UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 30, 2017
orFor the quarterly period ended September 30, 2023
or
o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-13057
Ralph Lauren Corporation
(Exact name of registrant as specified in its charter)
Delaware13-2622036
(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)
(212) 318-7000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Class A Common Stock, $.01 par valueRLNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filero
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o . Yes No þ
At FebruaryNovember 2, 2018, 55,408,4522023, 39,751,805 shares of the registrant's Class A common stock, $.01 par value, and 25,881,27624,881,276 shares of the registrant's Class B common stock, $.01 par value, were outstanding.





RALPH LAUREN CORPORATION
INDEX
 
Page
Page
PART I. FINANCIAL INFORMATION (Unaudited)
Item 1.Financial Statements:
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.    
Item 2.
Item 6.5.
Item 6.
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101INSTANCE DOCUMENT
EX-101SCHEMA DOCUMENT
EX-101CALCULATION LINKBASE DOCUMENT
EX-101LABELS LINKBASE DOCUMENT
EX-101PRESENTATION LINKBASE DOCUMENT
EX-101DEFINITION LINKBASE DOCUMENT



21



RALPH LAUREN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 December 30,
2017
 April 1,
2017
September 30,
2023
April 1,
2023
 
(millions)
(unaudited)
(millions)
ASSETSASSETSASSETS
Current assets:    Current assets:
Cash and cash equivalents $1,175.7
 $668.3
Cash and cash equivalents$1,381.8 $1,529.3 
Short-term investments 862.3
 684.7
Short-term investments85.1 36.4 
Accounts receivable, net of allowances of $218.6 million and $214.4 million 295.2
 450.2
Accounts receivable, net of allowances of $173.0 million and $175.3 millionAccounts receivable, net of allowances of $173.0 million and $175.3 million461.1 447.7 
Inventories 825.4
 791.5
Inventories1,195.3 1,071.3 
Income tax receivable 69.8
 79.4
Income tax receivable50.0 50.7 
Prepaid expenses and other current assets 304.8
 280.4
Prepaid expenses and other current assets221.2 188.7 
Total current assets 3,533.2
 2,954.5
Total current assets
3,394.5 3,324.1 
Property and equipment, net 1,215.9
 1,316.0
Property and equipment, net875.6 955.5 
Operating lease right-of-use assetsOperating lease right-of-use assets1,088.2 1,134.0 
Deferred tax assets 133.1
 125.9
Deferred tax assets262.7 255.1 
Goodwill 935.0
 904.6
Goodwill883.0 898.9 
Intangible assets, net 201.5
 219.8
Intangible assets, net82.2 88.9 
Other non-current assets 180.3
 131.2
Other non-current assets136.9 133.0 
Total assets $6,199.0
 $5,652.0
Total assets
$6,723.1 $6,789.5 
LIABILITIES AND EQUITYLIABILITIES AND EQUITYLIABILITIES AND EQUITY
Current liabilities:    Current liabilities:
Current portion of long-term debt $298.3
 $
Accounts payable 184.3
 147.7
Accounts payable$460.1 $371.6 
Income tax payable 138.5
 29.5
Current income tax payableCurrent income tax payable56.3 59.7 
Current operating lease liabilitiesCurrent operating lease liabilities270.9 266.7 
Accrued expenses and other current liabilities 1,089.1
 982.7
Accrued expenses and other current liabilities823.1 795.5 
Total current liabilities 1,710.2
 1,159.9
Total current liabilities
1,610.4 1,493.5 
Long-term debt 290.3
 588.2
Long-term debt1,139.5 1,138.5 
Income tax payable 150.8
 
Long-term finance lease liabilitiesLong-term finance lease liabilities266.9 315.3 
Long-term operating lease liabilitiesLong-term operating lease liabilities1,079.0 1,141.1 
Non-current income tax payableNon-current income tax payable42.2 75.9 
Non-current liability for unrecognized tax benefits 76.4
 62.7
Non-current liability for unrecognized tax benefits100.7 93.8 
Other non-current liabilities 563.8
 541.6
Other non-current liabilities115.2 100.9 
Commitments and contingencies (Note 13) 
 
Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)
Total liabilities 2,791.5
 2,352.4
Total liabilities
4,353.9 4,359.0 
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; 108.7 million and 107.7 million shares issued; 39.8 million and 40.7 million shares outstandingClass A common stock, par value $.01 per share; 108.7 million and 107.7 million shares issued; 39.8 million and 40.7 million shares outstanding1.0 1.0 
Class B common stock, par value $.01 per share; 24.9 million shares issued and outstandingClass B common stock, par value $.01 per share; 24.9 million shares issued and outstanding0.3 0.3 
Additional paid-in-capital 2,365.1
 2,308.8
Additional paid-in-capital2,875.0 2,824.3 
Retained earnings 5,751.5
 5,751.9
Retained earnings6,779.7 6,598.2 
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; 68.9 million and 67.0 million sharesTreasury stock, Class A, at cost; 68.9 million and 67.0 million shares(7,024.0)(6,797.3)
Accumulated other comprehensive loss (130.6) (198.4)Accumulated other comprehensive loss(262.8)(196.0)
Total equity 3,407.5
 3,299.6
Total equity
2,369.2 2,430.5 
Total liabilities and equity $6,199.0
 $5,652.0
Total liabilities and equity
$6,723.1 $6,789.5 
See accompanying notes.

32



RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended Nine Months Ended Three Months EndedSix Months Ended
 December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 
(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
$1,633.0 $1,579.9 $3,129.5 $3,070.5 
Cost of goods sold(a)
 (645.6) (731.4) (1,809.9) (2,255.4)
Cost of goods soldCost of goods sold(562.9)(556.8)(1,027.4)(1,046.0)
Gross profit 996.2
 983.2
 2,843.2
 2,832.0
Gross profit
1,070.1 1,023.1 2,102.1 2,024.5 
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)
Impairment of assets (3.9) (10.3) (24.8) (56.7)
Restructuring and other charges(a)
 (23.3) (66.7) (78.7) (193.9)
Selling, general, and administrative expensesSelling, general, and administrative expenses(896.3)(809.5)(1,726.3)(1,630.1)
Restructuring and other charges, netRestructuring and other charges, net(9.3)(6.9)(44.9)(12.5)
Total other operating expenses, net (807.0) (854.9) (2,370.4) (2,658.6)
Total other operating expenses, net
(905.6)(816.4)(1,771.2)(1,642.6)
Operating income 189.2
 128.3
 472.8
 173.4
Operating income
164.5 206.7 330.9 381.9 
Foreign currency gains (losses) 0.6
 (2.7) 2.4
 0.8
Interest expense (4.8) (3.6) (14.4) (11.1)Interest expense(10.0)(9.5)(20.0)(21.3)
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 incomeInterest income15.8 6.6 31.5 10.2 
Other expense, netOther expense, net(4.8)(3.7)(6.3)(8.5)
Income before income taxes 186.3
 123.1
 464.3
 163.6
Income before income taxes
165.5 200.1 336.1 362.3 
Income tax provision (268.1) (41.8) (342.8) (58.9)Income tax provision(18.6)(49.6)(57.1)(88.4)
Net income (loss) $(81.8) $81.3
 $121.5
 $104.7
Net income (loss) per common share:        
Net income
Net income
$146.9 $150.5 $279.0 $273.9 
Net income per common share:Net income per common share:
Basic $(1.00) $0.98
 $1.49
 $1.26
Basic$2.24 $2.21 $4.24 $3.97 
Diluted $(1.00) $0.98
 $1.47
 $1.25
Diluted$2.19 $2.18 $4.15 $3.90 
Weighted average common shares outstanding:        
Weighted-average common shares outstanding:Weighted-average common shares outstanding:
Basic 81.7
 82.6
 81.7
 82.9
Basic65.6 68.0 65.7 69.0 
Diluted 81.7
 83.3
 82.5
 83.6
Diluted67.2 69.0 67.3 70.3 
Dividends declared per share $0.50
 $0.50
 $1.50
 $1.50
Dividends declared per share$0.75 $0.75 $1.50 $1.50 
(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 Nine Months Ended
  December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
  
(millions)
(unaudited)
Net income (loss) $(81.8) $81.3
 $121.5
 $104.7
Other comprehensive income (loss), net of tax:        
Foreign currency translation gains (losses) 3.0
 (88.8) 90.7
 (86.7)
Net gains (losses) on cash flow hedges 2.3
 45.0
 (22.0) 43.2
Net gains (losses) on defined benefit plans (0.5) 1.1
 (0.9) 2.0
Other comprehensive income (loss), net of tax 4.8
 (42.7) 67.8
 (41.5)
Total comprehensive income (loss) $(77.0) $38.6
 $189.3
 $63.2

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

54



RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended Six Months Ended
 December 30,
2017
 December 31,
2016
September 30,
2023
October 1,
2022
 
(millions)
(unaudited)
(millions)
Cash flows from operating activities:    Cash flows from operating activities:
Net income $121.5
 $104.7
Net income$279.0 $273.9 
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 expense116.8 108.1 
Deferred income tax expense (benefit) (8.0) 9.8
Equity in losses of equity-method investees 3.6
 5.2
Non-cash stock-based compensation expense 56.3
 46.4
Non-cash impairment of assets 24.8
 56.7
Non-cash restructuring-related inventory charges 1.3
 149.4
Deferred income tax expenseDeferred income tax expense6.1 36.1 
Stock-based compensation expenseStock-based compensation expense50.7 40.7 
Bad debt expenseBad debt expense0.3 0.6 
Other non-cash charges 6.7
 18.1
Other non-cash charges16.3 13.3 
Changes in operating assets and liabilities:    Changes in operating assets and liabilities:
Accounts receivable 158.9
 214.9
Accounts receivable(26.5)(113.8)
Inventories (11.6) (36.5)Inventories(151.0)(345.8)
Prepaid expenses and other current assets (4.2) (72.8)Prepaid expenses and other current assets(37.8)(59.6)
Accounts payable and accrued liabilities 105.0
 98.4
Accounts payable and accrued liabilities154.7 31.8 
Income tax receivables and payables 279.7
 (2.6)Income tax receivables and payables(41.8)28.9 
Deferred income 3.8
 (15.5)
Operating lease right-of-use assets and liabilities, netOperating lease right-of-use assets and liabilities, net(18.2)(12.3)
Other balance sheet changes (6.1) 42.6
Other balance sheet changes(5.0)— 
Net cash provided by operating activities 951.1
 850.7
Net cash provided by operating activities
343.6 1.9 
Cash flows from investing activities:    Cash flows from investing activities:
Capital expenditures (123.0) (225.5)Capital expenditures(82.4)(83.9)
Purchases of investments (985.5) (460.5)Purchases of investments(158.6)(431.2)
Proceeds from sales and maturities of investments 795.3
 704.8
Proceeds from sales and maturities of investments108.1 849.2 
Acquisitions and ventures (4.6) (2.5)
Other investing activitiesOther investing activities— (6.0)
Net cash provided by (used in) investing activities (317.8) 16.3
Net cash provided by (used in) investing activities
(132.9)328.1 
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 debtRepayments of long-term debt— (500.0)
Payments of finance lease obligationsPayments of finance lease obligations(11.2)(10.8)
Payments of dividends (121.7) (123.7)Payments of dividends(98.2)(99.1)
Repurchases of common stock, including shares surrendered for tax withholdings (15.9) (115.0)Repurchases of common stock, including shares surrendered for tax withholdings(225.7)(417.3)
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
(335.1)(1,027.2)
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(23.9)(60.6)
Net increase in cash, cash equivalents, and restricted cash 511.4
 468.5
Net decrease in cash, cash equivalents, and restricted cashNet decrease in cash, cash equivalents, and restricted cash(148.3)(757.8)
Cash, cash equivalents, and restricted cash at beginning of period 711.8
 502.1
Cash, cash equivalents, and restricted cash at beginning of period1,536.9 1,872.0 
Cash, cash equivalents, and restricted cash at end of period $1,223.2
 $970.6
Cash, cash equivalents, and restricted cash at end of period$1,388.6 $1,114.2 
See accompanying notes.

5


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



RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(Unaudited)
Six Months Ended September 30, 2023
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at April 1, 2023
132.6 $1.3 $2,824.3 $6,598.2 67.0 $(6,797.3)$(196.0)$2,430.5 
Comprehensive income:
Net income279.0 
Other comprehensive loss(66.8)
Total comprehensive income212.2 
Dividends declared(97.5)(97.5)
Repurchases of common stock, including excise tax1.9 (226.7)(226.7)
Stock-based compensation50.7 50.7 
Shares issued pursuant to stock-based compensation plans1.0 — — — 
Balance at September 30, 2023
133.6 $1.3 $2,875.0 $6,779.7 68.9 $(7,024.0)$(262.8)$2,369.2 
Six Months Ended October 1, 2022
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at April 2, 2022
131.8 $1.3 $2,748.8 $6,274.9 61.9 $(6,308.7)$(180.3)$2,536.0 
Comprehensive income:
Net income273.9 
Other comprehensive loss(77.0)
Total comprehensive income196.9 
Dividends declared(100.7)(100.7)
Repurchases of common stock4.4 (417.3)(417.3)
Stock-based compensation40.7 40.7 
Shares issued pursuant to stock-based compensation plans0.8 — — — 
Balance at October 1, 2022
132.6 $1.3 $2,789.5 $6,448.1 66.3 $(6,726.0)$(257.3)$2,255.6 
(a)Includes Class A and Class B common stock.
(b)Accumulated other comprehensive income (loss).
See accompanying notes.
7




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

1.    Description of Business
Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of premiumluxury 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 numbera wide range of products, brands, salesdistribution 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 channelschannel 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-commercedigital 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 useaccess its various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.home.
The Company organizes its business into the following three reportable segments: North America, Europe, and Asia. In addition to these reportable segments, the Company also has other non-reportable segments. See Note 1716 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, 20172023 (the "Fiscal 20172023 10-K").
Basis of Consolidation
These unaudited interim consolidated financial statements present the consolidated financial position, income (loss), comprehensive income (loss), and cash flows of the Company, including all entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.
Fiscal Periods
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest toimmediately before or after March 31. As such, fiscal year 20182024 will end on March 31, 201830, 2024 and will be a 52-week period ("Fiscal 2018"2024"). Fiscal year 20172023 ended on April 1, 20172023 and was also a 52-week period ("Fiscal 2017"2023"). The thirdsecond quarter of Fiscal 20182024 ended on DecemberSeptember 30, 20172023 and was a 13-week period. The thirdsecond quarter of Fiscal 20172023 ended on December 31, 2016October 1, 2022 and was also a 13-week period.

