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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-13057
Ralph Lauren Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-2622036
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
650 Madison Avenue, 10022
New York,New York(Zip Code)
(Address of principal executive offices) 
(212318-7000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Class A Common Stock, $.01 par valueRLNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
At October 29, 2021, 48,735,761 shares of the registrant's Class A common stock, $.01 par value, and 24,881,276 shares of the registrant's Class B common stock, $.01 par value, were outstanding.


RALPH LAUREN CORPORATION
INDEX
 

1


RALPH LAUREN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 25,
2021
March 27,
2021
(millions)
ASSETS
Current assets:
Cash and cash equivalents$2,387.9 $2,579.0 
Short-term investments673.1 197.5 
Accounts receivable, net of allowances of $222.7 million and $213.8 million
419.3 451.5 
Inventories928.2 759.0 
Income tax receivable42.1 54.4 
Prepaid expenses and other current assets182.1 166.6 
Total current assets
4,632.7 4,208.0 
Property and equipment, net971.0 1,014.0 
Operating lease right-of-use assets1,149.3 1,239.5 
Deferred tax assets289.9 283.9 
Goodwill933.1 934.6 
Intangible assets, net112.2 121.1 
Other non-current assets88.5 86.4 
Total assets
$8,176.7 $7,887.5 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$499.1 $ 
Accounts payable451.4 355.9 
Current income tax payable71.4 50.6 
Current operating lease liabilities276.2 302.9 
Accrued expenses and other current liabilities962.5 875.4 
Total current liabilities
2,260.6 1,584.8 
Long-term debt1,135.5 1,632.9 
Long-term operating lease liabilities1,198.3 1,294.5 
Non-current income tax payable104.8 118.7 
Non-current liability for unrecognized tax benefits84.2 91.4 
Other non-current liabilities530.5 560.8 
Commitments and contingencies (Note 13)
Total liabilities
5,313.9 5,283.1 
Equity:
Class A common stock, par value $.01 per share; 106.9 million and 106.1 million shares issued; 48.8 million and 48.3 million shares outstanding
1.0 1.0 
Class B common stock, par value $.01 per share; 24.9 million shares issued and outstanding
0.3 0.3 
Additional paid-in-capital2,707.7 2,667.1 
Retained earnings6,129.8 5,872.9 
Treasury stock, Class A, at cost; 58.1 million and 57.8 million shares
(5,856.0)(5,816.1)
Accumulated other comprehensive loss(120.0)(120.8)
Total equity
2,862.8 2,604.4 
Total liabilities and equity
$8,176.7 $7,887.5 
See accompanying notes.
2


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedSix Months Ended
 September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
(millions, except per share data)
Net revenues
$1,504.1 $1,193.5 $2,880.4 $1,681.0 
Cost of goods sold(488.9)(394.1)(897.1)(532.9)
Gross profit
1,015.2 799.4 1,983.3 1,148.1 
Selling, general, and administrative expenses(754.9)(628.2)(1,483.1)(1,135.8)
Impairment of assets(0.7)(31.0)(19.3)(33.1)
Restructuring and other charges(7.7)(160.5)(8.4)(167.5)
Total other operating expenses, net
(763.3)(819.7)(1,510.8)(1,336.4)
Operating income (loss)
251.9 (20.3)472.5 (188.3)
Interest expense(13.6)(12.8)(26.9)(22.4)
Interest income1.2 2.2 3.0 5.1 
Other income (expense), net(1.4)1.8 (0.5)3.9 
Income (loss) before income taxes
238.1 (29.1)448.1 (201.7)
Income tax benefit (provision)(44.8)(10.0)(90.1)34.9 
Net income (loss)
$193.3 $(39.1)$358.0 $(166.8)
Net income (loss) per common share:
Basic$2.61 $(0.53)$4.84 $(2.27)
Diluted$2.57 $(0.53)$4.75 $(2.27)
Weighted average common shares outstanding:
Basic74.0 73.5 73.9 73.3 
Diluted75.3 73.5 75.3 73.3 
Dividends declared per share$0.6875 $ $1.375 $ 
See accompanying notes.

