Ralph Lauren Reports Fourth Quarter and Full Year Fiscal 2016 Results

• Fourth Quarter Consolidated Net Revenues were $1.9 Billion
• Earnings Per Diluted Share Was $0.88 in the Fourth Quarter, Excluding
  Restructuring and Other Charges
• Better-Than-Expected Operating Margin, Excluding Restructuring and
  Other Charges, Reflects Disciplined Expense Management
• The Company’s Board of Directors Authorizes an Additional $200 Million
  Stock Repurchase Program

NEW YORK–(BUSINESS WIRE)–Ralph Lauren Corporation (NYSE:RL) today reported net income of $74
million, or $0.88 per diluted share, for the fourth quarter of Fiscal
2016, which excludes restructuring and other charges that are primarily
related to activities associated with the Company’s global brand
reorganization. This compared to reported net income of $124 million, or
$1.41 per diluted share, for the fourth quarter of Fiscal 2015. On a
reported basis, net income was $41 million or $0.49 per diluted share in
the fourth quarter of Fiscal 2016.

Net income for the full year Fiscal 2016 period was $546 million, or
$6.36 per diluted share, excluding restructuring and other charges. This
compared to net income of $702 million, or $7.88 per diluted share, for
Fiscal 2015. On a reported basis, net income was $396 million, or $4.62
per diluted share.

The Company’s Board of Directors authorized an additional $200 million
stock repurchase program permitting the Company to purchase shares of
Class A Common Stock, subject to market conditions. This amount is in
addition to the $100 million available at the end of the fourth quarter
of Fiscal 2016 as part of a previously authorized stock repurchase
program, bringing the Company’s total current authorization to $300
million.

“Fiscal 2016 was a year of significant change for our Company as we
established a new organizational structure and appointed a new CEO,”
said Ralph Lauren, Executive Chairman and Chief Creative Officer. “I am
greatly encouraged by the changes that have already taken shape over the
past several months under Stefan’s leadership and he has my full support
as he and his team build and implement our new strategic growth plan.”

“We have made great progress over the past few months in developing our
long-term growth strategy,” said Stefan Larsson, President and Chief
Executive Officer. “Immediately following the comprehensive assessment
work we undertook after I arrived at the Company, we started developing
our new strategic plan and building the foundation to start executing.
We are looking forward to sharing the plan at our Investor Day on June
7th. We are confident that our new strategic plan will strengthen the
brand, drive sustainable profitable sales growth and deliver shareholder
value.”

Fourth Quarter and Full Year Fiscal 2016 Income Statement Review

Net Revenues. Net revenues for the fourth quarter of
Fiscal 2016 were flat with the prior year period on a constant currency
basis and declined 1% on a reported basis to $1.9 billion. The decline
in reported net revenues was in line with the guidance provided in
February of a 0%-2% reported revenue decline and included approximately
110 basis points of negative impact from foreign currency effects. In
constant currency, international net revenue rose 3% in the fourth
quarter, offset by a 1% decline in the Americas that was due to
proactive measures taken in the U.S. to clear end-of-season inventories
related to the Fall season.

The Company’s fourth quarter in Fiscal 2016 included a 53^rd
week that contributed approximately $70 million of sales in the fourth
quarter and was primarily generated within the retail segment.

Net revenues for the full year Fiscal 2016 period increased 1% on a
constant currency basis, and declined 3% on a reported basis to $7.4
billion.

• Wholesale Sales. In the fourth quarter of Fiscal 2016,
  wholesale segment sales decreased 5% on a constant currency basis and
  6% on a reported basis to $942 million, primarily due to a decline in
  sales in North America.

  For Fiscal 2016, wholesale sales
  decreased 3% on a constant currency basis and 6% on a reported basis
  to $3.3 billion, due to a decline in sales in North America.

• Retail Sales. Retail segment sales increased 7% on a constant
  currency basis and 6% on a reported basis to $889 million in the
  fourth quarter, driven by the benefit of a 53^rd week of
  sales, new store expansion and e-commerce growth. On a 13-week to
  13-week basis, consolidated comparable store sales decreased 5% in
  constant currency and 6% as reported during the fourth quarter.

