6)			(0.7)			(4.9)
Total operating income	$	175.2	11.8%	$	220.6	16.0%	$	(45.4)	(420 bps)

Three Months Ended
December 30, 2017 December 31, 2016
Operating
Income (Loss) Operating
Margin Operating
Income (Loss) Operating
Margin $
Change Margin
Change
(millions) (millions) (millions)
Segment:
North America $ 196.6
22.2% $ 206.4
20.6% $ (9.8 ) 160 bps
Europe 81.0
21.4% 63.8
18.3% 17.2
310 bps
Asia 44.3
17.6% 23.3
9.9% 21.0
770 bps
Other non-reportable segments 37.1
29.5% 33.2
25.7% 3.9
380 bps
359.0
326.7
32.3

Unallocated corporate expenses (146.5 ) (131.7 ) (14.8 )
Unallocated restructuring and other charges (23.3 ) (66.7 ) 43.4

Total operating income $ 189.2
11.5% $ 128.3
7.5% $ 60.9
400 bps
(a)Reflects the disposition of our Club Monaco business at the end of the first quarter of Fiscal 2022.

North America operating margin~~improved~~ declined by ~~160~~910 basis points, primarily due to the ~~favorable impact~~unfavorable impacts of 80approximately 550 basis points and 120 basis points related to our retail ~~business~~ and ~~80 basis points related to our~~ wholesale ~~business,~~businesses, respectively, both largely driven ~~by the increase in our gross profit margin, partially offset~~ by an increase in SG&A expenses as a percentage of net ~~revenues.~~revenues due in part to higher marketing investments and a decline in our gross margin due in part to higher freight costs. The remaining 240 basis point decline was attributable to higher non-routine inventory charges recorded during the three months ended July 2, 2022 as compared to the prior fiscal year period.

Europe operating margindeclined by 900 basis points, primarily due to the unfavorable impacts of approximately 350 basis points and 120 basis points related to our wholesale and retail businesses, respectively, both largely driven by a decline in our gross margin due in part to higher freight costs. The basis point decline of our wholesale business also reflected an increase in SG&A expenses as a percentage of net revenues due in part to higher marketing investments. The overall decline in operating margin also reflected unfavorable foreign currency effects of approximately 330 basis points, as well as approximately 70 basis points attributable to unfavorable channel mix. The remaining 30 basis point decline was attributable to higher net non-routine inventory charges and bad debt expense recorded during the three months ended July 2, 2022 as compared to the prior fiscal year period.

Asia operating margin improved by ~~310~~260 basis points, primarily due to the favorable impact of ~~180~~approximately 230 basis points related to our retail business, largely driven by an increase in our gross margin and a decline in SG&A expenses as a percentage of net revenues. The overall improvement in operating margin also reflected 40 basis points attributable to lower impairment of assets recorded during the three months ended July 2, 2022 as compared to the prior fiscal year period, as well as approximately 30 basis points related to our wholesale business, largely driven by a decline in SG&A expenses as a percentage of net revenues. The increase also reflected favorable foreign currency effects of 50 basis points and the favorable impact of 40 basis points related to lower non-cash charges recorded in connection with the Way Forward Plan during the three months ended December 30, 2017 as compared to the prior fiscal year period. The remaining 40 basis point increase in operating margin related to our retail business, largely driven by the increase in our gross profit margin, partially offset by an increase in SG&A expenses as a percentage of net revenues.



	51

~~Asia operating margin~~ improved by 770 basis points, primarily due to the favorable impact of 630 basis points related to lower non-cash charges recorded in connection with the Way Forward Plan during the three months ended December 30, 2017 as compared to the prior fiscal year period, as well as favorable foreign currency effects of 130 basis points. The increase also reflected the favorable impact of 30 basis points related to our retail business, primarily driven by the increase in our gross profit margin, partially offset by an increase in SG&A expenses as a percentage of net revenues. These ~~increases~~improvements in operating margin were partially offset by ~~a 20~~unfavorable foreign currency effects of approximately 40 basis ~~point decline related to our wholesale business.~~points.

Unallocated corporate expenses ~~increased~~ decreased by ~~$14.8~~$14.2 million to ~~$146.5~~$141.1 million during the three months ended ~~December 30, 2017~~July 2, 2022. The decline in unallocated corporate expenses was due to lower impairment charges of $17.5 million and higher ~~compensation-related expenses~~intercompany sourcing commission income of ~~$8.4~~$9.3 million (which is offset at the segment level and eliminates in consolidation), partially offset by higher marketing and advertising expenses of ~~$2.5 million, higher impairment of asset charges of $1.7~~$6.7 million and higher other expenses of ~~$2.2~~$5.9 million.

Unallocated restructuring and other charges, ~~decreased~~net increased by ~~$43.4~~$4.9 million to ~~$23.3~~$5.6 million during the three months ended ~~December 30, 2017,~~July 2, 2022, as previously discussed above and in Note 8 to the accompanying consolidated financial statements.


			47

Non-operating ~~Expense, net.~~ Income (Expense), Net. Non-operating ~~expense,~~income (expense), net is comprised of interest expense, interest income, and other income (expense), net, which includes foreign currency gains (losses), ~~interest expense, interest and other income, net, and~~ equity in ~~losses~~income (losses) from our equity-method ~~investees. Non-operating~~investees, and other non-operating expenses. During the three-month periods ended July 2, 2022 and June 26, 2021, we reported non-operating expense, net ~~decreased~~of $13.0 million and $10.6 million, respectively. The $2.4 million increase in non-operating expense, net was primarily driven by ~~$2.3~~a $5.7 million increase in other expense, net, largely due to ~~$2.9 million~~higher net foreign currency losses during the three months ended ~~December 30, 2017~~July 2, 2022 as compared to the prior fiscal year period. This unfavorable variance was partially offset by:

•a $1.8 million increase in interest income, primarily driven by higher interest rates in financial markets; and

•a $1.5 million decrease in interest expense, primarily driven by the lower average level of outstanding debt during the three months ended ~~December 31, 2016,~~July 2, 2022 as compared to the ~~increases in foreign currency gains~~prior fiscal year period resulting from our repayment of the 1.700% Senior Notes that matured on June 15, 2022 (see "Financial Condition and ~~interest and other income, net were partially offset by the increases in~~Liquidity — Cash Flows"), as well as lower interest expense ~~and equity in losses of equity-method investees.~~related to our finance leases.

Income Tax Provision. The income tax provision represents federal, foreign, state and local income taxes. The income tax provision and effective tax rate for the three months ended December 30, 2017 were $268.1 million and 143.9%, respectively, as compared to $41.8 million and 34.0%, respectively, for the three months ended December 31, 2016. The $226.3 million increase in the income tax provision was primarily due to one-time charges of $231.3 million recorded during the third quarter of Fiscal 2018 in connection with the TCJA (as discussed within "~~Recent Developments~~"), which negatively impacted our effective tax rate by 12,410 basis points, as well as the increase in pretax income. The increase in our effective tax rate also reflected the net favorable impact of 1,420 basis points, primarily due to the tax impact of earnings in lower taxed foreign jurisdictions versus the U.S. and foreign income tax reserve releases. The effective tax rate differs from the statutory tax rate due to the effect of state and local taxes, tax rates in foreign jurisdictions, and certain nondeductible expenses. Our effective tax rate will change from period to period based on various factors including, but not limited to, the geographic mix of earnings, the timing and amount of foreign dividends, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies.

The income tax provision and effective tax rate for the three months ended July 2, 2022 were $38.8 million and 23.9%, respectively, compared to $45.3 million and 21.6%, respectively, for the three months ended June 26, 2021. The $6.5 million decrease in our income tax provision was driven by the decline in our pretax income, partially offset by a 230 basis point increase in our effective tax rate. The increase in our effective tax rate was primarily due to the absence of prior year deferred tax adjustments of certain deferred tax liabilities, partially offset by a favorable change for audit related adjustments. See Note 9 to the accompanying consolidated financial statements.

Net ~~Income (Loss).~~ ~~We reported a net loss of $81.8~~Income. Net income decreased to $123.4 million for the three months ended ~~December 30, 2017, as compared to net income of $81.3~~July 2, 2022, from $164.7 million for the three months ended ~~December 31, 2016.~~June 26, 2021. The ~~$163.1~~$41.3 million decrease in net income was primarily due to the ~~increase~~decline in our operating income, partially offset by the decrease in our income tax provision, partially offset by the increase in operating income, as previously discussed. Net loss for the three months ended December 30, 2017 reflected one-time charges of $231.3 million recorded in connection with the TCJA,both as previously discussed. Our operating results during the three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016~~June 26, 2021 were ~~also~~ negatively impacted by net restructuring-related charges, ~~impairment of assets,~~ and certain other charges (benefits) totaling ~~$27.2~~$14.8 million and ~~$91.4~~$10.4 million, respectively, which had an after-tax effect of reducing net income by ~~$17.9~~$11.2 million and ~~$73.6~~$7.7 million, respectively.