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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'speriods' 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 ourits 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-monthsix-month periods ended DecemberSeptember 30, 20172023 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2018.2024.
3.Summary of Significant Accounting Policies
3.    Summary of Significant Accounting Policies
Revenue Recognition
Revenue is recognizedThe Company recognizes revenue across all segmentschannels of the business when thereit 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 ofsubject 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 withinfrom the Company's retail business is recognized when the customer takes physical possession of the products, which occurs either at the point of sale for merchandise purchased at the Company's own retail stores and shop-within-shop locations, or upon receipt of shipment for merchandise ordered through direct-to-consumer digital commerce sites. Such revenues are recorded net of estimated returns based on historical trends. Payment is due at the point of sale.
Gift cards purchased by customers are recorded as a liability until they are redeemed for products sold by the Company's retail business, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed (referred to as "breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions.
9


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Revenue from the Company's wholesale business is generally recognized upon shipment of products, at the timewhich 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 costsamounts have not differed materially from actual results.
Retail store and concession-based shop-within-shop revenueRevenue from the Company's licensing arrangements is recognized netover 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 thelicensed 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 arereceipt, may be recorded as a liability until they are redeemed, at which point revenue is recognized.recognized as revenue. The Company recognizes incomerevenue for unredeemed gift cards whensales-based royalty arrangements (including those for which the likelihoodroyalty 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 remoteprogress 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 doesis entitled to receive in exchange for providing access to its trademarks. As of September 30, 2023, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:
Contractually-Guaranteed
Minimum Royalties(a)
(millions)
Remainder of Fiscal 2024$46.8 
Fiscal 202564.5 
Fiscal 202647.9 
Fiscal 202746.0 
Fiscal 202811.8 
Fiscal 2029 and thereafter— 
Total$217.0 
(a)Amounts presented do not have a legal obligation to remit the valuecontemplate potential contract renewals or royalties earned in excess of the unredeemed gift card tocontractually-guaranteed minimums.
Disaggregated Net Revenues
The following tables disaggregate the relevant jurisdiction as unclaimed or abandoned property.Company's net revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors for the fiscal periods presented:

Three Months Ended
September 30, 2023October 1, 2022
North AmericaEuropeAsiaOtherTotalNorth AmericaEuropeAsiaOtherTotal
(millions)
Sales Channel(a):
Retail$437.8 $238.4 $318.1 $— $994.3 $424.0 $204.8 $288.2 $— $917.0 
Wholesale280.0 288.4 30.3 — 598.7 302.6 288.7 28.2 — 619.5 
Licensing— — — 40.0 40.0 — — — 43.4 43.4 
Total$717.8 $526.8 $348.4 $40.0 $1,633.0 $726.6 $493.5 $316.4 $43.4 $1,579.9 
810



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended
September 30, 2023October 1, 2022
North AmericaEuropeAsiaOtherTotalNorth AmericaEuropeAsiaOtherTotal
(millions)
Sales Channel(a):
Retail$848.8 $465.1 $670.2 $— $1,984.1 $861.8 $420.7 $602.1 $— $1,884.6 
Wholesale500.7 512.2 55.7 — 1,068.6 565.5 488.4 48.4 — 1,102.3 
Licensing— — — 76.8 76.8 — — — 83.6 83.6 
Total$1,349.5 $977.3 $725.9 $76.8 $3,129.5 $1,427.3 $909.1 $650.5 $83.6 $3,070.5 
Revenue from licensing arrangements is recognized when earned in accordance with the terms of the underlying agreements, generally based upon the higher of (i) contractually guaranteed minimum royalty levels or (ii) actual sales and royalty data, or estimates thereof, received
(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 its licensees. The Company accounts for sales taxesCompany's deferred income balances were $15.1 million and $14.1 million as of September 30, 2023 and April 1, 2023, respectively, and were primarily recorded within accrued expenses and other 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 September 30, 2023 is expected to be recognized as revenue within the next twelve months.
Shipping and Handling Costs
The costsCosts 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 costsCosts of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs"), are also included in SG&A expenses. Shipping and handling costs billed to customers are included in revenue.
A summary of shipping and handling costs recognized duringfor the three-month and nine-monthfiscal periods ended December 30, 2017 and December 31, 2016presented is as follows:
 Three Months Ended Nine Months Ended Three Months EndedSix Months Ended
 December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions) (millions)
Shipping costs $11.7
 $12.8
 $28.4
 $32.2
Shipping costs$19.2 $17.7 $36.1 $35.0 
Handling costs 39.7
 44.1
 115.3
 127.8
Handling costs41.5 39.7 80.7 76.7 
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"), and any other potentially dilutive instruments, only infor the periods in which such effects are dilutive.
11


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average number of common shares outstanding used to calculate basic net income (loss) per common share is reconciled to shares used to calculate diluted net income (loss) per common share as follows:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Basic shares65.6 68.0 65.7 69.0 
Dilutive effect of RSUs1.6 1.0 1.6 1.3 
Diluted shares67.2 69.0 67.3 70.3 
  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. As of DecemberSeptember 30, 20172023 and December 31, 2016,October 1, 2022, there were 2.00.3 million and

9


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.2 0.4 million,, respectively, of additional shares issuable contingent upon exercise of anti-dilutive options and contingent vesting of performance-based RSUs that were excluded from the diluted shares calculations.
Accounts Receivable
In the normal course of business, the Company extends credit to wholesale customers that satisfy 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.
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 EndedSix Months Ended
 December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions) (millions)
Beginning reserve balance $231.5
 $228.9
 $202.8
 $239.7
Beginning reserve balance$135.2 $157.4 $148.1 $180.7 
Amount charged against revenue to increase reserve 125.3
 151.8
 418.6
 479.6
Amount charged against revenue to increase reserve122.4 115.5 218.0 202.2 
Amount credited against customer accounts to decrease reserve (155.6) (171.8) (427.8) (511.1)Amount credited against customer accounts to decrease reserve(108.5)(99.4)(216.0)(202.7)
Foreign currency translation 0.4
 (7.8) 8.0
 (7.1)Foreign currency translation(2.5)(6.7)(3.5)(13.4)
Ending reserve balance $201.6
 $201.1
 $201.6
 $201.1
Ending reserve balance$146.6 $166.8 $146.6 $166.8 
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.
12


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A rollforward of the activity in the Company's allowance for doubtful accounts is presented 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 EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Beginning reserve balance$25.6 $27.7 $27.2 $34.0 
Amount recorded to expense to increase reserve(a)
1.1 2.5 0.3 0.6 
Amount written-off against customer accounts to decrease reserve— (1.6)(0.6)(4.9)
Foreign currency translation(0.3)(0.9)(0.5)(2.0)
Ending reserve balance$26.4 $27.7 $26.4 $27.7 
(a)
Amounts recorded to bad debt expense are included within SG&A expenses in the consolidated statements of operations.

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 andstores, specialty stores, and third-party digital partners around the world, and extends credit based on an evaluation of each customer's financial capacity and condition, usually without requiring collateral. In the Company's wholesale business, concentration of credit risk is relatively limited due to the large number of customers and their dispersion across many geographic areas. However, the Company has three key wholesale customers that generate significant sales volume. During Fiscal 2017,2023, the Company's sales to its three 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 largest wholesale customers related to its North America segment. As of DecemberSeptember 30, 2017,2023, these three key wholesale customers constitutedaccounted for approximately 27%31% 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 comprisedconsist 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$1.195 billion, $1.071 billion, and $1.261 billion as of September 30, 2023, April 1, 2023, and October 1, 2022, respectively.
Supplier Finance Program
The Company supports a voluntary supplier finance program which provides certain of its inventory suppliers the opportunity, at their sole discretion, to sell their receivables due from the Company (which are generally due within 90 days) to a participating financial institution in exchange for receipt of a discounted payment amount made earlier than the payment term stipulated between the Company and the supplier. The Company's vendor payment terms and amounts due are not impacted by a supplier's decision to participate in the program. The Company has not pledged any assets and does not provide guarantees under the supplier finance program. The Company's payment obligations outstanding under its supplier finance program were $177.5 million and $984.1$122.2 million as of DecemberSeptember 30, 2017,2023 and April 1, 2017,2023, respectively, and December 31, 2016, respectively.were recorded within accounts payable in the consolidated balance sheets.
Derivative Financial Instruments
The Company records all derivative financial instruments on its consolidated balance sheets at fair value. ForChanges in the fair value of derivative instruments that are designated and qualify for hedge accounting the effective portion of changes in their fair value isare 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 derivativeinstrument is being used to hedgehedging against changes in fair value or cash flows and net investments, respectively.
13


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Each derivative instrument that qualifies for hedge accounting is expected to be highly effective at reducingin 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 changeevaluate 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 ofGiven 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 thissuch counterparty credit risk, the Company has aCompany's policy ofis to only enteringenter 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
The Company uses forward foreign currency exchange contracts to reducemitigate 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 operational balances.currency. To the extent forward foreign currency exchange contracts are designated as cash flow hedges, and are highly effective in offsetting changes in the value of the hedged items, the related gains or losses on such instruments are initially deferred in equity as a component of AOCI and are subsequently recognized within cost of goods sold in the consolidated statements of operations as follows:
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 thatIf a derivative instrument designated as a cash flowis 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 andany 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 OperationOperations
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, toadjustments. 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 effectivenessinitially recorded in AOCI as a translation adjustment and are recorded in the consolidated statement of operations with any other ineffectivenessamortized into earnings as interest expense. Amountsexpense 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.
14


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Undesignated Hedges
All of the Company'sThe Company uses undesignated hedges are entered intoprimarily 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 valuevalues of undesignated derivativesuch instruments are immediately recognized in earnings each period within foreign currency gains (losses).other income (expense), net.
See Note 1211 for further discussion of the Company's derivative financial instruments.
Refer to Note 3 of the Fiscal 20172023 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 ActivitiesDisclosure of Supplier Finance Program Obligations
In August 2017,September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-12, "Targeted Improvements to Accounting for Hedging Activities"2022-04, "Disclosure of Supplier Finance Program Obligations" ("ASU 2017-12"2022-04"). ASU 2017-12 amends existing hedge accounting guidance by better aligning2022-04 requires entities to disclose the key terms of supplier finance programs they use in connection with the purchase of goods and services, along with the amount of obligations outstanding at the end of each period and an 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 valueannual rollforward of such instruments ultimately be presented inobligations. This standard does not affect the same incomerecognition, measurement, or financial statement line as the respective hedged item. Additionally, the updated guidance reduces complexity in the accounting for certain hedging relationships, eases documentation and effectiveness assessment requirements, broadens the scopepresentation of risk components eligible to qualify for hedge accounting, and modifies certain disclosure requirements.supplier finance program obligations. ASU 2017-122022-04 is effective for the Company beginning in its fiscal year ending March 28, 2020 ("Fiscal 2020"), with early adoption permitted,2024 and is to be applied usingretrospectively to all periods in which a modified retrospective transition approach, except forbalance sheet is presented. The annual rollforward disclosure is not required to be made until the amended presentationCompany's fiscal year ending March 29, 2025 ("Fiscal 2025") and disclosure requirements, which areis to be applied prospectively. The Company is currently evaluatingadopted ASU 2022-04 as of the impact that ASU 2017-12 will have on its consolidated financial statements and related disclosures.
Restricted Cash
In November 2016, the FASB issued ASU No. 2016-18, "Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flows explain the change during the period 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 quarterbeginning of Fiscal 2018 and applied its provisions retrospectively.2024. Other than the change in presentation within the statement of cash flows, the adoption ofnew disclosure requirements, ASU 2016-182022-04 did not have an impact on the Company's consolidated financial statements. See Note 183 for a reconciliationfurther discussion of cash, cash equivalents,the Company's supplier finance program.
5.    Property and restricted cash fromEquipment
Property and equipment, net consists of the consolidated balance sheets tofollowing:
September 30,
2023
April 1,
2023
 (millions)
Land and improvements$15.3 $15.3 
Buildings and improvements416.3 471.9 
Furniture and fixtures615.6 608.8 
Machinery and equipment381.7 375.9 
Capitalized software546.6 541.1 
Leasehold improvements1,226.1 1,216.1 
Construction in progress50.1 60.9 
3,251.7 3,290.0 
Less: accumulated depreciation(2,376.1)(2,334.5)
Property and equipment, net$875.6 $955.5 
Property and equipment, net includes finance lease right-of-use ("ROU") assets, which are reflected in the table above based on their nature.
Depreciation expense was $55.2 million and $110.1 million during the three-month and six-month periods ended September 30, 2023, respectively, and $49.6 million and $101.0 million during the three-month and six-month periods ended October 1, 2022, respectively, and was recorded primarily within SG&A expenses in the consolidated statements of 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.
1315



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 rightsPrepaid expenses and fixed payment obligations under most leases be recognized as right-of-useother 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 beginningfollowing:
September 30,
2023
April 1,
2023
 (millions)
Other taxes receivable$46.1 $46.7 
Non-trade receivables27.2 30.7 
Prepaid software maintenance23.3 18.5 
Prepaid advertising and marketing22.7 10.4 
Derivative financial instruments13.5 1.7 
Inventory return asset12.3 10.5 
Prepaid occupancy expense11.8 5.8 
Prepaid insurance7.0 4.1 
Cloud computing arrangement implementation costs6.9 6.2 
Prepaid logistic services6.3 6.5 
Tenant allowances receivable3.4 3.9 
Other prepaid expenses and current assets40.7 43.7 
Total prepaid expenses and other current assets$221.2 $188.7 
Other non-current assets consist of the 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.

September 30,
2023
April 1,
2023
 (millions)
Derivative financial instruments$41.8 $42.8 
Security deposits31.7 33.0 
Cloud computing arrangement implementation costs15.1 10.1 
Equity method and other investments9.7 10.6 
Deferred rent assets6.6 6.8 
Restricted cash5.4 6.1 
Other non-current assets26.6 23.6 
Total other non-current assets$136.9 $133.0 
1416



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
PrepaidAccrued expenses and other current assetsliabilities consist of the following:
September 30,
2023
April 1,
2023
 (millions)
Accrued inventory$239.3 $212.3 
Accrued operating expenses193.5 194.4 
Accrued payroll and benefits164.0 198.1 
Other taxes payable65.2 32.8 
Dividends payable48.5 49.2 
Restructuring reserve36.9 20.8 
Accrued capital expenditures31.5 37.2 
Finance lease obligations18.6 20.3 
Deferred income15.1 14.0 
Other accrued expenses and current liabilities10.5 16.4 
Total accrued expenses and other current liabilities$823.1 $795.5 
Other non-current liabilities consist of the following:
September 30,
2023
April 1,
2023
 (millions)
Deferred lease incentives and obligations$42.4 $43.2 
Deferred tax liabilities15.7 7.2 
Accrued benefits and deferred compensation15.2 12.4 
Restructuring reserve5.1 0.1 
Other non-current liabilities36.8 38.0 
Total other non-current liabilities$115.2 $100.9 
7.    Restructuring and Other Charges, Net
  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
A description of significant restructuring and other activities and their related costs is provided below.

Fiscal 2024 Restructuring Activities
During the three-month and six-month periods ended September 30, 2023, the Company recorded $6.8 million and $37.3 million, respectively, of cash-related restructuring charges, primarily associated with severance and benefit costs. As of September 30, 2023, the remaining restructuring liability related to these charges was $30.5 million, reflecting cash payments of $6.8 million made during the six months ended September 30, 2023.
Fiscal 2023 Restructuring Activities
The Company recorded total restructuring charges of $4.9 million and $5.6 million during the three-month and six-month periods ended October 1, 2022, respectively, related to its restructuring plan initiated during its fiscal year ended March 27, 2021 (the "Fiscal 2021 Strategic Realignment Plan"). Total restructuring charges included cash-related charges of $1.4 million and $2.1 million during the three-month and six-month periods ended October 1, 2022, respectively, and non-cash charges of $3.5 million during both the three-month and six-month periods ended October 1, 2022.
In addition to these charges, the Company recognized $2.0 million and $3.5 million of income within restructuring and other charges, net in the consolidated statements of operations during the second quarters of Fiscal 2024 and Fiscal 2023, respectively, related to consideration received from Regent, L.P. in connection with the Company's previously sold Club Monaco business.
1517



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other non-current assets consist of the following:
  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
Accrued expenses and other current liabilities consist 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

16


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.Impairment of Assets
The Company recorded non-cash impairment charges of $2.2 million and $14.0 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 restructuring and other activities and related costs is included below.
Way Forward Plan
On June 2, 2016, the Company's 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"). The Company is refocusing on its core brands and evolving its product, marketing, and shopping experience 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, which were substantially completed during Fiscal 2017, resulted in a reduction in workforce 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 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, 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 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, 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.