3


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months EndedSix Months Ended
 September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
(millions)
Net income (loss)
$193.3 $(39.1)$358.0 $(166.8)
Other comprehensive income (loss), net of tax:
Foreign currency translation gains (losses)(9.8)17.3 0.8 30.3 
Net gains (losses) on cash flow hedges1.1 (7.3)0.1 (11.3)
Net losses on defined benefit plans (0.2)(0.1)(0.3)
Other comprehensive income (loss), net of tax
(8.7)9.8 0.8 18.7 
Total comprehensive income (loss)
$184.6 $(29.3)$358.8 $(148.1)
See accompanying notes.
4


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
 September 25,
2021
September 26,
2020
(millions)
Cash flows from operating activities:
Net income (loss)$358.0 $(166.8)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense113.1 125.2 
Deferred income tax benefit(0.1)(86.9)
Non-cash stock-based compensation expense40.6 34.6 
Non-cash impairment of assets19.3 33.1 
Bad debt expense reversals(0.9)(25.4)
Other non-cash charges (benefits)1.8 (2.1)
Changes in operating assets and liabilities:
Accounts receivable26.6 (49.7)
Inventories(199.0)(129.3)
Prepaid expenses and other current assets(17.7)11.1 
Accounts payable and accrued liabilities145.7 219.6 
Income tax receivables and payables6.2 12.8 
Other balance sheet changes(29.4)11.1 
Net cash provided by (used in) operating activities
464.2 (12.7)
Cash flows from investing activities:
Capital expenditures(63.4)(53.9)
Purchases of investments(756.4)(407.0)
Proceeds from sales and maturities of investments279.5 471.5 
Settlement of net investment hedges 3.7 
Other investing activities(2.1)(0.5)
Net cash provided by (used in) investing activities
(542.4)13.8 
Cash flows from financing activities:
Repayments of credit facility borrowings (475.0)
Proceeds from the issuance of long-term debt 1,241.9 
Repayments of long-term debt (300.0)
Payments of finance lease obligations(11.7)(5.7)
Payments of dividends(50.5)(49.8)
Repurchases of common stock, including shares surrendered for tax withholdings(39.9)(35.5)
Other financing activities (8.6)
Net cash provided by (used in) financing activities
(102.1)367.3 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(11.0)23.6 
Net increase (decrease) in cash, cash equivalents, and restricted cash(191.3)392.0 
Cash, cash equivalents, and restricted cash at beginning of period2,588.0 1,629.8 
Cash, cash equivalents, and restricted cash at end of period$2,396.7 $2,021.8 
See accompanying notes.
5


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended September 25, 2021
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at June 26, 2021
131.6 $1.3 $2,685.5 $5,987.1 58.0 $(5,844.9)$(111.3)$2,717.7 
Comprehensive income:
Net income193.3 
Other comprehensive loss(8.7)
Total comprehensive income184.6 
Dividends declared(50.6)(50.6)
Repurchases of common stock0.1 (11.1)(11.1)
Stock-based compensation22.2 22.2 
Shares issued pursuant to stock-based
compensation plans
0.2    
Balance at September 25, 2021
131.8 $1.3 $2,707.7 $6,129.8 58.1 $(5,856.0)$(120.0)$2,862.8 
Three Months Ended September 26, 2020
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at June 27, 2020
130.9 $1.3 $2,609.5 $5,866.3 57.8 $(5,812.3)$(109.3)$2,555.5 
Comprehensive loss:
Net loss(39.1)
Other comprehensive income9.8 
Total comprehensive loss(29.3)
Dividends declared  
Repurchases of common stock (1.6)(1.6)
Stock-based compensation19.5 19.5 
Balance at September 26, 2020
130.9 $1.3 $2,629.0 $5,827.2 57.8 $(5,813.9)$(99.5)$2,544.1 
(a)Includes Class A and Class B common stock.
(b)Accumulated other comprehensive income (loss).
6