  Retail
  sales for Fiscal 2016 increased 4% on a constant currency basis from
  the prior year period, reflecting new store expansion, e-commerce
  growth and the benefit of a 53^rd week of sales. Reported
  retail sales decreased 1% to $3.9 billion. On a 52-week to 52-week
  basis, consolidated comparable store sales decreased 3% in constant
  currency and 7% as reported in Fiscal 2016.

• Licensing. Licensing segment revenue of $40 million in the
  fourth quarter increased 8% on both a constant currency and reported
  basis, reflecting higher royalties from increased sales of Ralph
  Lauren, Polo Ralph Lauren and Lauren products worldwide.

  Licensing
  revenues of $175 million in Fiscal 2016 were 5% above Fiscal 2015’s
  level in constant currency and increased 4% as reported.

Gross Profit. Gross profit for the fourth quarter of
Fiscal 2016 was $1.0 billion, excluding restructuring charges of $7
million. Gross profit margin was 54.5%, which was 90 basis points lower
than the prior year period, reflecting proactive measures taken in the
U.S. to clear end-of-season inventories related to the Fall season, in
addition to unfavorable foreign currency effects.

Gross profit for Fiscal 2016 decreased 4% to $4.2 billion, excluding
restructuring charges of $20 million. Gross profit margin for Fiscal
2016 was 56.8%, 70 basis points lower than the prior year, due to
negative foreign currency impacts, which was partially offset by
favorable sales mix shift to the retail segment.

Operating Expenses. Operating expenses in the fourth
quarter of Fiscal 2016 were $902 million, excluding restructuring and
other charges of $45 million. Operating expense rate of 48.2% increased
290 basis points compared with the fourth quarter of Fiscal 2015, due to
incremental investments in infrastructure, new stores and marketing,
along with unfavorable foreign currency effects. As reported, operating
expenses in the fourth quarter of Fiscal 2016 were $947 million.

Operating expenses in Fiscal 2016 were $3.4 billion, excluding
restructuring and other charges. Operating expense rate of 46.1%
increased 220 basis points compared to Fiscal 2015, due to fixed expense
deleverage and incremental investments in infrastructure and new stores.
As reported, operating expenses in Fiscal 2016 were $3.6 billion, which
included $122 million in restructuring charges, $22 million of
additional impairment associated with underperforming stores subject to
potential future closure, and $48 million related to a pending customs
audit, litigation and other charges.

Operating Income. Operating income in the fourth quarter
of Fiscal 2016 was $119 million, excluding restructuring and other
charges of $52 million. Operating margin of 6.4% was 370 basis points
below the prior year period, better than the guidance provided in
February of a 400-450 basis point decline, due to disciplined expense
management. The lower operating margin was primarily attributable to
gross margin pressure, unfavorable foreign currency effects, and
incremental investments in infrastructure and marketing.

Fiscal 2016’s operating income was $794 million, excluding restructuring
and other charges. Operating margin of 10.7% was 290 basis points below
the prior year period. The lower operating margin was primarily
attributable to gross margin pressure, fixed expense deleverage,
unfavorable foreign currency effects, and incremental investments in
infrastructure and new stores. As reported, operating income in Fiscal
2016 was $582 million, which included $142 million in restructuring
charges, $22 million of additional impairment associated with
underperforming stores subject to potential future closure, and $48
million related to a pending customs audit, litigation and other charges.

• Wholesale Operating Income. Wholesale operating income in the
  fourth quarter of Fiscal 2016 was $255 million, excluding
  restructuring and other charges, compared with $309 million in the
  prior year period. Wholesale operating margin decreased 350 basis
  points to 27.2% driven by proactive measures taken in the U.S. to
  clear end-of-season inventories related to the Fall season, and
  negative foreign currency effects.

  Wholesale operating
  income in Fiscal 2016 was $828 million, excluding restructuring and
  other charges, compared with $943 million in Fiscal 2015. Wholesale
  operating margin for Fiscal 2016 was 25.1% compared to 27.0% in Fiscal
  2015. The decline in wholesale operating margin was driven by gross
  margin pressure, fixed expense deleverage and negative foreign
  currency effects.

• Retail Operating Income. Retail operating income in the fourth
  quarter of Fiscal 2016 was $22 million, excluding restructuring and
  other charges, compared with $28 million in the prior year period.
  Retail operating margin declined 100 basis points to 2.4% due to
  proactive measures taken to clear end-of-season inventories in
  addition to negative foreign currency effects.