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 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 ReorganizationFiscal 2021 Strategic Realignment Plan were completed by the end of the first quarter of Fiscal 2017are complete and no additional charges are expected to be incurred in relationconnection with this plan. As of September 30, 2023 and April 1, 2023, the remaining restructuring liability related to this plan. A summaryplan was $11.5 million and $20.7 million, respectively, reflecting $8.9 million of cash payments and $0.3 million of non-cash adjustments made during the six months ended September 30, 2023.
Refer to Note 9 of the charges recorded in connection withFiscal 2023 10-K for additional discussion regarding 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)

Fiscal 2021 Strategic Realignment Plan.
Other Charges
During the three-month and nine-month periods ended December 30, 2017, theThe Company recorded other charges of $3.5$4.5 million and $10.5$9.6 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), primarily related to the departure of Mr. Stefan Larsson as the Company's President 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 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 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.
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-monthsix-month periods ended DecemberSeptember 30, 2017,2023, respectively, and lowered$5.7 million and $10.6 million during the three-month and six-month periods ended October 1, 2022, respectively, primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired.
8.    Income Taxes
Inflation Reduction Act of 2022
On August 16, 2022, President Biden signed the Inflation Reduction Act ("IRA") into law. The IRA enacted a 15% corporate minimum tax rate (subject to certain thresholds being met) that became effective for the Company beginning in its diluted earnings perFiscal 2024, a 1% excise tax on share by $2.80 during eachrepurchases made after December 31, 2022 (which may be reduced for the fair value of these periods.certain share issuances), and created and extended certain tax-related energy incentives. The provisional amounts were basedtax-related provisions of the IRA have not had a material impact on the Company's present interpretations ofconsolidated financial statements to date, but could in the TCJAfuture if the Company's facts and current available information, including assumptions and expectations about future events, such as its projected financial performance, and are subjectcircumstances were to further refinement aschange. See Note 13 for additional information becomes available (includingrelating to 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.stock repurchase program.
Effective Tax Rate
The Company's effective tax rate, which is calculated by dividing each fiscal period's income tax provision by pretax income, was 143.9%11.2% and 73.8%17.0% during the three-month and nine-monthsix-month periods ended DecemberSeptember 30, 2017,2023, respectively, and 34.0%24.8% and 36.0%24.4% during the three-month and nine-monthsix-month periods ended December 31, 2016,October 1, 2022, respectively.
The effective tax rates for the three-month and nine-monthsix-month periods ended DecemberSeptember 30, 20172023 were lower than the U.S. federal statutory income tax rate of 21% primarily due to favorable adjustments related to the revaluation of deferred tax assets arising from Swiss tax reform and favorable deferred tax adjustments related to the European Union's anti-tax avoidance directive. The lower effective tax rates were also driven by favorable remeasurements of net deferred tax assets as a result of recently enacted changes in tax legislation. The effective tax rates for the three-month and six-month periods ended October 1, 2022 were higher than the U.S. federal statutory income tax rate of 35%21% primarily as a resultdue 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 effective tax rate for the nine months ended

20


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2017 reflected the negative impact of the adoption of ASU 2016-09 (see Note 4), as well as 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., partially offset by valuation allowances and adjustments recorded on deferred tax assets, certain nondeductible expenses, and unrecognized tax benefits recorded on current year tax positions. The effective tax rate 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.
Uncertain Income Tax Benefits
The Company classifies interest and penalties related to unrecognized tax benefits as part of its income tax provision. The total amount of unrecognized tax benefits, including interest and penalties, was $76.4$100.7 million and $62.7$93.8 million as of DecemberSeptember 30, 20172023 and April 1, 2017,2023, 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$63.1 million and $46.7$59.6 million as of DecemberSeptember 30, 20172023 and April 1, 2017,2023, respectively.
Future Changes in Unrecognized Tax Benefits
The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, will change significantly during the next
18


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
twelve months. However, changes in the occurrence, expected outcomes, and timing of such events could cause the Company's current estimate to change materially in the future.
The Company files a consolidated U.S. federal income tax return, as well as tax returns in various state, local, and foreign jurisdictions. The Company is generally no longer subject to incomeexaminations by the relevant tax examinationsauthorities for years prior to its fiscal year ended April 3, 2010.March 30, 2013.
10.Debt
9.    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

September 30,
2023
April 1,
2023
(millions)
$400 million 3.750% Senior Notes(a)
$398.7 $398.4 
$750 million 2.950% Senior Notes(b)
740.8 740.1 
Total long-term debt$1,139.5 $1,138.5 
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 alsopresented net of unamortized debt issuance costs and original issue discount of $1.3 million and $1.7$1.6 million as of DecemberSeptember 30, 20172023 and April 1, 2017,2023, respectively.
(b)The carrying value of the 2.950% Senior Notes is presented net of unamortized debt issuance costs and original issue discount of $9.2 million and $9.9 million as of September 30, 2023 and April 1, 2023, respectively.
Senior Notes
In 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-denominated2.125% unsecured senior notes whichthat matured on October 4, 2013.September 26, 2018.
In August 2015,June 2020, the Company completed a secondanother 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 priceprices equal to 99.795%99.880% and 98.995% of their principal amount.amounts, respectively. The proceeds from this offeringthese 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, theThe Company initiatedhas a commercial paper borrowing program (the "Commercial Paper Program") that allowedallows it to issue up to $300$750 million of unsecured commercial paper notes through private placement using third-party broker-dealers. In May 2015, the Company expanded its Commercialbroker-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$750 million. Commercial Paper Program borrowings may be used to support the Company's general working capital and corporate needs. Maturities of commercial paper notes vary, but cannot exceed 397 days from the date of issuance. Commercial paper notes issued under the Commercial Paper Program rank equally in seniority with the Company's other forms of unsecured indebtedness. As of Decemberboth September 30, 2017,2023 and April 1, 2023, there were no borrowings outstanding under the Commercial Paper Program.
Revolving Credit Facilities
Global Credit Facility
In February 2015,June 2023, the Company terminated its then existing credit facility and entered into an amended and restateda new credit facility (which was further amended in March 2016) that provides for a $500$750 million senior unsecured revolving line of credit through February 11, 2020June 30, 2028 (the "Global Credit Facility") under terms and conditions substantially similar to those previously in effect.of the previous facility. The Global Credit Facility ismay be used for working capital needs, capital expenditures, certain investments, general corporate purposes, and for funding of acquisitions. The Global Credit Facility may also be used to support the issuance of letters of credit and 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. TheYen, and are guaranteed by some of the Company's domestic subsidiaries, including all of the Company's significant subsidiaries. In accordance with the terms of the agreement governing the Global Credit Facility, the Company has the ability to expand its borrowing availability under the Global Credit Facility to $750 million,$1.500 billion, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments. There are no mandatory reductions in borrowing ability throughout the term of the Global Credit Facility.
Borrowings under the Global Credit Facility bear interest at a rate per annum equal to, at the Company's option, either (a) an alternate base rate or (b) an adjusted term Secured Overnight Financing Rate ("SOFR") rate or the applicable currency in which the loans are made (the "Term Benchmark Rate") plus an applicable margin. The applicable margin for Term Benchmark Rate loans will be adjusted by reference to a grid (the "Pricing Grid"), which is included in the definition of "Applicable Rate" within the Global Credit Facility agreement and is based on ratings for the Company's senior, unsecured long-term indebtedness provided by established ratings agencies. In addition to paying interest on any outstanding borrowings under the Global Credit Facility, the Company is required to pay a commitment fee, calculated at a rate per annum determined in accordance with the Pricing Grid, on the average daily unused amount of the Facility, payable quarterly in arrears, and certain fees with respect to Letters of Credit that are issued. The current commitment fee rate of 8 basis points is subject to adjustment based on the Company's credit ratings. As of DecemberSeptember 30, 2017,2023, there were no borrowings outstanding under the Global Credit Facility, andnor were there any borrowings outstanding as of April 1, 2023 under the Company's previous facility. However, the Company was contingently liable for $9.3$11.8 million and $11.9 million of outstanding letters of credit.credit as of September 30, 2023 and April 1, 2023, respectively.

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 3.754.25 as of the date of measurement for the four most recent consecutive fiscal quarters. Adjusted Debt is defined generally as consolidated debt outstanding, including finance lease obligations, plus 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.
20


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Upon the occurrence of an Event of Default under the Global Credit Facility, the lenders may cease making loans, terminate the Global Credit Facility, and declare all amounts outstanding to be immediately due and payable. The Global Credit Facility specifies various events of default (many of which are subject to applicable grace periods), including, among others, the failure to make timely principal, interest, and fee payments or to satisfy the covenants, including the financial covenant described above. Additionally, the Global Credit Facility provides that an Event of Default will occur if Mr. Ralph Lauren, the Company's Executive Chairman and Chief Creative Officer, and entities controlled by the Lauren family fail to maintain a specified minimum percentage of the voting power of the Company's common stock. As of DecemberSeptember 30, 2017, 2023, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under the Company's Global Credit Facility.Facility.
Pan-Asia CreditBorrowing 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 facilitiesAdditionally, 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 CreditBorrowing 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 CreditBorrowing Facilities do not contain any financial covenants. The
A summary of the Company's Pan-Asia CreditBorrowing Facilities by country areis 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)$13 million) through April 5, 2018, and may3, 2024, which is also able to be used to support bank guarantees.
South Korea Credit Facility — provides Ralph Lauren (Korea) Ltd. with a revolving line of credit of up to 4730 billion South Korean Won (approximately $44$22 million) through October 31, 2018.
25, 2024.
Japan Overdraft Facility — provides Ralph Lauren Corporation Japan with an overdraft amount of up to 5 billion Japanese Yen (approximately $34 million) through April 30, 2024.
As of Decemberboth September 30, 2017,2023 and April 1, 2023, there were no borrowings outstanding under the Pan-Asia CreditBorrowing Facilities.
Refer to Note 1211 of the Fiscal 20172023 10-K for additional discussion of the terms and conditions of the Company's debt and credit facilities.
11.Fair Value Measurements
10.    Fair Value Measurements
U.S. GAAP establishesprescribes 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.

2321



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:
  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
September 30,
2023
April 1,
2023
 (millions)
Derivative assets(a)
$55.3 $44.5 
Derivative liabilities(a)
0.3 5.7 
(a)
(a)Based on Level 2 measurements.
(b)
$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.Level 2 measurements.
The Company's derivative financial instruments are recorded at fair value in its consolidated balance sheets and are valued using pricing models that are primarily based on market observable external inputs, including spot and forward currency exchange rates, benchmark interest rates, and discount rates consistent with the instrument's tenor, and consider the impact of the Company's own credit risk, if any. Changes in counterparty credit risk are also considered in the valuation of derivative financial instruments.
To the extent the Company invests in commercial paper, such investments are classified as available-for-sale and recorded at fair value in its consolidated balance sheets using external pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's investments. To the extent the Company invests in bonds, such investments are also classified as available-for-sale and recorded at fair value in its consolidated balance sheets based on quoted prices in active markets.
The Company's cash and cash equivalents, restricted cash, and time deposits are recorded at carrying value, which generally approximates fair value based on Level 1 measurements.
The Company's debt instruments are recorded at their carrying valuesamortized cost in its consolidated balance sheets, which may differ from their respective fair values. The fair values of the Senior NotesCompany's senior notes are estimated based on external pricing data, including available quoted market prices, and with reference to comparable debt instruments with similar interest rates, credit ratings, and trading frequency, among other factors. The fair values of the Company's commercial paper notes and borrowings outstanding under its credit facilities, if any, are estimated using external pricing data, based on interest rates and credit ratings for similar issuances with the same remaining term as the Company's outstanding borrowings. Due to their short-term nature, the fair values of the Company's commercial paper notes and borrowings outstanding under its credit facilities, if any, generally approximate their amortized cost carrying values.
The following table summarizes the carrying values and the estimated fair values of the Company's debt instruments:
 September 30, 2023April 1, 2023
 
Carrying Value(a)
Fair Value(b)
Carrying Value(a)
Fair Value(b)
 (millions)
$400 million 3.750% Senior Notes$398.7 $385.6 $398.4 $393.6 
$750 million 2.950% Senior Notes740.8 641.6 740.1 677.1 
  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 9 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
22


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
events or changes in circumstances indicate that their carrying valuethey may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), the respective carrying value of non-financial instrumentsassets are assessed for impairment and, if applicable,ultimately considered impaired, are adjusted and written down to and recorded attheir fair value, consideringas estimated based on consideration of external market participant assumptions.assumptions and discounted cash flows.
During both the nine-monththree-month and six-month periods ended December 30, 2017 and December 31, 2016,October 1, 2022, the Company recorded non-cash impairment charges of $24.8$0.2 million and $56.7 million, respectively,within SG&A expenses in the consolidated statements of operations to fully write offreduce the carrying values of certain long-lived assets based uponproperty and equipment, net to their assumedestimated fair values of zero. 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, based on historical experience and consideration of current trends, market conditions, and market conditions. See Note 7 for further discussion of the non-cashcomparable sales, as applicable. No impairment charges were recorded by the Company during the fiscalthree-month and six-month periods presented.ended September 30, 2023.
No goodwill impairment charges associated with goodwill or other intangible assets were recorded during either of the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 or December 31, 2016.October 1, 2022. The Company performed its annual assessment of the recoverability of goodwill impairment assessmentassigned to its reporting units using a qualitativequantitative 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 the2024. The estimated 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.were determined with the assistance of an independent third-party valuation firm using discounted cash flows and market comparisons. Based on the results of its qualitative goodwillthe quantitative impairment assessment, the Company concluded that it is not more likely than not that the fair values of its reporting units are less thansignificantly exceeded their respective carrying values and there were no reporting unitsnot at risk of impairment. Accordingly, no goodwill impairment charges were recorded.
12.Financial Instruments
11.    Financial Instruments
Derivative Financial Instruments
The Company is exposed to changes in foreign currency exchange rates, primarily relating to certain anticipated cash flows and the value of the reported net assets of its international operations, as well as changes in the fair value of its fixed-rate debt obligations attributed to changes in the benchmark interest rate. Consequently,rates. Accordingly, based on its assessment thereof, the Company usesmay use derivative financial instruments to manage and mitigate such risks. The Company does not enter into derivative transactionsuse 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 DecemberSeptember 30, 20172023 and April 1, 2017:2023:
 Notional AmountsDerivative AssetsDerivative Liabilities
Derivative Instrument(a)
September 30,
2023
April 1,
2023
September 30,
2023
April 1,
2023
September 30,
2023
April 1,
2023
   
Balance
Sheet
Line(b)
Fair
Value
Balance
Sheet
Line(b)
Fair
Value
Balance
Sheet
Line(b)
Fair
Value
Balance
Sheet
Line(b)
Fair
Value
 (millions)
Designated Hedges:
FC — Cash flow hedges$281.7 $345.1 PP$12.0 PP$1.4 $— AE$5.0 
Net investment hedges(c)
700.0 700.0 ONCA41.8 ONCA42.8 — — 
Total Designated Hedges981.7 1,045.1 53.8 44.2 — 5.0 
Undesignated Hedges:
FC — Undesignated hedges(d)
211.4 164.8 PP1.5 PP0.3 AE0.3 AE0.7 
Total Hedges$1,193.1 $1,209.9 $55.3 $44.5 $0.3 $5.7 
  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.
(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.
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 separate counterparties, the amounts presented in the consolidated balance sheets as of DecemberSeptember 30, 20172023 and April 1, 20172023 would be adjusted from the current gross presentation as detailed in the following table:
September 30, 2023April 1, 2023
Gross Amounts Presented in the Balance SheetGross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting AgreementsNet
Amount
Gross Amounts Presented in the Balance SheetGross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting AgreementsNet
Amount
(millions)
Derivative assets$55.3 $(0.3)$55.0 $44.5 $(4.5)$40.0 
Derivative liabilities0.3 (0.3)— 5.7 (4.5)1.2 
  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-monthsix-month periods endedDecember September 30, 20172023 and December 31, 2016:October 1, 2022:
 Gains (Losses)
Recognized in OCI
 Three Months EndedSix Months Ended
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Designated Hedges:
FC — Cash flow hedges$10.7 $12.2 $16.6 $28.5 
Net investment hedges — effective portion20.1 36.0 17.1 75.7 
Net investment hedges — portion excluded from assessment of hedge effectiveness(8.4)(0.4)(18.2)11.4 
Total Designated Hedges$22.4 $47.8 $15.5 $115.6 
  
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 EndedSix Months Ended
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
Cost of
goods sold
Cost of
goods sold
Cost of
goods sold
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
$(562.9)$(556.8)$(1,027.4)$(1,046.0)
Effects of cash flow hedging:
FC — Cash flow hedges1.3 3.7 6.2 6.5 
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 EndedSix Months Ended
September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions) 
Net Investment Hedges:
Net investment hedges — portion excluded from assessment of hedge effectiveness(a)
$3.1 $3.3 $6.2 $6.5 Interest expense
Total Net Investment Hedges$3.1 $3.3 $6.2 $6.5 
(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 DecemberSeptember 30, 2017,2023, it is expectedestimated that $8.0$14.5 million of pretax net lossesgains 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 amountsAmounts 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-monthsix-month periods endedDecember September 30, 20172023 and December 31, 2016:October 1, 2022:
 
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 EndedSix Months Ended
 December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
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$6.4 $13.1 $9.9 $24.6 Other income (expense), net
Total Undesignated Hedges $(1.9) $14.2
 $0.2
 $2.9
 Total Undesignated Hedges$6.4 $13.1 $9.9 $24.6 
Risk Management Strategies
Forward Foreign Currency Exchange Contracts
The Company uses forward foreign currency exchange contracts to reducemitigate 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 managefor managing the level of exposure to the risk of foreign currencysuch 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 currencyrelated exposures anticipated over a two-year period. In doing so, the Company usesnext twelve months using forward foreign currency exchange contracts that generally havewith maturities of two months to two yearsone year to provide continuing coverage throughoutover 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, theThe Company entered into two pay-floatingperiodically designates pay-fixed rate, receive-floating ratereceive 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"). The Cross-Currency Swaps, which mature on September 26, 2018 and August 18, 2020, respectively,subsidiaries. These contracts swap the 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 acontract's notional amount and the fixed spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest Rate Swaps, economically convertrate of interest payable on certain of the Company's $300 millionsenior 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-ratefixed-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, theThe Company's short-term investments consistedas of $732.9 million of time depositsSeptember 30, 2023 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 $684.72023 were $85.1 million and non-current investments of $21.4$36.4 million, both consistingrespectively, 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 20172023 10-K for further discussion of the Company's accounting policies relating to its investments.
13.
12.    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 entersmay 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)

14.13.    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 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 the term of the ASR Program, less an agreed upon discount. The average price per share paid for all of the shares delivered under the ASR Program was $98.48.
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:
Six Months Ended
September 30,
2023
October 1,
2022
(millions)
Cost of shares repurchased(a)
$175.0 $383.9 
Number of shares repurchased1.5 4.1 
  Nine Months Ended
  December 30,
2017
 December 31,
2016
  (millions)
Cost of shares repurchased $
 $100.0
Number of shares repurchased 
 1.0
(a)Excludes excise tax of $1.0 million incurred during the six months ended September 30, 2023. See Note 8 for further discussion regarding excise tax on share repurchases made after December 31, 2022.
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, excluding related excise taxes. As of DecemberSeptember 30, 2017,2023, the remaining availability under the Company's Class A common stock repurchase program was approximately $100 million.$1.000 billion. Repurchases of shares of the Company's Class A common stock are subject to overall business and market conditions.
In addition, during eachthe six-month periods ended September 30, 2023 and October 1, 2022, 0.4 million and 0.3 million shares of the nine-month periods ended December 30, 2017 and December 31, 2016, 0.2 million shares ofCompany's Class A common stock, at a cost of $15.9$50.7 million and $15.0$33.4 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.

