01—Abstract
Summary
Summary of the 10-K filed May 23, 2013. Cited figures are marked; the original filing is the authoritative source.
Ralph Lauren Corporation's Form 10-K for the 52-week fiscal year ended March 30, 2013 (Fiscal 2013) reports net revenues of $6.945 billiona, up 1.2% from $6.860 billion in Fiscal 2012, with net income of $750.0 million (up 10.1% from $681.0 million) and diluted EPS of $8.00 versus $7.13.
Growth came mainly from Retail, where revenues rose $192.3 millionb (5.6%) to $3.625 billion, while Wholesale fell $108.2 million (3.3%) to $3.138 billion on weakness in Europe and Japan. Gross margin improved 150 basis points to 59.8%, and operating income rose 8.4% to $1.127 billion. Results absorbed $18.5 million of pretax charges tied to the Rugby wind-down, which reduced net income by $12.0 million.
The company ended the year with $973.7 millionc of cash and cash equivalents and a net cash and investments position of $1.113 billion, generated $1.019 billion of operating cash flow, and returned capital through $547.3 million of stock repurchases and $127.8 million of dividends paid. The filing highlights management's view that the global economy remains challenging, with the European debt crisis weighing on European wholesale and some retail comparable store sales in Japan and Korea declining. Management expects these conditions to continue to affect sales and operating margin in Fiscal 2014.
Key forward items include the approximately $18 milliond Chaps menswear license acquisition completed in April 2013, the planned transition of the Australia and New Zealand licensed business to wholly-owned operation in June 2013, and fiscal 2014 capital expenditure guidance of $350 million to $450 million. The Lauren family controls about 83% of voting power, and three key wholesale customers, led by Macy's at about 12% of total net revenues, account for approximately 20% of total net revenues.
02—Key points
Key Highlights
- Net revenues of $6.945 billion, up 1.2%; excluding foreign currency, up 2.7%.
- Net income of $750.0 million, up 10.1%; diluted EPS of $8.00 versus $7.13 in Fiscal 2012.
- Retail net revenues rose 5.6% to $3.625 billion, while Wholesale fell 3.3% to $3.138 billion.
- Gross margin rose 150 basis points to 59.8%; operating income up 8.4% to $1.127 billion (16.2% of revenues).
- Operating cash flow of $1.019 billion; $547.3 million spent on share repurchases and $127.8 million on dividends.
- Net cash and investments of $1.113 billion at year-end; the $266.6 million Euro Debt is due October 2013.
- Quarterly dividend raised to $0.40 per share in May 2012; Ralph Lauren-family entities hold about 83% of voting power.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Ralph Lauren kept $0.11.
- Revenue$6.95B100.0%
- Cost of revenue−$2.79B40.2%
- Gross profit$4.16B59.8%
- Operating costs−$3.03B43.6%
- Operating income$1.13B16.2%
- Interest, other & tax−$377.0M5.4%
- Net income$750.0M10.8%
Where FY2013 revenue went
$6.95B- SG&A: $2.97B, 43% of revenue
- Cost of revenue: $2.79B, 40% of revenue
- Net income: $750.0M, 11% of revenue
- Other operating costs: $58.0M, 0.8% of revenue
- Interest, other & tax: $377.0M, 5.4% of revenue
Kept 11% as net incomeNet income $750.0M · 11%Other operating costs $58.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed May 23, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $6.95B$6.86B | +1.2% |
| Cost of Revenue | $2.79B$2.86B | −2.6% |
| Gross Profit | $4.16B$4.00B | +4.0% |
| SG&A Expenses | $2.97B$2.92B | +1.9% |
| Operating Expenses | $3.03B$2.96B | +2.4% |
| Operating Income | $1.13B$1.04B | +8.5% |
| Interest Expense | $22.00M$24.00M | −8.3% |
| Net Income | $750.00M$681.00M | +10.1% |
| EPS (Basic) | $8.21$7.35 | +11.7% |
| EPS (Diluted) | $8.00$7.13 | +12.2% |
| Shares Outstanding (Basic) | 91.30M92.70M | −1.5% |
| Shares Outstanding (Diluted) | 93.70M95.50M | −1.9% |
05—Questions
Frequently Asked Questions
How did Ralph Lauren perform financially in Fiscal 2013?
Net revenues grew 1.2% to $6.945 billion and net income rose 10.1% to $750.0 million, or $8.00 per diluted share. Operating income increased 8.4% to $1.127 billion, helped by a 150 basis point improvement in gross margin to 59.8%.
Which business segments drove growth and which declined?
Retail revenues increased $192.3 million (5.6%) to $3.625 billion, driven by new stores and e-commerce. Wholesale revenues decreased $108.2 million (3.3%) to $3.138 billion, reflecting reduced shipments in Europe and Japan, partly offset by the Americas. Licensing was roughly flat at $181.9 million.
What risks does management highlight for Fiscal 2014?
Management says the challenging global economy and European debt crisis continue to weigh on consumer demand and European wholesale sales, and that declining comparable store sales in Japan and Korea could persist. If the environment weakens, management expects continued negative effects on sales and operating margin in Fiscal 2014.
How concentrated is the wholesale customer base?
Three key wholesale customers account for about 45% of Wholesale revenues and about 20% of total net revenues, with about 30% of gross trade accounts receivable. Macy's alone represents about 12% of total net revenues.
How is the company returning capital to shareholders and funding itself?
During Fiscal 2013 it repurchased $450.0 million of Class A stock under its program, prepaid $50.0 million under a separate repurchase arrangement, and paid $127.8 million in dividends. It had no borrowings under its $500 million Global Credit Facility at year-end, and the Euro Debt matures in October 2013.
06—Continue