EDGAR 10-K Filing

Company CIK: 1037038
Filing Year: 2025
Filename: 1037038_10-K_2025_0001037038-25-000011.json

---

ITEM 1. BUSINESS
Item 1. Business.
General
Founded in 1967 by Mr. Ralph Lauren, we are a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, fragrances, and hospitality. For nearly 60 years, Ralph Lauren has sought to inspire the dream of a better life through authenticity and timeless style. Our long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. We believe that our global reach, breadth of lifestyle product offerings, and multi-channel distribution network are unique among luxury and apparel companies.
We diversify our business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (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. We sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operations around the world. Our wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to third parties for specified
periods the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel categories, eyewear, fragrances, and home furnishings.
We organize our business into the following three reportable segments: North America, Europe, and Asia. In addition to these reportable segments, we also have other non-reportable segments. See "Our Segments" for further discussion of our segment reporting structure.
Our global reach is extensive, as we sell directly to customers throughout the world via our 564 retail stores and 671 concession-based shop-within-shops, as well as through our own digital commerce sites and those of various third-party digital partners. Merchandise is also available through our wholesale distribution channels at over 9,400 doors worldwide, the majority in specialty stores, as well as through the digital commerce sites of many of our wholesale customers. In addition to our directly-operated stores and shops, our international licensing partners operate 116 stores.
We have been controlled by the Lauren family since the founding of our Company. As of March 29, 2025, Mr. R. Lauren, or entities controlled by the Lauren family, held approximately 85% of the voting power of the Company's outstanding common stock.
Objectives and Opportunities
Our purpose is to inspire the dream of a better life through authenticity and timeless style. We believe that our size and the global scope of our operations provide us with design, sourcing, and distribution synergies across our business. Our core strengths include a portfolio of luxury lifestyle products spanning across five categories: apparel, footwear & accessories, home, fragrances, and hospitality; a well-diversified global multi-channel distribution network; an investment philosophy supported by a strong balance sheet; and an experienced management team. Despite the various risks and uncertainties associated with the current global economic environment, as discussed further in Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Global Economic Conditions and Industry Trends," we believe our core strengths will allow us to effectively execute our long-term growth strategy.
During our September 2022 Investor Day, we introduced our current 3-year long-term growth strategy for Fiscal 2023 to Fiscal 2025, which is presented below:
Our next Investor Day will be held in September 2025, during which we will present our latest long-term growth strategy.
Global Citizenship and Sustainability
At Ralph Lauren, our purpose to inspire the dream of a better life through authenticity and timeless style guides everything we do. From creating iconic products to be worn, loved, and passed on through generations, to preserving the world's natural resources and supporting the people and communities that intersect our business, we continue to challenge ourselves when it comes to positively impacting our world. That is what we call Timeless by Design, our approach to Global Citizenship and Sustainability and our ambition for a better future. We weave our Company's purpose throughout our business through three key pillars:
1.Create with Intent
•Integrated Circularity - Our ethos of timelessness has always guided our creative vision. Today, we continue to deepen this philosophy and are evolving the way our products are designed, made, used, and recirculated. From empowering our designers with circular principles, to using materials that are sustainably sourced or recycled, our approach is designed to lessen our environmental impact.
•Sustainable Materials - Our iconic products are designed to be timeless and intended to be worn for generations. With this in mind, we choose our materials thoughtfully to ensure high-quality and durability. We are committed to using materials in ways that not only help our products live on, but also to help reduce environmental impact, protect biodiversity and animal welfare, support livelihoods, and improve the traceability of raw materials.
•Design with Intent - Since our founding, Ralph Lauren has been inspired by the beautiful and interconnected histories, arts, crafts, and cultures that make up the fabric of America. We are on a journey to evolve from inspiration to collaboration with communities that inspire us, which includes taking meaningful steps to be more inclusive throughout our business, from how we design to how products go to market. At its core, our Design with Intent function is about making sure the products we create and the stories we tell are authentic expressions of heritage, which is foundational to our timeless brand.
•Value Chain for Impact - To build a resilient and responsible supply chain, we are continuing to increase the transparency and traceability of our full value chain, strengthen our relationships with suppliers, and identify areas for improvement. We work with our suppliers to respect human rights and promote environmental sustainability.
2.Protect the Environment
•Climate - Significant reductions to global greenhouse gas ("GHG") emissions are collectively needed so we can protect and preserve the natural resources on which we depend. That is why we have committed to near-term and long-term targets to reduce absolute GHG emissions across our operations and supply chain.
•Water Stewardship - We are committed to reducing water consumption across our value chain, as it is critical for communities and ecosystems to thrive and is also an essential resource for our business. We strive to conserve water throughout our operations, support our suppliers to improve their water use efficiency and responsibly manage wastewater, and help improve community access to this resource.
•Waste Management - We are committed to conserving natural resources by managing waste responsibly. We work to minimize waste in our operations and divert waste from landfills and incineration through donation, reuse, and recycling. Our goal is continued improvement as we incorporate "zero waste" principles throughout our business practices.
•Chemical Management - We are committed to monitoring and reducing hazardous chemical use and discharge from our supply chain.
•Biodiversity - Our business depends on critical resources such as freshwater and essential raw materials, and climate change and biodiversity loss are closely intertwined. As ecosystems are increasingly threatened, we are committed to leveraging science to build an in-depth understanding of our current impacts on biodiversity.
3.Champion Better Lives
•Belonging & Equity - We believe a diversity of backgrounds, skills, and experiences of our employees and our culture of inclusivity drive innovation and creativity. We are committed to further strengthening a sense of belonging and equal opportunities for all. Our strategy is guided by three focus areas - Talent, Engagement, and Learning - and is designed to create a culture of belonging, enable open dialogue, amplify all perspectives, and continue to grow and advance our best-in-class talent.
•Employee Well-being - Our people drive our success and we are dedicated to supporting the physical, emotional, social, and financial needs of our employees and their families to help them thrive. To do so, we are focused on employee wellness, engagement, learning and development, and compensation and benefits.
•Community Engagement and Philanthropy - We seek to make the dream of a better life a reality in communities across the globe through contributions and actions that create positive social and environmental impact. The two main drivers of our giving efforts are through the Company's Social and Community Impact department and donations to The Ralph Lauren Corporate Foundation.
•Rights and Empowerment in the Supply Chain - We are committed to conducting our global operations ethically with respect for the dignity of all people who make our products. To support this, we work with our suppliers to build capacity, with workers to empower them, and with industry partners to collaborate for positive change. Our comprehensive approach integrates risk assessment, monitoring, remediation, capability building, stakeholder engagement, life skills programs and empowerment opportunities for factory workers.
Our most recently published Global Citizenship & Sustainability Report covering Fiscal 2024 may be found on our corporate website at https://corporate.ralphlauren.com/citizenship-and-sustainability. Our Global Citizenship & Sustainability Report covering Fiscal 2025 is expected to be released in September 2025. The content of our sustainability reports is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. See Item 1A - "Risk Factors - Risks Related to Citizenship and Sustainability Issues."
Recent Developments
Next Generation Transformation Project
We are in the early stages of executing a large-scale multi-year global project that is expected to significantly transform the way in which we operate our business and further enable our long-term strategic pivot towards a global direct-to-consumer-oriented model (the "Next Generation Transformation project" or "NGT project"). The NGT project will be completed in phases and involves the redesigning of certain end-to-end processes and the implementation of a suite of technology systems on a global scale. Such efforts are expected to result in significant process improvements and the creation of synergies across core areas of operations, including merchandise buying and planning, procurement, inventory management, retail and wholesale operations, and financial planning and reporting, better enabling us to optimize inventory levels and increase the speed with which we react to changes in consumer demand across markets, among other benefits.
In connection with the preliminary phase of the NGT project, we incurred other charges of $25.2 million and $5.1 million during Fiscal 2025 and Fiscal 2024, respectively, which were recorded within restructuring and other charges, net in the consolidated statements of operations.
Our Brands and Products
Our products, which include apparel and footwear & accessories for men, women, and children, as well as our fragrance and home collections, together with our hospitality portfolio, comprise one of the most widely recognized families of consumer brands. Reflecting a distinctive American perspective, we have been an innovator in aspirational lifestyle branding and believe that, under the direction of internationally renowned designer Mr. Ralph Lauren, we have had a considerable influence on the way people dress and the way that fashion is advertised throughout the world.
We combine consumer insight with our design, marketing, and imaging skills to offer, along with our licensing alliances, broad lifestyle product collections with a unified vision:
•Apparel - Our apparel products include extensive collections of men's, women's, and children's clothing, which are sold under various brand names, including Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL,
Polo Ralph Lauren, Lauren Ralph Lauren, Polo Golf Ralph Lauren, Ralph Lauren Golf, RLX Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others.
•Footwear & Accessories - Our range of footwear & accessories encompasses men's, women's, and children's, including casual shoes, dress shoes, boots, sneakers, sandals, eyewear, watches, fashion and fine jewelry, scarves, hats, gloves, umbrellas, and leather goods, including handbags, luggage, small leather goods, and belts, which are sold under our Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, RLX Ralph Lauren, Polo Ralph Lauren Children, and Chaps brands.
•Fragrance - Our fragrance offerings capture the essence of Ralph Lauren's men's and women's brands with numerous labels, designed to appeal to a variety of audiences. Women's fragrance products are sold under our Ralph Lauren Collection, Woman by Ralph Lauren, Romance Collection, and Ralph Collection. Men's fragrance products are sold under our Ralph's Club, Purple Label, Polo Blue, Polo Red, Polo Green, Polo Black, Polo 67, Safari, Polo Sport, and Big Pony Men's brands. Our fragrance offerings also include Polo Earth, a gender-neutral fragrance designed with sustainability in mind, made of 97% natural-origin ingredients.
•Home - Our home collections, which are sold primarily under our Ralph Lauren, Polo, Lauren by Ralph Lauren, and Chaps brands, reflect the spirit of the Ralph Lauren lifestyle. Our range of home products includes bed and bath lines, furniture, fabric and wall coverings, lighting, dining, floor coverings, and giftware, among others.
•Hospitality - Continuing to engage our consumers with experiential and unique expressions of the brand, our hospitality portfolio is a natural extension of the World of Ralph Lauren as expressed through the culinary arts. Ralph Lauren's global hospitality collection is comprised of our restaurants including The Polo Bar in New York City, RL Restaurant located in Chicago, Ralph's located in Paris, The Bar at Ralph Lauren located in Milan, Ralph's Bar located in Chengdu, and our Ralph's Coffee concept in various cities around the world.
Our lifestyle brand image is reinforced by our distribution through our stores and concession-based shop-within-shops, our wholesale channels of distribution, our global digital commerce sites, and our Ralph Lauren restaurants and cafés. We sell our products under the following key brand platforms:
1.Ralph Lauren Luxury - Our Luxury group includes:
Ralph Lauren Collection and Ralph Lauren Purple Label. Ralph Lauren Collection embodies the highest expression of chic, feminine glamour. Each piece is inspired by a vision of timeless luxury and modern elegance and is crafted with unparalleled passion and artistry. For men, Ralph Lauren Purple Label is the ultimate expression of luxury for the modern gentleman. Refined suitings are hand-tailored, including custom made-to-measure suits crafted in the time-honored traditions of Savile Row. Purple Label's sophisticated sportswear is designed with a meticulous attention to detail, capturing the elegance and ease of Ralph Lauren's signature, timeless style. Ralph Lauren Collection and Ralph Lauren Purple Label are made predominantly in Italy with the utmost attention to detail and quality and are available in select Ralph Lauren stores around the world, an exclusive selection of the finest specialty stores, and online at our Ralph Lauren digital commerce sites, including RalphLauren.com.
Double RL. Named after Ralph Lauren's working cattle ranch in Colorado, Double RL is a tribute to America's pioneering spirit and tradition of rugged independence. The foundation of Double RL lies in timeless wardrobe staples for men and women, including authentic American-made selvedge denim jeans, military-grade chinos, tube-knit t-shirts, thermals, and flannels. Beyond these iconic styles are added seasonal vintage-inspired collections, along with a full collection of footwear & accessories, including quality belts, bags, and leather goods. Double RL is available at Double RL stores, at select Ralph Lauren stores, and an exclusive selection of the finest specialty stores around the world, as well as online at our Ralph Lauren digital commerce sites, including RalphLauren.com.
Ralph Lauren Home. Ralph Lauren Home represents a full expression of modern luxury - style is a life well-lived. Based on an immersive design ethos, the collection includes furniture, lighting, bed and bath linens, tabletop, decorative accessories and gifts, as well as fabric, wallcoverings, and floorcoverings. Each piece is crafted with the greatest attention to detail. Ralph Lauren Home offers exclusive luxury goods at select Ralph Lauren stores and select wholesale partners, home specialty stores, trade showrooms, and online at our Ralph Lauren digital commerce site, RalphLauren.com.
Ralph Lauren Watches and Jewelry. We offer a premier collection of Swiss-made timepieces, which embody Ralph Lauren's passion for impeccable quality and exquisite design. We also offer premium collections of jewelry, which capture the glamour and craftsmanship of Ralph Lauren's most luxurious designs, from everyday collections to the most refined and precious materials. Ralph Lauren watches and jewelry are available online at RalphLauren.com, at select Ralph Lauren stores, and a few of the finest watch and jewelry retailers around the world.
2.Polo Ralph Lauren - The Polo Ralph Lauren group includes:
Polo Ralph Lauren. Men's Polo combines Ivy League classics and time-honored English haberdashery with downtown styles and all-American sporting looks in sportswear and tailored clothing. Women's Polo represents the epitome of classic and iconic American style with a modern and cool twist. Polo's signature aesthetic includes our renowned polo player logo. Polo Sport reflects the active lifestyle and youthful energy of Polo’s sporting roots through Men's and Women's activewear. Men's and Women's Polo apparel and footwear & accessories are available in Ralph Lauren stores around the world, better department and specialty stores, and online at our Ralph Lauren digital commerce sites, including RalphLauren.com.
Polo Ralph Lauren Children. Polo Ralph Lauren Children is designed to reflect the timeless heritage and modern spirit of Ralph Lauren's collections for men and women. Signature classics include iconic polo knit shirts and luxurious cashmere cable-knit sweaters. Polo Ralph Lauren Children is available in a full range of sizes, from baby to girls 2-16 and boys 2-20. Polo Ralph Lauren Children can be found in select Ralph Lauren stores around the world, better department stores, and online at our Ralph Lauren digital commerce sites, including RalphLauren.com, as well as certain of our retail partners' digital commerce sites.
RLX Ralph Lauren. RLX is the leading edge of Ralph Lauren's performance and activewear. Comprised of functional apparel that address the performance needs of a modern active lifestyle, RLX includes men's and women's apparel and accessories that represent Ralph Lauren's belief that things that are purposefully designed and made of the highest quality achieve a timeless elegance.
Polo Golf Ralph Lauren, Ralph Lauren Golf, and RLX Ralph Lauren Golf. Tested and worn by top-ranked professional golfers, Polo Golf Ralph Lauren, Ralph Lauren Golf, and RLX Ralph Lauren Golf for men and women define excellence in the world of golf. With a sharpened focus on the needs of the modern player but rooted in the rich design tradition of Ralph Lauren, the Golf collections combine state-of-the-art performance wear with luxurious finishing touches. Our Golf collections are available in select Ralph Lauren stores, exclusive private clubs and resorts, and online at RalphLauren.com.
Pink Pony. The Pink Pony campaign is our worldwide initiative in the fight against cancer. In the U.S., a percentage of sales from Pink Pony products benefit the Pink Pony Fund of The Ralph Lauren Corporate Foundation, which supports cancer-related programs for early diagnosis, education, treatment, and research, and is dedicated to bringing patient navigation and quality cancer care to medically underserved communities. Internationally, a network of local cancer charities around the world benefit from the sale of Pink Pony products. Pink Pony consists of dual gender sportswear and accessories. Pink Pony items feature our iconic pink polo player - a symbol of our commitment to the fight against cancer. Pink Pony is available at select Ralph Lauren stores and online at our Ralph Lauren digital commerce sites, including RalphLauren.com. Pink Pony is also available at select Macy's stores and online at Macys.com.
3.Lauren Ralph Lauren - Our Lauren group includes:
Lauren Ralph Lauren. Lauren for women combines aspirational timeless style with modern femininity in a lifestyle collection of sportswear, denim, and dresses, as well as footwear & accessories. Lauren for women is available in select department stores around the world and online at select digital commerce sites, including RalphLauren.com.
Lauren Home. Lauren Home collection includes accessibly-priced, timeless bath and bedding collections, as well as fabric and wall coverings, lighting, dining, and floor coverings, among others. The collection is built upon an assortment of essentials that is designed to be mixed with seasonal updates, all rooted in the brand's classic style.
4.Chaps - Chaps celebrates real American style, delivering classic collections updated for modern lifestyles for men, women, children and home. The modern lifestyle collection offers versatile sportswear, workday essentials, tailored clothing, and occasion dresses that are wearable from season to season. Chaps is available in select department stores and retail partners' digital commerce sites across the U.S., Canada, and Mexico.
Our Segments
We organize our business into the following three reportable segments:
•North America - Our North America segment, representing approximately 43% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded apparel, footwear & accessories, home, and related products made through our retail and wholesale businesses primarily in the U.S. and Canada. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our outlet stores, and our digital commerce sites, www.RalphLauren.com and www.RalphLauren.ca. Our wholesale business in North America is comprised primarily of sales to department stores and, to a lesser extent, specialty stores.
•Europe - Our Europe segment, representing approximately 31% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded apparel, footwear & accessories, home, and related products made through our retail and wholesale businesses in Europe and 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, as well as to various third-party digital and licensee partners.
•Asia - Our Asia segment, representing approximately 24% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded apparel, footwear & accessories, home, and related products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our outlet stores, our concession-based shop-within-shops, and our various digital commerce sites. In addition, we sell our products online through various third-party digital partner commerce sites. Our wholesale business in Asia is comprised primarily of sales to department stores and various third-party digital and licensee partners.
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 2% of our Fiscal 2025 net revenues, which primarily consist of Ralph Lauren and Chaps branded royalty revenues earned through our global licensing alliances.
This segment structure is consistent with how we establish our overall business strategy, allocate resources, and assess performance of our Company.
Approximately 57% of our Fiscal 2025 net revenues were earned outside of the U.S. See Note 20 to the accompanying consolidated financial statements for a summary of net revenues by segment and by geographic location, as well as additional financial metrics by segment.
Our Retail Business
Our retail business sells directly to customers throughout the world via our 564 retail stores and 671 concession-based shop-within-shops, totaling approximately 4.1 million and 0.7 million square feet, respectively, as well as through our own digital commerce sites and those of various third-party digital partners. We operate our business using a global omni-channel retailing strategy that seeks to deliver an integrated shopping experience with a consistent message of our brands and products to our customers, regardless of whether they are shopping for our products in physical stores or online. We also continue to scale and expand our Connected Retail capabilities to enhance the consumer experience, which include Online Appointment Bookings, Digital Clienteling, Endless Aisle, Buy Online-Ship from Store, Buy Online-Pick Up in Store, Same-Day Delivery, and Mobile Point of Sale and contactless payments, among other capabilities.
Ralph Lauren Stores
Our Ralph Lauren stores feature a broad range of apparel, footwear & accessories, watch and jewelry, fragrance, and home product assortments in an atmosphere reflecting the distinctive attitude and image of the Ralph Lauren, Polo, and Double RL brands, including exclusive merchandise that is not sold in department stores. During Fiscal 2025, we opened 30 new Ralph Lauren stores and closed 10 stores. Our Ralph Lauren stores are primarily situated in major upscale street locations and upscale regional malls, generally in large urban markets.
The following table presents the number of Ralph Lauren stores by segment as of March 29, 2025:
Ralph Lauren Stores
North America 51
Europe 47
Asia 154
Total 252
Our 9 flagship Ralph Lauren regional store locations showcase our iconic styles and products and demonstrate our most refined merchandising techniques. In addition to generating sales of our products, our worldwide Ralph Lauren stores establish, reinforce, and capitalize on the image of our brands. Our Ralph Lauren stores range in size from approximately 400 to 37,900 square feet.
Outlet Stores
We extend our reach to additional consumer groups through our outlet stores worldwide, which are principally located in major outlet centers. Our worldwide outlet stores offer selections of our apparel, footwear & accessories, and fragrances. In addition to these product offerings, certain of our worldwide outlet stores offer home product assortments. During Fiscal 2025, we opened 6 new outlet stores and closed 26 stores.
The following table presents the number of outlet stores by segment as of March 29, 2025:
Outlet Stores
North America 172
Europe 57
Asia 83
Total 312
Our outlet stores range in size from approximately 1,100 to 28,300 square feet. Outlet stores obtain products from our suppliers, our product licensing partners, and our other retail stores and digital commerce operations, and also serve as a secondary distribution channel for our excess and out-of-season products.
Concession-based Shop-within-Shops
The terms of trade for shop-within-shops are largely conducted on a concession basis, whereby inventory continues to be owned by us (not the department store) until ultimate sale to the end consumer. The salespeople involved in the sales transactions are generally our employees and not those of the department store.
The following table presents the number of concession-based shop-within-shops by segment as of March 29, 2025:
Concession-based
Shop-within-Shops
North America -
Europe 30
Asia 641
Total(a)
(a) Our concession-based shop-within-shops were located at approximately 300 retail locations.
The size of our concession-based shop-within-shops ranges from approximately 100 to 5,500 square feet. We may share in the cost of building out certain of these shop-within-shops with our department store partners.
Directly-Operated Digital Commerce Websites
In addition to our stores, our retail business sells products online in North America, Europe, and Asia through our various directly-operated digital commerce sites, which include www.RalphLauren.com, among others. We continue to expand accessibility to our digital flagships globally while localizing language, currencies, payment methods, product assortments, and content. We also sell our products online through various third-party digital partner commerce sites, primarily in Asia, as well as through our Ralph Lauren app in the U.S.
Our Ralph Lauren digital commerce sites offer our customers access to a broad array of Ralph Lauren, Double RL, Polo, and Lauren apparel, footwear & accessories, watch and jewelry, fragrance, and home product assortments, and reinforce the luxury image of our brands. While investing in digital commerce operations remains a primary focus, it is an extension of our investment in the integrated omni-channel strategy used to operate our overall retail business, in which our digital commerce operations are interdependent with our physical stores.
Our Wholesale Business
Our wholesale business sells our products globally primarily to major department stores, specialty stores, and golf and pro shops, as well as to various third-party digital partners. We have continued to focus on elevating our brand by improving in-store product assortment and presentation, as well as full-price sell-throughs to consumers. As of the end of Fiscal 2025, our wholesale products were sold through over 9,400 doors worldwide, with the majority in specialty stores. Our products are also increasingly being sold through the digital commerce sites of many of our traditional wholesale customers and our third-party digital partners.
The primary product offerings sold through our wholesale channels of distribution include apparel, footwear & accessories, and home product assortments. Our luxury brands, including Ralph Lauren Collection and Ralph Lauren Purple Label, are distributed worldwide through a limited number of premier fashion retailers. In North America, our wholesale business is comprised primarily of sales to department stores, and to a lesser extent, specialty stores. In Europe, our wholesale business is comprised primarily of a varying mix of sales to both department stores and specialty stores, depending on the country, as well as to various third-party digital partners. In Asia, our wholesale business is comprised primarily of sales to department stores and various third-party digital partners. We also distribute our wholesale products to certain licensed stores operated by our partners in Asia, Europe, Latin America, and emerging markets.
We sell most of our excess and out-of-season products through secondary distribution channels worldwide, including our retail outlet stores.
Worldwide Wholesale Distribution Channels
The following table presents by segment the approximate number of our primary full-price wholesale doors of distribution as of March 29, 2025:
Doors
North America 3,000
Europe 5,600
Asia 850
Total 9,450
In addition to our conventional wholesale doors, our products are increasingly being sold through the websites of many of our traditional wholesale customers, as well as those of our third-party digital partners. As of March 29, 2025, our wholesale business served approximately 120 third-party digital partners, primarily in Europe.
We have three key wholesale customers that generate significant sales volume. During Fiscal 2025, sales to our three largest wholesale customers accounted for approximately 12% of our total net revenues. Approximately 70% of sales to our three largest wholesale customers related to our North America segment and approximately 30% related to our Europe segment.
Our products are sold primarily by our own sales forces. Our wholesale business maintains its primary showrooms in New York City, as well as regional showrooms in London, Madrid, Milan, Munich, Paris, and Stockholm. In addition, we utilize virtual showrooms, allowing our customers to experience and discover our product assortments in a retail setting remotely.
Shop-within-Shops. As a critical element of our distribution to department stores, we and our licensing partners utilize shop-within-shops to enhance brand recognition, to permit more complete merchandising of our lines by the department stores, and to differentiate the presentation of our products.
The following table presents by segment the approximate number of shop-within-shops in our primary full-price distribution network as of March 29, 2025:
Shop-within-Shops
North America 6,300
Europe 7,000
Asia 1,050
Total 14,350
The size of our shop-within-shops ranges from approximately 80 to 9,200 square feet. Shop-within-shop fixed assets primarily include items such as customized freestanding fixtures, wall cases and components, decorative items, and flooring. We normally share in the cost of building out these shop-within-shops with our wholesale customers.
Replenishment Program. Core products such as knit shirts, chino pants, oxford cloth shirts, select footwear & accessories, and home products can be ordered by our wholesale customers at any time through our replenishment program. We generally ship these products within two to five days of order receipt.
Backlog. We generally receive wholesale orders approximately three to five months prior to the time the products are delivered to customers, except for orders received through our replenishment program which ship within two to five days of order receipt. Our wholesale orders are generally subject to broad cancellation rights. Further, the size of our order backlog depends on several factors, including the timing of the market weeks for our particular lines during which a significant percentage of our orders are received and the timing of shipments, which varies from year-to-year with consideration for holidays, consumer trends, concept plans, and the replenishment program's usage. Consequently, the dollar amount of our backlog as of any date may not be indicative of actual future shipments and therefore is not meaningful in understanding our business as a whole.
Our Licensing Business
Through licensing alliances, we combine our consumer insight, design, and marketing skills with the specific product or geographic competencies of our licensing partners to create and build new businesses. We generally seek out licensing partners who are leaders in their respective markets, contribute the majority of product development costs, provide the operational infrastructure required to support the business, and own the inventory. Our licensing business has been aggregated with other non-reportable segments.
Product Licensing
We grant our product licensees the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel categories, eyewear, fragrances, and home furnishings. Each product licensing partner pays us royalties based upon its sales of our products, generally subject to a minimum royalty requirement for the right to use our trademarks and design services. In addition, our licensing partners may be required to allocate a portion of their revenues to advertising our products and sharing in the creative costs associated with these products. Larger allocations typically are required in connection with launches of new products or in new territories. Our license agreements generally have three to five-year terms and may grant the licensees conditional renewal options.
We work closely with all of our licensing partners to ensure that their products are developed, marketed, and distributed to reach the intended consumer and are presented consistently across product categories to convey the distinctive identity and lifestyle associated with our brands. Virtually all aspects of the design, production quality, packaging, merchandising, distribution, advertising, and promotion of Ralph Lauren products are subject to our prior approval and continuing oversight. We perform a broader range of services for most of our Ralph Lauren Home licensing partners than we do for our other licensing partners, including design, operating showrooms, marketing, and advertising.
The following table lists our largest licensing agreements as of March 29, 2025 for the product categories presented. Except as noted in the table, these product licenses cover North America only.
Category Licensed Products Licensing Partners
Men's Apparel Underwear and Sleepwear Hanesbrands, Inc. (includes Japan)
Chaps 5 Star Apparel LLC (includes South America and South Korea)
Women's Apparel Outerwear S. Rothschild & Co., Inc.
Sleepwear Charles Komar and Sons, Inc. (includes Europe and the Middle East)
Intimates and Sleepwear Delta Galil (global)
Chaps 5 Star Apparel LLC (includes South America)
Beauty Products Fragrances L'Oreal S.A. (global)
Footwear Men's and Women's Slippers and Children's Footwear BBC International LLC (global, excluding Japan and South Korea)
Accessories Eyewear Luxottica Group S.p.A. (global)
Socks and Hosiery Renfro Corporation
Socks and Hosiery Naigai Co., Ltd. (Japan only)
Home Utility and Blankets Down-lite International, Inc.
Lighting Visual Comfort of America LLC (global)
International Licensed Distribution
Our international licensing partners acquire the right to sell, promote, market, and/or distribute various categories of our products in a given geographic area and source products from us, our product licensing partners, and/or independent sources. International licensees' rights may include the right to own and operate retail stores. As of March 29, 2025, our international licensing partners operated 116 stores.
Digital Ecosystem
Investing in our digital ecosystem remains a primary focus and is a key component of our integrated global omni-channel strategy that spans across owned and partnered channels, both physical and digital. Our digital ecosystem is comprised of directly-operated platforms, wholesale partner websites, third-party digital pure players, social commerce, and third-party gaming platforms.
Our directly-operated digital commerce sites and mobile application represent our digital flagships, featuring the most elevated expression of our brands. The strategy for our digital flagships is to deliver distinct and immersive brand experiences, continuously enhance consumer experience, and develop digital content that drives deeper consumer engagement and conversion. We continue to optimize our customer experience globally with the introduction of numerous features including new payment methods and improved search capabilities, as well as greater personalization and enhanced content. In conjunction with introducing new features, we have focused on foundational needs ranging from platform enhancements to technology solutions to operational efficiencies. Driving our long-term growth strategy, we also continue to scale and expand our Connected Retail capabilities to enhance the consumer experience and leverage inventory across direct-to-consumer channels, which include Online Appointment Bookings, Digital Clienteling, Endless Aisle, Buy Online-Ship from Store, Buy Online-Pick up In Store, Same-Day Delivery, and Mobile Point of Sale and contactless payments, among other capabilities.
Our products are also sold through the digital commerce sites of many of our wholesale customers across the globe. With all partners in our ecosystem, we seek to showcase the brand consistently with our values. We collaborate with our key wholesale customers to deliver the right content to the right audience, and leverage consumer insights to develop a holistic, channel-agnostic view of our consumer.
We also sell our products online through various third-party digital pure-play sites to reach a broader audience of consumers, including younger consumers, and amplify our brand messages. On many of these sites, we have created digital shop-in-shop environments with a consistent brand experience, tailored product stories, and an assortment that is carefully curated by our merchants. We also partner closely with our pure-play customers on marketing content and events, as well as optimizing search and other data analyses to drive higher traffic and conversion for our brands.
In connection with our digital commerce operations, we engage consumers through various digital and social media platforms, which are supported through our collaboration with influencers who have an authentic connection to our brand. Ralph Lauren brands are also represented in several gaming platforms, providing digital apparel offerings and virtual brand experiences that attract younger consumers.
Seasonality of Business
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. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting our retail 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 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.