3026



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dividends
Since 2003, theThe Company has generally maintained a regular quarterly cash dividend program on its common stock.stock since 2003.
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 thirdsecond quarter Fiscal 20182024 dividend of $0.50$0.75 per share was declared on December 14, 2017,September 15, 2023, was payable to stockholdersshareholders of record at the close of business on DecemberSeptember 29, 2017,2023, and was paid on January 12, 2018. Dividends paid amountedOctober 13, 2023.
The Company intends to $121.7 millioncontinue to pay regular dividends on outstanding shares of its common stock. However, any decision to declare and $123.7 million duringpay dividends in the nine-month periods ended December 30, 2017future 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)
14.    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) $(130.6)
Foreign Currency Translation Gains (Losses)(a)
Net Unrealized Gains (Losses) on Cash Flow Hedges(b)
Net Unrealized Gains (Losses) on Defined Benefit Plans(c)
Total Accumulated Other Comprehensive Income (Loss)
(millions)
Balance at April 1, 2023$(203.8)$4.1 $3.7 $(196.0)
Other comprehensive income (loss), net of tax:
OCI before reclassifications(75.6)14.3 (0.1)(61.4)
Amounts reclassified from AOCI to earnings— (5.3)(0.1)(5.4)
Other comprehensive income (loss), net of tax(75.6)9.0 (0.2)(66.8)
Balance at September 30, 2023$(279.4)$13.1 $3.5 $(262.8)
Balance at April 2, 2022$(189.7)$9.0 $0.4 $(180.3)
Other comprehensive income (loss), net of tax:
OCI before reclassifications(95.8)24.6 — (71.2)
Amounts reclassified from AOCI to earnings— (5.7)(0.1)(5.8)
Other comprehensive income (loss), net of tax(95.8)18.9 (0.1)(77.0)
Balance at October 1, 2022$(285.5)$27.9 $0.3 $(257.3)
(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 $2.9 million and $30.1 million for the six-month periods ended September 30, 2023 and October 1, 2022, respectively. OCI before reclassifications to earnings for the six-month periods ended September 30, 2023 and October 1, 2022 includes losses of $0.8 million (net of a $0.3 million income tax benefit) and gains of $66.0 million (net of a $21.1 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 11).
(b)OCI before reclassifications to earnings related to net unrealized gains (losses) on cash flow hedges are presented net of income tax provisions of $2.3 million and $3.9 million for the six-month periods ended September 30, 2023 and October 1, 2022, 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.
3127



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 EndedSix Months EndedLocation of
Gains (Losses)
Reclassified from AOCI
to Earnings
 December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (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$1.3 $3.7 $6.2 $6.5 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(0.3)(0.4)(0.9)(0.8)Income tax provision
Net of tax $(4.8) $5.2
 $(4.4) $(1.1)  Net of tax$1.0 $3.3 $5.3 $5.7 
(a)FC = Forward foreign currency exchange contracts.
(a)
15.    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 20102019 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 20102019 Incentive Plan.
Refer to Note 18 of the Fiscal 20172023 10-K for a detailed description of the Company's stock-based compensation awards, including information related to vesting terms, service, performance, and performancemarket 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-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016October 1, 2022 is as follows:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Compensation expense$29.3 $22.5 $50.7 $40.7 
Income tax benefit(4.7)(3.8)(8.0)(6.6)
  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)
(a)
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.

32


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, 20171,720
Granted
Exercised
Cancelled/Forfeited(537)
Options outstanding at December 30, 20171,183
Restricted Stock Awards and Service-based RSUs
The fair values of restricted stock awardsservice-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 suchgrant, 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$114.69 and $92.07 per share during the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016.October 1, 2022, respectively.
28


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of service-based RSU activity during the six months ended September 30, 2023 is as follows:
Number of
Service-based RSUs
(thousands)
Unvested at April 1, 20231,585 
Granted538 
Vested(985)
Forfeited(33)
Unvested at September 30, 20231,105 
Performance-based RSUs
The fair values of service-basedthe Company's performance-based RSUs granted to certain of the Company'sits senior executives as well as to certain of itsand 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 entitledaccrue to accrue dividend equivalentsthe holder while outstanding. The weighted-average grant date fair values of service-based RSU awards granted were $73.32outstanding and $83.92 per share 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 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.unvested. The weighted-average grant date fair values of performance-based RSUs that do not contain a TSR modifierRSU awards granted were $114.86 and $92.45 per share during the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016 were $69.40 and $86.15 per share,October 1, 2022, respectively.
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 valuesvalue of the Company's performance-based RSUs with aits TSR modifier are determinedawards on the date of grant using a Monte Carlo simulation, valuation model. This pricing model useswhich models multiple simulationsstock 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 toand determine its ultimate expected relative TSR performance ranking. No suchCompensation expense, net of estimated forfeitures, is recorded regardless of whether, and the extent to which, the market condition is ultimately satisfied. The weighted-average grant date fair values of market-based RSUs granted were $147.19 and $124.62 per share during the six-month periods ended September 30, 2023 and October 1, 2022, respectively. The assumptions used to estimate the fair value of TSR awards were granted during the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016.October 1, 2022 were as follows:

 Six Months Ended
 September 30,
2023
October 1,
2022
Expected volatility38.4 %49.9 %
Expected dividend yield2.5 %3.0 %
Risk-free interest rate4.6 %3.1 %
A summary of performance-based RSU activity including TSR awards during the six months ended September 30, 2023 is as follows:
Number of
Performance-based RSUs
(thousands)
Unvested at April 1, 2023469 
Granted217 
Change due to performance and/or market condition achievement— 
Vested— 
Forfeited(1)
Unvested at September 30, 2023685 
3329



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    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 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 retail and wholesale and retail businesses primarily 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 outlet 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 wholesaleretail and retailwholesale 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 outlet 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. The Company's retail business in Europe is comprised of its Ralph Lauren stores, its factory stores, its concession-based shop-within-shops, and itscountry, as well as to various e-commerce sites.
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 wholesaleretail and retailwholesale businesses in Asia, Australia, and New Zealand. The Company's retail business in Asia is primarily comprised of its Ralph Lauren stores, its factoryoutlet stores, its concession-based shop-within-shops, and its concession-based shop-within-shops.various digital commerce sites. In addition, the Company sells its products online through various third-party digital partner e-commercecommerce sites. In Asia, theThe 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) sales of Club Monaco branded products made through its retail businesses in the U.S., Canada, and Europe, and its licensing alliances in Europe and Asia, (ii) sales of Ralph Lauren branded products made through its wholesale business in Latin America, and (iii)Chaps branded royalty revenues earned through its global licensing alliances, excluding Club Monaco.alliances.
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 20172023 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 restructuringrestructuring-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.

Net revenues for each of the Company's segments are as follows:
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Net revenues:
North America$717.8 $726.6 $1,349.5 $1,427.3 
Europe526.8 493.5 977.3 909.1 
Asia348.4 316.4 725.9 650.5 
Other non-reportable segments40.0 43.4 76.8 83.6 
Total net revenues$1,633.0 $1,579.9 $3,129.5 $3,070.5 
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 operatingOperating income (loss) for each of the Company's segments areis as follows:
  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

  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 EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Operating income:
North America$110.2 $127.1 $235.5 $259.9 
Europe132.4 134.6 229.6 207.8 
Asia68.4 65.7 161.7 144.4 
Other non-reportable segments34.1 40.0 67.9 77.2 
345.1 367.4 694.7 689.3 
Unallocated corporate expenses(171.3)(153.8)(318.9)(294.9)
Unallocated restructuring and other charges, net(a)
(9.3)(6.9)(44.9)(12.5)
Total operating income$164.5 $206.7 $330.9 $381.9 
(a)
Segment operating income (loss) and 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 asset impairment charges (see Note 7), which are detailed below:
   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)

35


(a)The three-month and six-month periods ended September 30, 2023 and October 1, 2022 included certain unallocated restructuring and other charges, net (see Note 7), which are detailed below:
RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

   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) $(193.9)
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Unallocated restructuring and other charges, net:
North America-related$(1.6)$— $(5.5)$— 
Europe-related0.7 — (0.7)1.1 
Asia-related(2.1)— (3.5)0.2 
Corporate operations-related(1.8)(1.2)(25.6)(3.2)
Unallocated restructuring charges(4.8)(1.2)(35.3)(1.9)
Other charges (see Note 7)(4.5)(5.7)(9.6)(10.6)
Total unallocated restructuring and other charges, net$(9.3)$(6.9)$(44.9)$(12.5)
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

 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Depreciation and amortization expense:
North America$20.1 $18.0 $40.4 $36.2 
Europe9.3 7.3 18.1 15.1 
Asia13.4 11.5 26.7 23.6 
Unallocated corporate15.7 16.5 31.6 33.2 
Total depreciation and amortization expense$58.5 $53.3 $116.8 $108.1 
3631



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net revenues by geographic location of the reporting subsidiary are as follows:
  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
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Net revenues(a):
The Americas(b)
$763.3 $777.0 $1,439.9 $1,523.2 
Europe(c)
521.3 486.4 963.7 896.8 
  Asia(d)
348.4 316.5 725.9 650.5 
Total net revenues$1,633.0 $1,579.9 $3,129.5 $3,070.5 
(a)
(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 and six-month periods ended September 30, 2023 were $726.7 million and $1.370 billion, respectively, and $737.3 million and $1.449 billion during the three-month and six-month periods ended October 1, 2022, respectively.
(c)Includes the Middle East.
(d)Includes Australia and New Zealand.
17.    Additional Financial Information
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 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 DecemberSeptember 30, 20172023 and April 1, 20172023 from the consolidated balance sheets to the consolidated statements of cash flows is as follows:
 September 30,
2023
April 1,
2023
 (millions)
Cash and cash equivalents$1,381.8 $1,529.3 
Restricted cash included within prepaid expenses and other current assets1.4 1.5 
Restricted cash included within other non-current assets5.4 6.1 
Total cash, cash equivalents, and restricted cash$1,388.6 $1,536.9 
  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 restrictedRestricted cash relaterelates to cash placedheld 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 Nine Months Ended Six Months Ended
 December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
September 30,
2023
October 1,
2022
 (millions) (millions)
Cash paid for interest $3.6
 $2.9
 $9.2
 $9.7
Cash paid for interest$17.4 $22.1 
Cash paid for income taxes 19.4
 19.2
 47.7
 69.5
Cash paid for income taxes, net of refundsCash paid for income taxes, net of refunds92.6 55.9 
3732



RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash Paid for Leases
The following table summarizes certain cash flow information related to the Company's leases:
Six Months Ended
September 30,
2023
October 1,
2022
(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$145.4 $169.1 
Operating cash flows for finance leases5.0 5.7 
Financing cash flows for finance leases11.2 10.8 
Non-cash Transactions
Operating lease ROU assets recorded in connection with the recognition of new lease liabilities was $84.8 million and $135.0 million for the six-month periods ended September 30, 2023 and October 1, 2022, respectively. Finance lease ROU assets recorded in connection with the recognition of new lease liabilities was $0.5 million for the six-month period ended September 30, 2023. No finance lease ROU assets were recorded in connection with the recognition of new lease liabilities during the six-month period ended October 1, 2022. Additionally, $27.1 million of finance lease ROU assets were reclassified and reflected as operating lease ROU assets as a result of certain lease amendments executed during the six-month period ended September 30, 2023.
Non-cash investing activities also included capital expenditures incurred but not yet paid of $33.9$31.5 million and $55.9$31.2 million for the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 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,October 1, 2022, 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 constituterepresentatives of the Company, may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our current expectations about the Company's future operating results and financial condition, the implementation and results of our strategic plans and initiatives, store openings and closings, 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 "aim," "anticipate," "outlook," "estimate," "ensure," "commit," "expect," "project," "we believe,"believe," "is or remains optimistic,"envision," "currently envisions,"goal," "target," "can," "will," and similar words or phrases andphrases. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements. 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 any potential changes resulting from the execution of 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 inflationary pressures, including increases in the costs of raw materials, transportation, wages, healthcare, and other benefit-related costs;
the impact of economic, political, and other conditions on us, our transitioncustomers, suppliers, vendors, and lenders, including potential business disruptions related to our new Chief Executive Officer;the Russia-Ukraine and Israel-Hamas wars, civil and political unrest, diplomatic tensions between the U.S. and other countries, rising interest rates, and bank failures, among other factors described herein;
our ability to successfully implement our long-term growth strategy and achieve anticipated operating enhancements and cost reductions from our restructuring plans;
the potential impact to our business resulting from investmentssupply 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, port congestion, and other costs incurredscrutiny or detention of goods produced in connection withcertain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the execution of our long-term growth strategy, including restructuring-related charges,Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which may be dilutivecould result in shipment approval delays leading to our earnings 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 a recession or 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;
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;
34


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 to our business resulting from pandemic diseases such as COVID-19, 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 on our operations and on our suppliers and customers resulting from man-made or natural disasters, including pandemic diseases, severe weather, geological events, and other catastrophic events, such as terrorist attacks and military conflicts;
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 securemaintain adequate levels of liquidity to provide for our facilitiescash needs, including our debt obligations, tax obligations, capital expenditures, and systemspotential payment of dividends and thoserepurchases of our third-party service providers from, among other things, cybersecurity breaches, actsClass 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 asfinancial 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 obligationscompetitors;
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;

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the potential imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from trade developments between the U.S. and China or other countries, and any related impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry,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 resultimplement 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 paymentand effective tax rate due to a variety of dividends, capital expenditures,factors, including potential changes in U.S. or foreign tax laws and potential repurchasesregulations, 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 operating results, 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;
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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 imagecredit 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 storewholesale 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, 20172023 (the "Fiscal 20172023 10-K"). There are no material changes to such risk factors, other thannor 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 toimmediately before or after March 31. As such, fiscal year 20182024 will end on March 31, 201830, 2024 and will be a 52-week period ("Fiscal 2018"2024"). Fiscal year 20172023 ended on April 1, 20172023 and was also a 52-week period ("Fiscal 2017"2023"). The thirdsecond quarter of Fiscal 20182024 ended on DecemberSeptember 30, 20172023 and was a 13-week period. The thirdsecond quarter of Fiscal 20172023 ended on December 31, 2016October 1, 2022 and was also a 13-week period.