Net Income ~~(Loss)~~ per Diluted Share. ~~We reported a net loss~~ Net income per diluted share ~~of $1.00~~decreased to $1.73 for the three months ended ~~December 30, 2017, as compared to net income per diluted share of $0.98~~July 2, 2022, from $2.18 for the three months ended ~~December 31, 2016.~~June 26, 2021. The ~~$1.98~~$0.45 per share ~~decline~~decrease was ~~due to~~driven by the lower level of net income, as previously discussed, ~~and~~partially offset by lower weighted-average diluted shares outstanding during the three months ended December 30, 2017 driven by our share repurchases during the last twelve months. Net loss per diluted share for the three months ended December 30, 2017 was negatively impacted by approximately $2.80 per share as a result of one-time charges recorded in connection with the TCJA, as previously discussed. Net income (loss) per diluted share for the three-month periods ended December 30, 2017 and December 31, 2016 were also negatively impacted by approximately $0.23 per share and $0.88 per share, respectively, as a result of restructuring-related charges, impairment of assets, and certain other charges, as previously discussed.



	52

~~Nine Months Ended December 30, 2017 Compared to Nine Months Ended December 31, 2016~~

Nine Months Ended
December 30,
2017 December 31,
2016
$
Change

% / bps
Change
(millions, except per share data)
Net revenues $ 4,653.1
$ 5,087.4
$ (434.3 ) (8.5 %)
Cost of goods sold^(a)
(1,809.9 ) (2,255.4 ) 445.5
(19.8 %)
Gross profit 2,843.2
2,832.0
11.2
0.4 %
Gross profit as % of net revenues 61.1 % 55.7 % 540 bps
Selling, general, and administrative expenses^(a)
(2,248.9 ) (2,389.9 ) 141.0
(5.9 %)
SG&A expenses as % of net revenues 48.3 % 47.0 % 130 bps
Amortization of intangible assets (18.0 ) (18.1 ) 0.1
(0.9 %)
Impairment of assets (24.8 ) (56.7 ) 31.9
(56.3 %)
Restructuring and other charges^(a)
(78.7 ) (193.9 ) 115.2
(59.4 %)
Operating income 472.8
173.4
299.4
172.7 %
Operating income as % of net revenues 10.2 % 3.4 % 680 bps
Foreign currency gains 2.4
0.8
1.6
201.1 %
Interest expense (14.4 ) (11.1 ) (3.3 ) 30.6 %
Interest and other income, net 7.1
5.7
1.4
23.0 %
Equity in losses of equity-method investees (3.6 ) (5.2 ) 1.6
(31.1 %)
Income before income taxes 464.3
163.6
300.7
183.7 %
Income tax provision (342.8 ) (58.9 ) (283.9 ) 481.5 %
Effective tax rate^(b)
73.8 % 36.0 % 3,780 bps
Net income $ 121.5
$ 104.7
$ 16.8
16.0 %
Net income per common share:
Basic $ 1.49
$ 1.26
$ 0.23
18.3 %
Diluted $ 1.47
$ 1.25
$ 0.22
17.6 %


^(a)	~~Includes total depreciation expense of $201.4 million and $213.8 million for the nine-month periods ended December 30, 2017 and December 31, 2016, respectively.~~


^(b)	~~Effective tax rate is calculated by dividing the income tax provision by income before income taxes.~~

~~Net Revenues.~~ Net revenues decreased by $434.3 million, or 8.5%, to $4.653 billion during the nine months ended December 30, 2017 as compared to the nine months ended December 31, 2016, including net favorable foreign currency effects of $18.3 million. On a constant currency basis, net revenues decreased by $452.6 million, or 8.9%.

The following table summarizes the percentage change in our consolidated comparable store sales for the nine months ended December 30, 2017 as compared to the prior fiscal year period on both a reported and constant currency basis:

As
Reported

Constant
Currency
E-commerce comparable store sales (16 %) (17 %)
Comparable store sales excluding e-commerce (3 %) (4 %)
Total comparable store sales (6 %) (6 %)



	53

~~Our global average store count decreased by~~July 2, stores and concession shops during the nine months ended December 30, 2017 compared with the nine months ended December 31, 2016, primarily due to global store closures primarily associated with the Way Forward Plan, largely offset by new concession shop openings in Asia.

~~Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior year period, are provided below:~~

Nine Months Ended $ Change Foreign Exchange Impact $ Change % Change
December 30,
2017 December 31,
2016
As
Reported

Constant
Currency

As
Reported

Constant
Currency
(millions)
Net Revenues:
North America $ 2,471.7
$ 2,901.2
$ (429.5 ) $ 1.6
$ (431.1 ) (14.8 %) (14.9 %)
Europe 1,165.0
1,172.6
(7.6 ) 28.4
(36.0 ) (0.7 %) (3.1 %)
Asia 676.9
662.8
14.1
(11.8 ) 25.9
2.1 % 3.9 %
Other non-reportable segments 339.5
350.8
(11.3 ) 0.1
(11.4 ) (3.2 %) (3.2 %)
Total net revenues $ 4,653.1
$ 5,087.4
$ (434.3 ) $ 18.3
$ (452.6 ) (8.5 %) (8.9 %)

~~North America net revenues~~ — Net revenues decreased by $429.5 million, or 14.8%, during the nine months ended December 30, 2017 as compared to the nine months ended December 31, 2016, including net favorable foreign currency effects of $1.6 million. On a constant currency basis, net revenues decreased by $431.1 million, or 14.9%.

~~The $429.5 million net decline in North America net revenues was driven by:~~

a $311.7 million net decrease related to our North America wholesale business, largely driven by a strategic reduction of shipments (including within the off-price channel) and points of distribution in connection with our long-term growth strategy, the impact of brand discontinuances, and the continued challenging department store traffic trends; and

a $115.0 million net decrease in comparable store sales, primarily driven by lower sales from our Ralph Lauren e-commerce operations and certain of our retail stores due in part to a decline in traffic, as well as lower levels of promotional activity and a planned reduction in inventory in connection with our long-term growth strategy. The following table summarizes the percentage change in comparable store sales related to our North America retail business on both a reported and constant currency basis:

As
Reported

Constant
Currency
E-commerce comparable store sales (23 %) (23 %)
Comparable store sales excluding e-commerce (5 %) (5 %)
Total comparable store sales (9 %) (9 %)

~~a $2.8 million net decrease in non-comparable store sales.~~

~~Europe net revenues~~ — Net revenues decreased by $7.6 million, or 0.7%, during the nine months ended December 30, 2017 as compared to the nine months ended December 31, 2016, including net favorable foreign currency effects of $28.4 million. On a constant currency basis, net revenues decreased by $36.0 million, or 3.1%.

~~The $7.6 million net decline in Europe net revenues was driven by:~~

a $26.4 million net decrease in comparable store sales, including net favorable foreign currency effects of $9.3 million. Our comparable store sales decreased by $35.7 million on a constant currency basis, primarily driven by lower sales from certain of our retail stores due in part to lower levels of promotional activity in connection with our long-term growth strategy. The following table summarizes the percentage change in comparable store sales related to our Europe retail business on both a reported and constant currency basis:



	54

As
Reported

Constant
Currency
E-commerce comparable store sales (2 %) (6 %)
Comparable store sales excluding e-commerce (5 %) (8 %)
Total comparable store sales (5 %) (7 %)

a $15.9 million net decrease related to our Europe wholesale business, driven by the impact of brand discontinuances and a strategic reduction of shipments within the off-price channel in connection with our long-term growth strategy, partially offset by net favorable foreign currency effects of $15.2 million.

~~These declines were partially offset by a $34.7 million net increase in non-comparable store sales, primarily driven by new store openings and net favorable foreign currency effects of $3.9 million.~~

~~Asia net revenues~~ — Net revenues increased by $14.1 million, or 2.1%, during the nine months ended December 30, 2017 as compared to the nine months ended December 31, 2016, including net unfavorable foreign currency effects of $11.8 million. On a constant currency basis, net revenues increased by $25.9 million, or 3.9%.