Working capital requirements vary throughout the year. Working capital requirements typically increase during the first half of the fiscal year as inventory builds to support peak shipping/selling periods and, accordingly, typically decrease during the second half of the fiscal year as inventory is shipped/sold. Cash provided by operating activities is typically higher in the second half of the fiscal year due to reduced working capital requirements during that period.
Product Design
Our products reflect a timeless and innovative interpretation of American style with a strong global appeal. Our consistent emphasis on new and distinctive design has been an important contributor to the prominence, strength, and reputation of the Ralph Lauren brands.
Our Ralph Lauren products are designed by, and under the direction of, Mr. Ralph Lauren and our design teams. We form design teams around our brands and product categories to develop concepts, themes, and products for each brand and category. Through close collaboration with merchandising, sales, and product management staff, these teams support all of our businesses in order to gain market information and other valuable input.
Marketing and Advertising
Our marketing and advertising programs communicate the themes and images of our brands and are integral to the success of our product offerings. The majority of our advertising programs are created and executed by our in-house creative and advertising agency to ensure consistency of presentation, which are complemented by our marketing experts in each region who help to execute our localized strategies.
We create distinctive image advertising for our brands, conveying the particular message of each one within the context of the overall Ralph Lauren portfolio. Advertisements often portray a lifestyle rather than a specific item and may include a variety of products offered by us and, in some cases, our licensing partners. Our communication campaigns are increasingly being executed through digital and social media platforms to drive further engagement with the younger consumer. With regard to influencers, we believe in fostering long-term relationships with those who have an authentic connection to our brand and influence the areas of culture that matter most to our audiences. We also continue to advertise through print and outdoor media, and, to a lesser extent, through television and cinema.
Our digital advertising programs focus on high impact and innovative digital media outlets, which allow us to convey our key brand messages and lifestyle positioning. We also develop digital editorial initiatives that allow for deeper education and engagement around the Ralph Lauren lifestyle. We deploy these marketing and advertising initiatives through online, mobile, video, email, and social media. Our digital commerce sites present the Ralph Lauren lifestyle online, while offering a broad array of our apparel, footwear & accessories, home, fragrances, and hospitality product lines.
Additionally, we advertise in consumer and trade publications, and participate in cooperative advertising on a shared cost basis with some of our wholesale and licensing partners. We have outdoor advertising placements in key cities as well, focusing on impact and reach. We also provide point-of-sale fixtures and signage to our wholesale customers to enhance the presentation of our products at their retail locations. In addition, when our licensing partners are required to spend an amount equal to a percentage of their licensed product sales on advertising, in certain cases we coordinate the advertising placement on their behalf. We believe our investments in shop-within-shop environments and retail stores, including our global flagship locations, contribute to and enhance the themes of our brands to consumers.
We also conduct a variety of public relations activities, including fashion presentations in major cities such as New York City and Milan. Such fashion events, in addition to celebrity dressing occasions, including those related to red carpet events, weddings, and major sporting events, and events hosted in our stores and restaurants, including The Polo Bar in New York City, generate extensive domestic and international media and social coverage.
We are the official outfitter for all on-court officials at the Wimbledon, U.S. Open, and Australian Open tennis tournaments. These tournaments provide worldwide exposure for our brand in a relevant lifestyle environment. We also continue to be an Official Outfitter of the U.S. Olympic and Paralympic Teams, providing the Opening and Closing Ceremony Uniform apparel and a collection of Villagewear apparel and accessories available to men, women, and children, with the right to manufacture, distribute, advertise, promote, and sell products in the U.S. Most recently, we dressed Team USA for the Summer Olympic and Paralympic Games in Paris in 2024, and we will be dressing the team for the upcoming Winter Olympic and Paralympic Games in Milan in 2026, and the Summer Olympic and Paralympic Games in Los Angeles in 2028. As part of our involvement with Team USA, we have established a partnership with athletes serving as brand ambassadors and as the faces of our advertising, marketing, and public relations campaigns. We are also an Official Partner for the Professional Golfers' Association ("PGA") of America and the Official Outfitter of the U.S. Ryder Cup Team, as well as a partner of the American Junior Golf Association. We sponsor a roster of professional golfers, including Andrea Lee, Billy Horschel, Davis Love III, Devon Bling, Doc Redman, Jonathan Byrd, Megha Ganne, Nick Watney, Sean Foley, Smylie Kaufman, Todd Anderson, Tom Watson, Trevor Werbylo, Troy Taylor II, Tyler Strafaci, and Zach Johnson.
We believe our partnerships with such prestigious global athletic events reinforce our brand's Sport & Style heritage in a truly authentic way and serve to connect our Company and brands to our consumers through their individual areas of passion.
Sourcing, Production and Quality
We contract for the manufacture of our products with suppliers and do not own or operate any production facilities. Approximately 300 different suppliers worldwide produce our apparel, footwear & accessories, and home products, with no one supplier providing more than 5% of our total products (by dollar value) during Fiscal 2025.
Our Global Sourcing organization closely supervises these suppliers to make our designs as per our specifications and standards. Ralph Lauren's Quality Assurance team works with suppliers to ensure best practices are carried out prior to and during production. Compliance to our standards is ensured through our Quality Control requirements and follow-up inspections and reviews. Both the initial Quality Assurance work and the Quality Control requirements ensure merchandise is received at the distribution facilities and shipped to customers with minimal interruption.
Management continually monitors political, economic, social, environmental, trade, and labor risks. We manage our exposure through, among other measures, by diversifying production among countries and suppliers and sourcing from countries with trade preferences. In Fiscal 2025, approximately 96% of our products (by dollar value) were produced outside of the U.S., primarily in Asia, Europe, and Latin America, with approximately 20% of our products sourced from Vietnam, 16% from Cambodia, and 12% from China. See "Import Restrictions and Other Government Regulations," Item 1A - "Risk Factors - Risks Related to Macroeconomic Conditions - Economic conditions could have a negative impact on our major customers, suppliers, vendors, and lenders, which in turn could materially adversely affect our business," and Item 1A - "Risk Factors - Risks Related to our Business and Operations - Our business is subject to risks associated with importing products and the ability of our manufacturers to produce our goods on time and to our specifications."
We are committed to conducting our global operations ethically and with respect for the dignity of all people who make our products. All our suppliers are expected to uphold our Ralph Lauren Operating Standards. These standards require business partners to foster a safe, sustainable, inclusive, and ethical workplace through continuous improvement. Our Global Citizenship team monitors the compliance of our business partners as part of our due diligence processes.
Our business model requires us to commit to most of our garment production and related fabric procurement before actual sales occur. In cases where we overestimate customer demand for specific products or materials, we manage excess inventory by redirecting these items to our outlet stores and other secondary sales channels.
Competition
Competition is very strong in the segments of the fashion and consumer product industries in which we operate. We compete with an extensive range of designers and manufacturers of apparel, footwear, accessories, fragrances, and home products, both domestic and international. We also face increasing competition from companies selling our product categories solely through the Internet. Some of our competitors may be significantly larger and have substantially greater resources than us. We compete primarily on the basis of brand strength, timeless style, quality, value, and service, which depend on our ability to:
•anticipate and respond in a timely manner to changing consumer demands and shopping preferences, including the ever-increasing shift to digital brand engagement, social media communications, and online and cross-channel shopping;
•create and maintain favorable brand recognition, loyalty, and a reputation for quality, including through digital brand engagement and online and social media presence;
•develop and produce innovative, high-quality products in sizes, colors, and styles that appeal to consumers of varying demographics;
•competitively price our products and create a compelling value proposition for consumers;
•provide strong and effective marketing support in several diverse demographic markets, including through digital and social media platforms in order to stay better connected to consumers;
•establish relationships with athletes, musicians, influencers, and other celebrities to promote our brands and products;
•provide attractive, reliable, secure, and user-friendly digital commerce sites;
•adapt to changes in technology, including the successful utilization of data analytics, artificial intelligence, and machine learning;
•obtain sufficient and desirable retail floor space and effectively present our products to consumers;
•attract consumer traffic to stores, shop-within-shops, and digital commerce sites;
•source sustainable and traceable raw materials at cost-effective prices;
•anticipate and maintain proper inventory levels;
•ensure product availability and optimize supply chain and distribution efficiencies;
•maintain and grow market share;
•recruit and retain talent to operate our retail stores, distribution centers, and various corporate functions;
•protect our intellectual property; and
•withstand prolonged periods of adverse economic conditions or business disruptions.
See Item 1A - "Risk Factors - Risks Related to our Business and Operations - We face intense competition worldwide in the markets in which we operate."
Distribution
To facilitate global distribution, our products are shipped from manufacturers to a network of distribution centers around the world for inspection, sorting, packing, and delivery to our retail locations and digital commerce and wholesale customers. This network includes the following primary distribution facilities:
Facility Location Geographic Region Serviced Facility
Ownership
N. Pendleton Street, High Point, North Carolina U.S. Owned
NC Highway 66, High Point, North Carolina U.S. Leased
Toronto, Ontario Canada Third-party
Parma, Italy Europe and Latin America Third-party
Yokohama, Japan Japan Third-party
Bugok, South Korea South Korea Leased
Tuen Mun, Hong Kong China and Southeast Asia(a)
Third-party
(a)Includes Australia and New Zealand.
All facilities are designed to allow for high-density cube storage and value-added services and utilize unit and carton tracking technology to facilitate process control and inventory management. The distribution network is managed through globally integrated information technology systems.
Information Systems
Our information systems facilitate business processes, consumer experiences, and decision-making support across the Company and our extended ecosystem of manufacturers, vendors, business partners, and customers. Our system applications are connected to support the flow of information across functions, including, but not limited to (i) product design, sourcing, and production; (ii) merchandising planning and buying; (iii) comprehensive order processing, fulfillment, and distribution; (iv) retail store, digital commerce, and hospitality operations; (v) marketing and advertising; (vi) financial accounting and management reporting; and (vii) human resources.
Our retail operation systems, including point-of-sale registers and merchandising, planning, and inventory management systems, support operational processes within our store network and link with our digital commerce processes to support omni-channel capabilities.
We are continually improving and upgrading our computer systems, services, and software. For example, during Fiscal 2025, we continued to enhance our solutions for advanced analytics, furthering our use of artificial intelligence ("AI"), both predictive and generative, and machine learning ("ML") for areas such as planning, marketing, and personalization. Our digital commerce enhancements included expanded payment methods, improved search capabilities, more personalized user experiences, and elevated content offerings.
We are also in the early stages of executing a large-scale multi-year global project that is expected to significantly transform the way in which we operate our business and further enable our long-term strategic pivot towards a global direct-to-consumer-oriented model (the "Next Generation Transformation project" or "NGT project"). The NGT project will be completed in phases and involves the redesigning of certain end-to-end processes and the implementation of a suite of information systems on a global scale. See Item 1 - "Business - Recent Developments" for further discussion regarding our NGT project.
See Item 1A - "Risk Factors - Risks Related to Information Systems and Data Security."
See Item 1C - "Cybersecurity" for discussion regarding our cybersecurity risk management and strategy, as well as our cybersecurity governance.
Wholesale Credit Control
We manage our own credit function. We sell our merchandise principally to major department stores, specialty stores, and third-party digital partners, and extend credit based on an evaluation of the wholesale customer's financial capacity and condition, usually without requiring collateral. We monitor credit levels and the financial condition of our wholesale customers on a continuing basis to minimize credit risk. We do not factor or underwrite our accounts receivables, nor do we maintain credit insurance to manage the risk of bad debts. In North America, collection and deduction transactional activities are primarily provided through a third-party service provider. See Item 1A - "Risk Factors - Risks Related to our Business and Operations - A substantial portion of our revenue is derived from a limited number of large wholesale customers. Our business could be adversely affected as a result of consolidations, liquidations, restructurings, other ownership changes in the retail industry, and/or any financial instability of our large wholesale customers."
Trademarks
We own the RALPH LAUREN, POLO, POLO RALPH LAUREN, and the famous Polo Player Design trademarks in the U.S. and over 120 countries worldwide. Other trademarks that we own include, but are not limited to:
•PURPLE LABEL;
•DOUBLE RL;
•RRL & DESIGN;
•RLX;
•RL;
•LAUREN RALPH LAUREN;
•PINK PONY;
•LAUREN;
•RALPH;
•POLO BEAR; and
•CHAPS.
Mr. Ralph Lauren has the royalty-free right to use as trademarks RALPH LAUREN, DOUBLE RL, and RRL in perpetuity in connection with, among other things, beef and living animals. The trademarks DOUBLE RL and RRL are currently used by the Double RL Company, an entity wholly owned by Mr. R. Lauren. In addition, Mr. R. Lauren has the right to engage in personal projects involving film or theatrical productions (not including or relating to our business) through RRL Productions, Inc., a company wholly owned by Mr. R. Lauren. Any activity by these companies has no direct impact on us.
Our trademarks are the subject of registrations and pending applications throughout the world for use on a variety of items of apparel, apparel-related products and accessories, home furnishings, restaurant and café services, online services and online publications, and beauty products, as well as in connection with retail services, and we continue to expand our worldwide usage and registration of related trademarks. In general, trademarks remain valid and enforceable as long as the marks are used in connection with the related products and services and the required registration renewals are filed. We regard the license to use the trademarks and our other proprietary rights in and to the trademarks as extremely valuable assets in marketing our products and, on a worldwide basis, vigorously seek to protect them against infringement. As a result of the appeal of our trademarks, our products have been the object of counterfeiting. While we have a broad enforcement program which has been generally effective in protecting our intellectual property rights and limiting the sale of counterfeit products in the U.S. and in most major markets abroad, we face greater challenges with respect to enforcing our rights against trademark infringement in certain parts of Asia.
In markets outside of the U.S., our rights to some or all of our trademarks may not be clearly established. Over the course of our international expansion, we have experienced conflicts with various third parties who have acquired ownership rights in certain trademarks, including POLO and/or a representation of a Polo Player Design, which impede our use and registration of our principal trademarks. While such conflicts are common and may arise again from time to time as we continue our international expansion, we have, in general, successfully resolved such conflicts in the past through both legal action and negotiated settlements with third-party owners of the conflicting marks (see Item 1A - "Risk Factors - Risks Related to our Business and Operations - Our trademarks and other intellectual property rights may not be adequately protected outside the U.S." and Item 3 - "Legal Proceedings" for further discussion). Although we have not suffered any material restraints or restrictions on doing business in desirable markets in the past, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce trademarks to new markets.
Import Restrictions and Other Government Regulations
Virtually all of our merchandise imported into the Americas, Europe, Asia, Australia, and New Zealand is subject to duties. In addition, most of the countries to which we ship could impose safeguard quotas and duties to protect their local industries from import surges that threaten to create market disruption. The U.S. and other countries may also unilaterally impose additional duties in response to a particular product being imported at unfairly traded prices in such increased quantities that would cause (or threaten) injury to the relevant domestic industry (generally known as "anti-dumping" actions). If dumping is suspected in the U.S., the U.S. government may self-initiate a dumping case on behalf of the U.S. textile industry which could significantly affect our costs. Furthermore, additional duties, generally known as countervailing duties, can also be imposed by the U.S. government to offset subsidies provided by a foreign government to foreign manufacturers if the importation of such subsidized merchandise injures or threatens to injure a U.S. industry.
In addition, each of the countries in which our products are sold has laws and regulations covering imports. Because the U.S. and the other countries in which our products are manufactured and sold may, from time to time, impose new duties, tariffs, surcharges, or other import controls or restrictions, or adjust presently prevailing duty or tariff rates or levels, we maintain a program of intensive monitoring of import restrictions and opportunities. We seek to minimize our potential exposure to import-related risks through, among other measures, adjustments in product design and fabrication, shifts of production among countries and manufacturers, and through geographical diversification of our sources of supply.
As almost all of our products are manufactured by foreign suppliers, the enactment of new legislation or the administration of current international trade regulations or executive action affecting textile agreements, or changes in sourcing patterns could adversely affect our operations. We are also subject to other international trade agreements, such as the U.S.-Mexico-Canada Agreement, the Central American Free Trade Agreement, the U.S.-Peru Free Trade Agreement, the U.S.-Jordan Free Trade Agreement, the U.S.-Korea Free Trade Agreement and other special trade preference programs. A portion of our imported products are eligible for certain of these duty-advantaged programs. See Item 1A - "Risk Factors - Risks Related to Regulatory, Legal, and Tax Matters - Our ability to conduct business globally may be affected by a variety of legal, regulatory, political, and economic risks" and "Risk Factors - Risks Related to our Business and Operations - Our business is subject to risks associated with importing products and the ability of our manufacturers to produce our goods on time and to our specifications."
Apparel and other products sold by us are under the jurisdiction of multiple governmental agencies, including, in the U.S., the Federal Trade Commission, U.S. Customs & Border Protection, the U.S. Fish and Wildlife Service, the Environmental Protection Agency, and the Consumer Products Safety Commission. Our products are also subject to regulation in the U.S. and other countries, including the U.S. Consumer Product Safety Improvement Act, which relate principally to product labeling, licensing requirements, and consumer product safety requirements and regulatory testing, particularly with respect to products used by children. Any failure to comply with such requirements could result in significant penalties and require us to recall products, which could have a material adverse effect on our business or operating results. We believe that we are in substantial compliance with these regulations, as well as applicable federal, state, local, and foreign rules and regulations governing the discharge of materials hazardous to the environment. Our licensed products, licensing partners, buying/sourcing agents, and the vendors and factories with which we contract for the manufacture and distribution of our products are also subject to regulation. Our agreements require our licensing partners, buying/sourcing agents, vendors, and factories to operate in compliance with all applicable laws and regulations, and we are not aware of any violations which could reasonably be expected to have a material adverse effect on our business or operating results.
We are also subject to disclosure and reporting requirements, established under existing or new federal or state laws, such as the requirements to identify the origin and existence of certain "conflict minerals" under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and disclosures of specific actions to eradicate abusive labor practices in our supply chain under the California Transparency in Supply Chains Act. While we require our suppliers to operate in compliance with all applicable laws and our operating guidelines which promote ethical and socially responsible business practices, any violation of labor, environmental, health, and safety or other laws, or any divergence by an independent supplier's labor practices from generally accepted industry standards, could damage our reputation, disrupt our sourcing capabilities, and increase the cost of doing business, adversely affecting our results of operations. See Item 1A - "Risk Factors - Risks Related to our Business and Operations - Our business could suffer if we fail to comply with labor laws or if one of our manufacturers fails to use acceptable labor or environmental practices."
Although we have not suffered any material restriction from doing business in desirable markets in the past, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce additional trademarks to new markets.
Human Capital
Our purpose is to inspire the dream of a better life through authenticity and timeless style. This purpose extends to how we provide resources to support our employees' health, well-being, work-life harmony, and quality of life. We believe that attracting, developing, and retaining a diverse work force that is both skilled and motivated is critical to the successful execution of our long-term growth strategy. To this end, we are committed to creating a culture and work environment in which all employees feel welcome and can thrive, both as individuals and as part of our team.
Our Board of Directors regularly reviews our people and development strategic initiatives.
Our Employees
As of March 29, 2025, we had approximately 23,400 employees, comprised of approximately 15,000 full-time and 8,400 part-time employees. Approximately 9,800 of our employees are located in the U.S. and 13,600 are located in foreign countries.
As of March 29, 2025, approximately 64% and 36% of our global workforce self-identified as female and male, respectively. In the U.S., approximately 59% of our workforce self-identified as an underrepresented race and ethnic group and 34% self-identified as White, with the remaining 7% electing not to disclose such information.
Belonging & Equity
We believe a diversity of backgrounds, skills, and experiences of our employees and our culture of inclusivity drive innovation and creativity. We are committed to further strengthening a sense of belonging and equal opportunities for all within our Company. Our strategy is guided by the following three focus areas:
1.Talent - We ensure that fostering a culture of inclusion and belonging is a priority company-wide, resulting in the cultivation of diverse, best-in-class teams and equal opportunities for development. We also plan to drive progress towards our goal of exceeding an 80% employee survey score on "my manager creates a sense of belonging for the entire team."
2.Engagement - We enable open dialogue and create opportunities for the amplification of all voices and perspectives. Our Employee Impact Groups harness the talent and passion of our employees from around the world to help create an inclusive and engaging company culture.
3.Learning - We remain dedicated to the growth and advancement of our talent and offer a wide range of development programs for all levels, including on-the-job training, coaching, and skill-building through our various customized learning and training programs. All our employee learning and development programs aim to promote our Ralph Lauren Success Drivers - the key attributes, skills, ways of thinking, and behaviors that ultimately create conditions that better enable individuals and teams to succeed.
Additional information relating to our initiatives can be found in our most recently published Global Citizenship & Sustainability Report covering Fiscal 2024, which is available on our corporate website at https://corporate.ralphlauren.com/citizenship-and-sustainability. Our Global Citizenship & Sustainability Report covering Fiscal 2025 is expected to be released in September 2025. The content of our sustainability reports is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.
Talent Development
Throughout Fiscal 2025, we evolved from a focus on Talent Development to a more holistic approach under the Employee Learning Experience. This transformation reflects our commitment to providing meaningful, purpose-driven learning opportunities that resonate on a personal level, evoke emotion, and inspire thoughtful self-reflection and connection to our Purpose and Strategy.
The Employee Learning Experience model enables us to offer more tailored, meaningful learning journeys that align with our purpose and foster continuous development. A cornerstone of this transformation has been the continued delivery of Situational Leadership® II ("SLII") for all people leaders. This experience reinforces a shared understanding of leadership development and strengthens our ability to grow high-performing teams that drive organizational success. Building on the foundation of SLII, a key highlight of Fiscal 2025 has been the launch of Purpose Driven Coaching. As we evolve our leadership philosophy, we are transitioning from traditional management styles to a coaching-oriented mindset. This shift promotes greater accountability, while ensuring employees feel seen, heard, and valued - fundamentally enhancing engagement and performance.
In parallel, we have placed significant emphasis on career development and aspirations. Our goal is to empower employees to take ownership of their career journeys by providing visibility into various career paths and organizational functions. This initiative has included Career Aspiration Days, where employees engage in interactive learning sessions and connect directly with cross-functional teams to explore required skills and competencies. In Europe and Asia we also launched our Associate Career Development Journeys highlighting key skills and behaviors required to grow and develop at each level. Additionally, we have introduced comprehensive Career Aspiration Toolkits for managers. These resources are designed to support meaningful career conversations and help teams navigate the full spectrum of career growth opportunities within the organization.
These initiatives reflect our unwavering commitment to building a culture of continuous learning, intentional growth, and empowered leadership aligned with our Purpose - positioning us for long-term success.
Employee Safety and Well-Being
We are committed to the safety, health, and overall well-being of each of our employees and their families, providing a wide array of physical, emotional, social, and financial support to meet this objective. THRIVE, our global wellness program and related application tool, provides access to volunteer events and physical and mental wellness support. The THRIVE application also provides a daily pulse question through Microsoft Teams, which links to additional wellness articles based on an employee's response. In addition, these pulse responses are tracked so that employees can view their well-being progress. In partnership with THRIVE, we also introduced a variety of activations throughout the year - from educational webinars on topics such as family, mind, finance, harmony, and health, to Wellness Journeys, a three-part training series delivered in each region and tailored to local Health & Wellness priorities. These efforts also included a company-wide Summer Challenge focused on promoting physical activity.
To streamline access to our resources and ensure consistency across all markets, we rebranded and relaunched our global wellness offering under the unified name RL Wellness. This shift reinforces our global approach to employee well-being and introduces new tools, including the RL Wellness Catalogue - a comprehensive, evergreen resource that clearly outlines the support available in each region - and the Quarterly Wellness Digest, a global initiative designed to increase visibility and alignment of our Health & Wellness efforts across all three regions. Part of these efforts include conversations with external mental health and wellness experts - including Olympians, leading psychologists, and best-selling authors - who shared insights to support and inspire our global teams.
We also continue to offer key well-being services around the world, including Gympass in the U.S., which supports physical and mental wellness through access to thousands of fitness centers and digital health partners; Bond in France, the United Kingdom, and the U.S., a personal safety app that provides real-time support from trained security professionals in situations that may feel unsafe; and Benefit Station in Japan, providing discounts on gyms, travel, language schools, restaurants, childcare, and elderly care services.
Compensation and Benefits
We are committed to providing competitive compensation and benefits to attract and retain a diverse and talented workforce. In addition, we take a proactive approach to pay equity and continually monitor our compensation programs to promote fairness.
We offer a wide array of both employer-paid and employee-paid benefits to support our employees' overall financial, physical, and mental well-being, including, but not limited to, healthcare and welfare benefits, retirement savings, paid time off, temporary leave, sabbaticals, and flexible work arrangements. We understand that everyone has unique needs when it comes to caring for and growing their families.
With the rise in cancer diagnoses, specifically around breast cancer and skin cancer, starting in January 2025, we are providing free additional coverage to essential screenings above the national guidelines to lower overall cost of treatment for our U.S. employees and provide better outcomes for those impacted. In addition, all Ralph Lauren employees and their eligible dependents will have the ability to virtually meet and consult with an expert from Memorial Sloan Kettering for free if they receive a cancer diagnosis.
In previous years, part-time employee benefits eligibility was determined by the average number of hours worked per week in a 12-month lookback period. Now, all part-time employees with one year of service, regardless of average hours worked, will be eligible for Ralph Lauren benefits for calendar 2025. Our two medical plan options have been enhanced to provide more coverage, such as diagnostic doctor's visits, and one of our medical plan options also includes additional coverage, such as diagnostic testing and prescription drugs. In addition, dental and vision coverage is also available and can be purchased without the requirement to bundle with a medical plan.
Information About Our Executive Officers
As of the filing date of this Form 10-K, the following are our current executive officers and their principal recent business experience:
Ralph Lauren
Age 85 Mr. Ralph Lauren founded our business in 1967 and, for over five decades, has cultivated the iconography of America into a global lifestyle brand. He has been our Executive Chairman and Chief Creative Officer since November 2015, and a director of the Company since prior to our initial public offering in 1997. He had previously been our Chairman and Chief Executive Officer since prior to our initial public offering in 1997 until November 2015. In addition, he was previously a member of our Advisory Board or the Board of Directors of our predecessors since their organization.
Patrice Louvet
Age 60 Mr. Louvet has served as our President and Chief Executive Officer, and a director of the Company since July 2017. Prior to joining the Company, he served as the Group President, Global Beauty, of Procter & Gamble Co. ("P&G") since February 2015. Prior to that role, Mr. Louvet held successively senior leadership positions at P&G, including the roles of Group President, Global Grooming (Gillette), and President of P&G's Global Prestige Business. Before he joined P&G, he served as a Naval Officer, Admiral Aide de Camp in the French Navy from 1987 to 1989. Mr. Louvet graduated from École Supérieure de Commerce de Paris and received his M.B.A. from the University of Illinois. Mr. Louvet also serves on the board of trustees of the Hospital of Special Surgery and joined the board of directors of Danone in April 2022. He is also on the CEO Advisory Council of the Fashion Pact, a coalition committed to advancing environmental sustainability in the fashion and textile industries.
Robert Ranftl
Age 53 Mr. Ranftl has been our Chief Operating Officer since April 2025. He is responsible for Global IT, Digital, Transformation, Logistics, Real Estate, Architecture and Store Design, and Licensing for the Company. He joined the Company as Chief Operating Officer of Asia Pacific in 2015 based in Hong Kong. He served as Chief Operating Officer of International for Asia Pacific, Europe and Latin America from April 2017 to April 2019 based in Geneva. He served as Chief Operating Officer of Commercial from April 2019 to April 2022 based in London. Most recently, Mr. Ranftl served as Regional CEO for North America from April 2022 to April 2025 where he was instrumental in leading the execution and progress toward the Company’s Next Great Chapter: Accelerate strategic goals, including returning the North America business to growth. Prior to joining the Company, Mr. Ranftl was with the VF Corporation where he was the Chief Financial Officer of Asia Pacific. Mr. Ranftl earned his Bachelor of Science degree from Johnson State College in Vermont.
Justin Picicci
Age 46 Mr. Picicci has served as our Chief Financial Officer since May 2024. He joined the Company in 2006 and has held a series of senior finance leadership roles across the organization. Most recently, he served as Enterprise Chief Financial Officer from July 2022 through April 2024, overseeing all internal finance functions. Prior to that, he held several key leadership positions, including Chief Financial Officer of North America (January 2020 to June 2022), Global Controller (June 2017 to December 2019), and Chief Financial Officer of Asia based in Hong Kong (May 2015 to May 2017). Before joining the Company, Mr. Picicci held finance roles at Interpublic Group and KPMG. He holds a Bachelor of Science degree from the University at Albany.
David Lauren
Age 53 Mr. David Lauren has been our Chief Branding and Innovation Officer, Strategic Advisor to the CEO, and Vice Chairman of the Board since April 2022. He served as our Chief Innovation Officer, Strategic Advisor to the CEO, and Vice Chairman of the Board from October 2016 to March 2022. Prior to that, he served in numerous leadership roles at the Company with responsibility for advertising, marketing, communications, and philanthropy. He has been a director of the Company since August 2013. Mr. D. Lauren oversees the Company's innovation strategy, processes, and capabilities to drive its brand strength and financial performance across all channels. He has been instrumental in growing the Company's global digital commerce business and pioneering our technology initiatives. Mr. D. Lauren is also the President of The Ralph Lauren Corporate Foundation (formerly known as The Polo Ralph Lauren Foundation). Before joining the Company in 2000, he was Editor-In-Chief and President of Swing, a general interest publication for Generation X. Mr. D. Lauren is the son of Mr. R. Lauren.
Halide Alagöz
Age 53 Ms. Alagöz joined the Company as the Corporate Senior Vice President of Global Manufacturing and Sourcing in 2016. She has been our Chief Product & Merchandising Officer since March 2025. Ms. Alagöz is responsible for our end-to-end product life cycle, bringing the magic of our design and product vision to life for our consumers around the world. She leads all brand and product teams, driving innovation and execution - from development and merchandising, to sourcing and through our store presentation - of all products across the Ralph Lauren portfolio. Prior to joining the Company, Ms. Alagöz was with H&M Corporation for 18 years, most recently in Hong Kong as the Head of Purchasing. During her tenure with H&M, Ms. Alagöz was responsible for various regional and global supply chain operations in Hong Kong, China, Bangladesh, and Turkey. She also serves on the board of directors of the American Apparel & Footwear Association since April 2018 and was confirmed as its Chair for its 2025-2026 term in March 2024. Ms. Alagöz earned both her bachelor's degree in Industrial Engineering and her master's degree in Engineering Management from Istanbul Technical University.