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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-monthsix-month periods ended DecemberSeptember 30, 2017.2023. 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-monthsix-month periods ended DecemberSeptember 30, 20172023 as compared to the three-month and nine-monthsix-month periods ended December 31, 2016.
October 1, 2022.
Financial condition and liquidity.    This section provides a discussion of our financial condition and liquidity as of DecemberSeptember 30, 2017,2023, 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 ninesix months ended DecemberSeptember 30, 20172023 as compared to the ninesix months ended December 31, 2016;October 1, 2022; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, common stock repurchases, payments of dividends, andour supplier finance program, 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 obligationsmaterial cash requirements since April 1, 2017.
2023.
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.
2023.
Critical accounting policies.     This section discusses any significant changes in our critical accounting policies since April 1, 2017.2023. 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 20172023 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.
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OVERVIEW
Our Business
Our Company is a global leader in the design, marketing, and distribution of premiumluxury 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 numbera wide range of products, brands, salesdistribution 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 channelschannel 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-commercedigital 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 useaccess our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.

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home.
We organize our business into the following three reportable segments:
North America — Our North America segment, representing approximately 57%47% of our Fiscal 20172023 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale and retail businesses primarily 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 outlet 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%29% of our Fiscal 20172023 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesaleretail and retailwholesale 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 outlet 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. Our retail business in Europe is comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and ourcountry, as well as to various e-commerce sites.
third-party digital partners.
Asia — Our Asia segment, representing approximately 13%22% of our Fiscal 20172023 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our wholesaleretail and retailwholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our factoryoutlet stores, our concession-based shop-within-shops, and our concession-based shop-within-shops.various digital commerce sites. In addition, we sell our products online through various third-party digital partner e-commercecommerce sites. In Asia, ourOur 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%2% of our Fiscal 20172023 net revenues, which primarily consist of (i) sales of our Club Monaco branded products made through our retail businesses in the U.S., Canada, and Europe, and our licensing alliances in Europe and Asia, (ii) sales of our Ralph Lauren branded products made through our wholesale business in Latin America, and (iii)Chaps branded royalty revenues earned through our global licensing alliances, excluding Club Monaco.alliances.
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 20Approximately 53% 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 20172023 net revenues were earned outside of the U.S. See Note 1716 to the accompanying consolidated financial statements for a summaryfurther discussion of net revenues and operating income (loss) byour 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 income (loss), and cash flows in any fiscal quarter may be affected by other events impactingaffecting retail sales, such as changes in weather patterns. Accordingly, our operating results and cash flows for the three-month and nine-monthsix-month periods endedDecember September 30, 20172023 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2018.2024.
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Global Economic Conditions and Industry Trends
The global economy and ourretail industry are impacted by many different influences. Most recently,factors. Changes in economic conditions, most notably inflationary pressures (including increases in the U.S. enacted new tax legislation known as the TCJA (as defined in "Recent Developments" below)cost of raw materials, transportation, and salaries & benefits), which is intendedrising interest rates, significant foreign currency volatility, bank failures, and concerns of a potential recession, continue to stimulate economic growthimpact consumer discretionary income levels, spending, and capital investmentsentiment in the U.S. by, among its other provisions, lowering tax rates for both corporations and individuals alike.beyond. In response to such pressures, as well as in an effort to reduce elevated inventory levels, many retailers (particularly in the U.S.) have become increasingly more promotional in an attempt to offset traffic declines and increase conversion. Certain other worldwide events including political unrest, acts of terrorism,and factors, such as international trade relations, new legislation and regulations, taxation or monetary policy changes, political and currencycivil unrest, and commodity price changes, increase volatility ingrowing diplomatic tensions, among other factors, have also adversely impacted 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 stateThe continuation of the global economy. As our international business continues to grow, and because the majority of our products are produced outside of the U.S., major changes in global tax policies or trade relationsthese trends could have a material adverse effect on our business or operating results. Our results
The global economy has also havebeen negatively impacted by ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraine and Israel-Hamas wars. Although our voluntary decision to suspend operations in Russia has not resulted in a material impact to our consolidated financial statements and our ongoing operations in Israel are also not material, our business has been, and are expected tomay continue to be, impacted by the broader macroeconomic implications resulting from these and other military conflicts, including inflationary pressures, unfavorable foreign currency exchange rate fluctuations.

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In addition, the retail landscaperates, increases in which we operate is evolving, with consumers continuing to diversify the channelsenergy prices, food shortages, and volatility in which they transact and shifting their shopping preference from physical stores to online. This, along withfinancial markets, among other factors, has resulted in many retailers, including certain of our large wholesale customers, becoming highly promotionalwhich have adversely impacted consumer sentiment and aggressively marking down their merchandise in an attempt to offset declines in physical store traffic. 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 byconfidence. It is not clear at this time how long these dynamics. The continuation of these industry trendsconflicts will endure, or if they will escalate further with additional countries declaring war against each other, which could further impact consumer spendingamplify the impacts of the various macroeconomic factors described above and consumption behaviorpotentially result in our industry, which could have a material adverse effect on our business or operating results. Additionally, changes in economic conditions, including those that 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.global recession.
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 with these strategies,Our strategy for mitigating inflationary pressures includes numerous levers, including our commitment to driving average unit retail growth, leveraging our diversified supply chain and strong supplier relationships, elevating our product sustainability efforts, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts. We have also taken earlier receipts of inventory and strategically utilize faster means of transportation when necessary to maximize full-price selling windows. While we are taking deliberate actionsremain agile and mindful of the increasing competitive promotional environment, we plan to ensure promotional consistency across channelscontinue driving our broader long-term strategy of brand elevation, which includes multiple levers to continue driving average unit retail growth and enhance the overall brand and shopping experience, including reducing shipments to better align with underlying demand and lower inventory levels. Additionally, we are optimizing our wholesale distribution channel by closing 20% to 25% of 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.equity.
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 impactimpacts 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.2023 10-K.
Summary of Financial Performance
Operating Results
During the three months ended DecemberSeptember 30, 2017,2023, 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$1.633 billion, net income of $81.3$146.9 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$2.19, as compared to net revenues of $4.653$1.580 billion, net income of $121.5$150.5 million, and net income per diluted share of $1.47, as compared to$2.18 during the three months ended October 1, 2022. During the six months ended September 30, 2023, we reported net revenues of $5.087$3.130 billion, net income of $104.7$279.0 million, and net income per diluted share of $1.25$4.15, as compared to net revenues of $3.070 billion, net income of $273.9 million, and net income per diluted share of $3.90 during the ninesix months ended December 31, 2016.October 1, 2022. The comparability of our operating results has been affected by one-timenet restructuring-related charges recorded during the third quarter of Fiscal 2018 in connection with the TCJA,and certain other benefits (charges), as well as restructuring-related charges, impairmentnon-recurring income tax events. We also continue to experience varying degrees of assets,business disruptions resulting from the current macroeconomic environment, including ongoing inflationary pressures, the war in Ukraine, and certain other charges, as discussed further below.foreign currency volatility.
Our operating performance for the three-month and nine-monthsix-month periods ended DecemberSeptember 30, 20172023 reflected declines in net revenuesrevenue increases of 4.2%3.4% and 8.5%1.9%, respectively, on a reported basis and 6.1%1.7% and 8.9%, respectively,1.4% on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition"below. The declinesNet revenue growth was led by Asia, which more than offset the decline 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 of our quality of distribution and sales initiatives, including lower levels of promotional activity and a strategic reduction in shipments, as well as brand discontinuances and lower consumer demand.America.
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Our gross profit as a percentage of net revenues increased by 34070 basis points to 60.7%65.5% during the three months ended DecemberSeptember 30, 2017,2023 and by 540130 basis points to 61.1%67.2% during the ninesix months ended DecemberSeptember 30, 2017. These increases were2023, primarily driven by lower levels of promotional activity in connection with our long-term growth strategy,freight costs, favorable geographic and channel mix, and higher pricing, partially offset by higher product costs. The six months ended September 30, 2023 was also favorably impacted by lower sourcing costs, as well as lower non-cash inventory-related charges recorded in connection with the Way Forward Plan.

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non-routine inventory charges.
Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues during the three months ended September 30, 2023 increased by 370 basis points to 54.9% and by 210 basis points to 47.1%55.2% during the six months ended September 30, 2023, primarily driven by higher compensation-related expenses and rent and occupancy costs. The three months ended DecemberSeptember 30, 2017,2023 also reflected higher marketing and by 130 basis points 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, asadvertising expenses resulting from a greater portionshift in timing 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.certain marketing investments.
Net income decreased by $163.1$3.6 million to $146.9 million during the three months ended DecemberSeptember 30, 2017 to a loss of $81.8 million2023 as compared to the three months ended December 31, 2016,October 1, 2022, primarily due to a $226.3$42.2 million increasedecline in our operating income, partially offset by a $31.0 million decrease in our income tax provision largely driven bydue to a one-time charges recorded in connection with the TCJA, partially offset bytax benefit, as well as a $60.9$7.6 million increase in operating income. Netnon-operating 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 million increase in our income tax provision largely driven by one-time charges recorded in connection with the TCJA.
net. Net income per diluted share declinedincreased by $1.98$0.01 to a loss of $1.00$2.19 per share during the three months ended December 30, 2017, due to the lower level of net income andOctober 1, 2022 primarily driven by lower weighted-average diluted shares outstanding. Net income increased by $5.1 million to $279.0 million during the six months ended September 30, 2023 as compared to the six months ended October 1, 2022, primarily due to a $31.3 million decrease in our income tax provision largely due to a one-time tax benefit, as well as a $24.8 million increase in non-operating income, net, partially offset by a $51.0 million decline in our operating income. Net income per diluted share increased by $0.22$0.25 to $1.47$4.15 per share during the ninesix months ended DecemberSeptember 30, 2017, due to the higher level of net income and2023 primarily driven by lower weighted-average diluted shares outstanding.
Net income for 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 operating results during each of the three-month and nine-month periods ended DecemberSeptember 30, 20172023 and October 1, 2022, were also negatively impacted by net restructuring-related charges impairment of assets, and certain other charges (benefits) totaling $27.2$7.2 million and $104.8$4.7 million, respectively, which had an after-tax effect of reducing net income by $17.9$5.8 million, or $0.23$0.09 per diluted share, and $69.8$3.5 million, or $0.85$0.05 per diluted share, respectively. OurDuring the six-month periods ended September 30, 2023 and October 1, 2022, our operating results during the three-month and nine-month periods ended December 31, 2016 were negatively impacted by net restructuring-related charges impairment of assets, and certain other charges (benefits) totaling $91.4$40.9 million and $400.0$19.5 million, respectively, which had an after-tax effect of reducing net income by $73.6$31.7 million, or $0.88$0.46 per diluted share, and $298.0$14.7 million, or $3.57$0.21 per diluted share, respectively. Net income during both the three-month and six-month periods ended September 30, 2023 also reflected an income tax benefit of $11.8 million, or $0.18 and $0.17 per diluted share, respectively, recorded in connection with non-recurring income tax events.
Financial Condition and Liquidity
We ended the thirdsecond quarter of Fiscal 20182024 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,$327.4 million, as compared to $786.2$427.2 million as of the end of Fiscal 2017.2023. The increasedecrease 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 $225.7 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $98.2 million, and to invest in our business through $123.0$82.4 million in capital expenditures, and to make dividend paymentspartially offset by our operating cash flows of $121.7$343.6 million.
We generated $951.1 million ofNet cash from operations during the nine months ended December 30, 2017, compared to $850.7provided by operating activities was $343.6 million during the ninesix months ended December 31, 2016.September 30, 2023, as compared to $1.9 million during the six months ended October 1, 2022. The net increase in ourcash provided by operating cash flowsactivities was due to a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period, partially offset by a decline in net income before non-cash charges.
Our equity increaseddecreased to $3.408$2.369 billion as of DecemberSeptember 30, 20172023 compared to $3.300$2.431 billion as of April 1, 2017, primarily attributable2023 due to our share repurchase activity and dividends declared during the six months ended September 30, 2023, 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

arrangements.
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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.
Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition
The comparability of our operating results for the three-month and nine-monthsix-month periods endedDecember September 30, 20172023 and December 31, 2016October 1, 2022 has been affected by restructuring-relatedcertain events, including:
pretax charges impairment of assets, andincurred 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
  December 30,
2017
 December 31,
2016
 December 30,
2017
 December 31,
2016
  (millions)
Impairment of assets (see Note 7) $(3.9) $(10.3) $(24.8) $(56.7)
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)
Total charges $(27.2) $(91.4) $(104.8) $(400.0)
 Three Months EndedSix Months Ended
 September 30,
2023
October 1,
2022
September 30,
2023
October 1,
2022
 (millions)
Restructuring and other charges, net (see Note 7)$(9.3)$(6.9)$(44.9)$(12.5)
Non-routine inventory benefits (charges)(a)
1.8 2.4 3.6 (9.2)
Impairment of assets(b)
— (0.2)— (0.2)
Non-routine bad debt expense reversals(c)
0.3 — 0.4 2.4 
Total charges$(7.2)$(4.7)$(40.9)$(19.5)
(a)
Non-cash restructuring-related inventory charges
(a)Non-routine inventory benefits (charges) are recorded within cost of goods sold in the consolidated statements of operations. The benefits recorded within cost of goods sold in the consolidated statements of operations.
Additionally, during the third quarterthree-month periods ended September 30, 2023 and October 1, 2022 primarily related to reversals of Fiscal 2018, weamounts previously recognized in connection with delays in U.S. customs shipment reviews and approvals and the COVID-19 pandemic, respectively. The benefits recorded during the six-month period ended September 30, 2023 primarily related to reversals of amounts previously recognized in connection with delays in U.S. customs shipment reviews and approvals (approximately $3 million) and the COVID-19 pandemic (approximately $1 million). During the six-month period ended October 1, 2022, the net charges recorded primarily related to the Russia-Ukraine war (approximately $10 million), partially offset by reversal of amounts previously recognized in connection with the COVID-19 pandemic (approximately $1 million).
(b)Impairment of assets are recorded within SG&A expenses in the consolidated statements of operations. The impairment recorded during the three-month and six-month periods ended October 1, 2022 related to the write-down of certain long-lived assets in connection with our restructuring plans.
(c)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 six-month periods ended September 30, 2023 and October 1, 2022 primarily related to charges previously recognized in connection with the Russia-Ukraine war.
a one-time chargestax benefit of $231.3$11.8 million recorded within our income tax provision during the second quarter of Fiscal 2024 in connection with Swiss tax reform and the TCJA,European Union's anti-tax avoidance directive, which negatively impacteddecreased our effective tax rate by 12,410710 basis points and 4,980350 basis points during the three-month and nine-monthsix-month periods ended DecemberSeptember 30, 2017,2023, respectively. See Note 98 to the accompanying consolidated financial statements for further discussion of the TCJA.discussion.
SinceBecause 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 rateSuch 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 assessfor assessing how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe this information is useful to investors to facilitatefor facilitating comparisons of operating results and better identifyidentifying 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.
40


Our discussion also includes reference to comparable store sales. Comparable store sales refer to the growthchange in sales of sales inour stores that arehave been open for at least one13 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 fiscalthe 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 one13 full fiscal year. Sales from our e-commerce sites are included withinmonths. 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 thatmetrics are shut down duringcalculated 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.