  Retail
  operating income was $422 million in Fiscal 2016, excluding
  restructuring and other charges, compared to $527 million in the prior
  year period. Retail operating margin declined 260 basis points to
  10.7%. The lower operating margin was due to fixed expense deleverage,
  gross margin pressure and negative foreign currency effects.

• Licensing Operating Income. Licensing operating income of $35
  million in the fourth quarter of Fiscal 2016 increased 9% compared
  with the prior year period. Licensing operating income of $155 million
  in Fiscal 2016 increased 2% above the prior year period.

Net Income and Diluted EPS. Net income for the fourth
quarter of Fiscal 2016 was $74 million, or $0.88 per diluted share,
excluding restructuring and other charges. This compared to reported net
income of $124 million, or $1.41 per diluted share, for the fourth
quarter of Fiscal 2015. On a reported basis, net income was $41 million
or $0.49 per diluted share in the fourth quarter.

Net income for the full year Fiscal 2016 period was $546 million, or
$6.36 per diluted share, excluding restructuring and other charges. This
compared to net income of $702 million, or $7.88 per diluted share, for
Fiscal 2015. On a reported basis, net income was $396 million, or $4.62
per diluted share.

The Company had an effective tax rate of approximately 34%, excluding
restructuring and other charges, in the fourth quarter of Fiscal 2016,
which compared to an effective tax rate of 28% in the fourth quarter of
Fiscal 2015. This was higher than our guidance of 32% due to one-time
discrete items. On a reported basis, the effective tax rate was 33% in
the fourth quarter of Fiscal 2016.

Fourth Quarter Fiscal 2016 Balance Sheet and Cash Flow Review

The Company ended Fiscal 2016 with $1.3 billion in cash and investments,
or $559 million in cash and investments net of debt (“net cash”),
compared to $1.2 billion in cash and investments and $620 million in net
cash at the end of Fiscal 2015. The fourth quarter of Fiscal 2016 ended
with inventory of $1.1 billion compared to $1.0 billion in the prior
year period. The increase in inventory reflects investments to support
new stores and concession shops.

The Company had $418 million in capital expenditures in Fiscal 2016,
compared to $391 million in the prior year period. The Company
repurchased approximately 1.2 million shares of Class A Common Stock
during the fourth quarter, utilizing $100 million of its share
repurchase authorization and bringing year-to-date repurchases to $480
million.

Global Retail Store Network

The Company ended Fiscal 2016 with 493 directly operated stores,
comprised of 144 Ralph Lauren stores, 77 Club Monaco stores and 272 Polo
factory stores. The Company also operated 583 concession shop locations
worldwide at the end of the year. Compared to the end of Fiscal 2015,
the Company had 27 net new directly operated stores and 47 net new
concession shops at the end of Fiscal 2016.

In addition to Company-operated locations, international licensing
partners operated 93 Ralph Lauren stores and 42 dedicated shops, as well
as 133 Club Monaco stores and shops at the end of Fiscal 2016.

Fiscal 2017 Outlook

We plan to provide our first quarter and full year Fiscal 2017 outlook
at our Investor Day event on June 7, 2016.

Conference Call

As previously announced, the Company will host a conference call and
live online webcast today, Thursday, May 12^th, at 9:00 a.m.
Eastern. Listeners may access a live broadcast of the conference call on
the Company’s investor relations website at http://investor.ralphlauren.com
or by dialing 517-623-4799. To access the conference call, listeners
should dial in by 8:45 a.m. Eastern and request to be connected to the
Ralph Lauren Fourth Quarter Fiscal 2016 conference call.

An online archive of the broadcast will be available by accessing the
Company’s investor relations website at http://investor.ralphlauren.com.
A telephone replay of the call will be available from 12:00 P.M.
Eastern, Thursday, May 12, 2016 through 6:00 P.M. Eastern, Thursday, May
19, 2016 by dialing 402-530-7970 and entering passcode 7536.