---

ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
There are risks associated with an investment in our securities. The following risk factors should be read carefully in connection with evaluating our business and the forward-looking statements contained in this Annual Report on Form 10-K. Any of the following risk factors could materially adversely affect our business, including our prospects, results of operations, financial condition, liquidity, the trading price of our securities, and/or the actual outcome of matters as to which forward-looking statements are made in this report. Additional risks and uncertainties not currently known to us or that we currently view as immaterial may also materially adversely affect our business in future periods or if circumstances change.
Risks Related to Macroeconomic Conditions
Economic, political, and other conditions, including the imposition of significant new tariffs or other changes to existing trade policies and agreements, may adversely affect the global economy and/or the level of consumer purchases of discretionary items and luxury retail products, including our products.
The global economy and retail industry are impacted by many uncontrollable factors, including, among others, diplomatic and trade relationships, including potential changes to international trade policies or agreements, such as the imposition of new tariffs; general domestic and international political conditions; consumer perceptions of current and future economic conditions, including any recessionary fears; inflation; interest rates; foreign currency exchange rates; the availability and price of commodities, including fuel and energy costs; employment levels and wage rates; stock market performance; the housing market; consumer debt levels; the availability of consumer credit; the health and stability of the banking sector; global food supplies; taxation; the threat, outbreak, or escalation of terrorism, military conflicts, or other hostilities; consumer perceptions of personal well-being and safety; man-made or natural disasters, including pandemic diseases; and weather conditions.
Most recently, the U.S. announced significant changes to its trade policies, including widespread tariff increases on imported goods (including on those countries from which we import a substantial amount of our finished products, most notably Vietnam, Cambodia, and China) with potential further increases and revisions or terminations to existing trade agreements. In response, many countries have announced or are otherwise considering retaliatory tariffs on U.S. exports and other trade restrictions. This has led to significant uncertainty regarding the future relationship between the U.S. and other countries, as well as growing concerns about a global trade war, higher inflation, and a potential global recession, which has already caused significant volatility of global stock markets and foreign currency exchange rates.
Other recent economic conditions, including ongoing inflationary pressures, organized labor disputes, high interest rates, significant foreign currency volatility, and military conflicts (as discussed below), continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as to reduce elevated inventory levels, many retailers (particularly in the U.S.) continue to resort to promotional activity in an attempt to offset traffic declines and increase conversion. Our gross margins could be adversely impacted if we were to apply a similar strategy over a prolonged period of time.
The global economy has also been negatively impacted by ongoing military conflicts, including the Russia-Ukraine and Israel-Hamas wars, militant attacks on cargo vessels in the Red Sea, and other hostilities in the Middle East. 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 may continue to be, affected by the broader macroeconomic implications resulting from these and other military conflicts, including inflationary pressures, unfavorable foreign currency exchange rates, increases in energy prices, food shortages, and financial market volatility, among other factors, which have adversely impacted consumer sentiment and confidence. Although our business has not been significantly impacted by the Red Sea crisis, it could lead to shipping delays, inventory shortages, and/or higher freight costs in the near future and beyond. It is not clear at this time how long these conflicts will endure, or if they will escalate further with additional countries declaring war against each other, which could further amplify the impacts of the various macroeconomic factors described above and potentially result in a global recession.
Consumer purchases of discretionary items and luxury retail products, including our products, tend to decline during periods of recession, high inflation, or rising interest rates, and at other times when disposable income is lower. Unfavorable economic conditions and other factors, such as pandemic diseases and other health-related concerns, political unrest, military conflicts, and acts of terrorism, may also reduce consumers' willingness and ability to travel to major cities and vacation destinations in which our stores and shop-within-shops are located. Further, consumers may prefer to spend more of their discretionary income on "experiences," such as dining and entertainment, over consumer goods. Stay-at-home orders, social gathering restrictions, and work-from-home arrangements, such as those resulting from pandemic diseases, may also diminish consumers' demand for luxury apparel products. Accordingly, a downturn or an uncertain outlook in the economies in which
we, or our wholesale customers and licensing partners, sell our products, or other changes in consumer preferences, may materially adversely affect our business.
Economic conditions could have a negative impact on our major customers, suppliers, vendors, and lenders, which in turn could materially adversely affect our business.
Although we believe that our existing cash and investments, cash provided by operations, and available borrowing capacity under our credit and overdraft facilities and commercial paper borrowing program will provide us with sufficient liquidity, the impact of adverse economic conditions (such as ongoing inflationary pressures and high interest rates) on our major customers, suppliers, vendors, and lenders and their ability to access global capital markets cannot be predicted. The inability of third parties to manufacture and/or ship our products due to insufficient liquidity or otherwise could impair our ability to meet the delivery date requirements of our customers. A disruption in the ability of our significant customers to access liquidity could cause serious disruptions or an overall deterioration of their businesses which could lead to a significant reduction in their future orders of our products and the inability or failure on their part to meet their payment obligations to us, any of which could have a material adverse effect on our business.
Any deterioration in global financial or capital markets could affect our ability to access sources of liquidity to provide for our future cash needs, increase the cost of any future financing, or cause our lenders to be unable to meet their funding commitments under our credit and overdraft facilities. We also regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation ("FDIC") insured banks, which exceed the FDIC insurance limits. In addition, we maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies. Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis. Our major customers, suppliers, and vendors may also be subject to similar risks, which in turn could have a resulting material adverse impact on our business if they were to lose access to sufficient liquidity.
Our business is exposed to domestic and foreign currency fluctuations.
Our business is exposed to foreign currency exchange risk. Specifically, changes in exchange rates between the U.S. Dollar and other currencies impact our financial results from a transactional perspective, as our foreign operations generally purchase inventory in U.S. Dollars. Given that we source most of our products overseas, the cost of these products may be affected by changes in the value of the relevant currencies. Changes in currency exchange rates may also impact consumers' willingness or ability to travel abroad and/or purchase our products while traveling, as well as affect the U.S. Dollar value of the foreign currency denominated prices at which our international businesses sell products. Additionally, the operating results and financial position of our international subsidiaries are exposed to foreign exchange rate fluctuations as their financial results are translated from the respective local currency into U.S. Dollars during the financial statement consolidation process. The foreign currencies to which we are exposed to from a transactional and translational perspective primarily include the Euro, the Japanese Yen, the British Pound Sterling, the South Korean Won, the Chinese Renminbi, the Canadian Dollar, the Swiss Franc, and the Australian Dollar. The expansion of our international business increases our exposure to foreign currency exchange risk.
Although we hedge certain exposures to changes in foreign currency exchange rates arising in the ordinary course of business, we cannot fully anticipate all of our currency exposures and therefore foreign currency fluctuations may have a material adverse impact on our business. In addition, factors that could impact the effectiveness of our hedging activities include the volatility of currency markets, the accuracy of forecasted transactions, and the availability of hedging instruments. As such, our hedging activities may not completely mitigate the impact of foreign currency fluctuations on our results of operations.
Infectious disease outbreaks, such as the COVID-19 pandemic, could have a material adverse effect on our business.
Widespread public health emergencies or infectious disease outbreaks, such as the novel strain of coronavirus commonly referred to as COVID-19, have had, and could again in the future have, a material adverse effect on our business, results of operations, and financial condition. Potential impacts to our business include, but are not limited to: (i) our ability to successfully execute our long-term growth strategy; (ii) supply chain disruptions resulting from closed factories, reduced workforces, scarcity of raw materials, shipping and loading capacity constraints, and scrutiny or embargoing of goods produced in infected areas, including any related cost increases; (iii) reduced retail traffic at our stores and those of our wholesale
customers and licensing partners due to forced closures or other operational restrictions, such as reduced capacity limits and operating hours, declines in tourism, and/or potential changes in consumer behavior and shopping preferences, such as their willingness to congregate in shopping centers or other populated locations and the overall growing preference to shop online versus at traditional brick and mortar locations; (iv) potential declines in the level of consumer purchases of discretionary items and luxury retail products, including our products, caused by higher unemployment and lower disposable income levels, inflationary pressures, travel and social gathering restrictions, work-from-home arrangements, or other factors beyond our control; (v) the potential build-up of excess inventory as a result of store closures and/or lower consumer demand; (vi) temporary closures or other operational restrictions of our distribution centers and/or corporate facilities; (vii) our ability to attract, retain, and manage employees; (viii) additional costs to protect the health and safety of our employees, customers, and communities, such as more frequent and thorough cleanings of our facilities and supplying personal protection equipment; (ix) the potential loss of one or more of our significant wholesale customers or licensing partners, or the loss of a large number of smaller wholesale customers or licensing partners, if they are not able to withstand prolonged periods of adverse economic conditions, and our ability to collect outstanding receivables; (x) increased vulnerability to data security or privacy breaches as a result of remote working arrangements; (xi) our ability to successfully negotiate with landlords to obtain rent abatements, rent deferrals, and other relief; (xii) our ability to access capital markets and maintain compliance with covenants associated with our existing debt instruments, as well as the ability of our key customers, suppliers, and vendors to do the same with regard to their own obligations; (xiii) our ability to generate sufficient cash flows to support our operations, including repayment of our debt obligations as they become due, as well as to return value to our shareholders in the form of dividend payments and repurchases of our common stock; (xiv) diversion of management attention and resources from ongoing business activities and/or a decrease in employee morale; and (xv) our ability to maintain an effective system of internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002.
Risks Related to our Strategic Initiatives and Restructuring Activities
We cannot assure the successful implementation of our growth strategy.
We have developed a long-term growth strategy with the objective of delivering sustainable, profitable growth and long-term value creation for shareholders, as outlined in Item 1 - "Business - Objectives and Opportunities." Our ability to successfully execute our growth strategy is subject to various risks and uncertainties, as described herein.
Although we believe that our growth strategy will lead to long-term growth in revenue and profitability, there can be no assurance regarding the timing of or extent to which we will realize the anticipated benefits, if at all. Our failure to realize the anticipated benefits, which may be due to our inability to execute the various elements of our growth strategy, changes in consumer preferences, competition, economic conditions (including potential changes to existing trade policies and agreements, including higher tariffs on U.S. imports, as well as inflationary pressures), and other risks described herein, such as those related to pandemic diseases, supply chain disruptions, and military conflicts or other hostilities, could have a material adverse effect on our business. Such a failure could also result in the implementation of new restructuring-related activities, which may be dilutive to our earnings in the short term.
Achievement of our growth strategy may require investment in new capabilities, distribution channels, and technologies, such as those related to our Next Generation Transformation project. These investments may result in short-term costs without accompanying current revenues and, therefore, may be dilutive to our earnings in the short term. There can be no assurance regarding the timing of or extent to which we will realize the anticipated benefits of these investments and other costs, if at all.
We may not be successful in the expansion of our multi-channel distribution network or accelerating growth in certain product categories.
Implementation of our growth strategy involves the continuation and expansion of our multi-channel distribution network, including within international markets such as China, which is subject to many factors, including, but not limited to, our ability to (i) identify new or underpenetrated markets where our products and brand will be accepted by consumers; (ii) attract customers, particularly in new markets; (iii) identify desirable freestanding and department store locations, the availability of which may be out of our control; (iv) negotiate acceptable lease terms, including desired tenant improvement allowances; (v) efficiently and cost effectively build-out stores and shop-within-shops; (vi) source sufficient inventory levels timely to meet the needs of the new stores and shop-within-shops; (vii) hire, train, and retain competent store personnel; and (viii) integrate new stores and shop-within-shops into our existing systems and operations.
Any of these challenges could delay or otherwise prevent us from successfully executing our distribution expansion strategy. There can be no assurance that our new stores and shop-within-shops will be successful and profitable or if the capital costs associated with the build-out of such new locations will be recovered. Further, entry into new markets may bring us into competition with new or existing competitors that have a more established market presence than us or other competitive advantages. Other risks related to our international expansion plans include (i) changes in general economic conditions in specific countries and markets, including those resulting from inflationary pressures, pandemic diseases, natural or man-made
disasters, civil or political instability, or military conflicts, terrorist acts, or other hostilities; (ii) changes in diplomatic and trade relationships and any resulting anti-American sentiment; (iii) foreign government regulation; (iv) risks associated with importing products; and (v) restrictions on the repatriation of funds held internationally, among other risks described herein. If our expansion plans are unsuccessful or do not deliver an appropriate return on our investments, our business, results of operations, and financial condition could be adversely affected.
The success of our business also depends largely on our ability to continue to maintain, enhance, and expand our digital footprint and capabilities. Consumers continue to increasingly shop online using computers, smartphones, tablets, and other devices, and also use such devices to perform comparison shopping on a real-time basis. Certain adverse events, such as pandemic diseases and severe weather, tend to amplify this trend, as consumers may find it difficult to travel to our brick and mortar locations or otherwise prefer to avoid populated locations, such as indoor shopping centers. Any failure on our part, or on the part of our third-party digital partners, to provide attractive, reliable, secure, and user-friendly digital commerce platforms, including mobile apps, could negatively impact our customers' shopping experience resulting in reduced website traffic, diminished loyalty to our brands, and lost sales. In addition, as we continue to expand and increase the global presence of our digital commerce business, sales from our brick and mortar stores and wholesale channels of distribution in areas where digital commerce sites are introduced may decline due to changes in consumer shopping habits and cannibalization.
Our growth strategy also includes accelerating growth in certain high-potential, underdeveloped product categories, comprised of women's apparel, outerwear, and handbags. We compete with other retailers in these product categories, some of which may be significantly larger than us and more established in these product categories, and competition is intense, as described within other risk factors herein. There can be no assurance that our targeted expansion in these product categories will be successful.
The success of our business depends on our ability to respond to constantly changing fashion and retail trends and consumer preferences in a timely manner, develop products that resonate with our existing customers and attract new customers, and provide a seamless shopping experience to our customers.
The industries in which we operate have historically been subject to rapidly changing fashion trends and consumer preferences. Our success depends in large part on our ability to originate and define fashion product and home product trends, as well as to anticipate, gauge, and react to changing consumer preferences in a timely manner. Our products must appeal to a broad range of consumers worldwide across various price points whose preferences cannot be predicted with certainty and are subject to rapid change, influenced by fashion trends, economic conditions, and weather conditions, among other factors. This issue is further compounded by the increasing use of digital and social media by consumers and the speed by which information and opinions are shared across the globe. We cannot assure that we will be able to continue to develop appealing styles or successfully meet constantly changing consumer preferences in the future. In addition, we cannot assure that any new products or brands that we introduce will be successfully received by consumers. Any failure on our part to anticipate, identify, and respond effectively to changing consumer preferences and fashion trends could adversely affect consumer acceptance of our products and leave us with a substantial amount of unsold inventory or missed opportunities. Conversely, if we underestimate consumer demand for our products or if manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages. Any of these outcomes could have a material adverse effect on our business.
Our marketing and advertising programs are integral to the success of our product offerings and on our ability to attract new customers and retain existing customers. Our communication campaigns are increasingly being executed through digital and social media platforms to drive further engagement with the younger consumer, with a focus on influencers. However, we cannot assure that our marketing and advertising programs will be successful or appeal to consumers. Ineffective marketing and advertising programs could impede our ability to maintain brand relevance, attract new customers, or retain existing customers.
The success of our business also depends on our ability to continue to develop and maintain a reliable omni-channel experience for our customers, as well as our ability to introduce new Connected Retail capabilities, such as those described in Item 1 - "Business - Digital Ecosystem." Our business has evolved from an in-store experience to a shopping experience through multiple technologies, including computers, smartphones, tablets, and other devices, as our customers have become increasingly technologically savvy and expect a seamless omni-channel experience regardless of whether they are shopping in stores or online. We are increasingly using digital and social media platforms to interact with customers and enhance their shopping experience. If we are unable to develop and continuously improve our customer-facing technologies, the efforts of which typically require significant capital investments, we may not be able to provide a convenient and consistent experience to our customers regardless of the sales channel. This could negatively affect our ability to compete with other retailers and result in diminished loyalty to our brands, which could adversely impact our business.
We implement new store design concepts and other renovations to our existing store portfolio as part of our growth strategy. There can be no assurance that any of our store designs will resonate with customers or otherwise achieve the desired sales and profitability measures necessary to recover our initial capital investments. If customers are not receptive to the design layout or visual merchandising of our stores, our business could be adversely affected. In addition, the failure of our store
designs to achieve acceptable results could lead to asset impairment charges and/or our decision to close a store prior to the lease expiration date resulting in other store closure-related charges, including early lease termination fees.
Our retail stores are generally located in shopping malls or other shopping centers. Our sales at such stores, as well as our flagship locations, are largely dependent upon the volume of retail traffic in those shopping centers and the surrounding area. Retail traffic to our stores has been, and may continue to be, negatively impacted by disruptions caused by adverse economic conditions, pandemic diseases, natural or man-made disasters, severe weather conditions, declines in tourism, the increasing shift towards digital commerce channels, and other various factors beyond our control. Any significant declines in retail traffic in the future could have a material adverse effect on our business.
Our profitability may decline if we are unable to effectively manage inventory or as a result of increasing pressure on margins.
The nature of the apparel retail industry requires us to carry a significant amount of inventory, especially prior to the peak holiday selling season when we build up our inventory levels in order to meet anticipated consumer demand. Although we have shortened lead times for the design, sourcing, and production of certain of our product lines, we expect to continue to place orders with our vendors for the majority of products in advance of the related selling season. As a result, we are vulnerable to changes in consumer preferences and demand and pricing shifts. Our failure to continue to shorten lead times or to correctly anticipate consumer preferences and demand could result in the build-up of excess inventory. Other factors beyond our control could also result in the build-up of excess inventory, including unforeseen adverse economic conditions or business disruptions, such as those caused by pandemic diseases. Excess inventory levels could result in the utilization of less-preferred distribution channels, markdowns, promotional sales, donations, or destruction to dispose of such excess or slow-moving inventory, which may negatively impact our overall profitability and/or impair the image of our brands. Conversely, if we underestimate consumer demand for our products or if manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages, which may negatively impact customer relationships, diminish brand loyalty, and result in lost sales. Any of these outcomes could have a material adverse effect on our business.
Additionally, our industry is subject to significant pricing pressure caused by many factors, including inflationary pressures, intense competition and a highly promotional retail environment, consolidation in the retail industry, pressure from retailers to reduce the costs of products, excess inventory levels in the marketplace, and changes in consumer spending patterns. Changes to existing trade policies and agreements, including higher tariffs on U.S. imports, could exacerbate such pricing pressures. Although we continue to limit our promotional activity in connection with our quality of sales initiatives, these factors may cause us to reduce our sales prices to retailers and consumers, which could cause our gross margin to decline. If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our profitability will decline. In addition, changes in our customer, channel, and geographic sales mix could have a negative impact on our profitability. Any of these outcomes could have a material adverse effect on our business.
We may not fully realize the expected cost savings and/or operating efficiencies from our restructuring plans.
We have implemented restructuring plans to support key strategic initiatives. Although designed to deliver long-term sustainable growth, restructuring plans present significant potential risks that may impair our ability to achieve anticipated operating enhancements and/or cost reductions, or otherwise harm our business, including (i) higher than anticipated costs in implementing planned workforce reductions, particularly in highly regulated locations outside the U.S.; (ii) higher than anticipated lease termination and store or facility closure costs; (iii) failure to meet operational targets or customer requirements due to the loss of employees or inadequate transfer of knowledge; (iv) failure to maintain adequate controls and procedures while executing, and subsequent to completing, our restructuring plans; (v) diversion of management attention and resources from ongoing business activities and/or a decrease in employee morale; (vi) attrition beyond any planned reduction in workforce; and (vii) damage to our reputation and brand image due to our restructuring-related activities.
If we are not successful in implementing and managing our restructuring plans, we may not be able to achieve targeted operating enhancements, sales growth, and/or cost reductions, which could adversely impact our business. Our failure to achieve targeted results for any reason, including business disruptions resulting from adverse economic conditions or catastrophic events such as pandemic diseases, could also lead to the implementation of additional restructuring-related activities, which may be dilutive to our earnings in the short term.
Risks Related to our Business and Operations
The loss of the services of Mr. Ralph Lauren or any other changes to our executive and senior management team may be disruptive to, or cause uncertainty in, our business.
Mr. Ralph Lauren's leadership in the design and marketing areas of our business has been a critical element of our success since the inception of our Company. Mr. R. Lauren is instrumental to, and closely identified with, our brand that bears
his name. Our ability to maintain our brand image and leverage the goodwill associated with Mr. R. Lauren's name may be damaged if we were to lose his services. The death or disability of Mr. R. Lauren or other extended or permanent loss of his services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverse effect on our business.
We also depend on the service and management experience of other key executive officers and members of senior management who have substantial experience and expertise in our industry and our business and have made significant contributions to our growth and success. Any changes in our executive and senior management team, including those resulting from our restructuring actions, may be disruptive to, or cause uncertainty in, our business and future strategic direction. The departure of any key individual and the failure to ensure a smooth transition and effective transfer of knowledge involving senior employees could hinder or delay our strategic planning and execution, as well as adversely affect our ability to attract and retain other experienced and talented employees. The success of our business also depends on our ability to attract and retain an adequate number of qualified employees to operate our retail stores and distribution centers and to perform various corporate functions.
Competition in our industry to attract and retain employees is intense and is influenced by our reputation, our ability to offer competitive compensation and benefits, and economic conditions, among other factors. Furthermore, the retail industry (among others) has experienced, and could again experience in the future, overall labor shortages resulting from a combination of pandemic diseases, labor disputes, strikes, and other factors. The introduction of new work arrangements and company-specific requirements regarding when and how often employees are required to work on-site versus remotely may also impact companies' ability to attract and retain employees. As companies increasingly allow employees to work remotely, traditional geographic competition for talent may change in ways that we cannot predict. The departure of key individuals or our failure to maintain sufficient employee staffing levels could have a material adverse impact on our business, as well as impede our ability to maintain an effective system of internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002.
Our business is subject to risks associated with importing products and the ability of our manufacturers to produce our goods on time and to our specifications.
We do not own or operate any manufacturing facilities and depend exclusively on independent third parties for the manufacture of our products. Our products are manufactured to our specifications through arrangements with approximately 300 foreign manufacturers in various countries. In Fiscal 2025, approximately 96% of our products (by dollar value) were produced outside of the U.S., primarily in Asia, Europe, and Latin America, with approximately 20% of our products sourced from Vietnam, 16% from Cambodia, and 12% from China. Risks inherent in importing our products include (i) the imposition of additional tariffs, duties, taxes, and other charges on imports or exports, such as those recently announced by the U.S. as discussed below; (ii) changes in diplomatic and trade relationships, including the imposition of any sanctions, restrictions, and other responses; (iii) the imposition of additional regulations, quotas, trade sanctions, or safeguards relating to imports or exports, and costs of complying with such regulations and other laws relating to the identification and reporting of the sources of raw materials used in our products, which could lead to the detention, exclusion, or seizure of goods and imposition of monetary penalties and fines; (iv) adverse changes in local economic conditions, such as prolonged periods of recession, high inflation and/or interest rates, or other factors described herein; (v) changes in social or political conditions, including those resulting from military conflicts, terrorist acts, or other hostilities, that could result in the disruption of trade from the countries in which our manufacturers or suppliers are located; (vi) pandemic diseases, which could result in closed factories, reduced workforces, scarcity of raw materials, port congestion, and scrutiny or embargoing of goods produced in infected areas; (vii) unfavorable changes in the availability, cost, or quality of raw materials and commodities; (viii) labor shortages within our supply chain resulting from labor disputes, strikes, or otherwise; (ix) increases in the cost of labor or transportation; (x) disruptions of shipping and international trade caused by natural and man-made disasters, severe weather, military conflicts, terrorist acts, or other hostilities (such as militant attacks on cargo vessels in the Red Sea), or other unforeseen events, including any resulting impact to shipping prices and shipping times; (xi) heightened terrorism-related cargo and supply chain security concerns, which could subject imported or exported goods to additional, more frequent, or more thorough inspections, leading to delays in the delivery of cargo; and (xii) decreased scrutiny by customs officials for counterfeit goods, leading to lost sales, increased costs for our anti-counterfeiting measures, and damage to the reputation of our brands.
As previously discussed, in April 2025, the U.S. announced significant changes to its trade policies, including a universal baseline tariff of 10% on all U.S. imported goods, plus additional country-specific tariffs. In return, many countries have announced retaliatory tariffs on U.S. exports, resulting in uncertainty of the future relationship between the U.S. and other countries, as well as the potential of an ensuing global trade war and recession. While the U.S. implemented a 90-day pause on the majority of its proposed tariffs, we cannot predict at this time if and when any of the proposed tariffs will become effective. As approximately 96% of our products are currently produced outside of the U.S., any material change in tariffs or other trade restrictions could result in a significant increase to our product costs. There can be no assurance that we will be able to offset
potential increased product costs through higher sales prices to our consumers, supply chain diversification, or other mitigating measures, which in turn could have a material adverse effect on our business due to lower profitability.
In addition, the entire apparel industry, including our Company, has faced, and could continue to face, supply chain challenges as a result of inflationary pressures, political instability, severe weather, military conflicts and other hostilities, pandemic diseases, and other factors, including reduced freight availability, port congestion, labor shortages, and rising wages and energy costs, among other factors. The inability of a manufacturer to ship orders of our products in a timely manner or to meet our strict quality standards could cause us to miss the delivery date requirements of our customers for those items, which could result in cancellation of orders, refusal to accept deliveries, or a substantial reduction in purchase prices. We have also incurred, and may continue to incur, higher freight and other logistic costs as a result of certain of the beforementioned factors. In addition, the cost and availability of raw materials used to manufacture our products are subject to significant fluctuation as a result of certain of the beforementioned factors (including inflationary pressures), as well as crop yields which could be negatively impacted by severe weather conditions. We may not be able to implement price increases that fully offset increases in raw materials, freight, or other sourcing costs and/or any such price increases could have an adverse impact on consumer demand for our products. Any one of these factors could have a material adverse effect on our business.
Our business could suffer if we need to replace manufacturers or distribution centers.
We do not own or operate any manufacturing facilities and depend exclusively on independent third parties for the manufacture of our products, the majority of which are located in foreign countries. Accordingly, the success of our business depends on our ability to identify reputable manufacturers who can fulfill our orders timely and to our specifications, as well as the timely importation, customs clearance, and shipment of products to and from our various distribution centers. We compete with other companies for the production capacity of our manufacturers. Some of these competitors may place larger orders than we do, and thus may have an advantage in securing production capacity. If we experience a significant increase in demand, or if an existing manufacturer of ours must be replaced, we may have to expand our third-party manufacturing capacity. We cannot guarantee that this additional capacity will be available when required on terms that are acceptable to us. We enter into purchase order commitments each season specifying a time for delivery, method of payment, design and quality specifications, and other standard industry provisions, but do not have long-term contracts with any manufacturer. None of the manufacturers we use produce our products exclusively.
In addition, we rely on a number of owned, leased, and independently-operated distribution facilities around the world to warehouse and ship products to our customers and perform other related logistic services. Our ability to meet the needs of our customers depends on the proper operation of these distribution centers. Our distribution centers generally utilize computer-controlled and automated equipment, which are subject to various risks, including software viruses, security breaches, power interruptions, or other system failures. If any of our distribution centers were to close or become inoperable or inaccessible for any reason, including, but not limited to, natural disasters, severe weather, labor shortages, fires, and system failures, pandemic diseases, or if we fail to successfully consolidate existing facilities or transition to new facilities, we could experience a substantial loss of inventory, disruption of deliveries to our customers and our stores, increased costs, and longer lead times associated with the distribution of products during the period that would be required to reopen or replace the facility. Any such disruptions could have a material adverse effect on our business.
We also rely upon third-party transportation providers for substantially all of our product shipments, including shipments to and from our distribution centers, to our stores and shop-within-shops, and to our digital commerce and wholesale customers. Our utilization of these shipping services is subject to various risks, including, but not limited to, potential labor shortages (stemming from labor disputes, strikes, or otherwise), severe weather, and pandemic diseases, which could delay the timing of shipments, and increases in wages and fuel prices, which could result in higher transportation costs. The rapid increase of online shopping driven by changes in consumer shopping preferences has amplified certain of these risks resulting in capacity constraints. We have incurred, and may continue to incur, higher freight and other logistic costs as a result of certain of the beforementioned factors. Any delays in the timing of our product shipments or increases in transportation costs could have a material adverse effect on our business.
We face intense competition worldwide in the markets in which we operate.
We face increasing competition from companies selling apparel, footwear, accessories, home, and other of our product categories, including through the Internet. Although we sell our products through the Internet, increased competition and promotional activity in the worldwide apparel, footwear, accessory, and home product industries from Internet-based competitors could reduce our sales, prices, and margins. We also face intense competition from other domestic and foreign apparel, footwear, and accessory companies that sell products through brick and mortar stores and wholesale and licensing channels. We compete with these companies primarily on the basis of: (i) anticipating and responding in a timely manner to changing consumer demands and shopping preferences, including the ever-increasing shift to digital brand engagement, social media communications, and online and cross-channel shopping; (ii) creating and maintaining favorable brand recognition,
loyalty, and a reputation for quality, including through digital brand engagement and online and social media presence; (iii) developing and producing innovative, high-quality products in sizes, colors, and styles that appeal to consumers of varying demographics; (iv) competitively pricing our products and creating a compelling value proposition for consumers; (v) providing strong and effective marketing support in several diverse demographic markets, including through digital and social media platforms in order to stay better connected to consumers; (vi) establishing relationships with athletes, musicians, influencers, and other celebrities to promote our brands and products; (vii) providing attractive, reliable, secure, and user-friendly digital commerce sites; (viii) adapting to changes in technology, including the successful utilization of data analytics, artificial intelligence, and machine learning; (ix) obtaining sufficient and desirable retail floor space and effective presentation of our products at stores and shop-within-shops; (x) attracting consumer traffic to stores, shop-within-shops, and digital commerce sites; (xi) sourcing sustainable and traceable raw materials at cost-effective prices; (xii) anticipating and maintaining proper inventory levels; (xiii) ensuring product availability and optimizing supply chain and distribution efficiencies with third-party manufacturers and retailers; (xiv) maintaining and growing market share; (xv) recruiting and retaining talent to operate our retail stores, distribution centers, and various corporate functions; (xvi) protecting our intellectual property; and (xvii) ability to withstand prolonged periods of adverse economic conditions or business disruptions.
Some of our competitors may be significantly larger and more diversified and may have greater financial, marketing, and distribution resources, more desirable store locations, and/or greater digital commerce presence than us, among other competitive advantages. Such competitive advantages may enable them to better withstand unfavorable economic conditions, compete more effectively on the basis of price and production, and/or more quickly respond to rapidly changing fashion trends and consumer preferences than us. In addition, technological advances and the retail industry's low barriers to entry allow for the introduction of new competitors and products at a rapid pace, which has been further compounded by the increasing shift to digital shopping channels. Any increased competition, or our failure to adequately address any of these competitive factors, could result in reduced market share or sales, which could adversely affect our business.
The success of our business depends on our ability to retain the value and reputation of our brands.