4641



RESULTS OF OPERATIONS
Three Months Ended DecemberSeptember 30, 20172023 Compared to Three Months Ended December 31, 2016October 1, 2022
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  
 September 30,
2023
October 1,
2022
$
Change
% / bps
Change
 (millions, except per share data) 
Net revenues
$1,633.0 $1,579.9 $53.1 3.4 %
Cost of goods sold(562.9)(556.8)(6.1)1.1 %
Gross profit
1,070.1 1,023.1 47.0 4.6 %
Gross profit as % of net revenues65.5 %64.8 %70 bps
Selling, general, and administrative expenses(896.3)(809.5)(86.8)10.7 %
SG&A expenses as % of net revenues54.9 %51.2 %370 bps
Restructuring and other charges, net(9.3)(6.9)(2.4)34.3 %
Operating income
164.5 206.7 (42.2)(20.4 %)
Operating income as % of net revenues10.1 %13.1 %(300 bps)
Interest expense(10.0)(9.5)(0.5)5.0 %
Interest income15.8 6.6 9.2 138.8 %
Other expense, net(4.8)(3.7)(1.1)30.7 %
Income before income taxes
165.5 200.1 (34.6)(17.3 %)
Income tax provision(18.6)(49.6)31.0 (62.5 %)
Effective tax rate(a)
11.2 %24.8 %(1,360 bps)
Net income
$146.9 $150.5 $(3.6)(2.4 %)
Net income per common share:
Basic
$2.24 $2.21 $0.03 1.4 %
Diluted
$2.19 $2.18 $0.01 0.5 %
(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.
Net Revenues.    Net revenues decreasedincreased by $72.8$53.1 million, or 4.2%3.4%, to $1.642$1.633 billion during the three months ended DecemberSeptember 30, 20172023 as compared to the three months ended December 31, 2016,October 1, 2022, including net favorable foreign currency effects of $31.3$27.1 million. On a constant currency basis, net revenues decreasedincreased by $104.1$26.0 million, or 6.1%.1.7%, driven by Asia.
The following table summarizes the percentage change in our consolidated comparable store sales for the three months ended DecemberSeptember 30, 20172023 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%
Brick and mortar%
Total comparable store sales%
4742



Our global average store count decreasedincreased by 638 stores and concession shops during the three months ended DecemberSeptember 30, 20172023 compared with the three months ended December 31, 2016, primarily due to global store closures primarily associated with the Way Forward Plan, largely offsetOctober 1, 2022, 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
September 30,
2023
October 1,
2022
Freestanding Stores:    Freestanding Stores:
North America 218
 222
North America236 239 
Europe 82
 87
Europe104 98 
Asia 103
 93
Asia224 197 
Other non-reportable segments 78
 83
Total freestanding stores 481
 485
Total freestanding stores564 534 
    
Concession Shops:    Concession Shops:
North America 2
 1
North America
Europe 25
 34
Europe27 29 
Asia 599
 598
Asia682 682 
Other non-reportable segments 2
 2
Total concession shops 628
 635
Total concession shops710 712 
Total stores 1,109
 1,120
Total stores1,274 1,246 
In addition to our stores, we sell products online in North America, Europe, and EuropeAsia through our various e-commercedigital commerce sites, which include www.RalphLauren.com and www.ClubMonaco.com, among others. In Asia, weas well as through our Polo mobile apps in North America. 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$ ChangeForeign Exchange Impact$ Change% Change
 September 30,
2023
October 1,
2022
As
Reported
Constant
Currency
As
Reported
Constant
Currency
 (millions) 
Net Revenues:
North America$717.8 $726.6 $(8.8)$(0.9)$(7.9)(1.2 %)(1.1 %)
Europe526.8 493.5 33.3 35.9 (2.6)6.8 %(0.5 %)
Asia348.4 316.4 32.0 (7.9)39.9 10.1 %12.6 %
Other non-reportable segments40.0 43.4 (3.4)— (3.4)(7.9 %)(7.9 %)
Total net revenues$1,633.0 $1,579.9 $53.1 $27.1 $26.0 3.4 %1.7 %
  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%)
North America net revenues — Net revenues decreased by $114.4$8.8 million, or 11.4%1.2%, during the three months ended DecemberSeptember 30, 20172023 as compared to the three months ended December 31, 2016, including net favorable foreign currency effects of $1.3 million.October 1, 2022. On a constant currency basis, net revenues decreased by $115.7$7.9 million, or 11.6%1.1%.
The $114.4$8.8 million net decline in North America net revenues was driven by:
a $66.6$22.6 million net decrease related to our North America wholesale business largely drivenas we carefully manage sell-ins to our wholesale customers to better align with consumer demand.
This decrease was partially offset by:
a $13.8 million increase related to our North America retail business. On a constant currency basis, net revenues increased by a strategic reduction$14.3 million, reflecting an increase 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$16.1 million net decrease in comparable store sales, primarily drivenpartially offset by lower sales from our Ralph Lauren e-commerce operations and certaina decrease of our retail stores due$1.8 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 a $0.4 million net increase in non-comparable store sales.
43


% Change
Digital commerce%
Brick and mortar%
Total comparable store sales%
Europe net revenues — Net revenues increased by $29.3$33.3 million, or 8.4%6.8%, during the three months ended DecemberSeptember 30, 20172023 as compared to the three months ended December 31, 2016, includingOctober 1, 2022. On a constant currency basis, net revenues declined by $2.6 million, or 0.5%.
The $33.3 million increase in Europe net revenues was driven by:
a $33.6 million increase related to our Europe retail business, inclusive of favorable foreign currency effects of $28.1$15.2 million. On a constant currency basis, net revenues increased by $1.2$18.4 million, or 0.3%.
The $29.3reflecting increases of $12.8 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 comparableand $5.6 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 commerce14 %
Brick and mortar%
Total comparable store sales%
This increase was partially offset by a $0.3 million decrease related to our Europe wholesale business on bothlargely driven by lapping the prior fiscal year period's favorable post-pandemic wholesale allowances and a reported and constantshift in timing of certain shipments into the first quarter of Fiscal 2024, offset by favorable foreign currency basis:effects of $20.7 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$32.0 million, or 6.7%10.1%, during the three months ended DecemberSeptember 30, 20172023 as compared to the three months ended December 31, 2016, includingOctober 1, 2022. On a constant currency basis, net favorablerevenues increased by $39.9 million, or 12.6%.
The $32.0 million increase in Asia net revenues was driven by:
a $29.9 million increase related to our Asia retail business, inclusive of unfavorable foreign currency effects of $0.3$7.2 million. On a constant currency basis, net revenues increased by $15.5$37.1 million, or 6.6%.
The $15.8reflecting increases of $20.2 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 comparableand $16.9 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 commerce19 %
Brick and mortar%
Total comparable store sales%


a $2.1 million increase related to our Asia wholesale business, inclusive of unfavorable foreign currency effects of $0.7 million.
  
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$47.0 million, or 1.3%4.6%, to $996.2 million$1.070 billion for the three months ended DecemberSeptember 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 a net2023, including favorable foreign currency effecteffects of $23.7$18.8 million. Gross profit as a percentage of net revenues increased to 60.7%65.5% for the three months ended DecemberSeptember 30, 20172023 from 57.3%64.8% for the three months ended December 31, 2016.October 1, 2022. The 34070 basis point increase was primarily driven by lower levels of promotional activity in connection with our long-term growth strategy,freight costs, favorable geographic and channel mix, and lower sourcing costs, as well as the absence of non-cash inventory-related charges recorded in connection with the Way Forward Plan during the three months ended December 30, 2017 as compared to the comparable prior year period.higher pricing, partially offset by higher product costs.
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.
44


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 financeselling and administration.administrative costs. SG&A expenses increased by $1.9$86.8 million, or 0.2%10.7%, to $773.8$896.3 million for the three months ended DecemberSeptember 30, 2017. This increase included a net2023, including unfavorable foreign currency effecteffects of $12.3$4.9 million. SG&A expenses as a percentage of net revenues increased to 47.1%54.9% for the three months ended DecemberSeptember 30, 20172023 from 45.0%51.2% for the three months ended December 31, 2016.October 1, 2022. The 210370 basis point increase was primarily due tolargely driven by operating deleverage on lower net revenues, as previously discussed, and the unfavorable impact attributable to geographic and channel mix, as a greater portion of ourSG&A expense growth outpaced 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.growth.
The $1.9$86.8 million net increase in SG&A expenses was driven by:
Three Months Ended September 30, 2023
Compared to
Three Months Ended October 1, 2022
(millions)
SG&A expense category:
Compensation-related expenses$33.7 
Marketing and advertising expenses25.1 
Rent and occupancy expenses8.5 
Depreciation and amortization expense5.3 
Selling-related expenses4.5 
Other9.7 
Total increase in SG&A expenses$86.8 
  
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
Restructuring and Other Charges, Net. During the fourth quarterthree-month periods ended September 30, 2023 and October 1, 2022, we recorded restructuring charges of Fiscal 2018, we continue to expect a certain amount$6.8 million and $4.7 million, respectively, primarily consisting 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 marketingseverance and advertising programs,benefits costs, as well as expansionother charges of $4.5 million and renovations of our retail stores$5.7 million, respectively, primarily related to rent and concession shops.
Amortization of Intangible Assets.    Amortization of intangible assets remained flat at $6.0 millionoccupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. Additionally, during the three-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016.

50


Impairment of Assets. During the three-month periods ended December 30, 2017 and December 31, 2016,October 1, 2022, we recorded non-cash impairment charges of $2.2recognized $2.0 million and $10.3$3.5 million, respectively, to write off certain fixed assetsof income related to our domestic and international stores, shop-within-shops, and corporate officesconsideration received from Regent, L.P. ("Regent") 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 million to write off certain fixed assets related to underperforming shop-within-shops as a result of our on-going store portfolio evaluation. See Note 7 to the accompanying consolidated financial statements.previously sold Club Monaco business.
Restructuring and Other Charges. During the three-month periods ended December 30, 2017 and December 31, 2016, we recorded restructuring charges of $19.8 million and $66.7 million, respectively, in connection with the Way Forward Plan, 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 three months ended December 30, 2017, we recorded other charges of $3.5 million 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. See Note 8 to the accompanying consolidated financial statements.
Operating Income.    Operating income increaseddecreased by $42.2 million, or 20.4%, to $189.2$164.5 million for the three months ended DecemberSeptember 30, 2017, from $128.3 million for the three months ended December 31, 2016. Our operating results2023, reflecting favorable foreign currency effects of $13.9 million. Additionally, during the three-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016 October 1, 2022, our operating results were negatively impacted by net restructuring-related charges, impairment of assets,charges and certain other charges (benefits) totaling $27.2$7.2 million and $91.4$4.7 million, respectively, as previously discussed. The increase in operating income also included a net favorable foreign currency effect of $11.4 million.respectively. Operating income as a percentage of net revenues increased to 11.5%was 10.1% for the three months ended DecemberSeptember 30, 2017 from 7.5% for the three months ended December 31, 2016. The 4002023, reflecting a 300 basis point increasedecline 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 in our gross profit margin, partially offset by the increase in SG&A expenses as a percentage of net revenues, allpartially offset by the increase in our gross margin, both as previously discussed.
45


Operating income (loss) and margin for our segments, as well as a discussion of the changes inin each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:
 Three Months Ended  
September 30, 2023October 1, 2022  
Operating
Income
Operating
Margin
Operating
Income
Operating
Margin
$
Change
Margin
Change
(millions) (millions) (millions) 
Segment:
North America$110.2 15.4%$127.1 17.5%$(16.9)(210 bps)
Europe132.4 25.1%134.6 27.3%(2.2)(220 bps)
Asia68.4 19.6%65.7 20.8%2.7 (120 bps)
Other non-reportable segments34.1 85.2%40.0 92.3%(5.9)(710 bps)
345.1 367.4 (22.3)
Unallocated corporate expenses(171.3)(153.8)(17.5)
Unallocated restructuring and other charges, net(9.3)(6.9)(2.4)
Total operating income$164.5 10.1%$206.7 13.1%$(42.2)(300 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
North America operating margin improveddeclined by 160210 basis points, primarily due to the favorablenet unfavorable impact of 80approximately 170 basis points related to our retail business and 80 basis points related to our wholesale business, 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, partially offset by an increase in gross margin. The remaining 40 basis point decline was driven by unfavorable channel mix.
Europe operating margin improved declined by 310220 basis points, primarily due to the favorableunfavorable impact of 180approximately 270 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. The overall decline in operating margin also reflected approximately 80 basis points attributable to unfavorable channel mix. These increasesdeclines in operating margin were partially offset by favorable foreign currency effects of 130 basis points.
Asia operating margin declined by 120 basis points, primarily due to the net unfavorable impact of approximately 110 basis points driven by an increase in SG&A expenses as a 20percentage of net revenues and a decline in gross margin. The remaining 10 basis point decline related to our wholesale business.was driven by unfavorable channel mix.
Unallocated corporate expenses increased by $14.8$17.5 million to $146.5$171.3 million during the three months ended DecemberSeptember 30, 20172023. The increase in unallocated corporate expenses was due to higher compensation-related expenses of $8.4$12.3 million, higher marketing and advertising expenses of $2.5 million, higher impairment of asset charges of $1.7$7.5 million, and higher other expenses of $2.2$1.5 million, partially offset by lower non-income tax related expenses of $3.8 million.
Unallocated restructuring and other charges, decreasednet increased by $43.4$2.4 million to $23.3$9.3 million during the three months ended DecemberSeptember 30, 2017,2023, as previously discussed above and in Note 87 to the accompanying consolidated financial statements.
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 lossesincome (losses) from our equity-method investees. Non-operatinginvestees, and other non-operating expenses. During the three-months ended September 30, 2023, we reported non-operating income, net, of $1.0 million as compared to non-operating expense, net decreased by $2.3 million to $2.9of $6.6 million during the three monthsthree-months ended December 30, 2017 as compared to the three months ended December 31, 2016, as the increasesOctober 1, 2022. The $7.6 million increase in foreign currency gains and interest and othernon-operating income, net were partially offsetwas mainly driven by the increasesa $9.2 million increase in interest expense and equityincome, primarily attributable to higher interest rates in losses of equity-method investees.financial markets.
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 September 30, 2023 were $18.6 million and 11.2%, respectively, as compared to $49.6 million and 24.8%, respectively, for the three months ended October 1, 2022. The $31.0 million decrease in our income tax provision was primarily driven by a one-time tax benefit of $11.8 million recorded during the second quarter of Fiscal 2024 in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, which lowered our effective tax rate by 710 basis points, as well as a decrease in our pretax income. The decline in
46


our effective tax rate was also due to favorable stock compensation and foreign amortization adjustments, as well as the favorable impact of remeasuring net deferred tax assets as a result of recently enacted changes in tax legislation. See Note 8 to the accompanying consolidated financial statements.
Net Income (Loss).    We reported a net loss of $81.8Income.    Net income decreased to $146.9 million for the three months ended DecemberSeptember 30, 2017, as compared to net income of $81.32023, from $150.5 million for the three months ended December 31, 2016.October 1, 2022. The $163.1$3.6 million decrease in net income was primarily due to our lower operating income, partially offset by the increasedecrease in our income tax provision, partially offset by theas well as an increase in operatingnon-operating income, net, all 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, as previously discussed. Our operating results duringDuring the three-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016 were also negatively impacted byOctober 1, 2022, our operating results included net restructuring-related charges impairment of assets, and certain other charges (benefits) totaling $27.2$7.2 million and $91.4$4.7 million, respectively, which had an after-tax effect of reducing net income by $17.9$5.8 million and $73.6$3.5 million, respectively. Net income during the three months ended September 30, 2023 also reflected an income tax benefit of $11.8 million recorded in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, as previously discussed.
Net Income (Loss) per Diluted Share.    We reported a net loss    Net income per diluted share of $1.00increased to $2.19 for the three months ended DecemberSeptember 30, 2017, as compared to net income per diluted share of $0.982023, from $2.18 for the three months ended December 31, 2016.October 1, 2022. The $1.98$0.01 per share declineincrease was due to the lower level of net income, as previously discussed, andprimarily driven by lower weighted-average diluted shares outstanding during the three months ended DecemberSeptember 30, 20172023 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 DecemberSeptember 30, 20172023 and December 31, 2016October 1, 2022 were also negatively impacted by approximately $0.23$0.09 per share and $0.88$0.05 per share, respectively, as a result of net restructuring-related charges impairment of assets, and certain other charges (benefits), as previously discussed.