ABOUT RALPH LAUREN

Ralph Lauren Corporation (NYSE:RL) is a global leader in the design,
marketing and distribution of premium lifestyle products in four
categories: apparel, home, accessories and fragrances. For more than 49
years, Ralph Lauren’s reputation and distinctive image have been
consistently developed across an expanding number of products, brands
and international markets. The Company’s brand names, which include
Ralph Lauren Purple Label, Ralph Lauren Collection, Double RL, Ralph
Lauren Black Label, Polo Ralph Lauren, Polo Sport, Polo Ralph Lauren
Children’s, Ralph Lauren Home, Lauren Ralph Lauren, RLX, Denim & Supply
Ralph Lauren, American Living, Chaps and Club Monaco, constitute one of
the world’s most widely recognized families of consumer brands. For more
information, go to http://investor.ralphlauren.com.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release and oral statements made from time to time by
representatives of the Company contain certain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the statements
under “Fiscal 2016 Outlook” and statements regarding, among other
things, our current expectations about the Company’s future results and
financial condition, revenues, store openings and closings, employee
reductions, margins, expenses and earnings and are indicated by words or
phrases such as “anticipate,” “estimate,” “expect,” “project,” “we
believe” and similar words or phrases. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause actual results, performance or achievements to be materially
different from the future results, performance or achievements expressed
in or implied by such forward-looking statements. Forward-looking
statements are based largely on the Company’s expectations and judgments
and are subject to a number of risks and uncertainties, many of which
are unforeseeable and beyond our control. The factors that could cause
actual results to materially differ include, among others: the loss of
key personnel or other changes in our executive and senior management
team or to our operating structure and our ability to effectively
transfer knowledge during periods of transition; our ability to achieve
anticipated operating enhancements and/or cost reductions from our
restructuring plans, which could include the potential sale,
discontinuance, or consolidation of certain of our brands; our ability
to successfully implement our anticipated growth strategies and to
capitalize on our repositioning initiatives in certain brands, regions
and merchandise categories; our ability to secure the technology
facilities and systems used by the Company and those of third party
service providers from, among other things, cybersecurity breaches, acts
of vandalism, computer viruses or similar events; our exposure to
currency exchange rate fluctuations from both a transactional and
translational perspective, and risks associated with increases in the
costs of raw materials, transportation, and labor; our ability to
continue to maintain our brand image and reputation and protect our
trademarks; the impact of the volatile state of the global economy,
stock markets, and other economic conditions on us, our customers, our
suppliers, and our vendors, and our ability and their ability to access
sources of liquidity; the impact of changes in consumers’ ability or
preferences to purchase premium lifestyle products that we sell and our
ability to forecast consumer demand; changes in the competitive
marketplace, including the introduction of new products or pricing
changes by our competitors, and consolidations, liquidations,
restructurings, and other ownership changes in the retail industry;
risks associated with our international operations, including risks
related to the importation and exportation of products, and risks
associated with compliance with the Foreign Corrupt Practices Act or
violations of other anti-bribery and corruption laws prohibiting
improper payments and the burdens of complying with a variety of foreign
laws and regulations, including tax laws; the impact to our business of
events of unrest and instability that are currently taking place in
certain parts of the world; our ability to continue to expand our
business internationally; changes in our effective tax rates or credit
profile and ratings within the financial community; changes in the
business of, and our relationships with, major department store
customers and licensing partners; our efforts to improve the efficiency
of our distribution system and enhance our information technology
systems and global e-commerce platform; our intention to introduce new
products or enter into or renew alliances and exclusive relationships;
our ability to access sources of liquidity to provide for our cash
needs, including our debt obligations, payment of dividends, capital
expenditures, and potential repurchases of our Class A common stock; our
ability to open new retail stores, concession shops, and e-commerce
sites in an effort to expand our direct-to-consumer presence; our
ability to make certain strategic acquisitions and successfully
integrate the acquired businesses into our existing operations; the
impact to our business resulting from potential costs and obligations
related to the early termination of our long term, non-cancellable
leases; the potential impact to the trading prices of our securities if
our Class A Common Stock share repurchase activity and/or cash dividend
rate differs from investors’ expectations; our ability to maintain our
credit profile and ratings within the financial community; the potential
impact on our operations and on our customers resulting from natural or
man-made disasters; and other risk factors identified in the Company’s
Annual Report on Form 10-K, Form 10-Q and Form 8-K reports filed with
the Securities and Exchange Commission. The Company undertakes no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

Contacts

Ralph Lauren Corporation
Investor Relations:
Evren Kopelman,
212-813-7862
or
Corporate Communications:
Ryan Lally,
212-318-7116

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