Our success depends on the value and reputation of our brands and our ability to consistently anticipate, identify, and respond to customers' demands, preferences, and fashion trends in the design, pricing, and production of our products, including the preference for certain products to be manufactured in the U.S., and deliver high-quality and sustainable products supported by engaging marketing campaigns. Any negative publicity regarding Mr. R. Lauren, or other members of our management team, or our Company as a whole, especially through social media which accelerates and increases the potential scope of negative publicity, could adversely impact the image of our brands with our customers and result in diminished loyalty to our brands and potentially lead to adverse consumer actions, including boycotts, even if the subject of such publicity is unverified or inaccurate and we seek to correct it. Consumer sentiment can also be influenced by our partnership with athletes and other public figures, our relationships with wholesale customers, licensees, and suppliers, our views on political and social issues, or our long-term initiatives and goals regarding our impact on the environment and society as a whole, among other factors. Even if we react appropriately to negative publicity, our customers' perception of our brand image and our reputation could be negatively impacted. Any failure on our part to retain the value and reputation of brands could adversely impact our business.
Our trademarks and other intellectual property rights may not be adequately protected outside the U.S.
Our trademarks, intellectual property, and other proprietary rights are extremely important to our success and our competitive position. We devote substantial resources to the establishment and protection of our trademarks and anti-counterfeiting activities worldwide. However, significant counterfeiting and imitation of our products continue to exist. In addition, the laws of certain foreign countries may not protect trademarks or other proprietary rights to the same extent as do the laws of the U.S. and, as a result, our intellectual property may be more vulnerable and difficult to protect in such countries. Over the course of our international expansion, we have experienced conflicts with various third parties that have acquired or claimed ownership rights to some of our key trademarks that include Polo and/or a representation of a polo player astride a horse, or otherwise have contested our rights to our trademarks. We have resolved certain of these conflicts through both legal action and negotiated settlements. We cannot guarantee that the actions we have taken to establish and protect our trademarks and other proprietary rights will be adequate to prevent counterfeiting, lost business, or brand dilution, any of which may have a material adverse effect on our business. We expect to continue to devote substantial resources to challenge brands imitating our products. Also, there can be no assurance that others will not assert rights in, or ownership of, trademarks and other proprietary rights of ours or that we will be able to successfully resolve these types of conflicts to our satisfaction or at all.
Our business is subject to risks related to leasing real estate and other assets under long-term, non-cancellable leases.
We generally operate most of our stores and corporate facilities under long-term, non-cancellable leasing arrangements. Our retail store leases typically require us to make minimum rental payments, and often contingent rental payments based upon sales. In addition, our leases generally require us to pay our proportionate share of the cost of insurance, taxes, maintenance, and utilities. We generally cannot cancel our leases at our option. If we decide to close a store, or if we decide to downsize,
consolidate, or relocate any of our corporate facilities, we may incur an impairment charge and/or exit costs associated with the disposal of the store or corporate facility. In addition, we may remain obligated under the applicable lease for, among other things, payment of the base rent for the remaining lease term, even after the space is exited or otherwise closed and even if such closures are beyond our control (such as forced store closures resulting from pandemic diseases). Such costs and obligations related to the early or temporary closure of our stores or termination of our leases could have a material adverse effect on our business. In addition, certain of our leases include renewal options or terms that require rental payments to be adjusted to reflect current fair market rental rates, which could be significantly higher than the prior term's rental payments. Further, as each of our leases naturally expires, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could lead to store closures resulting in lost sales.
A substantial portion of our revenue is derived from a limited number of large wholesale customers. Our business could be adversely affected as a result of consolidations, liquidations, restructurings, other ownership changes in the retail industry, and/or any financial instability of our large wholesale customers.
Several of our department store customers, including some under common ownership, account for a significant portion of our wholesale net sales. A substantial portion of sales of our licensed products by our domestic licensing partners are also made to our largest department store customers. Sales to our three largest wholesale customers accounted for approximately 12% of total net revenues for Fiscal 2025, and these customers accounted for approximately 25% of our total gross trade accounts receivable outstanding as of March 29, 2025. Approximately 70% of sales to our three largest wholesale customers related to our North America segment and approximately 30% related to our Europe segment.
While we have long-standing relationships with the majority of our wholesale customers, we typically do not enter into long-term agreements with them. Instead, we enter into a number of purchase order commitments with our customers for each of our product lines every season. A decision by the controlling owner of a group of stores or any other significant customer, whether motivated by economic conditions, financial difficulties, competitive conditions, or otherwise, to decrease or eliminate the amount of merchandise purchased from us or our licensing partners or to change their manner of doing business with us or our licensing partners or a change based on their new strategic and operational initiatives, including their continued focus on further development of "private labels" and exclusive product offerings in an effort to differentiate themselves from competitors, could have a material adverse effect on our business.
The department store sector has experienced numerous consolidations, restructurings, bankruptcies, and other ownership changes in recent times, which could potentially increase in frequency as a result of current adverse economic conditions, including changes to existing trade policies and agreements (including higher tariffs on U.S. imports), ongoing inflationary pressures and high interest rates, and/or changes in consumer shopping preferences, such as the continued shift away from traditional brick and mortar wholesale retailers to larger online retailers. Such disruptions have typically resulted in actual or anticipated bankruptcies (such as Hudson Bay Company's recent bankruptcy filing), store closures (such as Macy's previously announced plan to close 150 stores over a 3-year period through calendar 2026), centralized purchasing decisions, and increased emphasis on inventory management and productivity, which could result in fewer stores carrying our products or reduced demand of our products by our wholesale customers. There can be no assurance that our wholesale customers have adequate financial resources and/or access to additional capital to withstand prolonged periods of adverse economic conditions. The loss of one or more significant wholesale customers, or the loss of a large number of smaller wholesale customers, could have a material adverse effect on our business. Furthermore, the consolidation or other changes with respect to our wholesale customers could decrease our opportunities in the market, increase our reliance on a smaller number of large wholesale customers, and/or decrease our negotiating strength with our wholesale customers.
Certain of our large wholesale customers, particularly those located in the U.S., have been highly promotional and have aggressively marked down their merchandise, including our products at times in the past. The continuation of such promotional activity could negatively impact our brand image and/or lead to requests from those customers for increased end-of-season markdown allowances. In response and in connection with our growth plan, we strategically reduce shipments to certain of our customers and exit less productive doors when deemed appropriate.
We sell our wholesale merchandise primarily to major department stores, specialty stores, and third-party digital partners across North America, Europe, Asia, Australia, and New Zealand, and extend credit based on an evaluation of each wholesale customer's financial condition, usually without requiring collateral. However, the financial difficulties of a wholesale customer could cause us to limit or eliminate our business with that customer. We may also assume more credit risk relating to that customer's receivables. Our inability to collect on our trade accounts receivable from any one of these customers could have a material adverse effect on our business. See Item 1 - "Business - Wholesale Credit Control."
We have a substantial amount of indebtedness which could restrict our ability to engage in additional capital-related transactions in the future.
As of March 29, 2025, our consolidated indebtedness was approximately $1.1 billion, comprised of our outstanding unsecured senior notes. We also maintain several credit and overdraft facilities, including our Global Credit Facility, which collectively had a remaining availability of approximately $805 million as of March 29, 2025. Accordingly, the amount of our indebtedness could further increase materially if we decide to draw upon our credit or overdraft facilities. This substantial level of indebtedness could have adverse consequences to our business, including (i) making it more difficult to satisfy our debt obligations as they become due; (ii) impairing our ability to obtain additional financing in the future; (iii) requiring a substantial portion of our cash flows from operations to be used for the payment of principal and interest on our indebtedness, thereby reducing the amount of cash available to fund working capital needs, capital expenditures, and other general corporate purposes; (iv) limiting our flexibility to plan for, or react to, changes in our business; and (v) increasing our vulnerability to adverse economic and industry conditions.
We rely on our operating cash flows to repay our outstanding borrowings, as well as to fund any working capital needs, capital expenditures, dividend payments, share repurchases, and other general corporate purposes. Prolonged periods of adverse economic conditions or business disruptions in any of our key regions, or a combination thereof, 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. Credit rating agencies also periodically review our capital structure and our ability to generate earnings. A prolonged period of deteriorated financial performance or our inability to comply with debt covenants (as discussed below) could make future financing more difficult to secure and/or expensive. Further, factors beyond our control, such as adverse economic conditions, could disrupt capital markets and limit the availability or willingness of financial institutions to extend capital to us in the future.
Certain of our debt instruments contain a number of affirmative and negative covenants, including maintaining a leverage ratio at or below a specified level. Our failure to comply with such covenants or otherwise secure temporary waivers of non-compliance, could result in the termination of the related facilities and/or our lenders demanding any amounts outstanding to be immediately repaid, which could have a material adverse effect on our business. Further, even if we are able to obtain waivers of non-compliance, such waivers may result in incremental fees, higher interest rates, and/or additional restrictions and covenants.
Additionally, interest rates have been at elevated levels in recent years and it is uncertain if and when such rates may decline. Higher interest rates may increase the cost of any borrowings under our various credit and overdraft facilities, as well as negatively impact consumer sentiment and the global economy as a whole, which could result in a material adverse effect on our business.
We rely on our licensing partners to preserve the value of our licenses. Failure to maintain licensing partners could harm our business.
The risks associated with our own products also apply to our licensed products in addition to any number of possible risks specific to a licensing partner's business, including risks associated with a particular licensing partner's ability to (i) obtain capital; (ii) execute its business plans; (iii) manage its labor relations; (iv) maintain relationships with its suppliers and customers; (v) generate sufficient cash flows to fund its operations and pay its obligations as they become due, including minimum royalties due to us; (vi) withstand prolonged periods of adverse economic conditions; (vii) manage its credit and bankruptcy risks effectively; and (viii) protect the value and reputation of our brands.
Although a number of our license agreements prohibit our licensing partners from entering into licensing arrangements with our competitors, our licensing partners generally are not precluded from offering, under other non-competitor brands, the types of products covered by their license agreements with us. A substantial portion of sales of our products by our domestic licensing partners are also made to our largest customers. While we have significant control over our licensing partners' products and advertising, we rely on our licensing partners for, among other things, operational and financial control over their businesses. Changes in management, reduced sales of licensed products, poor execution, or financial difficulties with respect to any of our licensing partners could adversely affect our revenues, both directly from reduced licensing revenue received and indirectly from reduced sales of our other products. Although we believe that we could replace our existing licensing partners in most circumstances, if necessary, our inability to do so for any period of time could have a material adverse effect on our business.
Our business could be adversely affected by man-made or natural disasters and other catastrophic events in the locations in which we or our customers or suppliers operate.
Our operations, including retail, distribution, warehousing, and corporate operations, are susceptible to man-made or natural disasters, including severe weather, geological events, pandemic diseases, and other catastrophic events, such as terrorist attacks and military conflicts, any of which could disrupt our operations. In addition, the operations of our customers and suppliers could experience similar disruptions. The occurrence of natural disasters or other catastrophic events may result in sudden disruptions in the business operations of the local and regional economies affected, as well as the global economy as a whole, including, but not limited to, shortages and/or rising costs of raw materials or energy, public health issues, system failures, and reduced retail traffic. The occurrence of such events could also adversely affect financial markets and the availability of capital. In addition, our business can be affected by unseasonable weather conditions, such as extended periods of unseasonably warm temperatures in the winter or unseasonably cold temperatures in the summer. There is growing concern that climate change may increase both the frequency and severity of extreme weather conditions and natural disasters. Any of these events could result in decreased demand for our products and disruptions in our sales channels and manufacturing and distribution networks, which could have a material adverse effect on our business.
Risks Related to Information Systems and Data Security
A data security or privacy breach could damage our reputation and our relationships with our customers or employees, expose us to litigation risk, and adversely affect our business.
We are dependent on information technology systems and networks, including the Internet, for a significant portion of our direct-to-consumer sales, including our digital commerce operations and retail business credit card transaction authorization and processing (among other electronic payment methods that we accept). We are also responsible for storing data relating to our customers and employees and rely on third parties for the operation of our digital commerce sites and for the various social media tools and websites we use as part of our marketing strategy. In our normal course of business, we often collect, transmit, and/or retain certain sensitive and confidential customer information, including credit card information. There is significant concern by consumers, employees, and lawmakers alike over the security of personal information transmitted over the Internet, consumer identity theft, and user privacy.
Cyber-criminals are constantly devising new, sophisticated schemes to gain unauthorized access to computer systems and confidential or sensitive data, including through the use of artificial intelligence. Despite the security measures we currently have in place (including those described in Item 1C - "Cybersecurity"), our facilities and systems and those of our third-party service providers may be vulnerable to targeted or random attacks that could lead to security breaches, acts of vandalism, phishing attacks, denial-of-service attacks, computer viruses, malware, ransomware, misplaced or lost data, programming and/or human errors, or other Internet or email events. Further, our employees may intentionally or inadvertently cause data security breaches that result in the unauthorized access or release of our private and sensitive information, the risk of which may be compounded as the use of artificial intelligence becomes more prevalent. The extensive use of smartphones, tablets, and other wireless devices, as well as our hybrid work policy, under which a substantial portion of our corporate employees work remotely for part of the work week, heighten these and other operational risks. Given the sensitive nature of information collected and processed, the retail industry in particular continues to be the target of many cyber-attacks, which are becoming increasingly more frequent and difficult to anticipate, prevent, and timely detect due to their rapidly evolving nature. Furthermore, economic sanctions issued by one country against another or trade disputes could increase the risk of retaliatory state-sponsored cyber-attacks. Given the rapidly evolving nature, sophistication, and complexity of cyber-attacks, despite our reasonable efforts to mitigate and prevent such attacks, it is possible that we may not be able to anticipate, prevent, timely detect, or implement effective preventive measures to protect against all cyber-attack incidents.
Although we have purchased network security and cyber liability insurance to provide a level of financial protection should a data breach occur, such insurance may not cover us against all claims or costs associated with such a breach, and we cannot be certain that such insurance will continue to be available to us on economically reasonable terms or at all, or that our insurers will not deny coverage as to any future claim. Additionally, the technology we use to protect our systems from being breached or compromised could become outdated as a result of advances in computer capabilities or other technological developments, thereby requiring us to make further investments in capital or other resources to protect us against cyber-attacks, the cost of which could be significant. Further, measures we implement to protect our computer systems against cyber-attacks may make them harder to use or reduce the speed at which they operate, which in turn could negatively impact our customers' shopping experience resulting in reduced website traffic, diminished loyalty to our brands, and lost sales.
If unauthorized parties gain access to our networks or databases, or those of our vendors, they may be able to steal, publish, delete, modify, or block our access to our private and sensitive internal and third-party information. Any perceived or actual electronic or physical security breach involving the misappropriation, loss, or other unauthorized disclosure of confidential or personally identifiable information, including penetration of our network security, whether by us or by a third
party, could disrupt our business, result in negative media attention, severely damage our reputation and our relationships with our customers, employees, or vendors, expose us to risks of litigation, significant fines and penalties, liability, and higher costs for insurance or insurance not being available to us on economically feasible terms or at all, and result in deterioration in our customers', employees', or vendors' confidence in us, and adversely affect our business, results of operations, and financial condition. Since we do not control third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future, any perceived or actual unauthorized disclosure of personally identifiable information regarding our employees, customers, or website visitors could harm our reputation and credibility, result in lost sales, impair our ability to attract website visitors, and/or reduce our ability to attract and retain employees and customers. As these threats develop and grow, we may find it necessary to make significant further investments to protect data and our infrastructure, including the implementation of new computer systems or upgrades to existing systems, deployment of additional personnel and protection-related technologies, engagement of third-party consultants, and training of employees.
In addition, the regulatory environment relating to information security and privacy is becoming increasingly more demanding with frequent new requirements surrounding the handling, protection, and use of personal and sensitive information. We may incur significant costs in complying with the various applicable state, federal, and foreign laws regarding protection of, and unauthorized disclosure of, personal information. Additionally, failing to comply with such laws and regulations could damage the reputation of our brands and lead to adverse consumer actions, as well as expose us to government enforcement action and/or private litigation, any of which could adversely affect our business.
Our business could suffer if our computer systems and websites are disrupted or cease to operate effectively.
We are dependent on our computer systems to record and process transactions and manage and operate our business, including designing, marketing, manufacturing, importing, tracking, and distributing our products, processing payments, accounting for and reporting financial results, and managing our employees and employee benefit programs. In addition, we have digital commerce and other informational websites in North America, Europe, and Asia, and have plans for additional digital commerce sites in the future. Further, we utilize technology in the execution of our digital brand engagement and social media communication initiatives. We have also implemented a hybrid work policy, allowing a substantial portion of our corporate employees to work remotely for part of the work week. Given the complexity of our business and the significant number of transactions that we engage in on a daily basis, it is imperative that we maintain uninterrupted operation of our computer hardware and software systems.
Despite our preventative efforts, our systems are vulnerable to damage or interruption from, among other things, security breaches, computer viruses, technical malfunctions, inadequate system capacity, power outages, natural disasters, and usage errors by our employees or third-party consultants. If our information technology systems become damaged or otherwise cease to function properly, we may have to make significant investments to repair or replace them. Additionally, confidential or sensitive data related to our customers, employees, or vendors could be lost or compromised.
We are continually improving and upgrading our computer systems, software, and related processes. As described in Item 1 - "Business - Recent Developments," we are in the early stages of executing a large-scale multi-year transformational project, which entails upgrading and enhancing our technology infrastructure to better enable us to implement process changes to improve productivity and operational efficiencies on a global scale (the "Next Generation Transformation project" or "NGT project"). A system project of this scope requires a significant investment in human and financial resources and involves many risks and uncertainties, including failure to operate as designed, failure to properly integrate with other systems, potential loss of data or information, cost overruns, and implementation delays. Any disruptions, delays, or deficiencies in the design, implementation, or transition of such systems could also result in disruptions to our business operations, including the sourcing, sale, and shipment of our product, delays in the collection of cash from our customers, diversion of management attention, and/or adversely affect our ability to accurately report our financial results in a timely manner or otherwise maintain compliance with internal controls. There is also no guarantee that we will realize the anticipated global synergies and benefits related to this project. Any material disruptions in our information technology systems could have a material adverse effect on our business.
Risks Related to Citizenship and Sustainability Issues
Our business could suffer if we fail to meet our global citizenship and sustainability goals or if such goals do not meet the expectations of our stakeholders.
There is an increased focus from consumers, employees, investors, advocacy groups, and other stakeholders regarding environmental, social, and governance ("ESG") matters. Furthermore, investors have placed increased importance on the social cost of their investments. We have established certain long-term initiatives and goals regarding our impact on natural resources and society as a whole as part of our Global Citizenship & Sustainability strategy, with the aim of future-proofing our business for years to come. However, there can be no assurance that our various stakeholders will agree with our initiatives, or if we will be successful in achieving our goals by our targeted dates or at all. Further, we could incur additional costs, face market and
technological barriers, and require additional resources to monitor, report, and comply with various citizenship and sustainability practices. Our failure, or perceived failure, to achieve our goals could damage the reputation of our brands and lead to adverse consumer actions and/or investment decisions by investors, as well as our ability to attract and retain employees.
Conversely, in recent years, negative sentiment towards corporate goals and initiatives related to these areas has gained momentum in the U.S., which has been accompanied by the proposal or enactment of policies, legislation, or initiatives by several state legislatures and by the U.S. federal government intended to prohibit or limit consideration of ESG matters by corporations and investors. Additionally, we could also be criticized by stakeholders who share such sentiment for having certain initiatives and goals or for any revisions to such initiatives or goals. We may not be able to meet the increasingly diverging expectations and perspectives on these topics and could be subjected to scrutiny that could adversely affect our reputation, business, financial performance and growth.
Climate change, or our ability to adhere to any legislation and regulatory requirements related to climate change, traceability and transparency, product labeling, or other sustainability matters may adversely affect our business.
Our business is susceptible to risks associated with climate change, including potential disruptions to our retail stores, distribution centers, and corporate facilities or those facilities of our wholesale customers, licensees, logistics partners, and suppliers. Increased frequency and/or severity of extreme weather events due to climate change could adversely impact global supply chains, including the availability, quality, and cost of raw materials (such as cotton, a key raw material used in the production of our products that is highly susceptible to severe weather conditions), the ability of our manufacturers to fulfill our orders timely and to our specifications, and shipping disruptions and/or higher freight costs. An increase in extreme weather conditions could also result in more frequent damage and/or closures of our stores, distribution centers, and corporate facilities, adversely impact retail traffic, consumer's disposable income levels or spending habits on discretionary items, or otherwise disrupt business operations in the communities in which we operate, any of which could result in lost sales or higher costs.
In addition, many countries in which we and our suppliers and wholesale customers operate have begun enacting new legislation and regulations intended to reduce or mitigate the potential impacts of climate change, which could result in higher sourcing, operational, and compliance-related costs. Such proposed measures also include expanded disclosure requirements regarding greenhouse gas emissions, climate change risks, and other climate-related information, including independent auditors providing increasing levels of attestation to the accuracy of such disclosures. There has also been increased focus by governmental and non-governmental organizations, consumers, customers, and other stakeholders on products that are made with more sustainable practices and materials and other sustainability matters, including traceability and transparency, sustainability claims and product labeling requirements, responsible sourcing and deforestation, design for circularity, the use of energy, water, and synthetic fibers, and the recyclability or recoverability of packaging, product, and materials. It is becoming increasingly complex to monitor, assess, and ultimately comply with such new laws and regulations due to the rapid speed at which such legislation is evolving, coupled with inconsistencies or contradictions between jurisdictions. Our ability to comply with any such new laws and regulations or otherwise meet our various stakeholders' expectations may lead to increased costs and operational complexity, including, but not limited to, implementation of new information technology systems and the development of controls and processes surrounding the completeness and accuracy of the data being reported. Any failure on our part to comply with such regulations or meet such expectations could lead to adverse investment decisions by investors, lost sales resulting from our inability to sell our products in applicable jurisdictions and/or adverse consumer purchase decisions, as well as expose us to government enforcement action and/or private litigation.
Risks Related to Regulatory, Legal, and Tax Matters
Our ability to conduct business globally may be affected by a variety of legal, regulatory, political, and economic risks.
Our ability to capitalize on growth in new international markets and to maintain our current level of operations in our existing markets is subject to certain risks associated with operating in various locations around the globe. These include, but are not limited to (i) complying with a variety of U.S. and foreign laws and regulations, including, but not limited to, trade, product labeling, and product safety restrictions, as well as forced labor regulations such as the Uyghur Forced Labor Prevention Act ("UFLPA") and the Countering America's Adversaries Through Sanctions Act ("CAATSA"), both of which prohibit the importation of goods made in whole or in part in certain territories, or by certain identified entities, and grants U.S. Customs & Border Protection the authority to detain, exclude, or seize goods and assess monetary penalties and fines, the Foreign Corrupt Practices Act, which prohibits U.S. companies from making improper payments to foreign officials for the purpose of obtaining or retaining business, and similar foreign country laws, such as the U.K. Bribery Act, which prohibits U.K. and related companies from any form of bribery; (ii) the imposition of additional duties, tariffs, taxes, and other charges or other barriers to trade; (iii) changes in diplomatic and trade relationships; (iv) general economic fluctuations in specific countries or markets; (v) unexpected changes in laws, judicial processes, or regulatory requirements; (vi) adapting to local customs and culture; (vii) civil and political instability, military conflicts, terrorist attacks, and other hostilities; and (viii) pandemic diseases.
The future geopolitical landscape remains particularly uncertain. Any resulting changes in international trade relations, legislation and regulations (including those related to tariffs, importation, and taxation), or economic and monetary policies, or heightened diplomatic tensions or political and civil unrest, among other potential impacts (all as described within other risk factors herein), could adversely impact the global economy and our operating results. Any negative sentiment toward the U.S. as a result of any such changes could also adversely affect our business.
Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results.
We are subject to income and non-income taxes in many U.S. and certain foreign jurisdictions, with the applicable tax rates varying by jurisdiction. We record tax expense based on our estimates of future payments, which include reserves for uncertain tax positions in multiple tax jurisdictions. At any given time, multiple tax years are subject to audit by various taxing authorities. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. As a result, we expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur and exposures are evaluated. Our effective tax rate in a given financial statement period may also be materially impacted by changes in the mix and level of earnings by jurisdiction or by changes to existing accounting rules. Additionally, our products are subject to import and excise duties, and/or sales, consumption, value-added taxes ("VAT"), and other non-income taxes in certain international jurisdictions. Failure to correctly calculate or submit the appropriate amount of income or non-income taxes could subject us to substantial fines and penalties and adversely affect our business.
In addition, the tax laws and regulations in the countries where we operate may change, or there may be changes in interpretation and enforcement of existing tax laws, which could materially affect our income tax expense in our consolidated financial statements. For example, the Organisation for Economic Co-operation and Development (the "OECD"), which represents a coalition of member countries, has proposed changes to numerous long-standing tax principles through its Base Erosion and Profit Shifting project, which is focused on a number of issues, including the creation of a global minimum tax rate of 15% commonly referred to as "Pillar Two." Although the U.S. effectively withdrew from the OECD global tax agreement in January 2025, other countries where we conduct business, including Switzerland, the United Kingdom, and Germany, have enacted similar legislation implementing Pillar Two rules (in whole or in part), and additional countries could implement related legislation in the future. We cannot be certain if or when other countries will enact new legislation or how closely any such new legislation will align with the OECD's Pillar Two framework. While we continue to evaluate the impact of these legislative changes as new guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. Accordingly, although our business has not currently been materially impacted by those countries that have enacted Pillar Two rules to date, we cannot guarantee that such impacts will remain immaterial to our business in the future. Furthermore, other taxing authorities of certain state, local, and other foreign jurisdictions may also decide to modify existing tax laws. We cannot predict which, if any, of these items or others will be enacted into law or the resulting impact any such enactment will have on our business operations, which could be material.
Our business could suffer if we fail to comply with labor laws or if one of our manufacturers fails to use acceptable labor or environmental practices.
We are subject to labor laws governing relationships with employees, including minimum wage requirements, overtime, working conditions, and citizenship requirements. Compliance with these laws may lead to increased costs and operational complexity and may increase our exposure to governmental investigations or litigation. In addition, we require our licensing partners and independent manufacturers to operate in compliance with applicable laws and regulations. We also require our manufacturers to make progress toward our citizenship and sustainability goals, including those related to the environment and employee safety and well-being, among others. While our internal and vendor operating guidelines promote ethical business practices and our employees periodically visit and monitor the operations of our independent manufacturers, we do not control these manufacturers or their labor practices. The violation of any ethical, social, product safety, labor, health, environmental, privacy, or other standards and regulations by an independent manufacturer used by us or one of our licensing partners, could interrupt or otherwise disrupt the shipment of finished products to us, subject us to litigation, and/or damage our reputation. Any of these events, in turn, could have a material adverse effect on our business.
Certain legal proceedings, regulatory matters, and accounting changes could adversely affect our business.
We are involved in certain legal proceedings and regulatory matters and are subject from time to time to various claims involving alleged breach of contract claims, intellectual property and other related claims, escheatment and unclaimed property, credit card fraud, security breaches in certain of our retail store information systems, employment issues, consumer matters, lease disputes, and other litigation. Certain of these lawsuits and claims, if decided adversely to us or settled by us, could result in material liability to our Company or have a negative impact on our reputation or relations with our employees, customers, licensing partners, or other third parties. Other potential claimants may also be encouraged to bring suits against us based on a settlement from us or adverse court decision against us for similar claims or allegations as their own. In addition, regardless of the outcome of any litigation or regulatory proceedings, such proceedings could result in substantial costs and may require our
Company to devote substantial time and resources to defend itself. Further, changes in governmental regulations both in the U.S. and in other countries where we conduct business operations could have an adverse impact on our business. See Item 3 - "Legal Proceedings" for further discussion of our Company's legal matters.
In addition, we are subject to changes in accounting rules and interpretations issued by the Financial Accounting Standards Board and other regulatory agencies. If and when effective, such changes to accounting standards could have a material impact on our consolidated financial statements. See Note 4 to the accompanying consolidated financial statements for a discussion of certain recently issued accounting standards.
Risks Related to our Common Stock
The trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our earnings or other financial performance, including our ability to return value to shareholders.
Our business planning process is designed to maximize our long-term strength, growth, and profitability, and not to achieve an earnings target in any particular fiscal quarter. We believe that this longer-term focus is in the best interests of our Company and our stockholders. However, we also recognize that, from time to time, it may be helpful to provide investors with guidance as to our quarterly and annual forecast of net sales and earnings. While we generally expect to provide updates to our guidance when we report our results each fiscal quarter, we do not have any responsibility to update any of our guidance or other forward-looking statements at such times or otherwise. In addition, any longer-term guidance that we provide is based on goals that we believe, at the time guidance is given, are reasonably attainable. However, such long-range targets are more difficult to predict than our current quarter and full fiscal year expectations. Additionally, external analysts and investors may publish their own independent predictions of our future performance. We do not endorse such predictions or assume any responsibility to correct such predictions when they differ from our own expectations. If, or when, we announce actual results that differ from those that have been predicted by us, outside analysts, or others, the market price of our securities could be adversely affected. Investors who rely on these predictions when making investment decisions with respect to our securities do so at their own risk. We take no responsibility for any losses suffered as a result of such changes in the prices of our securities. Furthermore, the stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Accordingly, public perception and other factors outside of our control may impact our stock price, regardless of our actual operating performance.
In addition, we have historically returned value to shareholders through our payment of quarterly cash dividends and common stock share repurchases. Investors may have an expectation that we will continue to pay quarterly cash dividends, further increase our cash dividend rate, and/or repurchase shares available under our Class A common stock repurchase program. Our ability to pay quarterly cash dividends and repurchase our Class A common stock will depend on our ability to generate sufficient cash flows from operations in the future. This ability may be subject to certain economic, financial, competitive, and other factors that are beyond our control, such as impacts related to pandemic diseases, which in the past had resulted in us temporarily suspending our quarterly cash dividend and share repurchases. Although both of these programs are currently active, our Board of Directors may, at its discretion, elect to suspend or otherwise alter these programs at any time. The market price of our securities could be adversely affected if our cash dividend payments and/or Class A common stock share repurchase activity differ from investors' expectations.
Furthermore, stockholder activism, which could take many forms or arise in a variety of situations, remains popular with many public investors. Due to the potential volatility of our stock price and for a variety of other reasons, we may become the target of securities litigation or stockholder activism. Responding to stockholder activist campaigns may result in increased costs and diversion of management's attention and resources.
The voting shares of our Company's stock are concentrated in one majority stockholder.
As of March 29, 2025, Mr. Ralph Lauren, or entities controlled by the Lauren family, held approximately 85% of the voting power of the outstanding common stock of our Company. In addition, Mr. R. Lauren serves as our Executive Chairman and Chief Creative Officer, Mr. R. Lauren's son, Mr. David Lauren, serves as our Chief Branding and Innovation Officer, Strategic Advisor to the CEO, and Vice Chairman of the Board of Directors, and we employ other members of the Lauren family. From time to time, we may have other business dealings with Mr. R. Lauren, members of the Lauren family, or entities affiliated with Mr. R. Lauren or the Lauren family. As a result of his stock ownership and position in our Company, Mr. R. Lauren has the ability to exercise significant control over our business, including, without limitation, (i) the election of our Class B common stock directors, voting separately as a class and (ii) any action requiring the approval of our stockholders, including the adoption of amendments to our certificate of incorporation and the approval of mergers or sales of all or substantially all of our assets.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