RALPH LAUREN CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(Unaudited)
Six Months Ended September 25, 2021
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at March 27, 2021
131.0 $1.3 $2,667.1 $5,872.9 57.8 $(5,816.1)$(120.8)$2,604.4 
Comprehensive income:
Net income358.0 
Other comprehensive income
0.8 
Total comprehensive income358.8 
Dividends declared(101.1)(101.1)
Repurchases of common stock0.3 (39.9)(39.9)
Stock-based compensation40.6 40.6 
Shares issued pursuant to stock-based compensation plans
0.8    
Balance at September 25, 2021
131.8 $1.3 $2,707.7 $6,129.8 58.1 $(5,856.0)$(120.0)$2,862.8 
Six Months Ended September 26, 2020
Common Stock(a)
Additional
Paid-in
Capital
Treasury Stock
at Cost
Retained
Earnings
Total
Equity
SharesAmountSharesAmount
AOCI(b)
(millions)
Balance at March 28, 2020
129.8 $1.3 $2,594.4 $5,994.0 57.3 $(5,778.4)$(118.2)$2,693.1 
Comprehensive loss:
Net loss(166.8)
Other comprehensive income18.7 
Total comprehensive loss(148.1)
Dividends declared  
Repurchases of common stock0.5 (35.5)(35.5)
Stock-based compensation34.6 34.6 
Shares issued pursuant to stock-based compensation plans1.1    
Balance at September 26, 2020
130.9 $1.3 $2,629.0 $5,827.2 57.8 $(5,813.9)$(99.5)$2,544.1 
(a)Includes Class A and Class B common stock.
(b)Accumulated other comprehensive income (loss).
See accompanying notes.
7




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

1.    Description of Business
Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, footwear, accessories, home furnishings, fragrances, and hospitality. RLC's long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others. RLC and its subsidiaries are collectively referred to herein as the "Company," "we," "us," "our," and "ourselves," unless the context indicates otherwise.
The Company diversifies its business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows the Company to maintain a dynamic balance as its operating results do not depend solely on the performance of any single geographic area or channel of distribution. The Company sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and digital commerce operations around the world. The Company's wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which the Company has licensed the right to operate in defined geographic territories using its trademarks. In addition, the Company licenses to third parties for specified periods the right to access its various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.
The Company organizes its business into the following three reportable segments: North America, Europe, and Asia. In addition to these reportable segments, the Company also has other non-reportable segments. See Note 17 for further discussion of the Company's segment reporting structure.
2.    Basis of Presentation
Interim Financial Statements
These interim consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") and are unaudited. In the opinion of management, these consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position, income (loss), comprehensive income (loss), and cash flows of the Company for the interim periods presented. In addition, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") and the notes thereto have been condensed or omitted from this report as is permitted by the SEC's rules and regulations. However, the Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading.
This report should be read in conjunction with the Company's Annual Report on Form 10-K filed with the SEC for the fiscal year ended March 27, 2021 (the "Fiscal 2021 10-K").
Basis of Consolidation
These unaudited interim consolidated financial statements present the consolidated financial position, income (loss), comprehensive income (loss), and cash flows of the Company, including all entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.
Additionally, as discussed in Note 8, the Company completed the sale of its Club Monaco business at the end of its first quarter of Fiscal 2022 (as defined below) on June 26, 2021. As a result, assets and liabilities related to the Club Monaco business were deconsolidated from the Company's consolidated statement of financial position effective June 26, 2021, with Club Monaco's operating results included in the Company's consolidated statements of income (loss), comprehensive income (loss), and cash flows through the end of the first quarter of Fiscal 2022. Prior year financial statements were not affected.
8