~~The $14.1 million net increase in Asia net revenues was driven by:~~

~~a $5.8 million net increase related to our Asia wholesale business, primarily driven by our expansion in Japan, partially offset by net unfavorable foreign currency effects of $0.6 million; and~~

a $4.8 million net increase in comparable store sales, including net unfavorable foreign currency effects of $6.9 million. Our comparable store sales increased by $11.7 million on a constant currency basis, primarily driven by higher sales from certain of our retail locations due in part to improved conversion, partially offset by the impact of lower levels of promotional activity in connection with our long-term growth strategy. The following table summarizes the percentage change in comparable store sales related to our Asia retail business on both a reported and constant currency basis:

As
Reported

Constant
Currency
Total comparable store sales^(a)
1 % 3 %


^(a)	~~Comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.~~

~~a $3.5 million net increase in non-comparable store sales, primarily driven by new store openings, partially offset by net unfavorable foreign currency effects of $4.3 million.~~

~~Gross Profit.~~ Gross profit increased by $11.2 million, or 0.4%, to $2.843 billion for the nine months ended December 30, 2017. Gross profit during the nine-month periods ended December 30, 2017 and December 31, 2016 reflected non-cash inventory-related charges of $1.3 million and $149.4 million, respectively, recorded in connection with the Way Forward Plan. The increase in gross profit also included a net favorable foreign currency effect of $10.4 million. Gross profit as a percentage of net revenues increased to 61.1% for the nine months ended December 30, 2017 from 55.7% for the nine months ended December 31, 2016. The 540 basis point increase was primarily driven by the lower non-cash inventory-related charges recorded in connection with the Way Forward Plan during the nine months ended December 30, 2017 as compared to the comparable prior year period, lower levels of promotional activity in connection with our long-term growth strategy, favorable geographic and channel mix, and lower sourcing costs.

~~Selling, General, and Administrative Expenses.~~ SG&A expenses decreased by $141.0 million, or 5.9%, to $2.249 billion for the nine months ended December 30, 2017. This decrease included a net unfavorable foreign currency effect of $1.7 million. SG&A expenses as a percentage of net revenues increased to 48.3% for the nine months ended December 30, 2017 from 47.0% for the nine months ended December 31, 2016. The 130 basis point increase was primarily due to operating deleverage on lower net revenues, as previously discussed, and the unfavorable impact attributable to geographic and channel mix, as a greater portion of our revenue was generated by our international retail businesses (which typically carry higher operating expense margins). These increases were partially offset by our operational discipline and cost savings associated with our restructuring activities, as well as the favorable impact related to Mr. Ralph Lauren electing to forgo his Fiscal 2017 executive incentive bonus.



	55

~~The $141.0 million net decline in SG&A expenses was driven by:~~

Nine Months Ended December 30, 2017
Compared to
Nine Months Ended December 31, 2016
(millions)
SG&A expense category:
Compensation-related expenses^(a)
$ (40.3 )
Depreciation expense (22.7 )
Shipping and handling costs (16.3 )
Rent and occupancy expenses (16.2 )
Consulting fees (11.6 )
Marketing and advertising expenses (9.9 )
Selling-related expenses (9.1 )
Other (14.9 )
Total change in SG&A expenses $ (141.0 )


^(a)	~~Includes the favorable impact of $7.6 million related to Mr. Ralph Lauren electing to forgo his Fiscal 2017 executive incentive bonus.~~

~~Amortization of Intangible Assets.~~ ~~Amortization of intangible assets decreased slightly by $0.1 million, or 0.9%, to $18.0 million during the nine months ended December 30, 2017 due to favorable foreign currency effects.~~

~~Impairment of Assets.~~ During the nine-month periods ended December 30, 2017 and December 31, 2016, we recorded non-cash impairment charges of $14.0 million and $56.7 million, respectively, to write off certain fixed assets related to our domestic and international stores, shop-within-shops, and corporate offices in connection with the Way Forward Plan. Additionally, during the nine months ended December 30, 2017, we recorded non-cash impairment charges of $10.8 million to write off certain fixed assets related to underperforming stores and shop-within-shops as a result of our on-going store portfolio evaluation. See Note 7 to the accompanying consolidated financial statements.

~~Restructuring and Other Charges.~~ During the nine-month periods ended December 30, 2017 and December 31, 2016, we recorded restructuring charges of $63.7 million and $193.9 million, respectively, in connection with our restructuring plans, consisting of severance and benefit costs, lease termination and store closure costs, other cash charges, and non-cash accelerated stock-based compensation expense. In addition, during the nine months ended December 30, 2017, we recorded net other charges of $15.0 million primarily related to depreciation expense associated with our former Polo store at 711 Fifth Avenue in New York City recorded after the store closed during the first quarter of Fiscal 2018 in connection with the Way Forward Plan, the departure of Mr. Stefan Larsson, and the reversal of reserves associated with the settlement of certain non-income tax issues. See Note 8 to the accompanying consolidated financial statements.

~~Operating Income.~~ Operating income increased to $472.8 million for the nine months ended December 30, 2017, from $173.4 million for the nine months ended December 31, 2016. Our operating results during the nine-month periods ended December 30, 2017 and December 31, 2016 ~~were negatively impacted by restructuring-related char~~ges, impairment of assets, and certain other charges totaling $104.8 million and $400.0 million, respectively, as previously discussed. The increase in operating income also included a net favorable foreign currency effect of $8.7 million. Operating income as a percentage of net revenues increased to 10.2% for the nine months ended December 30, 2017 from 3.4% for the nine months ended December 31, 2016. The 680 basis point increase was primarily driven by the net decline in ~~restructuring-related char~~ges, impairment of assets, and certain other charges and the increase in our gross profit margin, partially offset by the increase in SG&A expenses as a percentage of net revenues, all as previously discussed.



	56

~~Operating income (loss) and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior year period, are provided below:~~

Nine Months Ended
December 30, 2017 December 31, 2016

Operating
Income (Loss)

Operating
Margin
Operating
Income (Loss)
Operating
Margin

$
Change

Margin
Change
(millions) (millions) (millions)
Segment:
North America $ 549.3
22.2% $ 574.6
19.8% $ (25.3 ) 240 bps
Europe 273.6
23.5% 239.2
20.4% 34.4
310 bps
Asia 101.0
14.9% (80.3 ) (12.1%) 181.3
2,700 bps
Other non-reportable segments 96.9
28.6% 91.0
25.9% 5.9
270 bps
1,020.8
824.5
196.3

Unallocated corporate expenses (469.3 ) (457.2 ) (12.1 )
Unallocated restructuring and other charges (78.7 ) (193.9 ) 115.2

Total operating income $ 472.8
10.2% $ 173.4
3.4% $ 299.4
680 bps

~~North America operating margin~~ improved by 240 basis points, primarily due to the favorable impact of 140 basis points related to our retail business, largely driven by the increase in our gross profit margin and decline in SG&A expenses as a percentage of net revenues. The increase also reflected the favorable impact of 100 basis points related to lower non-cash charges recorded in connection with the Way Forward Plan during the nine months ended December 30, 2017 as compared to the prior fiscal year period. Our wholesale business did not have a meaningful impact on our North America operating margin, as the improved gross margin was offset by operating expense deleverage on lower net revenues.

~~Europe operating margin~~ improved by 310 basis points, primarily due to the favorable impact of 180 basis points related to our retail business, largely driven by the increase in our gross profit margin, partially offset by an increase in SG&A expenses as a percentage of net revenues. The increase also reflected the favorable impact of 120 basis points related to lower non-cash charges recorded in connection with the Way Forward Plan during the nine months ended December 30, 2017 as compared to the prior fiscal year period, as well as the favorable impact of 60 basis points related to our wholesale business, largely driven by a decrease in SG&A expenses as a percentage of net revenues. These increases in operating margin were partially offset by unfavorable foreign currency effects of 50 basis points.

~~Asia operating margin~~ improved by 2,700 basis points, primarily due to the favorable impact of 2,160 basis points related to lower non-cash charges recorded in connection with the Way Forward Plan during the nine months ended December 30, 2017 as compared to the prior fiscal year period. The increase also reflected the favorable impact of 420 basis points related to our retail business, largely driven by a decline in SG&A expenses as a percentage of net revenues and the increase in our gross profit margin. The improvement also reflected favorable foreign currency effects of 150 basis points. These increases in operating margin were partially offset by a 30 basis point decline related to our wholesale business.

~~Unallocated corporate expenses~~ increased by $12.1 million to $469.3 million during the nine months ended December 30, 2017. The increase in unallocated corporate expenses was primarily due to lower intercompany sourcing commission income of $28.0 million (which is offset at the segment level and eliminates in consolidation) driven by the planned reduction in inventory, and higher impairment of asset charges of $10.4 million, partially offset by lower marketing and advertising expenses of $12.6 million, lower consulting fees of $6.3 million, lower compensation-related expenses of $5.9 million, and lower other expenses of $1.5 million.