---

ITEM 2. PROPERTIES
Item 2. Properties.
We primarily lease space for our retail stores, showrooms, warehouses, and offices in various domestic and international locations. We do not own any real property except for our retail digital commerce call center and distribution facility in High Point, North Carolina, and our retail stores in Southampton and Easthampton, New York, and Nantucket, Massachusetts, which we own.
We believe that our existing facilities are well maintained, in good operating condition, and are adequate for our present level of operations.
The following table sets forth information relating to our principal properties as of March 29, 2025:
Location Use Approximate
Square Feet
NC Highway 66, High Point, NC Wholesale and retail distribution facility 1,047,000
N. Pendleton Street, High Point, NC Retail digital commerce call center and distribution facility 805,000
601 West 26th Street, NYC Corporate offices and showrooms 380,200
650 Madison Avenue, NYC Executive and corporate offices, design studio, and showrooms 182,000
Long Island City, NY Corporate offices, design and digital production studios, showrooms, and warehousing 169,600
Gunpo, South Korea Wholesale and retail distribution facility 133,100
Nutley, NJ Corporate offices 92,500
Spinners Building, Hong Kong Asia sourcing offices 69,200
Gateway Office, Hong Kong Asia corporate offices 37,500
Geneva, Switzerland Europe corporate office 31,200
Seoul, South Korea Asia corporate offices 29,600
Shanghai, China Asia corporate offices 28,800
Watford, UK Europe corporate offices 28,000
Tokyo, Japan Asia corporate offices 24,700
London, UK Europe corporate offices 19,650
888 Madison Avenue, NYC Retail flagship store 37,900
N. Michigan Avenue, Chicago Retail flagship store 37,500
New Bond Street, London, UK Retail flagship store 31,500
867 Madison Avenue, NYC Retail flagship store 27,700
Paris, France Retail flagship store 25,700
Tokyo, Japan Retail flagship store 25,200
N. Rodeo Drive, Beverly Hills Retail flagship store 22,200
Milan, Italy Retail flagship store 14,900
Prince's Building, Hong Kong Retail flagship store 9,500
As of March 29, 2025, we directly operated 564 retail stores, totaling approximately 4.1 million square feet. We expect that we will be able to extend our retail store leases, as well as leases for our non-retail facilities, which expire in the near future on satisfactory terms or otherwise relocate to desirable alternate locations. We generally lease our freestanding retail stores for initial terms ranging from 3 to 10 years, with renewal options. See Item 1A - "Risk Factors - Risks Related to our Business and Operations - Our business is subject to risks related to leasing real estate and other assets under long-term, non-cancellable leases."

---

ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We are involved, from time to time, in litigation, other legal claims, and proceedings involving matters associated with or incidental to our business, including, among other things, matters involving credit card fraud, trademark and other intellectual property, licensing, importation and exportation of our products, taxation, unclaimed property, leases, and employee relations. We believe at present that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our consolidated financial statements. However, our 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.

---

ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of May 16, 2025, there were 595 holders of record of our Class A common stock and 7 holders of record of our Class B common stock. Our Class A common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "RL." All of our outstanding shares of Class B common stock are owned by Mr. Ralph Lauren, Executive Chairman and Chief Creative Officer, and entities controlled by the Lauren family. Shares of our 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 our Class B common stock were converted into Class A common stock during the fiscal quarter ended March 29, 2025.
The following table sets forth repurchases of shares of our Class A common stock during the fiscal quarter ended March 29, 2025:
Total Number of Shares Purchased Average
Price
Paid per
Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs Approximate Dollar
Value of Shares
That May Yet Be
Purchased Under the
Plans or Programs(a)
(millions)
December 29, 2024 to January 25, 2025 - $ - - $ 428
January 26, 2025 to February 22, 2025 - - - 428
February 23, 2025 to March 29, 2025 302,087 (b)
252.85 300,337 352
302,087 300,337
(a) On May 15, 2025 our Board of Directors approved an expansion of the common stock repurchase program that allows us to repurchase up to an additional $1.500 billion of Class A common stock repurchases. Repurchases of shares of Class A common stock are subject to overall business and market conditions.
(b) Includes 1,750 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.
The following graph compares the cumulative total stockholder return (stock price appreciation plus dividends) on our Class A common stock to the cumulative total return of the Standard & Poor's ("S&P") 500 Index and the S&P 1500 Apparel, Accessories & Luxury Goods Index for the period from March 28, 2020, the last day of our 2020 fiscal year, through March 29, 2025, the last day of our 2025 fiscal year. The returns are calculated by assuming a $100 investment made on March 28, 2020 in the Class A common stock and each index, with all dividends reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Ralph Lauren Corporation, the S&P 500 Index, and S&P 1500 Apparel, Accessories & Luxury Goods Index