Net income per diluted share during the three months ended September 30, 2023 was also favorably impacted by $0.18 due to an income tax benefit recorded in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, as previously discussed.
5247



NineSix Months Ended DecemberSeptember 30, 20172023 Compared to NineSix Months Ended December 31, 2016October 1, 2022
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.
  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%
 Six Months Ended  
 September 30,
2023
October 1,
2022
$
Change
% / bps
Change
 (millions, except per share data) 
Net revenues
$3,129.5 $3,070.5 $59.0 1.9 %
Cost of goods sold(1,027.4)(1,046.0)18.6 (1.8 %)
Gross profit
2,102.1 2,024.5 77.6 3.8 %
Gross profit as % of net revenues67.2 %65.9 %130 bps
Selling, general, and administrative expenses(1,726.3)(1,630.1)(96.2)5.9 %
SG&A expenses as % of net revenues55.2 %53.1 %210 bps
Restructuring and other charges, net(44.9)(12.5)(32.4)258.4 %
Operating income
330.9 381.9 (51.0)(13.4 %)
Operating income as % of net revenues10.6 %12.4 %(180 bps)
Interest expense(20.0)(21.3)1.3 (6.1 %)
Interest income31.5 10.2 21.3 208.7 %
Other expense, net(6.3)(8.5)2.2 (26.5 %)
Income before income taxes
336.1 362.3 (26.2)(7.2 %)
Income tax provision(57.1)(88.4)31.3 (35.4 %)
Effective tax rate(a)
17.0 %24.4 %(740 bps)
Net income
$279.0 $273.9 $5.1 1.9 %
Net income per common share:
Basic
$4.24 $3.97 $0.27 6.8 %
Diluted
$4.15 $3.90 $0.25 6.4 %
(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.
(a)Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
Net Revenues.    Net revenues decreasedincreased by $434.3$59.0 million, or 8.5%1.9%, to $4.653$3.130 billion during the ninesix months ended DecemberSeptember 30, 20172023 as compared to the ninesix months ended December 31, 2016,October 1, 2022, including net favorable foreign currency effects of $18.3$15.3 million. On a constant currency basis, net revenues decreasedincreased by $452.6$43.7 million, or 8.9%.1.4%, driven by our international businesses, which more than offset the decline in North America.
The following table summarizes the percentage change in our consolidated comparable store sales for the ninesix months ended DecemberSeptember 30, 20172023 as compared to the prior fiscal year period on both a reportedperiod:
% Change
Digital commerce%
Brick and mortar%
Total comparable store sales%
Our global average store count increased by 54 stores 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%)

concession shops during the six months ended September 30, 2023 compared with the six months ended October 1, 2022, driven by new openings primarily in Asia.
5348



Our global average store count decreased by 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 fiscal year period, are provided below:
 Six Months Ended$ ChangeForeign Exchange Impact$ Change% Change
 September 30,
2023
October 1,
2022
As
Reported
Constant
Currency
As
Reported
Constant
Currency
 (millions) 
Net Revenues:
North America$1,349.5 $1,427.3 $(77.8)$(2.5)$(75.3)(5.4 %)(5.3 %)
Europe977.3 909.1 68.2 41.3 26.9 7.5 %3.0 %
Asia725.9 650.5 75.4 (23.5)98.9 11.6 %15.2 %
Other non-reportable segments76.8 83.6 (6.8)— (6.8)(8.2 %)(8.2 %)
Total net revenues$3,129.5 $3,070.5 $59.0 $15.3 $43.7 1.9 %1.4 %
  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$77.8 million, or 14.8%5.4%, during the ninesix months ended DecemberSeptember 30, 20172023 as compared to the ninesix months ended December 31, 2016, including net favorable foreign currency effects of $1.6 million.October 1, 2022. On a constant currency basis, net revenues decreased by $431.1$75.3 million, or 14.9%5.3%.
The $429.5$77.8 million net decline in North America net revenues was driven by:
a $311.7$64.8 million net decrease related to our North America wholesale business largely driven by the return to a strategic reductionmore normalized timing of shipments (including within the off-price channel)following last year's supply chain disruption, as well as our careful management of sell-ins to our wholesale customers to better align with consumer demand; and points
a $13.0 million decrease related to our North America retail business. On a constant currency basis, net revenues decreased by $11.5 million, reflecting decreases 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$7.4 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$4.1 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:
% Change
Digital commerce(2 %)
Brick and mortar(1 %)
Total comparable store sales(1 %)
  
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 decreasedincreased by $7.6$68.2 million, or 0.7%7.5%, during the ninesix months ended DecemberSeptember 30, 20172023 as compared to the ninesix months ended December 31, 2016, includingOctober 1, 2022. On a constant currency basis, net revenues increased by $26.9 million, or 3.0%.
The $68.2 million increase in Europe net revenues was driven by:
a $44.4 million increase related to our Europe retail business, inclusive of favorable foreign currency effects of $28.4$17.9 million. On a constant currency basis, net revenues decreasedincreased by $36.0$26.5 million, or 3.1%.
The $7.6reflecting increases of $17.9 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 comparableand $8.6 million in non-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.sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:
% Change
Digital commerce11 %
Brick and mortar%
Total comparable store sales%
a $23.8 million increase related to our Europe wholesale business on both a reported and constantlargely driven by favorable foreign currency basis:

effects of $23.4 million.
5449



  
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$75.4 million, or 2.1%11.6%, during the ninesix months ended DecemberSeptember 30, 20172023 as compared to the ninesix months ended December 31, 2016, includingOctober 1, 2022. On a constant currency basis, net revenues increased by $98.9 million, or 15.2%.
The $75.4 million increase in Asia net revenues was driven by:
a $68.1 million increase related to our Asia retail business, inclusive of unfavorable foreign currency effects of $11.8$21.8 million. On a constant currency basis, net revenues increased by $25.9$89.9 million, or 3.9%.
The $14.1reflecting increases of $54.4 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 comparableand $35.5 million in non-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.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:
  
As
Reported
 
Constant
Currency
Total comparable store sales(a)
 1% 3%
business:
(a)
Comparable% Change
Digital commerce15 %
Brick and mortar10 %
Total comparable store sales for our Asia segment were comprised primarily of sales made through our stores and concession shops.11 %
a $3.5$7.3 million net increase related to our Asia wholesale business, reflecting increases most notably in non-comparable store sales, primarily driven by new store openings,Southeast Asia, Korea, and Japan, partially offset by net unfavorable foreign currency effects of $4.3$1.7 million.
Gross Profit.    Gross profit increased by $11.2$77.6 million, or 0.4%3.8%, to $2.843$2.102 billion for the ninesix months ended DecemberSeptember 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 net2023, including favorable foreign currency effecteffects of $10.4$3.6 million. Gross profit as a percentage of net revenues increased to 61.1%67.2% for the ninesix months ended DecemberSeptember 30, 20172023 from 55.7%65.9% for the ninesix months ended December 31, 2016.October 1, 2022. The 540130 basis point increase was primarily driven by the lower non-cash inventory-relatednon-routine inventory charges recorded in connection with the Way Forward Plan during the ninesix months ended DecemberSeptember 30, 20172023 as compared to the comparable prior fiscal year period, lower levels of promotional activity in connection with our long-term growth strategy,freight costs, favorable geographic and channel mix, and lower sourcinghigher pricing, partially offset by higher product costs.
Selling, General, and Administrative Expenses.    SG&A expenses decreasedincreased by $141.0$96.2 million, or 5.9%, to $2.249$1.726 billion for the ninesix months ended DecemberSeptember 30, 2017. This decrease included a net unfavorable2023, including favorable foreign currency effecteffects of $1.7$3.2 million. SG&A expenses as a percentage of net revenues increased to 48.3%55.2% for the ninesix months ended DecemberSeptember 30, 20172023 from 47.0%53.1% for the ninesix months ended December 31, 2016.October 1, 2022. The 130210 basis point increase was primarily due tolargely driven by operating deleverage on lower net revenues, as previously discussed, and the unfavorable impact attributable to geographic and channel mix, as a greater portion of ourSG&A expense growth outpaced 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


growth.
The $141.0$96.2 million net declineincrease 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 relatedSix Months Ended September 30, 2023
Compared
to Mr. Ralph Lauren electing to forgo his Fiscal 2017 executive incentive bonus.
Six Months Ended October 1, 2022
(millions)
SG&A expense category:
Compensation-related expenses$57.4 
Rent and occupancy costs16.5 
Depreciation and amortization expense8.4 
Shipping and handling costs5.1 
Marketing and advertising expenses4.2 
Selling-related expenses3.0 
Other1.6 
Total net increase in SG&A expenses$96.2 
AmortizationRestructuring and Other Charges, Net. During the six-month periods ended September 30, 2023 and October 1, 2022, we recorded net restructuring charges and benefits of Intangible Assets.    Amortization$37.3 million and $5.4 million, respectively, primarily consisting of intangible assets decreased slightly by $0.1severance and benefits costs, as well as other charges of $9.6 million or 0.9%,and $10.6 million, respectively, primarily related to $18.0 millionrent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. Additionally, during the nine months ended December 30, 2017 due to favorable foreign currency effects.
Impairment of Assets. During the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016,October 1, 2022, we recorded non-cash impairment charges of $14.0recognized $2.0 million and $56.7$3.5 million, respectively, to write off certain fixed assetsof income related to our domestic and international stores, shop-within-shops, and corporate officesconsideration received from Regent 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.previously sold Club Monaco business. 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.
50


Operating Income.   Operating income increaseddecreased by $51.0 million, or 13.4%, to $472.8$330.9 million for the ninesix months ended DecemberSeptember 30, 2017, from $173.4 million for the nine months ended December 31, 2016.2023, reflecting favorable foreign currency effects of $6.8 million. Our operating results during the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016 October 1, 2022 were negatively impacted by net restructuring-related charges, impairment of assets,charges and certain other charges (benefits) totaling $104.8$40.9 million and $400.0$19.5 million, respectively, as previously discussed. The increase in operating income also included a net favorable foreign currency effect of $8.7 million.respectively. Operating income as a percentage of net revenues increased to 10.2%was 10.6% for the ninesix months ended DecemberSeptember 30, 2017 from 3.4% for the nine months ended December 31, 2016. The 6802023, reflecting a 180 basis point increasedecline from the prior fiscal year period. The decline in operating income as a percentage of net revenues was primarily driven by thehigher net decline in restructuring-related charges, impairment of assets,charges and certain other charges and(benefits) recorded during the increase in our gross profit margin, partially offset bysix months ended September 30, 2023 as compared to the prior fiscal year period, as well as the increase in SG&A expenses as a percentage of net revenues, partially offset by the increase in our gross margin, 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 fiscal year period, are provided below:
 Six Months Ended  
September 30, 2023October 1, 2022  
Operating
Income
Operating
Margin
Operating
Income
Operating
Margin
$
Change
Margin
Change
(millions) (millions) (millions) 
Segment:
North America$235.5 17.4%$259.9 18.2%$(24.4)(80 bps)
Europe229.6 23.5%207.8 22.9%21.8 60 bps
Asia161.7 22.3%144.4 22.2%17.3 10 bps
Other non-reportable segments67.9 88.4%77.2 92.3%(9.3)(390 bps)
694.7 689.3 5.4 
Unallocated corporate expenses(318.9)(294.9)(24.0)
Unallocated restructuring and other charges, net(44.9)(12.5)(32.4)
Total operating income$330.9 10.6%$381.9 12.4%$(51.0)(180 bps)
  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 marginimproved declined by 24080 basis points, primarily due to the favorablenet unfavorable impact of 140approximately 120 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.revenues, partially offset by an increase in gross margin. The increaseoverall decline in operating margin also reflected approximately 30 basis points attributable to unfavorable channel mix. These declines in operating margin were partially offset by the favorable impact of 12070 basis points relatedattributable to lower non-cashnon-routine inventory charges recorded in connection with the Way Forward Plan during the ninesix months ended DecemberSeptember 30, 20172023 as compared to the prior fiscal year period, as well as theperiod.
Europe operating margin improved by 60 basis points, primarily due to favorable impactforeign currency effects of 60 basis points. The overall increase in operating margin also reflected approximately 20 basis points relatedlargely attributable to our wholesale business, largely driven by a decreasean increase in SG&A expenses as a percentage of net revenues.gross margin. These increasesimprovements in operating margin were partially offset by approximately 20 basis points attributable to unfavorable foreign currency effects of 50 basis points.channel mix.
Asia operating margin improved by 2,70010 basis points, primarily due to the net favorable impact of 2,160approximately 40 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 increasepartially offset by a decline in our gross profit margin. TheThis improvement also reflected favorablein operating margin was largely offset by unfavorable foreign currency effects of 15030 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$24.0 million to $469.3$318.9 million during the ninesix months ended DecemberSeptember 30, 2017.2023. The increase in unallocated corporate expenses was primarily due to higher compensation-related expenses of $25.3 million, lower intercompany sourcing commission income of $28.0$10.3 million (which is offset at the segment level and eliminates in consolidation) driven by the planned reduction in inventory,, and higher impairmentmarketing and advertising expenses of asset charges of $10.4$5.0 million, partially offset by lower marketing and advertisingnon-income tax related expenses of $12.6$5.9 million, lower consulting fees of $6.3 million, lower compensation-related expenses of $5.9$3.4 million, and lower other expenses of $1.5$7.3 million.
Unallocated restructuring and other charges, decreasednet increased by $115.2$32.4 million to $78.7$44.9 million during the ninesix months ended DecemberSeptember 30, 2017,2023, as previously discussed above and in Note 87 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.

5751



Non-operating Income (Expense), Net. During the six months ended September 30, 2023, we reported non-operating income, net of $5.2 million as compared to non-operating expense, net of $19.6 million during the six months ended October 1, 2022. The $24.8 million increase in non-operating income, net was mainly driven by a $21.3 million increase in interest income, primarily attributable to higher interest rates in financial markets.
Income Tax Provision.    The income tax provision and effective tax rate for the ninesix months ended DecemberSeptember 30, 20172023 were $342.8$57.1 million and 73.8%17.0%, respectively, as compared to $58.9$88.4 million and 36.0%24.4%, respectively, for the ninesix months ended December 31, 2016.October 1, 2022. The $283.9$31.3 million increasedecrease in theour income tax provision was primarily due todriven by a one-time chargestax benefit of $231.3$11.8 million recorded during the thirdsecond quarter of Fiscal 20182024 in connection with Swiss tax reform and the TCJA (as discussed within "Recent Developments"),European Union's anti-tax avoidance directive, which negatively impactedlowered our effective tax rate by 4,980350 basis points, as well as the increasea decrease in our pretax income. The increasedecline in our effective tax rate was also reflecteddue to the net favorable impact of 1,200 basis points, primarily due to theremeasuring net deferred tax impactassets as a result of earningsrecently enacted changes in lower taxed foreign jurisdictions versus the U.S. andtax legislation, the absence of (i) income tax reserveunfavorable prior year adjustments largely associated with an income tax settlement andrelated to certain income tax audits, and (ii) valuation allowances on and adjustments to deferred tax assets bothand receivables, and favorable stock compensation adjustments, partially offset by the absence of which werefavorable audit-related adjustments recorded duringin 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").prior fiscal year period. See Note 48 to the accompanying consolidated financial statements for additional information relating to our adoption of ASU 2016-09.statements.
Net Income.    Net income increased to $121.5$279.0 million for the ninesix months ended DecemberSeptember 30, 2017,2023, from $104.7$273.9 million for the ninesix months ended December 31, 2016.October 1, 2022. The $16.8$5.1 million increase in net income was primarily due to the $299.4 million increase in operating income, partially offset by the $283.9 million increasea decrease in our income tax provision, as previously discussed. Netwell as an increase in non-operating income, fornet, partially offset by the nine months ended December 30, 2017 reflected one-time charges of $231.3 million recordeddecline in connection with the TCJA,our operating income, all as previously discussed. Our operating results during the nine-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016October 1, 2022 were also negatively impacted by net restructuring-related charges impairment of assets, and certain other charges (benefits) totaling $104.8$40.9 million and $400.0$19.5 million, respectively, which had an after-tax effect of reducing net income by $69.8$31.7 million and $298.0$14.7 million, respectively. Net income during the six months ended September 30, 2023 also reflected an income tax benefit of $11.8 million recorded in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, as previously discussed.
Net Income per Diluted Share.    Net income per diluted share increased to $1.47 per share$4.15 for the ninesix months ended DecemberSeptember 30, 2017,2023, from $1.25$3.90 for the ninesix months ended December 31, 2016.October 1, 2022. The $0.22$0.25 per share increase was due toprimarily driven by the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during the ninesix months ended DecemberSeptember 30, 20172023 driven by our share repurchases during the last twelve months. Net income per diluted share for the nine monthssix-month periods ended DecemberSeptember 30, 2017 was2023 and October 1, 2022 were also negatively impacted by approximately $2.80$0.46 per share as a result of one-timeand $0.21 per share, respectively, attributable to net restructuring-related charges recorded in connection with the TCJA,and certain other charges (benefits), as previously discussed. Net income per diluted share forduring the nine-month periodssix months ended DecemberSeptember 30, 2017 and December 31, 2016 were2023 was also negativelyfavorably impacted by $0.85 per share$0.17 due to an income tax benefit recorded in connection with Swiss tax reform and $3.57 per share, respectively, as a result of restructuring-related charges, impairment of assets, and certain other charges,the European Union's anti-tax avoidance directive, as previously discussed.
52