~~Unallocated restructuring and other charges~~ ~~decreased by $115.2 million to $78.7 million during the nine months ended December 30, 2017, as previously discussed and in Note 8 to the accompanying consolidated financial statements.~~

~~Non-operating Expense, net.~~ Non-operating expense, net decreased by $1.3 million to $8.5 million during the nine months ended December 30, 2017 as compared to the nine months ended December 31, 2016, as the decline in equity in losses of equity-method investees and increases in foreign currency gains and interest and other income, net were largely offset by the increase in interest expense.



	57

~~Income Tax Provision.~~ The income tax provision and effective tax rate for the nine months ended December 30, 2017 were $342.8 million and 73.8%, respectively, as compared to $58.9 million and 36.0%, respectively, for the nine months ended December 31, 2016. The $283.9 million increase in the income tax provision was primarily due to one-time charges of $231.3 million recorded during the third quarter of Fiscal 2018 in connection with the TCJA (as discussed within "~~Recent Developments~~"), which negatively impacted our effective tax rate by 4,980 basis points, as well as the increase in pretax income. The increase in our effective tax rate also reflected the net favorable impact of 1,200 basis points, primarily due to the tax impact of earnings in lower taxed foreign jurisdictions versus the U.S. and the absence of (i) income tax reserve adjustments largely associated with an income tax settlement and certain income tax audits, and (ii) valuation allowances on and adjustments to deferred tax assets, both of which were recorded during the nine months ended December 31, 2016. The 1,200 basis points also reflected the unfavorable tax impact of the adoption of Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). See Note 4 to the accompanying consolidated financial statements for additional information relating to our adoption of ASU 2016-09.

~~Net Income.~~ Net income increased to $121.5 million for the nine months ended December 30, 2017, from $104.7 million for the nine months ended December 31, 2016. The $16.8 million increase in net income was primarily due to the $299.4 million increase in operating income, partially offset by the $283.9 million increase in our income tax provision, as previously discussed. Net income for the nine months ended December 30, 2017 reflected one-time charges of $231.3 million recorded in connection with the TCJA, as previously discussed. Our operating results during the nine-month periods ended December 30, 2017 and December 31, 2016 were also negatively impacted by restructuring-related charges, impairment of assets, and certain other charges totaling $104.8 million and $400.0 million, respectively, which had an after-tax effect of reducing net income by $69.8 million and $298.0 million, respectively.

~~Net Income per Diluted Share.~~ Net income per diluted share increased to $1.47 per share for the nine months ended December 30, 2017, from $1.25 for the nine months ended December 31, 2016. The $0.22 per share increase was due to the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during the nine months ended December 30, 20172022 driven by our share repurchases during the last twelve months. Net income per diluted share for the nine months ended December 30, 2017 was negatively impacted by approximately $2.80 per share as a result of one-time charges recorded in connection with the TCJA, as previously discussed. Net income per diluted share for the nine-monththree-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016~~June 26, 2021 were also negatively impacted by ~~$0.85~~$0.15 per share and ~~$3.57~~$0.11 per share, respectively, ~~as a result of~~related to net restructuring-related charges, impairment of assets, and certain other charges (benefits), as previously discussed.


			48

FINANCIAL CONDITION AND LIQUIDITY

Financial Condition

The following table presents our financial condition as of ~~December 30, 2017~~July 2, 2022 and April ~~1, 2017~~:2, 2022:

December 30,
2017 April 1,
2017 $
Change
(millions)
Cash and cash equivalents $ 1,175.7
$ 668.3
$ 507.4
Short-term investments 862.3
684.7
177.6
Non-current investments^(a)
83.3
21.4
61.9
Current portion of long-term debt^(b)
(298.3 ) —
(298.3 )
Long-term debt^(b)
(290.3 ) (588.2 ) 297.9
Net cash and investments^(c)
$ 1,532.7
$ 786.2
$ 746.5
Equity $ 3,407.5
$ 3,299.6
$ 107.9


	July 2, 2022		April 2, 2022		$ Change
	(millions)
Cash and cash equivalents	$	1,456.8	$	1,863.8	$	(407.0)
Short-term investments	320.1		734.6		(414.5)


Current portion of long-term debt(a)	—		(499.8)		499.8
Long-term debt(a)	(1,137.0)		(1,136.5)		(0.5)
Net cash and short-term investments	$	639.9	$	962.1	$	(322.2)
Equity	$	2,364.1	$	2,536.0	$	(171.9)


^(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 value 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.~~



			58

(a)See Note 10 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.

The ~~increase~~decrease in our net cash and short-term investments position at ~~December 30, 2017~~July 2, 2022 as compared to April ~~1, 2017~~2, 2022 was primarily due to our ~~operating cash flows of $951.1 million, partially offset by our~~ use of cash to support Class A common stock repurchases of $234.7 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $48.1 million, and to invest in our business through ~~$123.0~~$39.4 million in capital expenditures, as well as the unfavorable effect of exchange rate changes on our cash, cash equivalents, and ~~to make dividend payments~~restricted cash of ~~$121.7~~$30.0 million, partially offset by operating cash flows of $45.3 million.

The ~~increase~~decrease in our equity was ~~primarily~~ attributable to our share repurchase activity and dividends declared during the three months ended July 2, 2022, partially offset by our comprehensive income and the net impact of stock-based compensation ~~arrangements, partially offset by our dividends declared during the nine months ended December 30, 2017.~~arrangements.

Cash Flows

The following table details our cash flows for the ~~nine-month~~three-month periods ended ~~December 30, 2017~~July 2, 2022 and ~~December 31, 2016:~~June 26, 2021:


	Three Months Ended
	July 2, 2022		June 26, 2021		$ Change
	(millions)
Net cash provided by operating activities	$	45.3	$	247.6	$	(202.3)
Net cash provided by (used in) investing activities	365.6		(199.4)		565.0
Net cash used in financing activities	(788.6)		(34.3)		(754.3)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(30.0)		3.3		(33.3)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(407.7)	$	17.2	$	(424.9)

Nine Months Ended
December 30,
2017 December 31,
2016 $
Change
(millions)
Net cash provided by operating activities $ 951.1
$ 850.7
$ 100.4
Net cash provided by (used in) investing activities (317.8 ) 16.3
(334.1 )
Net cash used in financing activities (158.7 ) (369.5 ) 210.8
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 36.8
(29.0 ) 65.8
Net increase in cash, cash equivalents, and restricted cash $ 511.4
$ 468.5
$ 42.9

Net Cash Provided by Operating Activities. Net cash provided by operating activities ~~increased to $951.1~~was $45.3 million during the ~~nine~~three months ended ~~December 30, 2017,~~July 2, 2022, as compared to ~~$850.7~~$247.6 million during the ~~nine~~three months ended ~~December 31, 2016.~~June 26, 2021. The ~~$100.4~~$202.3 million net ~~increase~~decrease in cash provided by operating activities was due to a net ~~favorable~~unfavorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period ~~partially offset by~~as well as a ~~decline~~decrease in net income before non-cash charges.

The ~~decline in~~ net ~~income before non-cash charges reflected a one-time charge of $215.5 million recorded in connection with the TCJA's mandatory transition tax. This charge, which is expected~~unfavorable change related to ~~be paid over an eight-year period net of previously available foreign tax credit carryovers (see "Contractual and Other Obligations~~" below), did not impact our cash flows from operating activities during the nine months ended December 30, 2017 as reflected in the offsetting favorable change in our income taxes payable. Excluding the impact of this one-time charge, our operating assets and liabilities, including our working capital, ~~increased~~was primarily ~~due to:~~driven by:

~~favorable changes~~•a year-over-year increase in our ~~(i) other income tax receivables and payables (excluding the impact of the one-time mandatory transition tax) and (ii)~~inventory levels largely to support revenue growth, as well as higher goods-in-transit to mitigate ongoing global supply chain delays;


			49

•an unfavorable change related to our prepaid expenses and other current assets ~~both~~ largely driven by the timing of cash ~~collections and~~ payments; and

~~a decline in~~•an unfavorable change related to our ~~inventory levels,~~accounts receivable, largely driven by stronger performance in our ~~inventory management initiatives, lower sourcing costs, and the~~wholesale businesses, as well as timing of ~~inventory~~cash receipts.

These ~~increases~~decreases related to our operating assets and liabilities were partially offset by:

•a net favorable change in our accounts payable and accrued liabilities largely driven by an increase in our expenses during the first quarter of Fiscal 2023 compared to the prior year period, partially offset by an unfavorable change in our ~~accounts receivable, largely driven by~~dividends payable related to the ~~timing~~temporary suspension and subsequent resumption of our quarterly cash ~~collections.~~dividend program in Fiscal 2022.