---

ITEM 6. SELECTED FINANCIAL DATA
Item 6. Reserved

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following management's discussion and analysis of financial condition and results of operations ("MD&A") should be read together with our audited consolidated financial statements and notes thereto, which are included in this Annual Report on Form 10-K. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, Fiscal 2025 ended on March 29, 2025 and was a 52-week period; Fiscal 2024 ended on March 30, 2024 and was a 52-week period; Fiscal 2023 ended on April 1, 2023 and was a 52-week period; and Fiscal 2026 will end on March 28, 2026 and will be a 52-week period.
INTRODUCTION
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 Fiscal 2025. 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 Fiscal 2025 and Fiscal 2024 as compared to the respective prior fiscal year.
•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of March 29, 2025, 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 Fiscal 2025 and Fiscal 2024 as compared to the respective prior fiscal year; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, our supplier finance program, outstanding debt and covenant compliance, common stock repurchases, and payments of dividends; and (iv) a summary of our material cash requirements as of March 29, 2025.
•Market risk management. This section discusses how we manage our risk exposures related to foreign currency exchange rates, interest rates, and our investments as of March 29, 2025.
•Critical accounting policies. This section discusses our critical accounting policies considered to be important to our results of operations and financial condition, which 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 to the accompanying consolidated financial statements.
•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.
OVERVIEW
Our Business
Our Company is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, fragrances, and hospitality. Our long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others.
We diversify our business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (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. We sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operations around the world. Our wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to third parties for specified periods the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel categories, eyewear, fragrances, and home furnishings.
We organize our business into the following three reportable segments:
•North America - Our North America segment, representing approximately 43% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses primarily in the U.S. and Canada. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our outlet stores, and our digital commerce sites, www.RalphLauren.com and www.RalphLauren.ca. Our wholesale business in North America is comprised primarily of sales to department stores and, to a lesser extent, specialty stores.
•Europe - Our Europe segment, representing approximately 31% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Europe and 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, as well as to various third-party digital and licensee partners.
•Asia - Our Asia segment, representing approximately 24% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our outlet stores, our concession-based shop-within-shops, and our various digital commerce sites. In addition, we sell our products online through various third-party digital partner commerce sites. Our wholesale business in Asia is comprised primarily of sales to department stores and various third-party digital and licensee partners.
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 2% of our Fiscal 2025 net revenues, which primarily consist of Ralph Lauren and Chaps branded royalty revenues earned through our global licensing alliances.
Approximately 57% of our Fiscal 2025 net revenues were earned outside of the U.S. See Note 20 to the accompanying consolidated financial statements for further discussion of our segment 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. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting our retail 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 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.
Recent Developments
Next Generation Transformation Project
We are in the early stages of executing a large-scale, multi-year global project that is expected to significantly transform the way in which we operate our business and further enable our long-term strategic pivot towards a global direct-to-consumer-oriented model (the "Next Generation Transformation project" or "NGT project"). The NGT project will be completed in phases and involves the redesigning of certain end-to-end processes and the implementation of a suite of technology systems on a global scale. Such efforts are expected to result in significant process improvements and the creation of synergies across core areas of operations, including merchandise buying and planning, procurement, inventory management, retail and wholesale operations, and financial planning and reporting, better enabling us to optimize inventory levels and increase the speed with which we react to changes in consumer demand across markets, among other benefits.
In connection with the preliminary phase of the NGT project, we incurred other charges of $25.2 million and $5.1 million during Fiscal 2025 and Fiscal 2024, respectively, which were recorded within restructuring and other charges, net in the consolidated statements of operations.
Global Economic Conditions and Industry Trends
The global economy and retail industry are impacted by many uncontrollable factors. Most recently, the U.S. announced significant changes to its trade policies, including widespread tariff increases on imported goods, with potential further increases and revisions or terminations to existing trade agreements. In response, many countries have announced or are otherwise considering retaliatory tariffs on U.S. exports and other trade restrictions. This has led to significant uncertainty regarding the future relationship between the U.S. and other countries, as well as growing concerns about a global trade war, higher inflation, and a potential global recession, which has already caused significant volatility of global stock markets and foreign currency exchange rates.
Other recent economic conditions, including ongoing inflationary pressures, organized labor disputes, high interest rates, significant foreign currency volatility, and military conflicts (as discussed below), continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as to reduce elevated inventory levels, many retailers (particularly in the U.S.) continue to resort to promotional activity in an attempt to offset traffic declines and increase conversion. Furthermore, the department store sector has also experienced consolidations, restructurings, bankruptcies, and other ownership changes in recent times, as well as an increase in store closures.
The global economy has also been negatively impacted by ongoing military conflicts, including the Russia-Ukraine and Israel-Hamas wars, militant attacks on cargo vessels in the Red Sea, and other hostilities in the Middle East. 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 may continue to be, affected by the broader macroeconomic implications resulting from these and other military conflicts, including inflationary pressures, unfavorable foreign currency exchange rates, increases in energy prices, food shortages, and financial market volatility, among other factors, which have adversely impacted consumer sentiment and confidence. It is not clear at this time how long these conflicts will endure, or if they will escalate further with additional countries declaring war against each other, which could further amplify the impacts of the various macroeconomic factors described above and potentially result in a global recession.
The global supply chain has also been negatively impacted by various factors, including disruptions at U.S. ports and in the Red Sea. Although our business has not been significantly impacted by such disruptions, we have experienced some shipping delays impacting the timing of inventory receipts, and if such disruptions were to continue over a prolonged period, it could result in further inventory receipt delays and/or higher freight costs in the near-term and beyond.
We have implemented various global strategies to address many of these challenges and continue to build a foundation for long-term profitable growth by strengthening our consumer-facing areas and driving a more efficient operating model. We continue to monitor the current geopolitical landscape, including the potential impact of higher tariffs should they become effective. We have taken proactive measures in recent years to diversify our supply chain from a geographic perspective and believe we can further mitigate potential cost pressures associated with new tariffs through a combination of our disciplined inventory management, leveraging our relationships with suppliers to reduce product costs, our ability to change country of origin, and pricing actions. However, should the proposed tariffs become effective, our profitability will be negatively impacted. Regarding mitigating inflationary pressures, our strategy includes numerous levers, including our ability to effectively increase prices, leveraging our diversified supply chain and strong supplier relationships, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts. Despite the competitive environment, we plan to continue driving our broader long-term strategy of brand elevation, which includes multiple levers to continue driving average unit retail growth and brand equity.
We will continue to monitor these conditions and trends and adjust our operating strategies to help mitigate the related impacts on our results of operations, while remaining focused on the long-term growth of our business and protecting and elevating the value of our brand.
For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A - "Risk Factors" included in this Annual Report on Form 10-K.
Summary of Financial Performance
Operating Results
In Fiscal 2025, we reported net revenues of $7.079 billion, net income of $742.9 million, and net income per diluted share of $11.61, as compared to net revenues of $6.631 billion, net income of $646.3 million, and net income per diluted share of $9.71 in Fiscal 2024. The comparability of our operating results has been affected by net restructuring-related charges, impairment of assets, and certain other charges (benefits), as well as foreign currency volatility. Our operating results are also susceptible to changes in macroeconomic conditions.
Our operating performance for Fiscal 2025 reflected revenue increases of 6.8% on a reported basis and 7.7% on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. Net revenues reflected growth across all of our reportable segments.
Our gross profit as a percentage of net revenues increased by 180 basis points to 68.6% during Fiscal 2025, primarily driven by the favorable geographic, channel, and product mix, average unit retail ("AUR") growth, and lower cotton costs, more than offsetting incremental pressure from non-cotton product costs and unfavorable foreign currency effects.
Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues increased by 30 basis points to 54.6% during Fiscal 2025, largely attributable to geographic and channel mix, as well as increases across various expense categories, including higher compensation-related expenses and higher marketing investments due to planned key campaign events.
Net income increased by $96.6 million to $742.9 million in Fiscal 2025 as compared to Fiscal 2024, primarily due to a $175.7 million increase in our operating income, partially offset by a $76.7 million increase in our income tax provision. Net income per diluted share increased by $1.90 to $11.61 per share during Fiscal 2025 driven by the higher level of net income and lower weighted-average diluted shares outstanding.
During Fiscal 2025 and Fiscal 2024, our operating results were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $57.8 million and $69.9 million, respectively, which had an after-tax effect of reducing net income by $46.0 million, or $0.72 per diluted share, and $52.6 million, or $0.80 per diluted share, respectively. Net income during Fiscal 2024 also reflected an income tax benefit of $13.1 million, or $0.20 per diluted share, recorded in connection with non-recurring income tax events.
Financial Condition and Liquidity
We ended Fiscal 2025 in a net cash and short-term investments position (calculated as cash and cash equivalents, plus short-term investments, less total debt) of $940.4 million, as compared to $642.7 million as of the end of Fiscal 2024. The increase in our net cash and short-term investments position during Fiscal 2025 as compared to Fiscal 2024 was primarily due to our operating cash flows of $1.235 billion, partially offset by our use of cash to support Class A common stock repurchases of $480.9 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to invest in our business through $216.2 million in capital expenditures, and to make dividend payments of $201.1 million.
Net cash provided by operating activities was $1.235 billion during Fiscal 2025, as compared to $1.070 billion during Fiscal 2024. The net increase in cash provided by operating activities was due to an increase in net income before non-cash charges, as well as a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year.
Our equity increased to $2.589 billion as of March 29, 2025, compared to $2.450 billion as of March 30, 2024 due to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our share repurchase activity and dividends declared during Fiscal 2025.
Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition
The comparability of our operating results for the three fiscal years presented herein has been affected by certain events, including:
•pretax charges incurred in connection with our restructuring activities, as well as certain other benefits (charges) as summarized below (references to "Notes" are to the notes to the accompanying consolidated financial statements):
Fiscal Years Ended
March 29,
2025 March 30,
2024 April 1,
(millions)
Restructuring and other charges, net (see Note 9) $ (57.0) $ (74.9) $ (43.0)
Non-routine inventory benefits (charges)(a)
- 4.5 (15.4)
Impairment of assets (see Note 8) (0.8) - (9.7)
Non-routine bad debt expense reversals(b)
- 0.5 2.1
Total charges, net $ (57.8) $ (69.9) $ (66.0)
(a)Non-routine inventory benefits (charges) are recorded within cost of goods sold in the consolidated statements of operations. The benefits recorded during Fiscal 2024 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 $2 million). Non-routine inventory charges, net recorded during Fiscal 2023 primarily related to the Russia-Ukraine war (approximately $10 million) and delays in U.S. customs shipment reviews and approvals (approximately $5 million).
(b)Non-routine bad debt expense reversals are recorded within SG&A expenses in the consolidated statements of operations. Non-routine bad debt reversals, net recorded during Fiscal 2024 and Fiscal 2023 primarily related to charges previously recognized in connection with the Russia-Ukraine war.
•a one-time tax benefit of $13.1 million recorded within our income tax provision during Fiscal 2024 in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, which decreased our Fiscal 2024 effective tax rate by 170 basis points. See Note 10 to the accompanying consolidated financial statements for further discussion.
Because we are a global company, the comparability of our operating results reported in U.S. Dollars is also affected by foreign currency exchange rate fluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. Such fluctuations can have a significant effect on our reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), our discussions often contain references to constant currency measures, which are calculated by translating 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 for assessing how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe this information is useful to investors for facilitating comparisons of operating results and better identifying trends in our businesses. The constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with U.S. GAAP. Reconciliations between this non-U.S. GAAP financial measure and the most directly comparable U.S. GAAP measure are included in the "Results of Operations" section where applicable.
Our discussion also includes reference to comparable store sales. Comparable store sales refer to the change in sales of our stores that have been open for at least 13 full fiscal 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 the year are excluded from the calculation of comparable store sales. Sales for stores that are either relocated, enlarged (as defined by gross square footage expansion of 25% or greater), or generally closed for 30 or more consecutive days for renovation are also excluded from the calculation of comparable store sales until such stores have been operating in their new location or in their newly renovated state for at least 13 full fiscal months. All comparable store sales metrics are calculated on a 52-week and 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.
RESULTS OF OPERATIONS
Fiscal 2025 Compared to Fiscal 2024
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 table below and the discussion that follows have been calculated using unrounded numbers.
Fiscal Years Ended
March 29,
2025 March 30,
2024 $
Change % / bps
Change
(millions, except per share data)
Net revenues
$ 7,079.0 $ 6,631.4 $ 447.6 6.8 %
Cost of goods sold (2,226.1) (2,199.6) (26.5) 1.2 %
Gross profit
4,852.9 4,431.8 421.1 9.5 %
Gross profit as % of net revenues 68.6 % 66.8 % 180 bps
Selling, general, and administrative expenses (3,863.0) (3,600.5) (262.5) 7.3 %
SG&A expenses as % of net revenues 54.6 % 54.3 % 30 bps
Impairment of assets (0.8) - (0.8) 100.0 %
Restructuring and other charges, net (57.0) (74.9) 17.9 (23.9 %)
Operating income
932.1 756.4 175.7 23.2 %
Operating income as % of net revenues 13.2 % 11.4 % 180 bps
Interest expense (44.1) (42.2) (1.9) 4.6 %
Interest income 74.0 73.0 1.0 1.4 %
Other expense, net (11.3) (9.8) (1.5) 14.5 %
Income before income taxes
950.7 777.4 173.3 22.3 %
Income tax provision (207.8) (131.1) (76.7) 58.6 %
Effective tax rate(a)
21.9 % 16.9 % 500 bps
Net income
$ 742.9 $ 646.3 $ 96.6 14.9 %
Net income per common share:
Basic
$ 11.86 $ 9.91 $ 1.95 19.7 %
Diluted
$ 11.61 $ 9.71 $ 1.90 19.6 %
(a)Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
Net Revenues. Net revenues increased by $447.6 million, or 6.8%, to $7.079 billion in Fiscal 2025 as compared to Fiscal 2024, reflecting growth across all of our reportable segments, partially offset by unfavorable foreign currency effects of $66.1 million. On a constant currency basis, net revenues increased by $513.7 million, or 7.7%.
The following table summarizes the percentage change in our Fiscal 2025 consolidated comparable store sales as compared to the prior fiscal year:
% Change
Digital commerce 9 %
Brick and mortar 10 %
Total comparable store sales 10 %
Our global average store count decreased by 20 stores and concession shops during Fiscal 2025 compared with the prior fiscal year, largely driven by concession shop closures in Asia and lower-tierd outlet store closures in North America. The following table details our retail store presence by segment as of the periods presented:
March 29,
2025 March 30,
Freestanding Stores:
North America 223 230
Europe 104 103
Asia 237 231
Total freestanding stores 564 564
Concession Shops:
North America - 1
Europe 30 27
Asia 641 671
Total concession shops 671 699
Total stores 1,235 1,263
In addition to our stores, we sell products online in North America, Europe, and Asia through our various digital commerce sites, as well as through our Polo mobile apps in the U.S. We also sell products online through various third-party digital 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 prior fiscal year, are provided below:
Fiscal Years Ended $ Change Foreign Exchange Impact $ Change % Change
March 29,
2025 March 30,
2024 As
Reported Constant Currency As
Reported Constant
Currency
(millions)
Net Revenues:
North America $ 3,050.1 $ 2,950.5 $ 99.6 $ (4.3) $ 103.9 3.4 % 3.5 %
Europe 2,174.9 1,968.0 206.9 (13.2) 220.1 10.5 % 11.2 %
Asia 1,709.4 1,566.6 142.8 (48.5) 191.3 9.1 % 12.2 %
Other non-reportable segments 144.6 146.3 (1.7) (0.1) (1.6) (1.1 %) (1.1 %)
Total net revenues $ 7,079.0 $ 6,631.4 $ 447.6 $ (66.1) $ 513.7 6.8 % 7.7 %
North America net revenues - Net revenues increased by $99.6 million, or 3.4%, during Fiscal 2025 as compared to Fiscal 2024. On a constant currency basis, net revenues increased by $103.9 million, or 3.5%.
The $99.6 million increase in North America net revenues was driven by:
•a $118.5 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $121.9 million, reflecting increases of $114.3 million in comparable store sales and $7.6 million in non-comparable store sales. The increase in our comparable store sales reflected high-single digit AUR growth during Fiscal 2025 as compared to the prior fiscal year, as well as higher traffic. The following table summarizes the percentage changes in comparable store sales related to our North America retail business:
% Change
Digital commerce 2 %
Brick and mortar 8 %
Total comparable store sales 6 %
This increase was partially offset by an $18.9 million decline related to our North America wholesale business primarily driven by reduced excess inventory sales in the off-price wholesale channel.
Europe net revenues - Net revenues increased by $206.9 million, or 10.5%, during Fiscal 2025 as compared to Fiscal 2024. On a constant currency basis, net revenues increased by $220.1 million, or 11.2%.
The $206.9 million increase in Europe net revenues was driven by:
•a $132.8 million increase related to our Europe retail business, inclusive of unfavorable foreign currency effects of $6.2 million. On a constant currency basis, net revenues increased by $139.0 million, reflecting increases of $132.8 million in comparable store sales and $6.2 million in non-comparable store sales. The increase in our comparable store sales reflected low-double digit AUR growth during Fiscal 2025 as compared to the prior fiscal year, as well as higher traffic. The following table summarizes the percentage changes in comparable store sales related to our Europe retail business:
% Change
Digital commerce 16 %
Brick and mortar 14 %
Total comparable store sales 15 %
•a $74.1 million increase related to our Europe wholesale business largely driven by stronger re-order trends more than offsetting planned reductions within the off-price wholesale channel and unfavorable foreign currency effects of $7.0 million.
Asia net revenues - Net revenues increased by $142.8 million, or 9.1%, during Fiscal 2025 as compared to Fiscal 2024. On a constant currency basis, net revenues increased by $191.3 million, or 12.2%.
The $142.8 million increase in Asia net revenues was driven by:
•a $167.8 million increase related to our Asia retail business, inclusive of unfavorable foreign currency effects of $46.6 million. On a constant currency basis, net revenues increased by $214.4 million, reflecting increases of $151.4 million in comparable store sales and $63.0 million in non-comparable store sales. The increase in our comparable store sales reflected low-double digit AUR growth during Fiscal 2025 as compared to the prior fiscal year, as well as higher traffic. The following table summarizes the percentage changes in comparable store sales related to our Asia retail business:
% Change
Digital commerce 25 %
Brick and mortar 11 %
Total comparable store sales 12 %
This increase was partially offset by a $25.0 million decline related to our Asia wholesale business, largely driven by decreases in South Korea and Japan.
Gross Profit. Gross profit increased by $421.1 million, or 9.5%, to $4.853 billion in Fiscal 2025, including unfavorable foreign currency effects of $62.8 million. Gross profit as a percentage of net revenues increased to 68.6% in Fiscal 2025 from 66.8% in Fiscal 2024. The 180 basis point improvement was primarily driven by the favorable impact of approximately 70 basis points attributable to geographic and channel mix. The remaining 110 basis point improvement was primarily due to AUR growth of approximately high-single digits, lower cotton costs, and favorable product mix, more than offsetting incremental pressure from non-cotton products costs and unfavorable foreign currency effects of approximately 20 basis points.
Gross profit is the difference between total net revenues and cost of goods sold. Cost of goods sold includes the amounts incurred to acquire and produce inventory for sale to our customers, including product costs, freight-in, and import costs, as well as changes in reserves for shrinkage and inventory realizability. Gains and losses associated with forward foreign currency exchange contracts that are designated and qualifying as cash flow hedges of inventory transactions are also recognized within cost of goods sold when the hedged inventory is sold. The costs of selling merchandise, including those associated with preparing merchandise for sale, such as picking, packing, warehousing, and order charges, are included in SG&A expenses in the consolidated statements of operations. As a result, our gross profit may not be comparable to that of other entities.
Selling, General, and Administrative Expenses. SG&A expenses include costs relating to compensation and benefits, marketing and advertising, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased by $262.5 million, or 7.3%, to $3.863 billion in Fiscal 2025, including favorable foreign currency effects of $30.8 million. SG&A expenses as a percentage of net revenues increased to 54.6% in Fiscal 2025 from 54.3% in Fiscal 2024. The 30 basis point increase was largely attributable to geographic and channel mix resulting from growth of our international and retail businesses which typically carry higher operating expense margins, as well as increases across various expense categories, including higher compensation-related expenses and marketing investments due to planned key campaign events.
The $262.5 million increase in SG&A expenses was driven by:
Fiscal 2025
Compared to
Fiscal 2024
(millions)
SG&A expense category:
Compensation-related expenses $ 118.6
Marketing and advertising expenses 49.3
Rent and occupancy costs 30.2
Non-income-related taxes 24.0
Selling-related expenses 17.6
Other 22.8
Total increase in SG&A expenses $ 262.5
Impairment of Assets. During Fiscal 2025, we recorded impairment charges of $0.8 million to write-down long-lived assets in connection with certain North America wholesale shops that are expected to close earlier than the end of their original estimated useful life due to the related customer declaring bankruptcy. On a comparative basis, no impairment charges were recorded during Fiscal 2024. See Note 8 to the accompanying consolidated financial statements.
Restructuring and Other Charges, Net. During Fiscal 2025 and Fiscal 2024, we recorded net restructuring charges of $20.4 million and $55.8 million, respectively, primarily consisting of severance and benefits costs, as well as other charges of $11.4 million and $14.0 million, respectively, primarily related to rent and occupancy costs associated with certain previously exited real estate locations in connection with our restructuring activities for which the related lease agreements have not yet expired. In addition, during Fiscal 2025 and Fiscal 2024, we recorded other charges of $25.2 million and $5.1 million, respectively, in connection with our Next Generation Transformation project (refer to "Recent Developments" for additional discussion) and recorded other income of $2.8 million and $7.0 million, respectively, related to consideration received from Regent, L.P. in connection with our previously sold Club Monaco business. We donated this income to The Ralph Lauren Corporate Foundation, a non-profit, charitable foundation, which resulted in related offsetting donation expenses of $2.8 million and $7.0 million during Fiscal 2025 and Fiscal 2024, respectively. See Note 9 to the accompanying consolidated financial statements.
Operating Income. Operating income increased by $175.7 million, or 23.2%, to $932.1 million during Fiscal 2025, reflecting unfavorable foreign currency effects of $32.0 million. Our operating results during Fiscal 2025 and Fiscal 2024 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $57.8 million and $69.9 million, respectively. Operating income as a percentage of net revenues was 13.2% in Fiscal 2025, reflecting a 180 basis point improvement from Fiscal 2024. The improvement in operating income as a percentage of net revenues was primarily driven by the increase in our gross margin, as well as lower net restructuring-related charges and certain other charges (benefits) recorded during Fiscal 2025 as compared to the prior fiscal year, partially offset by the increase in SG&A expenses as a percentage of net revenues, all as previously discussed.
Operating income and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the prior fiscal year, are provided below:
Fiscal Years Ended
March 29, 2025 March 30, 2024
Operating
Income Operating
Margin Operating
Income Operating
Margin $
Change Margin
Change
(millions) (millions) (millions)
Segment:
North America $ 640.1 21.0% $ 548.9 18.6% $ 91.2 240 bps
Europe 566.2 26.0% 464.6 23.6% 101.6 240 bps
Asia 413.2 24.2% 335.9 21.4% 77.3 280 bps
Other non-reportable segments
125.8 87.0% 128.9 88.1% (3.1) (110 bps)
Total segment operating income 1,745.3 1,478.3 267.0
Corporate expenses, net (755.4) (647.0) (108.4)
Impairment of assets(a)
(0.8) - (0.8)
Restructuring and other charges, net(a)
(57.0) (74.9) 17.9
Total operating income $ 932.1 13.2% $ 756.4 11.4% $ 175.7 180 bps
(a)See discussion above for additional information related to impairment of assets and restructuring and other charges, net recorded during the fiscal years presented.
North America operating margin improved by 240 basis points due to an increase of 230 basis points in gross margin and a decline of 10 basis points in SG&A expense as a percentage of net revenues. The overall improvement in operating margin was inclusive of the unfavorable impact of approximately 10 basis points attributable to channel mix.
Europe operating margin improved by 240 basis points entirely due to an increase in gross margin. The overall improvement in operating margin was inclusive of the unfavorable impacts of approximately 30 basis points and 20 basis points related to foreign currency effects and channel mix, respectively.
Asia operating margin improved by 280 basis points due to a decline of 190 basis points in SG&A expenses as a percentage of net revenues and an increase of 80 basis points in gross margin. The overall improvement in operating margin was inclusive of the unfavorable impacts of approximately 50 basis points and 20 basis points related to foreign currency effects and channel mix, respectively.
Corporate expenses increased by $108.4 million to $755.4 million in Fiscal 2025 as compared to the prior fiscal year. The increase in corporate expenses was due to higher compensation-related expenses of $50.7 million, higher non-income taxes of $23.9 million, higher marketing and advertising expenses of $13.5 million, lower intercompany sourcing commission of $9.3 million (which is offset at the segment level and eliminates in consolidation), lower non-routine inventory benefits of $4.5 million, and higher other expenses of $22.8 million, partially offset by lower rent and occupancy expenses of $16.3 million.
Non-operating Income (Expense), Net. Non-operating income (expense), net is comprised of interest expense, interest income, and other income (expense), net, which includes foreign currency gains (losses), equity in income (losses) from our equity-method investees, and other non-operating expenses. During Fiscal 2025, we reported non-operating income, net, of $18.6 million as compared to $21.0 million during Fiscal 2024. The $2.4 million decrease in non-operating income, net was primarily driven by higher interest expense.
Income Tax Provision. The income tax provision represents federal, foreign, state and local income taxes. 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 in Fiscal 2025 were $207.8 million and 21.9%, respectively, compared to $131.1 million and 16.9%, respectively, in Fiscal 2024. The $76.7 million increase in our income tax provision was primarily driven by an increase in our pretax income, as well as a 500 basis point increase in our effective tax rate. The increase in our effective tax rate was due to the absence of prior year favorable adjustments related to the accrual of deferred tax assets in connection with a transaction entered into as part of a reorganization of our corporate entity structure, and revaluation of deferred tax assets as a result of tax rate changes enacted in the prior year period, partially offset by a current year favorable adjustment related to the revaluation of a deferred tax liability on foreign earnings. The increase in our effective tax rate was also due to the absence of a one-time tax benefit of $13.1 million recorded during Fiscal 2024 in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, which lowered our prior fiscal year period effective tax rate by 170 basis points. See Note 10 to the accompanying consolidated financial statements.
Net Income. Net income increased to $742.9 million in Fiscal 2025, from $646.3 million in Fiscal 2024. The $96.6 million increase in net income was primarily due to an increase in our operating income, partially offset by an increase in our income tax provision, both as previously discussed. Our operating results during Fiscal 2025 and Fiscal 2024 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $57.8 million and $69.9 million, respectively, which had an after-tax effect of reducing net income by $46.0 million and $52.6 million, respectively. Net income during Fiscal 2024 also reflected an income tax benefit of $13.1 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 $11.61 in Fiscal 2025, from $9.71 in Fiscal 2024. The $1.90 per share increase was primarily driven by the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during Fiscal 2025 driven by our share repurchases during the last twelve months. Net income per diluted share for Fiscal 2025 and Fiscal 2024 were also negatively impacted by $0.72 per share and $0.80 per share, respectively, attributable to net restructuring-related charges, impairment of assets, and certain other charges (benefits), as previously discussed. Net income per diluted share during Fiscal 2024 was also favorably impacted by $0.20 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.
Fiscal 2024 Compared to Fiscal 2023
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 table below and the discussion that follows have been calculated using unrounded numbers.
Fiscal Years Ended
March 30,
2024 April 1,
2023 $
Change % / bps
Change
(millions, except per share data)
Net revenues
$ 6,631.4 $ 6,443.6 $ 187.8 2.9 %
Cost of goods sold (2,199.6) (2,277.8) 78.2 (3.4 %)
Gross profit
4,431.8 4,165.8 266.0 6.4 %
Gross profit as % of net revenues 66.8 % 64.6 % 220 bps
Selling, general, and administrative expenses (3,600.5) (3,408.9) (191.6) 5.6 %
SG&A expenses as % of net revenues 54.3 % 52.9 % 140 bps
Impairment of assets - (9.7) 9.7 (100.0 %)
Restructuring and other charges, net (74.9) (43.0) (31.9) 74.1 %
Operating income
756.4 704.2 52.2 7.4 %
Operating income as % of net revenues 11.4 % 10.9 % 50 bps
Interest expense (42.2) (40.4) (1.8) 4.4 %
Interest income 73.0 32.2 40.8 127.1 %
Other expense, net (9.8) (4.1) (5.7) 142.3 %
Income before income taxes
777.4 691.9 85.5 12.4 %
Income tax provision (131.1) (169.2) 38.1 (22.5 %)
Effective tax rate(a)
16.9 % 24.5 % (760 bps)
Net income
$ 646.3 $ 522.7 $ 123.6 23.7 %
Net income per common share:
Basic
$ 9.91 $ 7.72 $ 2.19 28.4 %
Diluted
$ 9.71 $ 7.58 $ 2.13 28.1 %
(a)Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
Net Revenues. Net revenues increased by $187.8 million, or 2.9%, to $6.631 billion in Fiscal 2024 as compared to Fiscal 2023, including favorable foreign currency effects of $12.4 million. On a constant currency basis, net revenues increased by $175.4 million, or 2.7%. These increases were driven by our international businesses.
The following table summarizes the percentage change in our Fiscal 2024 consolidated comparable store sales as compared to the prior fiscal year:
% Change
Digital commerce 5 %
Brick and mortar 6 %
Total comparable store sales 6 %
Our global average store count increased by 30 stores and concession shops during Fiscal 2024 compared with the prior fiscal year, driven by new openings primarily in Asia. The following table details our retail store presence by segment as of the periods presented:
March 30,
2024 April 1,
Freestanding Stores:
North America 230 237
Europe 103 104
Asia 231 212
Total freestanding stores 564 553
Concession Shops:
North America 1 1
Europe 27 29
Asia 671 692
Total concession shops 699 722
Total stores 1,263 1,275
In addition to our stores, we sold products online in North America, Europe, and Asia through our various digital commerce sites, as well as through our Polo mobile apps in the U.S. We also sold products online through various third-party digital 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 prior fiscal year, are provided below:
Fiscal Years Ended $ Change Foreign Exchange Impact $ Change % Change
March 30,
2024 April 1,
2023 As
Reported Constant Currency As
Reported Constant
Currency
(millions)
Net Revenues:
North America $ 2,950.5 $ 3,020.5 $ (70.0) $ (2.2) $ (67.8) (2.3 %) (2.2 %)
Europe 1,968.0 1,839.2 128.8 69.6 59.2 7.0 % 3.2 %
Asia 1,566.6 1,426.7 139.9 (55.0) 194.9 9.8 % 13.7 %
Other non-reportable segments 146.3 157.2 (10.9) - (10.9) (6.9 %) (6.9 %)
Total net revenues $ 6,631.4 $ 6,443.6 $ 187.8 $ 12.4 $ 175.4 2.9 % 2.7 %
North America net revenues - Net revenues decreased by $70.0 million, or 2.3%, during Fiscal 2024 as compared to Fiscal 2023. On a constant currency basis, net revenues decreased by $67.8 million, or 2.2%.
The $70.0 million decline in North America net revenues was driven by:
•a $113.3 million decline related to our North America wholesale business as we carefully managed sell-ins to our wholesale customers to better align with consumer demand, as well as the return to a more normalized timing of shipments following the prior year's supply chain disruption.
This decline was partially offset by:
•a $43.3 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $44.3 million, reflecting increases of $35.9 million in comparable store sales and $8.4 million in non-comparable store sales. The increase in our comparable store sales reflected high-single digit AUR growth during Fiscal 2024 as compared to Fiscal 2023, as well as higher traffic. The following table summarizes the percentage changes in comparable store sales related to our North America retail business:
% Change
Digital commerce - %
Brick and mortar 3 %
Total comparable store sales 2 %
Europe net revenues - Net revenues increased by $128.8 million, or 7.0%, during Fiscal 2024 as compared to Fiscal 2023. On a constant currency basis, net revenues increased by $59.2 million, or 3.2%.
The $128.8 million increase in Europe net revenues was driven by:
•a $112.9 million increase related to our Europe retail business, inclusive of favorable foreign currency effects of $31.4 million. On a constant currency basis, net revenues increased by $81.5 million, reflecting increases of $66.7 million in comparable store sales and $14.8 million in non-comparable store sales. The increase in our comparable store sales reflected low-teens AUR growth during Fiscal 2024 as compared to Fiscal 2023, as well as higher traffic. The following table summarizes the percentage changes in comparable store sales related to our Europe retail business:
% Change
Digital commerce 11 %
Brick and mortar 7 %
Total comparable store sales 8 %
•a $15.9 million increase related to our Europe wholesale business largely driven by favorable foreign currency effects of $38.2 million and stronger re-order trends, more than offsetting the negative impact of lapping the prior fiscal year's favorable post-pandemic wholesale allowances.
Asia net revenues - Net revenues increased by $139.9 million, or 9.8%, during Fiscal 2024 as compared to Fiscal 2023. On a constant currency basis, net revenues increased by $194.9 million, or 13.7%.
The $139.9 million increase in Asia net revenues was driven by:
•a $141.7 million increase related to our Asia retail business, inclusive of unfavorable foreign currency effects of $51.5 million. On a constant currency basis, net revenues increased by $193.2 million, reflecting increases of $116.9 million in comparable store sales and $76.3 million in non-comparable store sales. The increase in our comparable store sales reflected low-teens AUR growth during Fiscal 2024 as compared to Fiscal 2023, as well as higher traffic. The following table summarizes the percentage changes in comparable store sales related to our Asia retail business:
% Change
Digital commerce 19 %
Brick and mortar 10 %
Total comparable store sales 10 %
This increase was partially offset by a $1.8 million decline related to our Asia wholesale business, inclusive of unfavorable foreign currency effects of $3.5 million.
Gross Profit. Gross profit increased by $266.0 million, or 6.4%, to $4.432 billion in Fiscal 2024, including unfavorable foreign currency effects of $4.9 million. Gross profit as a percentage of net revenues increased to 66.8% in Fiscal 2024 from 64.6% in Fiscal 2023. The 220 basis point improvement was primarily driven by the favorable impacts of approximately 90 basis points attributable to geographic and channel mix and 30 basis points attributable to lower non-routine inventory charges recorded during Fiscal 2024 as compared to the prior fiscal year. The remaining 100 basis point improvement was primarily due to lower freight costs and AUR growth of approximately low-double digits, more than offsetting incremental pressure from higher cotton costs and unfavorable foreign currency effects of 20 basis points.
Selling, General, and Administrative Expenses. SG&A expenses increased by $191.6 million, or 5.6%, to $3.600 billion in Fiscal 2024, including favorable foreign currency effects of $11.4 million. SG&A expenses as a percentage of net revenues increased to 54.3% in Fiscal 2024 from 52.9% in Fiscal 2023. The 140 basis point increase was largely attributable to geographic and channel mix resulting from growth of our international and retail businesses which typically carry higher operating expense margins.
The $191.6 million increase in SG&A expenses was driven by:
Fiscal 2024
Compared to
Fiscal 2023
(millions)
SG&A expense category:
Compensation-related expenses $ 108.2
Rent and occupancy costs 30.9
Marketing and advertising expenses 28.9
Depreciation and amortization expense 8.3
Other 15.3
Total increase in SG&A expenses $ 191.6
Impairment of Assets. No impairment charges were recorded during Fiscal 2024. On a comparative basis, during Fiscal 2023, we recorded impairment charges of $9.7 million to write-down certain long-lived assets, primarily related to a certain previously exited real estate location for which the related lease agreement had not yet expired. See Note 8 to the accompanying consolidated financial statements.
Restructuring and Other Charges, Net. During Fiscal 2024 and Fiscal 2023, we recorded net restructuring charges and benefits of $55.8 million and $19.2 million, respectively, primarily consisting of severance and benefits costs, as well as other charges of $14.0 million and $23.8 million, respectively, primarily related to rent and occupancy costs associated with certain previously exited real estate locations in connection with our restructuring activities for which the related lease agreements had not yet expired. In addition, during Fiscal 2024 we recorded other charges of $5.1 million in connection with our Next Generation Transformation project (refer to "Recent Developments" for additional discussion). Additionally, during Fiscal 2024 and Fiscal 2023, we recognized income of $7.0 million and $3.5 million, respectively, related to consideration received from Regent, L.P. in connection with our previously sold Club Monaco business. We donated this income to The Ralph Lauren Corporate Foundation, which resulted in related offsetting donation expenses of $7.0 million and $3.5 million during Fiscal 2024 and Fiscal 2023, respectively. See Note 9 to the accompanying consolidated financial statements.
Operating Income. Operating income increased by $52.2 million, or 7.4%, to $756.4 million during Fiscal 2024, reflecting favorable foreign currency effects of $6.5 million. Our operating results during Fiscal 2024 and Fiscal 2023 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $69.9 million and $66.0 million, respectively. Operating income as a percentage of net revenues was 11.4% in Fiscal 2024, reflecting a 50 basis point improvement from Fiscal 2023. The improvement in operating income as a percentage of net revenues was primarily driven by the increase in our gross margin, partially offset by the increase in SG&A expenses as a percentage of net revenues, both as previously discussed.
Operating income and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the prior fiscal year, are provided below:
Fiscal Years Ended
March 30, 2024 April 1, 2023
Operating
Income Operating
Margin Operating
Income Operating
Margin $
Change Margin
Change
(millions) (millions) (millions)
Segment:
North America $ 548.9 18.6% $ 565.1 18.7% $ (16.2) (10 bps)
Europe 464.6 23.6% 407.3 22.1% 57.3 150 bps
Asia 335.9 21.4% 289.6 20.3% 46.3 110 bps
Other non-reportable segments
128.9 88.1% 146.4 93.1% (17.5) (500 bps)
Total segment operating income 1,478.3 1,408.4 69.9
Corporate expenses(a)
(647.0) (651.5) 4.5
Impairment of assets(a)
- (9.7) 9.7
Restructuring and other charges, net (74.9) (43.0) (31.9)
Total operating income $ 756.4 11.4% $ 704.2 10.9% $ 52.2 50 bps
(a)See discussion above for additional information related to impairment of assets and restructuring and other charges, net recorded during the fiscal years presented.
North America operating margin declined by 10 basis points due to an increase of 240 basis points in SG&A expense as a percentage of net revenues, more than offsetting an increase of 230 basis points in gross margin. The overall decline in operating margin was inclusive of the unfavorable impact of approximately 30 basis points attributable to channel mix.
Europe operating margin improved by 150 basis points due to an increase of 240 basis points in gross margin, more than offsetting an increase of 90 basis points in SG&A expenses as a percentage of net revenues. The overall improvement in operating margin was inclusive of favorable foreign currency effects of 20 basis points and the unfavorable impact of 40 basis points related to channel mix.
Asia operating margin improved by 110 basis points due to decline of 140 basis points in SG&A expenses as a percentage of net revenues, more than offsetting a decline in gross margin of 20 basis points. The overall improvement in operating margin was inclusive of unfavorable foreign currency effects of 20 basis points.