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fiscal Periods
The Company utilizes a 52-53 week fiscal year ending on the Saturday immediately before or after March 31. As such, fiscal year 2022 will end on April 2, 2022 and will be a 53-week period ("Fiscal 2022"). Fiscal year 2021 ended on March 27, 2021 and was a 52-week period ("Fiscal 2021"). The second quarter of Fiscal 2022 ended on September 25, 2021 and was a 13-week period. The second quarter of Fiscal 2021 ended on September 26, 2020 and was also a 13-week period.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Actual results could differ materially from those estimates.
Significant estimates inherent in the preparation of the consolidated financial statements include reserves for bad debt, customer returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; fair value measurements; accounting for income taxes and related uncertain tax positions; valuation of stock-based compensation awards and related forfeiture rates; and reserves for restructuring activity, among others.
Reclassifications
Certain reclassifications have been made to prior period financial information in order to conform to the current period's presentation.
Seasonality of Business
The Company's business is typically affected by seasonal trends, with higher levels of retail sales in its second and third fiscal quarters and higher wholesale sales in its second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting its retail business and the timing of seasonal wholesale shipments. As a result of changes in its business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly operating trends and working capital requirements may not be indicative of the Company's future performance. In addition, fluctuations in sales, operating income (loss), and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes in weather patterns. Accordingly, the Company's operating results and cash flows for the three-month and six-month periods ended September 25, 2021 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2022.
COVID-19 Pandemic
Beginning in the fourth quarter of the Company's fiscal year ended March 28, 2020 ("Fiscal 2020"), a novel strain of coronavirus commonly referred to as COVID-19 emerged and spread rapidly across the globe, including throughout all major geographies in which the Company operates, resulting in adverse economic conditions and business disruptions, as well as significant volatility in global financial markets. Since then, governments worldwide have periodically imposed varying degrees of preventative and protective actions, such as temporary travel bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus. Such factors, among others, have resulted in a significant decline in retail traffic, tourism, and consumer spending on discretionary items. Additionally, companies across a wide array of industries have implemented various initiatives to reduce operating expenses and preserve cash balances during the pandemic, including work furloughs, reduced pay, and severance actions, which could lower consumers' disposable income levels or willingness to purchase discretionary items. Such government restrictions, company initiatives, and other macroeconomic impacts resulting from the pandemic could continue to adversely affect consumer behavior, spending levels, and/or shopping preferences, such as willingness to congregate in indoor shopping centers or other populated locations.
As a result of the COVID-19 pandemic, the Company has experienced varying degrees of business disruptions and periods of closure of its stores, distribution centers, and corporate facilities, as have the Company's wholesale customers, licensing partners, suppliers, and vendors. During the first quarter of Fiscal 2021 at the peak of the pandemic, the majority of the Company's stores in key markets were closed for an average of 8 to 10 weeks due to government-mandated lockdowns and
9


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
other restrictions, resulting in significant adverse impacts to its operating results. Resurgences and outbreaks in certain parts of the world resulted in further business disruptions periodically throughout Fiscal 2021, most notably in Europe where a significant number of the Company's stores were closed for approximately two to three months during the second half of Fiscal 2021, including during the holiday period, due to government-mandated lockdowns and other restrictions. Such disruptions continued into the first half of Fiscal 2022 in certain regions, although to a lesser extent than the comparable prior year fiscal period. Further, throughout the course of the pandemic, the majority of the Company's stores that were able to remain open have periodically been subject to limited operating hours and/or customer capacity levels in accordance with local health guidelines, with traffic remaining challenged. However, the Company's digital commerce operations have grown significantly from pre-pandemic levels, due in part to our investments and enhanced capabilities, as well as changes in consumer shopping preferences. The Company's wholesale and licensing businesses have experienced similar impacts, particularly in North America and Europe.
Throughout the course of the pandemic, the Company's priority has been to ensure the safety and well-being of its employees, customers, and the communities in which it operates around the world. The Company continues to consider the guidance of local governments and global health organizations and has implemented new health and safety protocols in its stores, distribution centers, and corporate facilities. The Company also took various preemptive actions in the prior fiscal year to preserve cash and strengthen its liquidity position, as described in the Fiscal 2021 10-K.
Despite the introduction of COVID-19 vaccines and recent improvements in the global economy as a whole, the pandemic remains volatile and continues to evolve, including the emergence of variants of the virus, such as the Delta variant. Accordingly, the Company cannot predict for how long and to what extent the pandemic will impact its business operations or the overall global economy. The Company will continue to assess its operations location-by-location, considering the guidance of local governments and global health organizations.
3.    Summary of Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue across all channels of the business when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized considers terms of sale that create variability in the amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or services, and is subject to an overall constraint that a significant revenue reversal will not occur in future periods. Sales and other related taxes collected from customers and remitted to government authorities are excluded from revenue.
Revenue from the Company's retail business is recognized when the customer takes physical possession of the products, which occurs either at the point of sale for merchandise purchased at the Company's own retail stores and shop-within-shop locations, or upon receipt of shipment for merchandise ordered through direct-to-consumer digital commerce sites. Such revenues are recorded net of estimated returns based on historical trends. Payment is due at the point of sale.
Gift cards purchased by customers are recorded as a liability until they are redeemed for products sold by the Company's retail business, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed (referred to as "breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions.
Revenue from the Company's wholesale business is generally recognized upon shipment of products, at which point title passes and risk of loss is transferred to the customer. In certain arrangements where the Company retains the risk of loss during shipment, revenue is recognized upon receipt of products by the customer. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends. The Company reviews and
10