Net Cash Provided by (Used in) Investing Activities. Net cash provided by investing activities was $365.6 million during the three months ended July 2, 2022, as compared to cash used in investing activities ~~was $317.8~~of $199.4 million during the ~~nine~~three months ended ~~December 30, 2017, as compared to~~June 26, 2021. The $565.0 million net increase in cash provided by investing activities ~~of $16.3 million during the nine months ended December 31, 2016. The $334.1 million net increase in cash used in investing activities~~ was primarily driven by:

•a ~~$434.5~~$581.6 million increase in ~~purchases of investments, less~~ proceeds from sales and maturities of investments, less purchases of investments. During the ~~nine~~three months ended ~~December 30, 2017,~~July 2, 2022, we ~~made~~received net ~~investment purchases~~proceeds from sales and maturities of ~~$190.2~~investments of $411.0 million, as compared to making net ~~investment sales~~purchases of ~~$244.3~~investments of $170.6 million during the ~~nine~~three months ended ~~December 31, 2016.~~June 26, 2021.

This increase in cash ~~used in~~provided by investing activities was partially offset by:

~~a $102.5~~•an $11.2 million ~~decline~~increase in capital expenditures. During the ~~nine~~three months ended ~~December 30, 2017,~~July 2, 2022, we spent ~~$123.0~~$39.4 million on capital expenditures, as compared to ~~$225.5~~$28.2 million during the ~~nine~~three months ended ~~December 31, 2016.~~June 26, 2021. Our capital expenditures during the ~~nine~~three months ended ~~December 30, 2017~~July 2, 2022 primarily related to ~~our global retail and~~



	59

~~department store renovations, new~~ store openings and ~~the continued~~renovations, as well as enhancements to our ~~global~~ information technology systems.

~~We currently~~Over the course of Fiscal 2023, we continue to expect to spend approximately ~~$200~~$290 million into $310 million on capital expenditures ~~during Fiscal 2018, lower than~~primarily related to store opening and renovations, as well as enhancements to our previous estimate of $225 million, as we shift certain capital investments into Fiscal 2019 and focus on consumer-facing initiatives that have demonstrated a proof of concept and healthy rates of return.information technology systems.

Net Cash Used in Financing Activities. Net cash used in financing activities was ~~$158.7~~$788.6 million during the ~~nine~~three months ended ~~December 30, 2017,~~July 2, 2022, as compared to ~~$369.5~~net cash used in financing activities of $34.3 million during the ~~nine~~three months ended ~~December 31, 2016.~~June 26, 2021. The ~~$210.8~~$754.3 million net ~~decrease~~increase in cash used in financing activities was primarily driven by:

•a ~~$116.1~~$500.0 million ~~decline~~increase in cash used to repay ~~debt, less proceeds from debt issuances. We~~debt. During the three months ended July 2, 2022, we repaid our previously outstanding $500.0 million principal amount of unsecured 1.700% senior notes that matured June 15, 2022. On a comparative basis, during the three months ended June 26, 2021, we did not issue or repay any ~~debt during the nine months ended December 30, 2017. On~~ debt;

•a ~~comparative basis, during the nine months ended December 31, 2016, we made $90.0~~$205.9 million ~~in net repayments related to our commercial paper note issuances and repayments and repaid $26.1 million of borrowings previously outstanding under our credit facilities; and~~

~~a $99.1 million decline~~increase in cash used to repurchase shares of our Class A common stock. During the ~~nine~~three months ended ~~December 30, 2017, $15.9~~July 2, 2022, we used $213.3 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program (which had been temporarily paused in connection with the COVID-19 pandemic but subsequently resumed during the third quarter of Fiscal 2022), and an additional $21.4 million in shares of our 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 ~~nine~~three months ended ~~December 31, 2016, we used $100.0 million to repurchase shares of Class A common stock pursuant to our common stock repurchase program, and an additional $15.0~~June 26, 2021, $28.8 million in shares of our Class A common stock were surrendered or withheld for ~~taxes.~~taxes; and

•a $48.1 million increase in payments of dividends, due to the reinstatement of our quarterly cash dividend program during Fiscal 2022 after being temporarily suspended at the beginning of the COVID-19 pandemic as a preemptive action to preserve cash and strengthen our liquidity position, as discussed in "Dividends" below.


			50

Sources of Liquidity

Our primary sources of liquidity are the cash flows generated from our operations, our available cash and cash equivalents and short-term investments, availability under our credit and overdraft facilities ~~our issuances of~~and commercial paper ~~notes,~~program, and other available financing options.

During the ~~nine~~three months ended ~~December 30, 2017,~~July 2, 2022, we generated ~~$951.1~~$45.3 million of net cash flows from our operations. As of ~~December 30, 2017,~~July 2, 2022, we had ~~$2.038~~$1.777 billion in cash, cash equivalents, and short-term investments, of which ~~$1.203 billion~~$636.6 million were held by our subsidiaries domiciled outside the U.S. We are not dependent on foreign cash to fund our domestic operations. ~~Given recent changes~~Undistributed foreign earnings generated on or before December 31, 2017 that were subject to the ~~taxation of~~one-time mandatory transition tax in connection with U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA") are not considered to be permanently reinvested and may be repatriated to the U.S. in the future with minimal or no additional U.S. taxation. We intend to permanently reinvest undistributed foreign earnings ~~in connection with~~generated after December 31, 2017 that were not subject to the ~~TCJA (as discussed within "Recent Developments"), we are exploring repatriation possibilities. If~~one-time mandatory transition tax. However, if our plans change and we choose to repatriate ~~any funds~~post-2017 earnings to the U.S. in the future, we ~~could potentially~~would be subject to applicable ~~state, local, and/or~~U.S. and foreign taxes. Any further changes in tax regulations could potentially change our future intentions regarding the reinvestment of our foreign earnings and we continue to monitor governing tax rules, as well as our cash needs.

The following table presents ~~our~~the total availability, borrowings outstanding, and remaining availability under our credit and overdraft facilities and Commercial Paper Program as of ~~December 30, 2017:~~July 2, 2022:

December 30, 2017
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 51
—
51


	July 2, 2022
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	38		—			38
Japan Overdraft Facility	37		—			37


^(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 December 30, 2017.~~



			60

(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 July 2, 2022.

We believe that ~~our~~the Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as of ~~December 30, 2017,~~July 2, 2022, there were ~~nine~~eight financial institutions participating in the Global Credit Facility, with no one participant maintaining a maximum commitment percentage in excess of 20%. In accordance with the terms of the agreement, we have the ability to expand our borrowing availability under the Global Credit Facility to $1 billion through the full term of the facility, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments.

Borrowings under the Pan-Asia Credit Facilities and Japan Overdraft Facility (collectively, the "Pan-Asia Borrowing Facilities") are guaranteed by the parent company and are granted at the sole discretion of the participating ~~regional branches of JPMorgan Chase (the "Banks")~~banks (as described within Note 10 to the accompanying consolidated financial statements), subject to availability of the ~~Banks'~~respective banks' funds and satisfaction of certain regulatory requirements. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the Global Credit Facility and the Pan-Asia ~~Credit~~Borrowing Facilities in the event of our election to draw additional funds in the foreseeable future.

Our sources of liquidity are used to fund our ongoing cash requirements, including working capital requirements, global retail store and ~~e-commerce~~digital commerce expansion, construction and renovation of shop-within-shops, investment in infrastructure, including technology, acquisitions, joint ventures, payment of dividends, debt repayments, Class A common stock repurchases, settlement of contingent liabilities (including uncertain tax positions), and other corporate activities, including our restructuring actions. We believe that our existing sources of cash, the availability under our credit facilities, and our ability to access capital markets will be sufficient to support our operating, capital, and debt service requirements for the foreseeable future, the ongoing development of our businesses, and our plans for further business expansion. However, prolonged periods of adverse economic conditions or business disruptions in any of our key regions, or a combination thereof, such as those resulting from pandemic


			51

diseases and other catastrophic events, could impede our ability to pay our obligations as they become due or return value to our shareholders, as well as delay previously planned expenditures related to our operations.

See Note 10 to the accompanying consolidated financial statements and Note 1211 of the Fiscal ~~2017~~2022 10-K ~~for detailed disclosure of the terms and conditions of our credit facilities.~~

~~Common Stock Repurchase Program~~

As of December 30, 2017, the remaining availability under our Class A common stock repurchase program was approximately $100 million. Repurchases of shares of Class A common stock are subject to overall business and market conditions. We currently do not expect to repurchase shares under our Class A common stock repurchase program during Fiscal 2018, as we evaluate the cash needs of our business, the sector dynamics, and recent changes to U.S. tax law.