Corporate expenses decreased by $4.5 million to $647.0 million in Fiscal 2024 compared to Fiscal 2023. The decrease in corporate expenses was due to lower non-routine inventory charges recorded during Fiscal 2024 as compared to the prior fiscal year of $19.9 million, lower rent and occupancy expenses of $6.6 million, lower marketing and advertising expenses of $6.4 million, lower depreciation and amortization expenses of $5.6 million, lower consulting fees of $5.1 million, lower selling-related expenses of $4.6 million, and lower other expenses of $6.8 million, partially offset by higher compensation-related expenses of $50.5 million.
Non-operating Income (Expense), Net. During Fiscal 2024, we reported non-operating income, net, of $21.0 million as compared to non-operating expense, net of $12.3 million during Fiscal 2023. The $33.3 million increase in non-operating income, net was mainly due to a $40.8 million increase in interest income driven by higher interest rates in financial markets and higher average on-hand cash, cash equivalents, and short-term investments balance during Fiscal 2024 compared to the prior fiscal year. The increase in interest income was partially offset by higher interest expense and other expense, net.
Income Tax Provision. The income tax provision and effective tax rate in Fiscal 2024 were $131.1 million and 16.9%, respectively, compared to $169.2 million and 24.5%, respectively, in Fiscal 2023. The $38.1 million decrease in our income tax provision was primarily driven by the 760 basis point decline in our effective tax rate, partially offset by an increase in our pretax income. The decline in our effective tax rate was due to a deferred tax benefit recognized as a result of transactions entered into as part of a reorganization of the Company's legal entity structure, the favorable impact of remeasuring net deferred tax assets as a result of changes enacted in tax legislation, and the absence of unfavorable prior year adjustments related to certain deferred tax assets and receivables, partially offset by the unfavorable impact of audit-related reserve adjustments. The decline in our effective tax rate was also due to a one-time tax benefit of $13.1 million recorded during Fiscal 2024 in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, which lowered our effective tax rate by 170 basis points. See Note 10 to the accompanying consolidated financial statements.
Net Income. Net income increased to $646.3 million in Fiscal 2024, from $522.7 million in Fiscal 2023. The $123.6 million increase in net income was primarily due to an increase in our operating income and non-operating income, net, as well as a decrease in our income tax provision, all as previously discussed. Our operating results during Fiscal 2024 and Fiscal 2023 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $69.9 million and $66.0 million, respectively, which had an after-tax effect of reducing net income by $52.6 million and $52.9 million, respectively. Net income during Fiscal 2024 also reflected an income tax benefit of $13.1 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 $9.71 in Fiscal 2024, from $7.58 in Fiscal 2023. The $2.13 per share increase was primarily driven by the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during Fiscal 2024 driven by our share repurchases during the preceding twelve months. Net income per diluted share for Fiscal 2024 and Fiscal 2023 were also negatively impacted by $0.80 per share and $0.76 per share, respectively, attributable to net restructuring-related charges, impairment of assets, and certain other charges (benefits), as previously discussed. Net income per diluted share during Fiscal 2024 was also favorably impacted by $0.20 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.
FINANCIAL CONDITION AND LIQUIDITY
Financial Condition
The following table presents our financial condition as of March 29, 2025 and March 30, 2024.
March 29,
2025 March 30,
2024 $
Change
(millions)
Cash and cash equivalents $ 1,922.5 $ 1,662.2 $ 260.3
Short-term investments 160.5 121.0 39.5
Current portion of long-term debt(a)
(399.7) - (399.7)
Long-term debt(a)
(742.9) (1,140.5) 397.6
Net cash and short-term investments $ 940.4 $ 642.7 $ 297.7
Equity $ 2,588.5 $ 2,450.3 $ 138.2
(a)See Note 11 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.
The increase in our net cash and short-term investments position at March 29, 2025 as compared to March 30, 2024 was primarily due to our operating cash flows of $1.235 billion, partially offset by our use of cash to support Class A common stock repurchases of $480.9 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to invest in our business through $216.2 million in capital expenditures, and to make dividend payments of $201.1 million.
The increase in our equity was attributable to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our share repurchase activity and dividends declared during Fiscal 2025.
Cash Flows
Fiscal 2025 Compared to Fiscal 2024
Fiscal Years Ended
March 29,
2025 March 30,
2024 $
Change
(millions)
Net cash provided by operating activities $ 1,235.1 $ 1,069.7 $ 165.4
Net cash used in investing activities (264.1) (256.8) (7.3)
Net cash used in financing activities (704.0) (665.6) (38.4)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(8.2) (13.6) 5.4
Net increase in cash, cash equivalents, and restricted cash $ 258.8 $ 133.7 $ 125.1
Net Cash Provided by Operating Activities. Net cash provided by operating activities was $1.235 billion during Fiscal 2025, as compared to $1.070 billion during Fiscal 2024. The $165.4 million net increase in cash provided by operating activities was due to an increase in net income before non-cash charges, as well as a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year.
The net favorable change related to our operating assets and liabilities, including our working capital, was primarily driven by:
•a favorable change in our accounts payable driven by the timing of cash payments, as well as a net favorable change in accrued liabilities largely driven by accrued payroll and benefits resulting from anticipated higher bonus achievement levels, partially offset by our restructuring reserve due to a decrease in restructuring charges recorded during the current fiscal year period as compared to the prior fiscal year period.
This increase related to our operating assets and liabilities was partially offset by:
•an unfavorable change in inventory driven by higher in-transit inventory, as well as higher product and freight costs.
Net Cash Used in Investing Activities. Net cash used in investing activities was $264.1 million during Fiscal 2025, as compared to $256.8 million during Fiscal 2024. The $7.3 million net increase in cash used in investing activities was primarily driven by:
•a $51.4 million increase in capital expenditures. During Fiscal 2025, we spent $216.2 million on capital expenditures, as compared to $164.8 million during Fiscal 2024. Our capital expenditures during Fiscal 2025 primarily related to store openings and renovations, enhancements to our information technology systems, and corporate office renovations.
This increase in cash used in investing activities was partially offset by:
•a $41.0 million decrease in purchases of investments, less proceeds from sales and maturities of investments. During Fiscal 2025, we made net investment purchases of $47.5 million, as compared to $88.5 million during Fiscal 2024.
In Fiscal 2026, we expect to spend approximately 4% to 5% of net revenues on capital expenditures, primarily related to the purchase of real estate, store openings and renovations, enhancements to our information technology systems (including those related to our Next Generation Transformation project), and a continuation of our corporate office renovations.
Net Cash Used in Financing Activities. Net cash used in financing activities was $704.0 million during Fiscal 2025, as compared to $665.6 million during Fiscal 2024. The $38.4 million net increase in cash used in financing activities was primarily driven by:
•a $31.2 million increase in cash used to repurchase shares of our Class A common stock. During Fiscal 2025, we used $424.5 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $56.4 million in shares of our Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during Fiscal 2024, we used $398.2 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $51.5 million in shares of our Class A common stock were surrendered or withheld for taxes.
Fiscal 2024 Compared to Fiscal 2023
Fiscal Years Ended
March 30,
2024 April 1,
2023 $
Change
(millions)
Net cash provided by operating activities $ 1,069.7 $ 411.0 $ 658.7
Net cash provided by (used in) investing activities (256.8) 471.5 (728.3)
Net cash used in financing activities (665.6) (1,208.8) 543.2
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(13.6) (8.8) (4.8)
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 133.7 $ (335.1) $ 468.8
Net Cash Provided by Operating Activities. Net cash provided by operating activities was $1.070 billion during Fiscal 2024, as compared to $411.0 million during Fiscal 2023. The $658.7 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, as well as an increase in net income before non-cash charges.
The net favorable change related to our operating assets and liabilities, including our working capital, was primarily driven by:
•a favorable change related to our inventories, largely driven by a more normalized receipt cadence;
•a net favorable change in our accrued liabilities largely driven by the impact of a lower bonus achievement level realized during Fiscal 2023 as compared to the prior fiscal year and a favorable change in our restructuring reserve due to an increase in restructuring charges recorded during Fiscal 2024 as compared to the prior fiscal year, as well as a favorable change in accounts payable driven by the timing of cash payments; and
•a favorable change related to our accounts receivable, largely driven by a decline in wholesale net revenues and timing of cash receipts.
Net Cash Provided by (Used in) Investing Activities. Net cash used in investing activities was $256.8 million during Fiscal 2024, as compared to net cash provided by investing activities of $471.5 million during Fiscal 2023. The $728.3 million net increase in cash used in investing activities was primarily driven by:
•a $783.3 million decrease in proceeds from sales and maturities of investments, less purchases of investments. During Fiscal 2024, we made net investment purchases of $88.5 million, as compared to receiving net proceeds from sales and maturities of investments of $694.8 million during Fiscal 2023.
This increase in cash used in investing activities was partially offset by:
•a $52.7 million decrease in capital expenditures. During Fiscal 2024, we spent $164.8 million on capital expenditures, as compared to $217.5 million during Fiscal 2023. Our capital expenditures during Fiscal 2024 primarily related to store openings and renovations, as well as enhancements to our information technology systems.
Net Cash Used in Financing Activities. Net cash used in financing activities was $665.6 million during Fiscal 2024, as compared to $1.209 billion during Fiscal 2023. The $543.2 million net decrease in cash used in financing activities was primarily driven by:
•a $500.0 million decrease in cash used to repay debt. During Fiscal 2024, we did not issue or repay any debt. On a comparative basis, during Fiscal 2023, we repaid our previously outstanding $500.0 million principal amount of unsecured 1.700% senior notes that matured on June 15, 2022; and
•a $38.9 million decrease in cash used to repurchase shares of our Class A common stock. During Fiscal 2024, we used $398.2 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $51.5 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 Fiscal 2023, we used $454.3 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $34.3 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 and commercial paper program, and other available financing options. We also maintain access to the capital markets and may issue debt securities from time to time, which may provide an additional source of liquidity and/or funds to refinance existing debt.
During Fiscal 2025, we generated $1.235 billion of net cash flows from our operations. As of March 29, 2025, we had $2.083 billion in cash, cash equivalents, and short-term investments, of which $1.398 billion were held by our subsidiaries domiciled outside the U.S. We are not dependent on foreign cash to fund our domestic operations. Undistributed foreign earnings generated on or before December 31, 2017 that were subject to the one-time mandatory transition tax in connection with U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA") are not considered to be permanently reinvested and may be repatriated to the U.S. in the future with minimal or no additional U.S. taxation. We intend to permanently reinvest undistributed foreign earnings generated after December 31, 2017 that were not subject to the one-time
mandatory transition tax. However, if our plans change and we choose to repatriate post-2017 earnings to the U.S. in the future, we would be subject to applicable U.S. and foreign taxes.
The following table presents the total availability, borrowings outstanding, and remaining availability under our credit and overdraft facilities and Commercial Paper Program as of March 29, 2025:
March 29, 2025
Description(a)
Total
Availability Borrowings
Outstanding Remaining
Availability
(millions)
Global Credit Facility and Commercial Paper Program(b)
$ 750 $ 11 (c)
$ 739
Pan-Asia Credit Facilities 33 - 33
Japan Overdraft Facility 33 - 33
(a)As defined in Note 11 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 March 29, 2025.
We believe that the Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as of March 29, 2025, there were seven 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 banks (as described within Note 11 to the accompanying consolidated financial statements), subject to availability of the 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 Borrowing Facilities in the event of our election to draw additional funds in the foreseeable future.
Our sources of liquidity are used to fund our ongoing cash requirements, including working capital requirements, global retail store and digital commerce expansion, construction and renovation of shop-within-shops, investment in infrastructure, including technology, 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 11 to the accompanying consolidated financial statements for additional information relating to our credit facilities.
Supplier Finance Program
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 the supplier. Our vendor payment terms and amounts due are not impacted by a supplier's decision to participate in the program. We have not pledged any assets and do not provide guarantees under the supplier finance program. Our payment
obligations outstanding under our supplier finance program were $181.0 million and $129.2 million as of March 29, 2025 and March 30, 2024, respectively, and were recorded within accounts payable in the consolidated balance sheets. See Note 3 to the accompanying consolidated financial statements for additional information relating to our supplier finance program.
Debt and Covenant Compliance
In August 2018, we completed a registered public debt offering and issued $400 million aggregate principal amount of unsecured senior notes due September 15, 2025, which bear interest at a fixed rate of 3.750%, payable semi-annually (the "3.750% Senior Notes"). In June 2020, we completed another registered public debt offering and issued an additional $500 million aggregate principal amount of unsecured senior notes that were due and repaid on June 15, 2022 with cash on hand, which bore interest at a fixed rate of 1.700%, payable semi-annually (the "1.700% Senior Notes"), and $750 million aggregate principal amount of unsecured senior notes due June 15, 2030, which bear interest at a fixed rate of 2.950%, payable semi-annually (the "2.950% Senior Notes").
The indenture and supplemental indentures governing the 3.750% Senior Notes and 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 11 to the accompanying consolidated financial statements. As of March 29, 2025, 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 Borrowing Facilities do not contain any financial covenants.
See Note 11 to the accompanying consolidated financial statements for additional information relating to our debt and covenant compliance.
Common Stock Repurchase Program
As of March 29, 2025, the remaining availability under our Class A common stock repurchase program was approximately $352 million. On May 15, 2025, our Board of Directors approved an expansion of our existing common stock repurchase program that allows us to repurchase up to an additional $1.500 billion of our Class A common stock, excluding related excise taxes. Repurchases of shares of our Class A common stock are subject to overall business and market conditions.
See Note 16 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 16, 2024, our Board of Directors approved an increase to our quarterly cash dividend on our common stock from $0.75 to $0.825 per share. On May 15, 2025, our Board of Directors approved an additional increase to the quarterly cash dividend on our common stock from $0.825 to $0.9125 per share. The first quarterly dividend to reflect this increase is expected to be payable to shareholders of record at close of business on June 27, 2025 and paid on July 11, 2025.
We intend to continue to pay regular dividends on outstanding shares of our common stock. However, any decision to declare and pay dividends in the future will ultimately be made at the discretion of our Board of Directors and will depend on our results of operations, cash requirements, financial condition, and other factors that the Board of Directors may deem relevant, including economic and market conditions.
See Note 16 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.
Material Cash Requirements
Firm Commitments
The following table summarizes certain of our aggregate material cash requirements as of March 29, 2025, and the estimated timing and effect that such obligations are expected to have on our liquidity and cash flows in future periods. We expect to fund these firm commitments with operating cash flows generated in the normal course of business and, if necessary, through availability under our credit facilities or other accessible sources of financing.
Fiscal
2026 Fiscal
2027-2028 Fiscal
2029-2030 Fiscal
2031 and
Thereafter Total
(millions)
Senior Notes $ 400.0 $ - $ - $ 750.0 $ 1,150.0
Interest payments on debt 29.6 44.3 44.3 11.1 129.3
Operating leases 265.4 429.7 280.6 517.4 1,493.1
Finance leases 28.2 58.8 44.4 166.8 298.2
Other lease commitments 6.3 26.4 26.3 31.0 90.0
Inventory purchase commitments 937.8 - - - 937.8
Mandatory transition tax payments 42.2 - - - 42.2
Real estate purchase commitment 116.9 - - - 116.9
Other commitments 110.9 122.1 71.8 - 304.8
Total $ 1,937.3 $ 681.3 $ 467.4 $ 1,476.3 $ 4,562.3
The following is a description of our material, firmly committed obligations as of March 29, 2025:
•Senior Notes represent the principal amount of our outstanding 3.750% Senior Notes and 2.950% Senior Notes. Amounts do not include any call premiums, unamortized debt issuance costs, or interest payments (see below);
•Interest payments on debt represent the semi-annual contractual interest payments due on our 3.750% Senior Notes and 2.950% Senior Notes. Amounts do not include the impact of potential cash flows underlying our related swap contracts (see Note 13 to the accompanying consolidated financial statements for discussion of our swap contracts);
•Lease obligations represent fixed payments due over the lease term of our noncancelable leases of real estate and operating equipment, including rent, real estate taxes, insurance, common area maintenance fees, and/or certain other costs. For lease terms that have commenced, information has been presented separately for operating and finance leases. Other lease commitments relate to executed lease agreements for which the related lease terms have not yet commenced as of March 29, 2025;
•Inventory purchase commitments represent our legally-binding agreements to purchase fixed or minimum quantities of goods at determinable prices;
•Mandatory transition tax payments represent our remaining tax obligation incurred in connection with the deemed repatriation of previously deferred foreign earnings pursuant to the TCJA (see Note 10 to the accompanying consolidated financial statements for discussion of the TCJA);
•Real estate purchase commitment relates to our legally-binding agreement to purchase real estate located in New York City; and
•Other commitments primarily represent our legally-binding obligations related to sponsorship, licensing, and other marketing and advertising agreements; information technology-related service agreements; and pension-related obligations.
Excluded from the above contractual obligations table is the non-current liability for unrecognized tax benefits of $193.3 million as of March 29, 2025, as we cannot make a reliable estimate of the period in which the liability will be settled, if ever. The above table also excludes the following: (i) amounts recorded in current liabilities in our consolidated balance sheet as of March 29, 2025, which will be paid within one year, other than lease obligations, mandatory transition tax payments, and accrued interest payments on debt; and (ii) non-current liabilities that have no cash outflows associated with them (e.g., deferred income), or the cash outflows associated with them are uncertain or do not represent a "purchase obligation" as such term is used herein (e.g., deferred taxes, derivative financial instruments, asset retirement obligations, and other miscellaneous items).
We also have certain contractual arrangements that would require us to make payments if certain events or circumstances occur. See Note 15 to the accompanying consolidated financial statements for a description of our contingent commitments not included in the above table.
Off-Balance Sheet Arrangements
In addition to the commitments included in the above table, our other off-balance sheet firm commitments relating to our outstanding letters of credit amounted to $10.6 million as of March 29, 2025. We do not maintain any other off-balance sheet arrangements, transactions, obligations, or other relationships with unconsolidated entities that would be expected to have a material current or future effect on our consolidated financial statements.
MARKET RISK MANAGEMENT
As discussed in Note 13 to the accompanying consolidated financial statements, we are exposed to a variety of levels and types of risks, including the impact of changes in currency exchange rates on foreign currency-denominated balances, certain anticipated cash flows of our international operations, and 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 fluctuations in benchmark interest rates. Accordingly, in the normal course of business we assess such risks and, in accordance with our established policies and procedures, may use derivative financial instruments to manage and mitigate them. We do not use derivatives for speculative or trading purposes.
Given our use of derivative instruments, we are exposed to the risk that the counterparties to such contracts will fail to meet their contractual obligations. To mitigate such counterparty credit risk, it is our policy to only enter into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. Our established policies and procedures for mitigating credit risk 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. As a result of the above considerations, we do not believe that we are exposed to undue concentration of counterparty risk with respect to our derivative contracts as of March 29, 2025. However, we do have in aggregate $25.9 million of derivative instruments in net asset positions held across three creditworthy financial institutions.
Foreign Currency Risk Management
We manage our exposure to changes in foreign currency exchange rates using forward foreign currency exchange and cross-currency swap contracts. Refer to Note 13 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, as well as the impact on earnings and other comprehensive income of such instruments for the fiscal years presented.
Forward Foreign Currency Exchange Contracts
We use forward foreign currency exchange contracts to mitigate risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of our overall strategy for managing the level of exposure to such exchange rate risk, relating primarily to the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, and the Chinese Renminbi, we generally hedge a portion of our related exposures anticipated over the next twelve months using forward foreign currency exchange contracts with maturities of two months to one year to provide continuing coverage over the period of the respective exposure.
Our foreign exchange risk management activities are governed by 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 periodic review of market values and performance of sensitivity analyses.
Cross-Currency Swap Contracts
We periodically designate pay-fixed rate, receive-fixed rate cross-currency swap contracts as hedges of our net investment in certain European subsidiaries. These contracts swap U.S. Dollar-denominated fixed interest rate payments based on the contract's notional amount and the fixed rate of interest payable on certain of our senior notes for Euro-denominated fixed interest rate payments, thereby economically converting a portion of our fixed-rate U.S. Dollar-denominated senior note obligations to fixed rate Euro-denominated 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.
Sensitivity
We perform a sensitivity analysis to determine the effects that market risk exposures may have on the fair values of our forward foreign currency exchange and cross-currency swap contracts. In doing so, we assess the risk of loss in the fair values of these contracts that would result from hypothetical changes in foreign currency exchange rates. This analysis assumes a like movement by the foreign currencies in our hedge portfolio against the U.S. Dollar. As of March 29, 2025, a 10% appreciation or depreciation of the U.S. Dollar against the foreign currencies under contract would result in a net increase or decrease, respectively, in the fair value of our derivative portfolio of approximately $121 million. This hypothetical net change in fair value should ultimately be largely offset by the net change in the related underlying hedged items.
Interest Rate Risk Management
Sensitivity
As of March 29, 2025, we had no variable-rate debt outstanding. As such, our exposure to changes in interest rates primarily relates to changes in the fair values of our fixed-rate Senior Notes. As of March 29, 2025, the aggregate fair values of our Senior Notes were $1.089 billion. A 25-basis point increase or decrease in interest rates would decrease or increase, respectively, the aggregate fair values of our Senior Notes by approximately $9 million based on certain simplifying assumptions, including an immediate across-the-board increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period. Such potential increases or decreases in the fair value of our debt would only be realized if we were to retire all or a portion of the debt prior to its maturity.
Investment Risk Management
As of March 29, 2025, we had cash and cash equivalents on-hand of $1.922 billion, consisting of deposits in interest bearing accounts, investments in money market deposit accounts, and investments in time deposits with original maturities of 90 days or less. Our other significant investments included $160.5 million of short-term investments, consisting of time deposits with original maturities greater than 90 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 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 13 to the accompanying consolidated financial statements for further detail of the composition of our investment portfolio as of March 29, 2025.
CRITICAL ACCOUNTING POLICIES
An accounting policy is considered to be critical if it is important to our results of operations, financial condition, and cash flows, and requires significant judgment and estimates on the part of management in its application. 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. We believe that the
following list represents our critical accounting policies. For a discussion of all of our significant accounting policies, including our critical accounting policies, see Note 3 to the accompanying consolidated financial statements.
Sales Reserves and Uncollectible Accounts
A significant area of judgment affecting reported revenue involves estimating sales reserves, which represent the portion of gross revenues not expected to be realized. In particular, gross revenue related to our wholesale business is reduced by estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Gross revenue related to our retail business, including digital commerce sales, is also reduced by an estimate of returns.
In developing estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and cooperative advertising allowances, we analyze historical trends, actual and forecasted seasonal results, 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. We review and refine these estimates on a quarterly basis. Our historical estimates of these amounts have not differed materially from actual results. However, unforeseen adverse future economic and market conditions, such as those resulting from widespread pandemic diseases and/or other catastrophic events, could result in our actual results differing materially from our estimates. A hypothetical 1% increase in our reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances as of March 29, 2025 would have reduced our Fiscal 2025 net revenues by approximately $1 million.
Similarly, we evaluate our accounts receivable balances to develop expectations regarding the extent to which they will ultimately be collected. Significant judgment and estimation are involved in this evaluation, including a receivables aging analysis which shows, by aged category, the percentage of receivables that has historically gone uncollected, an analysis of specific risks on a customer-by-customer basis for larger accounts (including consideration of their financial condition and ability to withstand potential prolonged periods of adverse economic conditions), and an evaluation of current and forecasted economic and market conditions over the respective asset's contractual life. Based on this information, we record an allowance for estimated amounts that we ultimately expect not to collect due to credit. Although we believe that we have adequately provided for these risks as part of our allowance for doubtful accounts, a severe and prolonged adverse impact on our major customers' business and operations beyond those forecasted could have a corresponding material adverse effect on our net revenues, cash flows, and/or financial condition. A hypothetical 1% increase in the level of our allowance for doubtful accounts as of March 29, 2025 would have increased our Fiscal 2025 SG&A expenses by less than $1 million.
See "Accounts Receivable" in Note 3 to the accompanying consolidated financial statements for an analysis of the activity in our sales reserves and allowance for doubtful accounts for each of the three fiscal years presented.
Inventories
We hold retail inventory that is sold in our own stores and digital commerce sites directly to consumers. We also hold inventory that is sold through wholesale distribution channels to major department stores and specialty retail stores. Substantially all of our inventories are comprised of finished goods, which are stated at the lower of cost or estimated realizable value, with cost determined on a weighted-average cost basis.
The estimated net realizable value of inventory is determined based on an analysis of historical sales trends of our individual product lines, the impact of market trends and economic conditions (including those resulting from pandemic diseases and other catastrophic events), and a forecast of future demand, giving consideration to the value of current orders in-house for future sales of inventory, as well as plans to sell inventory through our outlet stores, among other liquidation channels. Actual results may differ from estimates due to the quantity, quality, and mix of products in inventory, consumer and retailer preferences, and economic and market conditions. Reserves for inventory shrinkage, representing the risk of physical loss of inventory, are estimated based on historical experience and are adjusted based upon physical inventory counts. Our historical estimates of these costs and the related provisions have not differed materially from actual results. However, unforeseen adverse future economic and market conditions could result in our actual results differing materially from our estimates.
A hypothetical 1% increase in the level of our inventory reserves as of March 29, 2025 would have decreased our Fiscal 2025 gross profit by approximately $3 million.
Impairment of Goodwill and Other Intangible Assets
Goodwill and certain other intangible assets deemed to have indefinite useful lives are not amortized. Rather, goodwill and indefinite-lived intangible assets are assessed for impairment at least annually. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their carrying values may not be fully recoverable.
We generally perform our annual goodwill impairment assessment using a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its respective carrying value. However, in order to reassess the fair values of our reporting units, we periodically perform a quantitative impairment analysis in lieu of using the qualitative approach.
Performance of the qualitative goodwill impairment assessment requires judgment in identifying and considering the significance of relevant key factors, events, and circumstances that affect the fair values of our reporting units. This requires consideration and assessment of external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and planned financial performance. We also give consideration to the difference between each reporting unit's fair value and carrying value as of the most recent date that a fair value measurement was performed. If the results of the qualitative assessment conclude that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed.
The quantitative goodwill impairment test involves comparing the fair value of a reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. However, if the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded in an amount equal to that excess. Any impairment charge recognized is limited to the amount of the respective reporting unit's allocated goodwill.
Determining the fair value of a reporting unit under the quantitative goodwill impairment test requires judgment and often involves the use of significant estimates and assumptions, including an assessment of external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. Similarly, estimates and assumptions are used when determining the fair values of other indefinite-lived intangible assets. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the magnitude of any such charge. To assist management in the process of determining any potential goodwill impairment, we may review and consider appraisals from accredited independent valuation firms. Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions. These approaches involve significant estimates and assumptions, including projected future cash flows (including timing), discount rates reflecting the risks inherent in those future cash flows, perpetual growth rates, and selection of appropriate market comparable metrics and transactions.
We performed our annual goodwill impairment assessment as of the beginning of the second quarter of Fiscal 2025 using the qualitative approach discussed above. In performing the assessment, we considered the results of our most recent quantitative goodwill impairment test, which was performed as of the beginning of the second quarter of Fiscal 2024, the results of which indicated that the fair values of our reporting units significantly exceeded their respective carrying values. Based on the results of the qualitative impairment assessment, we concluded that it is not more likely than not that the fair values of our reporting units are less than their respective carrying values and there were no reporting units at risk of impairment. No goodwill impairment charges were recorded during any of the fiscal years presented. See Note 12 to the accompanying consolidated financial statements for further discussion.
In evaluating finite-lived intangible assets for recoverability, we use our best estimate of future cash flows expected to result from the use of the asset and its eventual disposition where probable. If such estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized to the extent that such asset's carrying value exceeds its fair value, as estimated considering external market participant assumptions.
It is possible that our conclusions regarding impairment or recoverability of goodwill or other intangible assets could change in future periods if, for example, (i) our businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, or (iv) the identification of our reporting units change, among other factors. Such changes could result in a future impairment charge of goodwill or other intangible assets, which could have a material adverse effect on our consolidated financial position or results of operations.
Impairment of Other Long-Lived Assets
Property and equipment and lease-related right-of-use ("ROU") assets, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. In evaluating long-lived assets for recoverability, we use our best estimate of future cash flows expected to result from the use of the asset (including any potential sublease income for lease-related ROU assets) and its eventual disposition, where applicable. If such estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized to the extent that such asset's carrying value exceeds its fair value, as estimated considering external market participant assumptions and discounted cash flows, including those based on estimated market rents for lease-related ROU assets. Assets to be disposed of and for which there is a committed plan of disposal (commonly referred to as assets held-for-sale) are reported at the lower of carrying value or fair value, less costs to sell.
In determining future cash flows, we take various factors into account, including changes in merchandising strategy, the emphasis on retail store cost controls, the effects of macroeconomic trends such as consumer spending, and the impacts of more experienced retail store managers and increased local advertising. Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flows do not meet expectations. For example, unforeseen adverse future economic and market conditions could negatively impact consumer behavior, spending levels, and/or shopping preferences and result in actual results differing from our estimates. Additionally, we may review and consider appraisals from accredited independent valuation firms to determine the fair value of long-lived assets, where applicable.
During Fiscal 2025 and Fiscal 2023, we recorded impairment charges of $0.8 million and $9.7 million, respectively, to write-down the carrying values of certain long-lived assets based upon their assumed fair values. No impairment charges were recorded during Fiscal 2024. See Note 8 to the accompanying consolidated financial statements for further discussion.
Income Taxes
In determining our income tax provision for financial reporting purposes, we establish a reserve for uncertain tax positions. If we believe that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the tax benefit. We measure the tax benefit by determining the largest amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. These assessments can be complex and require significant judgment, and we often obtain assistance from external advisors. To the extent that our estimates change or the final tax outcome of these matters is different from the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made. If the initial assessment of a position fails to result in the recognition of a tax benefit, we will recognize the tax benefit if (i) there are changes in tax law or analogous case law that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) the statute of limitations expires; or (iii) there is a completion of an audit resulting in a settlement of that tax year with the appropriate agency.
Deferred income taxes reflect the tax effect of certain net operating losses, capital losses, general business credit carryforwards, and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes, as determined under enacted tax laws and rates. Valuation allowances are established when management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized. Tax valuation allowances are analyzed periodically by assessing the adequacy of future expected taxable income, which typically involves the use of significant estimates. Such allowances are adjusted as events occur, or circumstances change, that warrant adjustments to those balances.
See Note 10 to the accompanying consolidated financial statements for further discussion of income taxes.
Contingencies
We are periodically exposed to various contingencies in the ordinary course of conducting our business, including potential losses relating to certain litigation, alleged information system security breaches, contractual disputes, employee relation matters, various tax or other governmental audits, and trademark and intellectual property matters and disputes. We record a liability for such contingencies to the extent that we conclude that it is probable that a loss has been incurred and the amount of such loss is reasonably estimable. In addition, if it is considered reasonably possible that an unfavorable settlement of a contingency could exceed any established liability, we disclose the estimated impact on our liquidity, financial condition, and results of operations, if practicable. Management considers many factors in making these assessments. As the ultimate resolution of contingencies is inherently unpredictable, these assessments can involve a series of complex judgments about future events including, but not limited to, court rulings, negotiations between affected parties, and governmental actions. As a
result, the accounting for loss contingencies relies heavily on management's judgment in developing the related estimates and assumptions.
Stock-Based Compensation
We expense all stock-based compensation awarded to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for forfeitures which are estimated based on an analysis of historical experience and expected future trends.
Restricted Stock Units ("RSUs")
We grant service-based RSUs to certain of our senior executives and other employees, as well as to our non-employee directors. In addition, we grant RSUs with performance-based and market-based vesting conditions to such senior executives and other key employees.
The fair values of our service-based RSU and performance-based RSU awards are measured based on the fair value of our 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 accrue while outstanding and unvested. Related compensation expense for performance-based RSUs is recognized over the employees' requisite service period, to the extent that our attainment of performance goals (upon which vesting is dependent) is deemed probable, and involves judgment as to expectations surrounding our achievement of certain defined operating performance metrics.
The fair value of our market-based RSU awards, for which vesting is dependent upon total shareholder return ("TSR") of our Class A common stock over a three-year performance period relative to that of a pre-established peer group, is measured on the grant date based on estimated projections of our relative TSR over the performance period. These estimates are made using a Monte Carlo simulation, which models multiple stock price paths of our Class A common stock and that of the peer group to evaluate and determine our ultimate expected relative TSR performance ranking. Related compensation expense, net of estimated forfeitures, is recorded regardless of whether, and the extent to which, the market condition is ultimately satisfied. See Note 18 to the accompanying consolidated financial statements for further discussion.
Sensitivity
The assumptions used in calculating the grant date fair values of our stock-based compensation awards represent our best estimates. In addition, projecting the achievement level of certain performance-based awards, as well as estimating the number of awards expected to be forfeited, requires judgment. If actual results or forfeitures differ significantly from our estimates and assumptions, or if assumptions used to estimate the grant date fair value of future stock-based award grants are significantly changed, stock-based compensation expense and, therefore, our results of operations could be materially impacted. A hypothetical 10% change in our Fiscal 2025 stock-based compensation expense would have affected our net income by approximately $9 million.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 4 to the accompanying consolidated financial statements for a description of certain recently issued accounting standards which have impacted our consolidated financial statements, or may impact our consolidated financial statements in future reporting periods.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of our exposure to market risk, see "Market Risk Management" in Item 7 included elsewhere in this Annual Report on Form 10-K.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
See the "Index to Consolidated Financial Statements" appearing at the end of this Annual Report on Form 10-K.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are the controls and other procedures of an issuer that are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that material information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
We have evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this annual report. 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 the fiscal year-end covered by this Annual Report on Form 10-K.
(b) Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. Generally Accepted Accounting Principles. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of the Company's assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may decline.
Under the supervision and with the participation of management, including our principal executive and principal financial officers, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the end of the fiscal year covered by this report based on the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this evaluation, management concluded that the Company's internal controls over financial reporting were effective at the reasonable assurance level as of the fiscal year-end covered by this Annual Report on Form 10-K.
Ernst & Young LLP, the Company's independent registered public accounting firm, has issued an attestation report on the Company's internal control over financial reporting as included elsewhere herein.
(c) Changes in Internal Controls over Financial Reporting
There has been no change in our internal control over financial reporting during the fourth quarter of Fiscal 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
Trading Arrangements
During the three months ended March 29, 2025, none of our directors or officers (as defined in Item 408 of Regulation S-K of the Securities Exchange Act) adopted or terminated "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements" (each term as defined in Item 408 of Regulation S-K of the Securities Exchange Act).

