01—Abstract
Summary
Summary of the 10-K filed May 24, 2012. Cited figures are marked; the original filing is the authoritative source.
Ralph Lauren Corporation (filed as Polo Ralph Lauren Corporation's successor; name changed to Ralph Lauren Corporation effective August 15, 2011) reported fiscal 2012 (52 weeks ended March 31, 2012) net revenues of $6.860 billiona, up 21.2% from $5.660 billion in Fiscal 2011, with net income attributable to RLC of $681.0 million and diluted EPS of $7.13, up from $5.75.
Growth was driven mainly by the Retail segment, whose revenues rose 26.9% to $3.432 billionb, and by Wholesale, which rose 16.9% to $3.246 billion. Gross margin declined 30 basis points to 58.3% due to substantial sourcing cost increases, partly offset by targeted pricing actions and a more favorable channel and geographic mix. Operating income rose 23.0% to $1.039 billion, with operating margin up 30 basis points to 15.2%.
The balance sheet remained strong. Cash and cash equivalents were $671.6 millionc, and net cash and investments were $1.013 billion, up from $838.6 million. Operating cash flow was $885.3 million, versus $688.7 million in the prior year.
During the year the company used $419.4 milliond to repurchase shares, spent $272.2 million on capital expenditures, and paid $74.3 million in dividends. Management noted that softness in certain European businesses and the continuing economic uncertainty in Europe could weigh on sales and margin growth in Fiscal 2013.
On May 21, 2012, the Board raised the quarterly dividend from $0.20 to $0.40 per share. The Lauren family controls about 73% of the voting power, and the company faces a pending Wathne litigation, which management does not expect to have a material adverse effect.
02—Key points
Key Highlights
- Net revenues rose 21.2% to $6.860 billion in Fiscal 2012, with net income attributable to RLC of $681.0 million, up 20.0%.
- Diluted EPS was $7.13 versus $5.75 in Fiscal 2011, a 24.0% increase helped by higher net income and lower weighted-average diluted shares.
- Retail segment revenues grew 26.9% to $3.432 billion and Retail operating margin rose 200 basis points to 16.3%, driven by Asia and comparable store sales growth of 14%.
- Gross margin fell 30 basis points to 58.3% because of substantial sourcing cost increases, particularly in Wholesale, partly offset by targeted pricing actions.
- Operating cash flow increased to $885.3 million; net cash and investments rose to $1.013 billion, and the company repurchased $419.4 million of stock.
- The quarterly dividend was raised from $0.20 to $0.40 per share on May 21, 2012.
- Mr. Ralph Lauren and entities controlled by the Lauren family hold about 73% of voting power, and management flagged softness in certain European businesses for Fiscal 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Ralph Lauren kept $0.10.
- Revenue$6.86B100.0%
- Cost of revenue−$2.86B41.7%
- Gross profit$4.00B58.3%
- Operating costs−$2.96B43.1%
- Operating income$1.04B15.1%
- Interest, other & tax−$358.0M5.2%
- Net income$681.0M9.9%
Where FY2012 revenue went
$6.86B- SG&A: $2.92B, 43% of revenue
- Cost of revenue: $2.86B, 42% of revenue
- Net income: $681.0M, 9.9% of revenue
- Other operating costs: $43.0M, 0.6% of revenue
- Interest, other & tax: $358.0M, 5.2% of revenue
Kept 9.9% as net incomeNet income $681.0M · 9.9%Other operating costs $43.0M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed May 24, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $6.86B$5.66B | +21.2% |
| Cost of Revenue | $2.86B$2.34B | +22.2% |
| Gross Profit | $4.00B$3.32B | +20.5% |
| SG&A Expenses | $2.92B$2.44B | +19.4% |
| Operating Expenses | $2.96B$2.47B | +19.6% |
| Operating Income | $1.04B$845.10M | +22.9% |
| Interest Expense | $24.00M$18.30M | +31.1% |
| Net Income | $681.00M$567.60M | +20.0% |
| EPS (Basic) | $7.35$5.91 | +24.4% |
| EPS (Diluted) | $7.13$5.75 | +24.0% |
| Shares Outstanding (Basic) | 92.70M96.00M | −3.4% |
| Shares Outstanding (Diluted) | 95.50M98.70M | −3.2% |
05—Questions
Frequently Asked Questions
How did Ralph Lauren perform financially in Fiscal 2012?
Net revenues increased 21.2% to $6.860 billion, operating income rose 23.0% to $1.039 billion, and net income attributable to RLC grew 20.0% to $681.0 million. Diluted EPS reached $7.13, compared with $5.75 in Fiscal 2011.
Which business segment drove the growth?
The Retail segment led growth, with revenues up 26.9% to $3.432 billion, supported by new stores, the South Korea acquisition, and a 14% increase in comparable store sales. Wholesale revenues rose 16.9% to $3.246 billion.
What pressures on profitability did management identify?
Substantial sourcing cost increases, particularly in the Wholesale segment, reduced gross margin by 30 basis points to 58.3%. Management said cost of goods inflation has peaked, but sourcing pressures will continue to affect gross profit percentages for the foreseeable future.
How strong is the company's financial position and what is it doing with its cash?
The company ended the year with $671.6 million in cash and cash equivalents and a net cash and investments position of $1.013 billion. It generated $885.3 million in operating cash flow and used cash for $419.4 million of share repurchases, $272.2 million of capital expenditures, and $74.3 million of dividends.
What dividend and outlook information did the filing provide?
On May 21, 2012, the Board approved raising the quarterly dividend from $0.20 to $0.40 per share. Management said that softness in certain European businesses and weak macroeconomic conditions could negatively affect sales and margin growth rates for Fiscal 2013.
06—Continue