~~See Note 14 to the accompanying consolidated financial statements~~ for additional information relating to our ~~Class A common stock repurchase program.~~

~~Dividends~~

Since 2003, we have maintained, and intend to continue to maintain, a regular quarterly cash dividend program on our common stock. However, any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on our results of operations, cash requirements, financial condition, and other factors that the Board of Directors may deem relevant.

~~See Note 14 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.~~credit facilities.

Debt and Covenant Compliance

In ~~September 2013,~~August 2018, we completed a registered public debt offering and issued ~~$300~~$400 million aggregate principal amount of unsecured senior notes due September ~~26, 2018,~~15, 2025, which bear interest at a fixed rate of ~~2.125%~~3.750%, payable semi-annually (the ~~"2.125%~~"3.750% Senior Notes"). In ~~August 2015,~~June 2020, we completed ~~a second~~another registered public debt offering and issued an additional ~~$300~~$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 ~~August 18, 2020,~~June 15, 2030, which bear interest at a fixed rate of ~~2.625%~~2.950%, payable semi-annually (the ~~"2.625%~~"2.950% Senior Notes").

The indenture and supplemental indentures governing the ~~2.125%~~3.750% Senior Notes and ~~2.625%~~2.950% Senior Notes (as supplemented, the "Indenture") contain certain covenants that restrict our 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 our property or assets to another party. However, the Indenture does not contain any financial covenants.

We have a credit facility that provides for a $500 million senior unsecured revolving line of credit through August 12, 2024, which is also used to support the issuance of letters of credit and the maintenance of the Commercial Paper Program (the "Global Credit Facility"). Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and other currencies, including Euros, Hong Kong Dollars, and Japanese Yen. We have the ability to expand the borrowing availability under the Global Credit Facility to $1 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.

The Global Credit Facility contains a number of covenants, as described in Note 10 to the accompanying consolidated financial statements. As of ~~December 30, 2017,~~July 2, 2022, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under our Global Credit Facility. The Pan-Asia ~~Credit~~Borrowing Facilities do not contain any financial covenants.



	61

See Note 10 to the accompanying consolidated financial statements and Note 1211 of the Fiscal ~~2017~~2022 10-K for additional information relating to our debt and covenant compliance.

~~Contractual~~Common Stock Repurchase Program

Repurchases of shares of our Class A common stock are subject to overall business and ~~Other Obligations~~

~~In connection with~~market conditions, as well as other potential factors such as the ~~TCJA's provision that subjects~~temporary restrictions previously ~~deferred foreign earnings~~in place under our Global Credit Facility. Accordingly, in response to business disruptions related to the COVID-19 pandemic, effective beginning in the first quarter of Fiscal 2021, we temporarily suspended our common stock repurchase program as a ~~one-time mandatory transition tax (as described in "Recent Developments"),~~preemptive action to preserve cash and strengthen our liquidity position. However, we ~~recorded a charge of $215.5 million within~~resumed activities under our ~~income tax provision~~Class A common stock repurchase program during the third quarter of Fiscal ~~2018, together with a corresponding current~~2022 as restrictions under our Global Credit Facility were lifted (see Note 11 of the Fiscal 2022 10-K) and ~~non-current income tax payable obligation within~~overall business and market conditions have improved since the COVID-19 pandemic first emerged.

On February 2, 2022, our Board of Directors approved an expansion of our existing common stock repurchase program that allowed us to repurchase up to an additional $1.500 billion of our Class A common stock. As of July 2, 2022, the remaining availability under our Class A common stock repurchase program was approximately $1.416 billion.

See Note 14 to the accompanying consolidated ~~balance sheets based upon the estimated timing of payments. This obligation, which was recorded on a provisional basis and is subject~~financial statements for additional information relating to ~~change, is expected to be paid over an eight-year period as follows:~~our Class A common stock repurchase program.


^(a)			The expected mandatory transition tax payments have been presented net of previously available foreign tax credit carryovers of $37.5 million, which we expect to utilize to partially reduce this tax obligation.52

Dividends

Except as discussed below, we have maintained a regular quarterly cash dividend program on our common stock since 2003.

In response to business disruptions related to the COVID-19 pandemic, effective beginning in the first quarter of Fiscal 2021 we temporarily suspended our quarterly cash dividend program as a preemptive action to preserve cash and strengthen our liquidity position. On May 19, 2021, our Board of Directors approved the reinstatement of our quarterly cash dividend program at the pre-pandemic amount of $0.6875 per share.

On May 18, 2022, our Board of Directors approved an increase to our quarterly cash dividend on its common stock from $0.6875 to $0.75 per share. The first quarterly dividend declared to reflect this increase was payable to shareholders of record at the close of business on July 1, 2022 and was paid on July 15, 2022.

We intend to continue to pay regular dividends on outstanding shares of our common stock. However, any decision to declare and pay dividends in the future will ultimately be made at the discretion of our Board of Directors and will depend on our results of operations, cash requirements, financial condition, and other factors that the Board of Directors may deem relevant, including economic and market conditions.

See Note 14 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.

Material Cash Requirements

There have been no substantial changes to our material cash requirements as disclosed in our Fiscal 2022 10-K, other than those which occur in the ordinary course of business. Refer to the"Financial Condition and Liquidity — Contractual and Other Obligations"section of the MD&A in our Fiscal ~~2017~~2022 10-K for detailed disclosure of our ~~other commitments and contractual obligations~~material cash requirements as of April ~~1, 2017.~~2, 2022.

MARKET RISK MANAGEMENT

As discussed in Note 1413 of the Fiscal ~~2017~~2022 10-K and Note 12 to the accompanying consolidated financial statements, we are exposed to a variety of levels and types of risks, including the impact of changes in ~~foreign~~ currency exchange rates ~~relating to~~on foreign currency-denominated balances, certain anticipated cash flows ~~from~~of our international operations, and ~~possible declines in~~ the value of reported net assets of our foreign operations, as well as changes in the fair value of our fixed-rate debt obligations relating to ~~changes~~fluctuations in benchmark interest rates. ~~Consequently, at times,~~Accordingly, in the normal course of business we ~~employ~~assess such risks and, in accordance with our established policies and procedures, ~~including the~~may use of derivative financial instruments to manage ~~such risks.~~and mitigate them. We do not ~~enter into derivative transactions~~use derivatives for speculative or trading purposes.

~~As a result of the~~Given our use of derivative instruments, we are exposed to the risk that the counterparties to ~~our~~such contracts will fail to meet their contractual obligations. To mitigate ~~this~~such counterparty credit risk, ~~we have a~~it is our policy ofto only ~~entering~~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. Our established policies and procedures for mitigating credit risk ~~from derivative transactions~~ include ongoing review and assessment of the creditworthiness of our counterparties. We also enter into master netting arrangements with counterparties, when possible, to further mitigate credit ~~risk associated with our derivative instruments.~~risk. As a result of the above considerations, we do not believe that we are exposed to ~~any~~ undue concentration of counterparty risk with respect to our derivative contracts as of ~~December 30, 2017.~~July 2, 2022. However, we do have in aggregate ~~$4.2~~$81.4 million of derivative instruments in net asset positions ~~with three~~held across eight creditworthy financial institutions.

Foreign Currency Risk Management

We manage our exposure to changes in foreign currency exchange rates ~~through the use of~~using forward foreign currency exchange and cross-currency swap contracts. ~~See~~ Refer to Note 12 to the accompanying consolidated financial statements for a summary of the notional amounts and fair values of our outstanding forward foreign currency exchange and cross-currency swap contracts, ~~outstanding~~as well as the impact on earnings and other comprehensive income of such instruments as of ~~December 30, 2017~~.

July 2, 2022.



			6253

Forward Foreign Currency Exchange Contracts

We enter into forward foreign currency exchange contracts ~~as hedges~~ to ~~reduce our~~mitigate risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, ~~intercompany royalty payments made by certain of our international operations, and~~ the settlement of foreign currency-denominated ~~balances.~~balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of our overall strategy ~~to manage~~for managing the level of exposure to ~~the risk of foreign currency~~such exchange rate ~~fluctuations,~~risk, relating 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,~~and the Chinese ~~Yuan, the New Taiwan Dollar, and the Hong Kong Dollar,~~Renminbi, we generally hedge a portion of our ~~foreign currency~~related exposures anticipated over ~~a two-year period. In doing so, we use~~the next twelve months using forward foreign currency exchange contracts ~~that generally have~~with maturities of two months to ~~two years~~one year to provide continuing coverage ~~throughout~~over the ~~hedging~~ period of the respective exposure.