FINANCIAL CONDITION AND LIQUIDITY
Financial Condition
The following table presents our financial condition as of DecemberSeptember 30, 20172023 and April 1, 2017:2023:
  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
September 30,
2023
April 1,
2023
$
Change
 (millions)
Cash and cash equivalents$1,381.8 $1,529.3 $(147.5)
Short-term investments85.1 36.4 48.7 
Long-term debt(a)
(1,139.5)(1,138.5)(1.0)
Net cash and short-term investments 
$327.4 $427.2 $(99.8)
Equity$2,369.2 $2,430.5 $(61.3)
(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 9 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.
The increasedecrease in our net cash and short-term investments position at DecemberSeptember 30, 20172023 as compared to April 1, 20172023 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 $225.7 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $98.2 million, and to invest in our business through $123.0$82.4 million in capital expenditures, and to make dividend paymentspartially offset by our operating cash flows of $121.7$343.6 million.
The increasedecrease in our equity was primarily attributable to our share repurchase activity and dividends declared during the six months ended September 30, 2023, 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-monthsix-month periods ended DecemberSeptember 30, 20172023 and December 31, 2016:October 1, 2022:
 Six Months Ended
 September 30,
2023
October 1,
2022
$
Change
 (millions)
Net cash provided by operating activities$343.6 $1.9 $341.7 
Net cash provided by (used in) investing activities(132.9)328.1 (461.0)
Net cash used in financing activities(335.1)(1,027.2)692.1 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(23.9)(60.6)36.7 
Net decrease in cash, cash equivalents, and restricted cash$(148.3)$(757.8)$609.5 
  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 $951.1was $343.6 million during the ninesix months ended DecemberSeptember 30, 2017,2023, as compared to $850.7$1.9 million during the ninesix months ended December 31, 2016.October 1, 2022. The $100.4$341.7 million net increase in cash provided by operating activities was due to a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period, partially offset by a decline 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 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,related to our operating assets and liabilities, including our working capital, increasedwas primarily due to:driven by:
a favorable changeschange related to our inventories, largely driven by a more normalized receipt cadence;
a net favorable change in our (i) other income tax receivables and payables (excludingaccrued liabilities largely driven by the impact of a lower bonus achievement level realized during Fiscal 2023 as compared to Fiscal 2022 and a favorable change in our restructuring reserve due to
53


an increase in restructuring charges recorded during the one-time mandatory transition tax) and (ii) prepaid expenses and other current assets, both largelyfiscal year period as compared to the prior fiscal year period, as well as a favorable change in accounts payable driven by the timing of cash collections and payments; and
a favorable change related to our accounts receivable, largely driven by a decline in our inventory levels, largely driven by our inventory management initiatives, lower sourcing costs,wholesale net revenues and the timing of inventorycash receipts.
These increases related to our operating assets and liabilities were partially offset by by:
an unfavorable change inrelated to our accounts receivable,income tax receivables and payables largely driven by the timing of cash collections.receipts and payments, respectively.
Net Cash Provided by (Used in) Investing Activities.    Net cash used in investing activities was $317.8$132.9 million during the ninesix months ended DecemberSeptember 30, 2017,2023, as compared to net cash provided by investing activities of $16.3$328.1 million during the ninesix months ended December 31, 2016.October 1, 2022. The $334.1$461.0 million net increase in cash used in investing activities was primarily driven by:
a $434.5$468.5 million increasedecrease in purchases of investments, less proceeds from sales and maturities of investments, less purchases of investments. During the ninesix months ended DecemberSeptember 30, 2017,2023, we made net investment purchases of $190.2$50.5 million, as compared to receiving net investmentproceeds from sales and maturities of $244.3investments of $418.0 million during the ninesix months ended December 31, 2016.October 1, 2022.
This increase in cash used in investing activities was partially offset by:
a $102.5 million decline in capital expenditures. During the ninesix months ended DecemberSeptember 30, 2017,2023, we spent $123.0$82.4 million on capital expenditures, as compared to $225.5 million duringwhich was down slightly versus the nine months ended December 31, 2016. Our capital expenditures duringcomparable prior fiscal year period. Over the nine months ended December 30, 2017 primarily related to our global retail and

59


department store renovations, new store openings, and the continued enhancements to our global information technology systems.
We currentlycourse of Fiscal 2024, we expect to spend approximately $200$250 million inon capital expenditures during Fiscal 2018, lower thanprimarily 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$335.1 million during the ninesix months ended DecemberSeptember 30, 2017,2023, as compared to $369.5 million$1.027 billion during the ninesix months ended December 31, 2016.October 1, 2022. The $210.8$692.1 million net decrease in cash used in financing activities was primarily driven by:
a $116.1$500.0 million declinedecrease in cash used to repay debt, less proceeds from debt issuances. Wedebt. During the six months ended September 30, 2023, we did not issue or repay any debt during the nine months ended December 30, 2017.debt. On a comparative basis, during the ninesix months ended December 31, 2016,October 1, 2022, we made $90.0 million in net repayments related torepaid our commercial paper note issuances and repayments and repaid $26.1 million of borrowings previously outstanding under our credit facilities;$500.0 million principal amount of unsecured 1.700% senior notes that matured on June 15, 2022; and
a $99.1$191.6 million declinedecrease in cash used to repurchase shares of our Class A common stock. During the ninesix months ended DecemberSeptember 30, 2017, $15.92023, we used $175.0 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $50.7 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 ninesix months ended December 31, 2016,October 1, 2022, we used $100.0$383.9 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $15.0$33.4 million in shares of our Class A common stock were surrendered or withheld for taxes.
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 ofand commercial paper notes,program, and other available financing options.
During the ninesix months ended DecemberSeptember 30, 2017,2023, we generated $951.1$343.6 million of net cash flows from our operations. As of DecemberSeptember 30, 2017,2023, we had $2.038$1.467 billion in cash, cash equivalents, and short-term investments, of which $1.203 billion$911.7 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 changesUndistributed foreign earnings generated on or before December 31, 2017 that were subject to the taxation ofone-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 withgenerated after December 31, 2017 that were not subject to the TCJA (as discussed within "Recent Developments"), we are exploring repatriation possibilities. Ifone-time mandatory transition tax. However, if our plans change and we choose to repatriate any fundspost-2017 earnings to the U.S. in the future, we could potentiallywould be subject to applicable state, local, and/orU.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.
54


The following table presents ourthe total availability, borrowings outstanding, and remaining availability under our credit and overdraft facilities and Commercial Paper Program as of DecemberSeptember 30, 2017:2023:
  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
 September 30, 2023
Description(a)
Total
Availability
Borrowings
Outstanding
Remaining
Availability
 (millions)
Global Credit Facility and Commercial Paper Program(b)
$750 $12 (c)$738 
Pan-Asia Credit Facilities35 — 35 
Japan Overdraft Facility34 — 34 
(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 9 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 $750 million.
(c)Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of September 30, 2023.
We believe that ourthe Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as of DecemberSeptember 30, 2017,2023, there were nineseven 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 $1.500 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 9 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 CreditBorrowing 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-commercedigital 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 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 109 to the accompanying consolidated financial statements and Note 1211 of the Fiscal 20172023 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.credit facilities.
DividendsSupplier Finance Program
Since 2003, we have maintained,We support a voluntary supplier finance program which provides certain of our inventory suppliers the opportunity, at their sole discretion, to sell their receivables due from us (which are generally due within 90 days) to a participating financial institution in exchange for receipt of a discounted payment amount made earlier than the payment term stipulated between us and intend to continue to maintain,the supplier. Our vendor payment terms and amounts due are not impacted by a regular quarterly cash dividend program on our common stock. However, anysupplier's decision to declare and pay dividendsparticipate in the future will be made atprogram. We have not pledged any assets and do not provide guarantees under the discretionsupplier finance program. Our payment obligations outstanding under our supplier finance program were $177.5 million and $122.2 million as of our Board of DirectorsSeptember 30, 2023 and will depend on our results of operations, cash requirements, financial condition,April 1, 2023, respectively, and other factors thatwere recorded within accounts payable in the Board of Directors may deem relevant.consolidated balance sheets.
See Note 14 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.
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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 secondanother 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 $750 million senior unsecured revolving line of credit through June 30, 2028, which may be used for working capital needs, capital expenditures, certain investments, general corporate purposes, and for funding of acquisitions, as well as 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 certain 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 $1.500 billion, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments. There are no mandatory reductions in borrowing ability throughout the term of the Global Credit Facility.
The Global Credit Facility contains a number of covenants, as described in Note 109 to the accompanying consolidated financial statements. As of DecemberSeptember 30, 2017,2023, 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 CreditBorrowing Facilities do not contain any financial covenants.

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See Note 109 to the accompanying consolidated financial statements and Note 1211 of the Fiscal 20172023 10-K for additional information relating to our debt and covenant compliance.
Contractual and Other ObligationsCommon Stock Repurchase Program
In connection withOn 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, excluding related excise taxes. As of September 30, 2023, the TCJA's provision that subjects previously deferred foreign earnings to a one-time mandatory transition tax (as described in "Recent Developments"), we recorded a chargeremaining availability under our Class A common stock repurchase program was approximately $1.000 billion. Repurchases of $215.5 million withinshares of our income tax provision during the third quarter of Fiscal 2018, together with a corresponding current and non-current income tax payable obligation within our consolidated balance sheets based upon the estimated timing of payments. This obligation, which was recorded on a provisional basis and isClass A common stock are subject to change, is expectedoverall business and market conditions.
As discussed in Note 8 to the accompanying consolidated financial statements, the Inflation Reduction Act ("IRA") was signed into law by President Biden in August 2022. Among its various provisions, the IRA imposes a 1% excise tax on share repurchases made after December 31, 2022.
See Note 13 to the accompanying consolidated financial statements for additional information relating to our Class A common stock repurchase program.
Dividends
We have generally maintained a regular quarterly cash dividend program on our common stock since 2003.
On May 18, 2022, our Board of Directors approved an increase to the quarterly cash dividend on our common stock from $0.6875 to $0.75 per share.
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 paid over an eight-year period as follows: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.
  
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
(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.56


See Note 13 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 2023 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 20172023 10-K for detailed disclosure of our other commitments and contractual obligationsmaterial cash requirements as of April 1, 2017.2023.
MARKET RISK MANAGEMENT
As discussed in Note 1413 of the Fiscal 20172023 10-K and Note 1211 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 toon foreign currency-denominated balances, certain anticipated cash flows fromof 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 changesfluctuations in benchmark interest rates. Consequently, at times,Accordingly, in the normal course of business we employassess such risks and, in accordance with our established policies and procedures, including themay use of derivative financial instruments to manage such risks.and mitigate them. We do not enter into derivative transactionsuse derivatives for speculative or trading purposes.
As a result of theGiven our use of derivative instruments, we are exposed to the risk that the counterparties to oursuch contracts will fail to meet their contractual obligations. To mitigate thissuch counterparty credit risk, we have ait is our policy ofto only enteringenter 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 DecemberSeptember 30, 2017.2023. However, we do have in aggregate $4.2$56.2 million of derivative instruments in net asset positions with threeheld across eight creditworthy financial institutions.
Foreign Currency Risk Management
We manage our exposure to changes in foreign currency exchange rates through the use ofusing forward foreign currency exchange and cross-currency swap contracts. See Refer to Note 1211 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, outstandingas well as the impact on earnings and other comprehensive income of such instruments as of DecemberSeptember 30, 2017.

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2023.
Forward Foreign Currency Exchange Contracts
We enter into forward foreign currency exchange contracts as hedges to reduce ourmitigate 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 managefor managing the level of exposure to the risk of foreign currencysuch 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 currencyrelated exposures anticipated over a two-year period. In doing so, we usethe next twelve months using forward foreign currency exchange contracts that generally havewith maturities of two months to two yearsone year to provide continuing coverage throughoutover 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.
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Cross-Currency Swap Contracts
During our fiscal year ended April 2, 2016 ("Fiscal 2016"), we entered into two pay-floatingWe periodically designate pay-fixed rate, receive-floatingreceive-fixed rate cross-currency swaps, with notional amounts of €280 million and €274 million, which we designatedswap 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. These contracts swap the U.S. Dollar-denominated variablefixed interest rate payments based on the 3-month London Interbank Offered Rate ("LIBOR") plus acontract's notional amount and the fixed spreadrate of interest payable on certain of our senior notes for Euro-denominated variablefixed interest rate payments, based on the 3-month Euro Interbank Offered Rate plusthereby economically converting a fixed spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest Rate Swaps (as defined below), economically convertportion 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-ratefixed 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 DecemberSeptember 30, 2017,2023, we had cash and cash equivalents on-hand of $1.176$1.382 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$85.1 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 1211 to the accompanying consolidated financial statements for further detail of the composition of our investment portfolio as of DecemberSeptember 30, 2017.2023.

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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 20172023 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, seerefer to the "Critical Accounting Policies" section of the MD&A in our Fiscal 20172023 10-K.
There have been no significant changes in the application of our critical accounting policies since April 1, 2017.2023.
Goodwill Impairment Assessment
We performed our annual assessment of the recoverability of goodwill impairment assessmentassigned to our reporting units using a qualitativequantitative 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 the2024. The estimated fair values and/or carrying amounts of our reporting units were determined with allocated goodwill. These factors included external factors such as macroeconomic, industry,the assistance of an independent third-party valuation firm using discounted cash flows 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.comparisons. Based on the results of our qualitative goodwillthe quantitative impairment assessment, we concluded that it is not more likely than not that the fair values of our reporting units are less thansignificantly exceeded their respective carrying values and there were no reporting unitsnot at risk of impairment. Accordingly, no goodwill impairment charges were recorded.
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.58


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

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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 DecemberSeptember 30, 2017. Except as discussed below, there2023.
There has been no change in the Company's internal control over financial reporting during the fiscal quarter ended DecemberSeptember 30, 20172023 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.
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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 20172023 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 20172023 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 withThere are no material changes to the risk factors and informationpreviously disclosed, innor has the Fiscal 2017 10-K.
The impact to ourCompany 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.
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 is complex and widely considered to be the most significant overhaul to the U.S. federal tax code since 1986.
Although we expect the TCJA will ultimately benefit ouroperating 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' expectationsfinancial condition.
Item 2.    Unregistered Sales of Equity Securities and there can be no assurance that the TCJA will ultimately benefit our resultsUse of operations and financial condition in future periods.Proceeds.

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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 DecemberSeptember 30, 2017.2023.
(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 DecemberSeptember 30, 2017:2023:
 
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, 201711,257
 $88.92
 
 $100
October 29, 2017 to December 2, 2017
 
 
 100
December 3, 2017 to December 30, 20173,238

101.38
 
 100
 14,495
   
  
Total Number of Shares PurchasedAverage
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)
July 2, 2023 to July 29, 2023— $— — $1,125 
July 30, 2023 to August 26, 2023987,776 (b)120.07 624,435 1,050 
August 27, 2023 to September 30, 2023439,007 (c)114.57 436,402 1,000 
1,426,783 1,060,837 
(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 363,341 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 2,605 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.
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Item 5.    Other Information.
During the fiscal quarter ended September 30, 2023, none of our directors or officers (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted or terminated "Rule 10b5-1 trading arrangements" (as defined in Item 408 of Regulation S-K of the Exchange Act) other than the following officers:
Patrice Louvet, President and Chief Executive Officer, adopted a new Rule 10b5-1 trading arrangement on August 25, 2023. Mr. Louvet's trading arrangement provides for the sale of up to an aggregate of 95,754 shares of Class A common stock until July 19, 2024.
Halide Alagöz, Chief Product Officer, adopted a new Rule 10b5-1 trading arrangement on September 19, 2023. Ms. Alagöz's trading arrangement provides for the sale of up to an aggregate of 7,000 shares of Class A common stock until March 28, 2024.
There were no "non-Rule 10b5-1 trading arrangements" (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted or terminated during the fiscal quarter ended September 30, 2023 by our directors and officers.
Item 6.    Exhibits.
Item 6.Exhibits.
3.1
3.2
3.3
12.1*31.1*
31.1*
31.2*
32.1*
32.2*
101*101.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.
* Filed herewith.



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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: FebruaryNovember 8, 20182023



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