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
refines these estimates on at least a quarterly basis. The Company's historical estimates of these amounts have not differed materially from actual results.
Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks (i.e., symbolic intellectual property) and benefit from such access through their own sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for most arrangements, may be subject to a contractually-guaranteed minimum royalty amount. Payments are generally due quarterly and, depending on time of receipt, may be recorded as a liability until recognized as revenue. The Company recognizes revenue for sales-based royalty arrangements (including those for which the royalty exceeds any contractually-guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-based royalty is not ultimately expected to exceed a contractually-guaranteed minimum royalty amount, the minimum is generally recognized as revenue ratably over the respective contractual period. This sales-based output measure of progress and pattern of recognition best represents the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for providing access to its trademarks. As of September 25, 2021, contractually-guaranteed minimum royalty amounts expected to be recognized as revenue during future periods were as follows:
Contractually-Guaranteed
Minimum Royalties(a)
(millions)
Remainder of Fiscal 2022$44.5 
Fiscal 202391.8 
Fiscal 202462.2 
Fiscal 202528.2 
Fiscal 202616.4 
Fiscal 2027 and thereafter26.7 
Total$269.8 
(a)Amounts presented do not contemplate potential contract renewals or royalties earned in excess of the contractually-guaranteed minimums.
Disaggregated Net Revenues
The following tables disaggregate the Company's net revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors for the fiscal periods presented:
Three Months Ended
September 25, 2021September 26, 2020
North AmericaEuropeAsiaOtherTotalNorth AmericaEuropeAsiaOtherTotal
(millions)
Sales Channel(a):
Retail$421.9 $229.5 $248.4 $0.4 $900.2 $314.7 $174.2 $219.3 $21.1 $729.3 
Wholesale281.2 266.0 21.5 0.3 569.0 228.2 185.3 17.3 2.3 433.1 
Licensing   34.9 34.9    31.1 31.1 
Total$703.1 $495.5 $269.9 $35.6 $1,504.1 $542.9 $359.5 $236.6 $54.5 $1,193.5 
11