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
Information relating to our directors and corporate governance will be set forth in the Company's proxy statement for its 2025 annual meeting of stockholders to be filed within 120 days after March 29, 2025 (the "Proxy Statement") and is incorporated by reference herein. Information relating to our executive officers is set forth in Item 1 of this Annual Report on Form 10-K under the caption "Information About Our Executive Officers."
We have a Code of Ethics for Principal Executive Officers and Senior Financial Officers that covers the Company's principal executive officer, principal operating officer, principal financial officer, principal accounting officer, controller, and any person performing similar functions, as applicable. We also have a Code of Business Conduct and Ethics that covers the Company's directors, officers, and employees. You can find our Code of Ethics for Principal Executive Officers and Senior Financial Officers and our Code of Business Conduct and Ethics (collectively, the "Codes") on our website, http://investor.ralphlauren.com. We will post any amendments to the Codes and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE on our website.
The Company has adopted an insider trading policy which governs the purchase, sale, and/or other dispositions of our securities by directors, officers and employees and other covered persons and is designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
Information relating to executive and director compensation will be set forth in the Proxy Statement and such information is incorporated by reference herein.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table sets forth information as of March 29, 2025 regarding compensation plans under which the Company's equity securities are authorized for issuance:
(a) (b) (c)
Plan Category Numbers of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights Weighted-Average
Exercise Price of
Outstanding Options ($) Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
Equity compensation plans approved by security holders
2,033,095 (1) N/A (2) 2,223,169 (3)
Equity compensation plans not approved by security holders
- - -
Total
2,033,095 $ - 2,223,169
(1)Consists of restricted stock units that are payable solely in shares of Class A common stock (including 517,039 service-based restricted stock units that have fully vested but for which the underlying shares have not yet been delivered as of March 29, 2025).
(2)No options were outstanding as of March 29, 2025.
(3)All of the securities remaining available for future issuance set forth in column (c) may be in the form of restricted stock units, performance awards, restricted stock, options, stock appreciation rights, or other stock-based awards under the Company's 2019 Incentive Plan.
Other information relating to security ownership of certain beneficial owners and management will be set forth in the Proxy Statement and such information is incorporated by reference herein.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required to be included by Item 13 of Form 10-K will be included in the Proxy Statement and such information is incorporated by reference herein.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services.
The information required to be included by Item 14 of Form 10-K will be included in the Proxy Statement and such information is incorporated by reference herein.
PART IV

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
(a) 1., 2. Financial Statements and Financial Statement Schedules. See index on Page.
3. Exhibits
Exhibit
Number Description
3.1 Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-24733) (the "S-1"))
3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed August 16, 2011)
3.3 Fifth Amended and Restated By-laws of the Company (filed as Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2024 (the “Fiscal 2024 10-K”))
4.1 Indenture, dated as of September 26, 2013, by and between the Company and Wells Fargo Bank, National Association (including the form of Note) (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed September 26, 2013)
4.2 Third Supplemental Indenture, dated as of August 9, 2018, by and between Ralph Lauren Corporation and Wells Fargo Bank, National Association (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed August 9, 2018)
4.3 Fourth Supplemental Indenture, dated as of June 3, 2020, by and between Ralph Lauren Corporation and Wells Fargo Bank, National Association (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed June 4, 2020)
4.4 Description of Securities Registered Under Section 12 of the Exchange Act (filed as Exhibit 4.4 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2020 (the "Fiscal 2020 10-K"))
10.1 Registration Rights Agreement dated as of June 9, 1997 by and among Ralph Lauren, GS Capital Partners, L.P., GS Capital Partner PRL Holding I, L.P., GS Capital Partners PRL Holding II, L.P., Stone Street Fund 1994, L.P., Stone Street 1994 Subsidiary Corp., Bridge Street Fund 1994, L.P., and the Company (filed as Exhibit 10.3 to the S-1)
10.2 Form of Indemnification Agreement between the Company and its Directors and Executive Officers (filed as Exhibit 10.26 to the S-1)†
10.3 Amended and Restated Employment Agreement, effective as of April 2, 2017, between the Company and Ralph Lauren (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 31, 2017)†
10.4 Amendment No. 1 to the Amended and Restated Employment Agreement, dated June 16, 2020, between the Company and Ralph Lauren (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed August 4, 2020)†
10.5 Amendment No.2 to the Amended and Restated Employment Agreement, dated June 16, 2021, between the Company and Ralph Lauren (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed August 3, 2021)†
10.6 Employment Agreement, dated May 13, 2017, between the Company and Patrice Louvet (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 17, 2017)†
10.7 Amendment No. 1 to the Employment Agreement, dated June 30, 2017, between the Company and Patrice Louvet (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2017)†
10.8 Amendment No. 2 to the Employment Agreement, dated June 17, 2020, between the Company and Patrice Louvet (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed August 4, 2020)†
10.9 Amendment No.3 to the Employee Agreement, dated July 28, 2021, between the Company and Patrice Louvet (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed August 3, 2021)†
Exhibit
Number Description
10.10 Amendment No. 4 to the Employment Agreement, dated August 4, 2023 between the Company and Patrice Louvet (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed August 10, 2023)†
10.11 Amendment No. 5 to the Employment Agreement, dated August 5, 2024 between the Company and Patrice Louvet (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed August 7, 2024)†
10.12 Amended and Restated Employment Agreement, dated February 14, 2021, between the Company and Halide Alagöz (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed August 9, 2022)†
10.13 Amendment No. 1 to the Amended and Restated Employment Agreement, dated August 3, 2022, between the Company and Halide Alagöz (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed August 9, 2022)†
10.14 Amendment No. 2 to Amended and Restated Employment Agreement, dated March 30, 2025, between the Company and Halide Alagöz (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 1, 2025)†
10.15 Employment Agreement, dated May 23, 2024, between the Company and Justin Picicci (filed as Exhibit 10.38 to the Fiscal 2024 10-K)†
10.16 Employment Agreement, dated January 20, 2025, between the Company and Robert Ranftl (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 21, 2025)†
10.17 Restricted Stock Unit Award Agreement, dated as of June 8, 2004, between the Company and Ralph Lauren (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended April 2, 2005)†
10.18 Executive Officer Annual Incentive Plan, as amended as of August 10, 2017 (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2017)†
10.19 Executive Officer Annual Incentive Plan, as amended as of May 20, 2020 (filed as Exhibit 10.14 to the Fiscal 2020 10-K)†
10.20 1997 Long-Term Stock Incentive Plan, as Amended and Restated as of August 12, 2004 (filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed October 4, 2004)†
10.21 Amendment, as of June 30, 2006, to the 1997 Long-Term Stock Incentive Plan, as Amended and Restated as of August 12, 2004 (filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2006)†
10.22 Amendment No. 2, dated as of May 21, 2009, to the 1997 Long-Term Stock Incentive Plan, as Amended and Restated as of August 12, 2004 (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2009)†
10.23 Amended and Restated 2010 Long-Term Incentive Plan, amended as of August 11, 2016 (filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2016)†
10.24 2019 Long-Term Stock Incentive Plan (filed as Appendix C to the Company's Definitive Proxy Statement dated June 21, 2019)†
10.25 Form of Non-Employee Director Restricted Stock Unit Award Agreement under the 2019 Long-Term Stock Incentive Plan (filed as Exhibit 10.39 to the Company's Annual Report on Form 10-K filed May 24, 2022) †
10.26 Amended and Restated Polo Ralph Lauren Supplemental Executive Retirement Plan (filed as Exhibit 10.1 to the Company's Form 10-Q for the quarterly period ended December 31, 2005)†
10.27 Form of Restricted Stock Unit Award Agreement under the 2019 Long-Term Stock Incentive Plan (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed November 10, 2022)†
10.28 Form of Performance Share Unit Award - ROIC Agreement under the 2019 Long-Term Stock Incentive Plan (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed November 10, 2022)†
10.29 Form of Performance Share Unit Award - TSR Agreement under the 2019 Long-Term Stock Incentive Plan (filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed November 10, 2022)†
10.30 Credit Agreement, dated as of June 30, 2023, among Ralph Lauren Corporation, Ralph Lauren Europe Sàrl, RL Finance B.V. and Ralph Lauren Asia Pacific Limited as the borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, HSBC Bank USA, N.A., ING Bank N.V., Dublin Branch, Deutsche Bank Securities Inc. and Sumitomo Mitsui Banking Corporation, as co-documentation agents (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 7, 2023)
14.1 Code of Ethics for Principal Executive Officers and Senior Financial Officers (filed as Exhibit 14.1 to the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 2003 and available, as amended, on the Company's Internet site)
14.2 Code of Business Conduct and Ethics of the Company (filed as Exhibit 14.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 27, 2015 and available, as amended, on the Company's Internet site)
19.1 Insider Trading Policies and Procedures of the Company (filed as Exhibit 19.1 to the Fiscal 2024 10-K)
21.1* List of Subsidiaries of the Company
23.1* Consent of Ernst & Young LLP
Exhibit
Number Description
31.1* Certification of Principal Executive Officer pursuant to 17 CFR 240.13a-14(a)
31.2* Certification of Principal Financial Officer pursuant to 17 CFR 240.13a-14(a)
32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1 Clawback Policy of the Company (filed as Exhibit 97.1 to the Fiscal 2024 10-K)
101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
Exhibits 32.1 and 32.2 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.
* Filed herewith.
† Management contract or compensatory plan or arrangement.