Our foreign exchange risk management activities are governed by ~~our Company's~~ established policies and procedures. These policies and procedures provide a framework that allows for the management of currency exposures while ensuring the activities are conducted within our established guidelines. Our policies include guidelines for the organizational structure of our risk management function and for internal controls over foreign exchange risk management activities, including, but not limited to, authorization levels, transaction limits, and credit quality controls, as well as various measurements for monitoring compliance. We monitor foreign exchange risk using different techniques, including a periodic review of market values and performance of sensitivity analyses.

Cross-Currency Swap Contracts

~~During our fiscal year ended April 2, 2016 ("Fiscal 2016"), we entered into two pay-floating~~We periodically designate pay-fixed rate, ~~receive-floating~~receive-fixed rate cross-currency ~~swaps, with notional amounts of €280 million and €274 million, which we designated~~swap contracts as hedges of our net investment in certain ~~of our~~ European ~~subsidiaries (the "Cross-Currency Swaps"). The Cross-Currency Swaps, which mature on September 26, 2018 and August 18, 2020, respectively,~~subsidiaries.

Our pay-fixed rate, receive-fixed rate cross-currency swap ~~the~~contracts swap U.S. Dollar-denominated ~~variable~~fixed interest rate payments based on the ~~3-month London Interbank Offered Rate ("LIBOR") plus a~~contract's notional amount and the fixed ~~spread~~rate of interest payable on certain of our senior notes for Euro-denominated ~~variable~~fixed interest rate payments, ~~based on the 3-month Euro Interbank Offered Rate plus~~thereby economically converting a ~~fixed spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest Rate Swaps (as defined below), economically convert~~portion of our ~~$300 million~~ fixed-rate ~~2.125% and $300 million fixed-rate 2.625%~~U.S. Dollar-denominated senior note obligations to ~~€280 million and €274 million floating-rate~~fixed rate Euro-denominated ~~liabilities, respectively.~~obligations.

See Note 3 to the accompanying consolidated financial statements for further discussion of our foreign currency exposures and the types of derivative instruments used to hedge those exposures.

~~Interest Rate Risk Management~~

During Fiscal 2016, we entered into two pay-floating rate, receive-fixed rate interest rate swap contracts which we designated as hedges against changes in the respective fair values of our fixed-rate 2.125% Senior Notes and our fixed-rate 2.625% Senior Notes attributed to changes in the benchmark interest rate (the "Interest Rate Swaps"). The Interest Rate Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, both have notional amounts of $300 million and swap the fixed interest rates on our 2.125% Senior Notes and 2.625% Senior Notes for variable interest rates based on 3-month LIBOR plus a fixed spread.

Investment Risk Management

As of ~~December 30, 2017,~~July 2, 2022, we had cash and cash equivalents on-hand of ~~$1.176~~$1.457 billion, consisting of deposits in interest bearing accounts, investments in money market deposit accounts, and investments in time deposits ~~and commercial paper~~ with original maturities of 90 days or less. Our other significant investments included ~~$862.3~~$320.1 million of short-term investments, consisting of investments in time deposits ~~and commercial paper~~ with original maturities greater than 90 days; $47.5 million of restricted cash placed in escrow with certain banks as collateral, primarily to secure guarantees in connection with certain international tax matters; and $83.3 million of investments with maturities greater than one year, consisting of time deposits.days.

We actively monitor our exposure to changes in the fair value of our global investment portfolio in accordance with our established policies and procedures, which include monitoring both general and issuer-specific economic conditions, as discussed ~~further below.~~in Note 3 to the accompanying consolidated financial statements. Our investment objectives include capital preservation, maintaining adequate liquidity, diversification to minimize liquidity and credit risk, and achievement of maximum returns within the guidelines set forth in our investment policy. See Note 12 to the accompanying consolidated financial statements for further detail of the composition of our investment portfolio as of ~~December 30, 2017~~.July 2, 2022.



	63

We evaluate investments held in unrealized loss positions, if any, for other-than-temporary impairment on a quarterly basis. This evaluation involves a variety of considerations, including assessments of risks and uncertainties associated with general economic conditions and distinct conditions affecting specific issuers. We consider the following factors: (i) the length of time and the extent to which the fair value has been below cost, (ii) the financial condition, credit worthiness, and near-term prospects of the issuer, (iii) the length of time to maturity, (iv) anticipated future economic conditions and market forecasts, (v) our intent and ability to retain our investment for a period of time sufficient to allow for recovery of market value, and (vi) an assessment of whether it is more likely than not that we will be required to sell our investment before recovery of market value. No material realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded in any of the fiscal periods presented.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 3 of the Fiscal ~~2017~~2022 10-K. Our estimates are often based on complex judgments, assessments of probability, and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. For a complete discussion of our critical accounting policies, ~~see~~refer to the "Critical Accounting Policies" section of the MD&A in our Fiscal ~~2017~~2022 10-K.

There have been no significant changes in the application of our critical accounting policies since April ~~1, 2017~~.2, 2022.

~~Goodwill Impairment Assessment~~

We performed our annual goodwill impairment assessment using a qualitative approach as of the beginning of the second quarter of Fiscal 2018. In performing the assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affected the fair values and/or carrying amounts of our reporting units with allocated goodwill. These factors included external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and expected financial performance. Additionally, the results of our most recent quantitative goodwill impairment test indicated that the fair values of these reporting units significantly exceeded their respective carrying values. Based on the results of our qualitative goodwill impairment assessment, we concluded that it is not more likely than not that the fair values of our reporting units are less than their respective carrying values, and there were no reporting units at risk of impairment.


			54

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 4 to the accompanying consolidated financial statements for a description of certain recently issued ~~or proposed~~ accounting standards which have impacted our consolidated financial statements, or may impact our consolidated financial statements in future reporting periods.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For a discussion of the Company's exposure to market risk, see "Market Risk Management" presented in Part I, Item 2 — MD&A of this Form 10-Q and incorporated herein by reference.


~~Item 4.~~	~~Controls and Procedures.~~

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

We carried out an evaluation based on criteria established in the Internal Control -— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) under the supervision and with the participation of management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities



	64

Exchange Act of 1934. Based on that evaluation, our principal executive and principal financial officers have concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of ~~December 30, 2017. Except as discussed below, there~~July 2, 2022.

There has been no change in the Company's internal control over financial reporting during the fiscal quarter ended ~~December 30, 2017~~July 2, 2022 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

~~Operating and Financial Reporting System Implementation~~

During the first quarter of Fiscal 2018, we completed the migration of our European operations to an operating and financial reporting information technology system, SAP, as part of a multi-year plan to integrate and upgrade our global systems and processes.


			55

As a result of the implementation of this system, we have experienced certain changes to our processes and procedures which, in turn, resulted in changes to our internal control over financial reporting. While we expect SAP to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as processes and procedures in each of the affected areas evolve. For a discussion of risks related to the implementation of new systems, see Item 1A — "~~Risk Factors~~ — ~~Risks and uncertainties associated with the implementation of information systems may negatively impact our business" in the Fiscal 2017 10-K.~~

PART II. OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings.~~

Item 1. Legal Proceedings.

Reference is made to the information disclosed under Item 3 — "Legal Proceedings" in the Fiscal ~~2017~~2022 10-K.


~~Item 1A.~~	~~Risk Factors.~~

Item 1A. Risk Factors.

Reference is made to the information disclosed under Part I, Item 1A — "Risk Factors" in the Fiscal ~~2017~~2022 10-K, which contains a detailed discussion of certain risk factors that could materially adversely affect the Company's business, operating results, and/or financial condition. ~~The following information amends, updates, and should be read in conjunction with~~There are no material changes to the risk factors ~~and information~~previously disclosed, innor has the ~~Fiscal 2017 10-K.~~

~~The impact to our~~Company identified any previously undisclosed risks that could materially adversely affect the Company's business, ~~of recently enacted U.S. tax legislation could differ materially from our current estimates.~~

~~Although we expect the TCJA will ultimately benefit our~~operating results, of operations and financial condition in future periods, primarily due to it reducing the U.S. federal statutory income tax rate from 35% to 21%, its enactment resulted in the recognition of one-time charges of $231.3 million within our income tax provision during the third quarter of Fiscal 2018. These charges were recorded on a provisional basis, as permitted by SEC Staff Accounting Bulletin No. 118 ("SAB 118"), based on our present interpretations of the TCJA and current available information, including assumptions and expectations about future events, such as our projected financial performance. Although we believe these provisional amounts represent a reasonable estimate of the ultimate enactment-related impact the TCJA will have on our consolidated financial statements, the amounts could be adjusted materially as additional information becomes available (including our actual full Fiscal 2018 results of operations and financial condition, which were projected for purposes of calculating the provisional amounts) and further analyses are completed. The impact of the TCJA to our business in future periods is also subject to a variety of factors beyond our control including, but not limited to, (i) potential amendments to the TCJA; (ii) potential changes to state, local, and foreign tax laws in response to the TCJA; and (iii) potential new or interpretative guidance issued by the Financial Accounting Standards Board or the Internal Revenue Service and other tax agencies. Any of these factors could cause our actual results to differ materiality from our current expectations and/or ~~investors' expectations~~financial condition.