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Six Months Ended
September 25, 2021September 26, 2020
North AmericaEuropeAsiaOtherTotalNorth AmericaEuropeAsiaOtherTotal
(millions)
Sales Channel(a):
Retail$834.1 $400.3 $521.2 $27.2 $1,782.8 $457.3 $253.4 $385.8 $27.6 $1,124.1 
Wholesale531.1 450.1 36.9 5.3 1,023.4 250.7 226.8 22.7 2.8 503.0 
Licensing   74.2 74.2    53.9 53.9 
Total$1,365.2 $850.4 $558.1 $106.7 $2,880.4 $708.0 $480.2 $408.5 $84.3 $1,681.0 
(a)Net revenues from the Company's retail and wholesale businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time.
Deferred Income
Deferred income represents cash payments received in advance of the Company's transfer of control of products or services to its customers and generally consists of unredeemed gift cards (net of breakage) and advance royalty payments from licensees. The Company's deferred income balances were $10.6 million and $12.1 million as of September 25, 2021 and March 27, 2021, respectively, and were primarily recorded within accrued expenses and other current liabilities within the consolidated balance sheets. The majority of the deferred income balance as of September 25, 2021 is expected to be recognized as revenue within the next twelve months.
Shipping and Handling Costs
Costs associated with shipping goods to customers are accounted for as fulfillment activities and reflected as selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations. Costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs"), are also included in SG&A expenses. Shipping and handling costs billed to customers are included in revenue.
A summary of shipping and handling costs for the fiscal periods presented is as follows:
 Three Months EndedSix Months Ended
 September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
 (millions)
Shipping costs$14.0 $12.2 $28.8 $20.6 
Handling costs35.8 33.3 70.2 59.8 
Net Income (Loss) per Common Share
Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common shares by the weighted-average number of common shares outstanding during the period. Weighted-average common shares include shares of the Company's Class A and Class B common stock. Diluted net income (loss) per common share adjusts basic net income (loss) per common share for the dilutive effects of outstanding restricted stock units ("RSUs"), stock options, and any other potentially dilutive instruments, only for the periods in which such effects are dilutive.
12


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average number of common shares outstanding used to calculate basic net income (loss) per common share is reconciled to shares used to calculate diluted net income (loss) per common share as follows:
 Three Months EndedSix Months Ended
 September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
 (millions)
Basic shares74.0 73.5 73.9 73.3 
Dilutive effect of RSUs and stock options
1.3  
(a)
1.4  
(a)
Diluted shares75.3 73.5 75.3 73.3 
(a)Incremental shares of 0.9 million and 1.2 million attributable to outstanding RSUs were excluded from the computation of diluted shares for the three-month and six-month periods ended September 26, 2020, respectively, as such shares would not be dilutive given the net losses incurred during such fiscal year periods.
All earnings per share amounts have been calculated using unrounded numbers. The Company has outstanding performance-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance conditions (i) have been satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive. In addition, options to purchase shares of the Company's Class A common stock at an exercise price greater than the average market price of such common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income (loss) per common share. As of September 25, 2021 and September 26, 2020, there were 0.4 million and 0.6 million, respectively, of additional shares issuable contingent upon vesting of performance-based RSUs and upon exercise of anti-dilutive stock options, that were excluded from the diluted shares calculations.
Accounts Receivable
In the normal course of business, the Company extends credit to wholesale customers that satisfy certain defined credit criteria. Payment is generally due within 30 to 120 days and does not involve a significant financing component. Accounts receivable are recorded at amortized cost, which approximates fair value, and are presented in the Company's consolidated balance sheets net of certain reserves and allowances. These reserves and allowances consist of (i) reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances (see the "Revenue Recognition" section above for further discussion of related accounting policies) and (ii) allowances for doubtful accounts.
A rollforward of the activity in the Company's reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances is presented as follows:
 Three Months EndedSix Months Ended
 September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
 (millions)
Beginning reserve balance$178.9 $184.0 $173.7 $204.7 
Amount charged against revenue to increase reserve101.6 72.6 188.7 83.9 
Amount credited against customer accounts to decrease reserve
(94.0)(88.2)(177.2)(122.1)
Foreign currency translation(1.7)3.5 (0.4)5.4 
Ending reserve balance$184.8 $171.9 $184.8 $171.9 
An allowance for doubtful accounts is determined through analysis of accounts receivable aging, assessments of collectability based on evaluation of historical trends, the financial condition of the Company's customers and their ability to withstand prolonged periods of adverse economic conditions, and evaluation of the impact of current and forecasted economic and market conditions over the related asset's contractual life, among other factors.
13


RALPH LAUREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A rollforward of the activity in the Company's allowance for doubtful accounts is presented as follows:
 Three Months EndedSix Months Ended
 September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
 (millions)
Beginning reserve balance$38.6 $55.9 $40.1 $71.5 
Amount recorded to expense to increase (decrease) reserve(a)
0.1 (8.9)(0.9)(25.4)
Amount written-off against customer accounts to decrease reserve
(0.6)(1.6)(1.3)(1.6)
Foreign currency translation(0.2)0.9