Item 2. Unregistered Sales of Equity Securities and ~~there can be no assurance that the TCJA will ultimately benefit our results~~Use of ~~operations and financial condition in future periods.~~Proceeds.



	65

~~For further discussion~~(a)Sales of ~~risks related to the potential imposition of additional regulations and laws and changes to our tax obligations and effective tax rate, refer to Part I, Item 1A — "Risk Factors — Our ability to conduct business globally may be affected by a variety of legal, regulatory, political, and economic risks" and "Risk Factors — Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results" in the Fiscal 2017 10-K.~~Unregistered Securities

~~See Note 9 to the accompanying consolidated financial statements for further discussion of the TCJA.~~


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


~~(a)~~	~~Sales of Unregistered Securities~~

Shares of the Company's Class B Common Stock may be converted immediately into Class A Common Stock on a one-for-one basis by the holder. There is no cash or other consideration paid by the holder converting the shares and, accordingly, there is no cash or other consideration received by the Company. The shares of Class A Common Stock issued by the Company in such conversions are exempt from registration pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

No shares of the Company's Class B common stock were converted into Class A common stock during the three months ended ~~December 30, 2017.~~July 2, 2022.


~~(b)~~	~~Not Applicable~~


~~(c)~~	~~Stock Repurchases~~

(b) Not Applicable

(c)Stock Repurchases

The following table sets forth the repurchases of shares of the Company's Class A common stock during the three months ended ~~December 30, 2017:~~July 2, 2022:

Total Number of Shares Purchased^(a)
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^(b)
(millions)
October 1, 2017 to October 28, 2017 11,257
$ 88.92
—
$ 100
October 29, 2017 to December 2, 2017 —
—
—
100
December 3, 2017 to December 30, 2017 3,238

101.38
—
100
14,495
—


	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)
April 3, 2022 to April 30, 2022	—		$	—	—	$	1,629
May 1, 2022 to May 28, 2022	313,469	(b)	95.59		226,700	1,608
May 29, 2022 to July 2, 2022	2,133,291	(c)	96.05		2,002,202	1,416
	2,446,760				2,228,902


^(a)	~~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.~~


^(b)	~~Repurchases of shares of Class A common stock are subject to overall business and market conditions.~~

(a)Repurchases of shares of the Company's Class A common stock are subject to overall business and market conditions.

(b)Includes 86,769 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 131,089 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.



			6656

Item 6. Exhibits.


~~Item 6.~~			~~Exhibits.~~



3.1	Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1/A (File No. 333-24733) filed June 10, 1997).
3.2		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Form 8-K filed August 16, 2011).
3.3		Fourth Amended and Restated By-Laws of the Company (filed as Exhibit 3.3 to the Form 10-Q filed on August 10, 2017).
12.110.1		~~Computation of Ratio of Earnings to Fixed Charges.~~Amended and Restated Employment Agreement, dated February 14, 2021, between the Company and Halide Alagoz †
31.110.2		Amendment No. 1 to the Amended and Restated Employment Agreement, dated August 3 , 2022, between the Company and Halide Alagoz †
31.1*		Certification of Principal Executive Officer pursuant to 17 CFR 240.13a-14(a).
31.2*		Certification of Principal Financial Officer pursuant to 17 CFR 240.13a-14(a).
32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
101101.INS		XBRL Instance Document - the instance document does not appear in the Interactive ~~data files pursuant to Rule 405 of Regulation S-T: (i)~~Data File because its XBRL tags are embedded within the Consolidated Balance Sheets at December 30, 2017 and April 1, 2017, (ii) the Consolidated Statements of Operations for the three-month and nine-month periods ended December 30, 2017 and December 31, 2016, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the three-month and nine-month periods ended December 30, 2017 and December 31, 2016, (iv) the Consolidated Statements of Cash Flows for the nine-month periods ended December 30, 2017 and December 31, 2016, and (v) the Notes to the Consolidated Financial Statements.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

Exhibits 32.1 and 32.2 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.


*			Filed herewith.
†			Management contract or compensatory plan or arrangement.

* ~~Filed herewith.~~



			6757

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


				RALPH LAUREN CORPORATION

			By:		~~RALPH LAUREN CORPORATION~~

	~~By:~~	/S/ JANE HAMILTON NIELSEN
				Jane Hamilton Nielsen
				Chief Operating Officer and Chief Financial Officer
				(Principal Financial and Accounting Officer)

Date: ~~February 8, 2018~~August 9, 2022



			6858



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	~~10022~~ (Zip Code)
(Address of principal executive offices)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Class A Common Stock, $.01 par value	RL	New York Stock Exchange



Large accelerated filer	þ☑	Accelerated filer	o☐
Non-accelerated filer	o ~~(Do not check if a smaller reporting company)~~ ☐	Smaller reporting company	o☐
		Emerging growth company	o☐



þ☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	~~For the quarterly period ended December 30, 2017~~



o ☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Severance and Benefit Costs			Lease Termination and Store Closure Costs			Other Cash Charges			Total
	(millions)
Balance at April 1, 2017	$	94.3		$	34.3		$	6.6		$	135.2
Additions charged to expense	25.3			28.5			9.2			63.0
Cash payments charged against reserve	(74.7		)	(18.0		)	(9.0		)	(101.7		)
Non-cash adjustments	0.6			7.8			—			8.4
Balance at December 30, 2017	$	45.5		$	52.6		$	6.8		$	104.9



	December 31, 2016
	Three Months Ended		Nine Months Ended		Cumulative Charges
	(millions)
Cash-related restructuring charges:
Severance and benefit costs	$	—	$	4.7	$	69.1
Lease termination and store closure costs	—		0.2		8.0
Other cash charges	—		—		13.8
Total cash-related restructuring charges	—		4.9		90.9
Non-cash charges:
Impairment of assets	—		—		27.2
Inventory-related charges^(a)	—		—		20.4
Accelerated stock-based compensation expense^(b)	—		—		8.9
Total non-cash charges	—		—		56.5
Total charges	$	—	$	4.9	$	147.4



	December 30, 2017				April 1, 2017
	Carrying Value^(a)		Fair Value^(b)		Carrying Value^(a)		Fair Value^(b)
	(millions)
$300 million 2.125% Senior Notes	$	298.3	$	300.2	$	298.1	$	302.2
$300 million 2.625% Senior Notes	290.3		302.2		290.1		302.8



	Mandatory Transition Tax Payments^(a)
	(millions)
Fiscal 2019	$	27.3
Fiscal 2020	14.0
Fiscal 2021	14.0
Fiscal 2022	14.0
Fiscal 2023	23.2
Fiscal 2024 and thereafter	85.5
Total mandatory transition tax payments	$	178.0



	Number of Shares
	Restricted Stock	Service-based RSUs
	(thousands)
Nonvested at April 1, 2017	19	922
Granted	—	695
Vested	—	(325	)
Forfeited	—	(140	)
Nonvested at December 30, 2017	19	1,152



	Number of Shares
	Performance-based RSUs — without TSR Modifier		Performance-based RSUs — with TSR Modifier
	(thousands)
Nonvested at April 1, 2017	788		61
Granted	585		—
Change due to performance/market condition achievement	(12	)	(21	)
Vested	(149	)	(40	)
Forfeited	(28	)	—
Nonvested at December 30, 2017	1,184		—



	As Reported		Constant Currency
E-commerce comparable store sales	(19	%)	(20	%)
Comparable store sales excluding e-commerce	(1	%)	(3	%)
Total comparable store sales	(5	%)	(6	%)



	December 30, 2017
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	51		—			51



	Total Number of Shares Purchased^(a)	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^(b)
					(millions)
October 1, 2017 to October 28, 2017	11,257	$	88.92	—	$	100
October 29, 2017 to December 2, 2017	—	—		—	100
December 3, 2017 to December 30, 2017	3,238	101.38		—	100
	14,495			—

As
Reported

Constant
Currency

Total comparable store sales^(a)