• Second Quarter Reported Revenues Increased 26% to $1.5 Billion, Above Expectations with Double-Digit Growth Across All Regions
• Global Digital Ecosystem Revenue Increased Approximately 45% Including Owned Digital Commerce Growth of 35%; Digital Operating Margin Expanded More Than 1,300 Basis Points to Fiscal 2020, Accretive to Total Company Operating Margin
• Second Quarter Average Unit Retail Increased 14% Driven by Continued Brand Elevation and Strong Full-Priced Selling Trends
• Operating Margin of 16.7% on a Reported Basis and 17.1% on an Adjusted Basis Represents Highest Second Quarter Adjusted Margin Since Fiscal 2013 with Better Than Expected Gross Margins and Operating Expense Leverage Despite Strategic Investments
• Share Repurchases Expected to Resume Starting in Second Half of Fiscal 2022, with Approximately $580 Million Remaining Under the Company's Current Authorization

Ralph Lauren Corporation (NYSE:RL), a global leader in the design, marketing, and distribution of premium lifestyle products, today reported earnings per diluted share of $2.57 on a reported basis and $2.62 on an adjusted basis, excluding restructuring-related and other net charges for the second quarter of Fiscal 2022. This compared to earnings per diluted share of ($0.53) on a reported basis and $1.44 on an adjusted basis, excluding restructuring-related and other net charges for the second quarter of Fiscal 2021.

"We continue to grow and evolve in ways I never imagined, all while holding true to the spirit of timelessness that defines who we are," said Ralph Lauren, Executive Chairman and Chief Creative Officer. "As we enter the holiday season with a greater sense of hope in the world, I am proud of how our teams are coming together to inspire optimism and love in everything we create — from our iconic products to our expanding digital, hospitality and store experiences all over the world."

"We delivered another quarter of strong progress on our Fiscal 2022 plan, with second quarter results exceeding our expectations across all key financial, operating and consumer health metrics," said Patrice Louvet, President and Chief Executive Officer. "Ralph Lauren remains on offense — our market share is growing and we are increasing our investments to deliver on further opportunities for growth. Even as we continue to navigate a volatile global environment, we are confident in our ability to sustain our momentum."

Key Achievements in Second Quarter Fiscal 2022

As we continued to navigate a volatile global retail and supply chain environment, we delivered the following highlights across our strategic priorities in the second quarter of Fiscal 2022:

• Win Over a New Generation of Consumers
  • Drove strong consumer engagement with continued growth in global brand consideration and purchase intent. Second quarter highlights included: our Summer of Sports sponsorships of the U.S. Open Tennis Championships and Team USA in the Ryder Cup and the Tokyo Olympics, as well as the Met Gala. We also launched our first digital apparel collection available for purchase in collaboration with global social networking platform Zepeto
  • Accelerated marketing investments as planned, with second quarter spend up 83% to last year and 27% compared to second quarter Fiscal 2020 levels. Investments focused on supporting new customer acquisition and digitally-amplified brand campaigns

• Energize Core Products and Accelerate Under-Developed Categories
  • Continued to drive our brand elevation strategy across regions and channels with direct-to-consumer average unit retail ("AUR") growth of 14% in the second quarter, on top of 26% growth in the prior year. All geographies exceeded our long-term target of low- to mid-single digit annual AUR growth, led by a 23% increase in North America on improved quality of sales and distribution
  • Leveraged our core and iconic styles led by casual bottoms, sweaters and fleece and drove encouraging trends in high-potential underdeveloped categories, particularly denim, accessories and home. Special releases in the quarter included our exclusive Next Generation-focused capsules for Urban Outfitters and ASOS and our new Ralph's Club fragrance

• Drive Targeted Expansion in Our Regions and Channels
  • Delivered strong growth across every region in the second quarter led by Europe and North America, particularly in wholesale. Asia performed in-line with our expectations, with strength in China and Korea more than offsetting greater than expected impact from COVID-19-related restrictions in Japan
  • Continued momentum in the Chinese mainland, in spite of COVID-19-related lockdowns in the quarter, with second quarter sales increasing more than 25% to last year and more than 70% compared to second quarter Fiscal 2020 in constant currency. Ralph Lauren opened its second digital-forward "Emblematic" retail concept in Shanghai during the quarter, supporting our key city ecosystem strategy in the region

• Lead With Digital
  • Global digital ecosystem revenues grew approximately 45% in the second quarter despite traffic continuing to normalize in physical stores, with momentum across both owned and wholesale digital channels globally
  • Second quarter operating margin in our owned digital business was consistent to last year, benefiting the total company margin rate, and expanded more than 1,300 basis points to second quarter Fiscal 2020

• Operate With Discipline to Fuel Growth
  • Second quarter adjusted operating margin expanded 450 basis points to last year to 17.1%, with significantly better operating expense leverage on stronger revenues more than offsetting increased marketing investments, coupled with continued gross margin expansion
  • Adjusted gross margin expansion of 80 basis points exceeded our expectations, with better pricing and promotions including 18 consecutive quarters of AUR growth and elevated product mix more than offsetting planned freight increases in the quarter
  • Completed the transition of Chaps to a licensed business in the second quarter as planned, concluding our brand portfolio realignment announced last year and enabling our teams to focus on our core brands as part of our Next Great Chapter elevation strategy

Second Quarter Fiscal 2022 Income Statement Review

Net Revenue. In the second quarter of Fiscal 2022, revenue increased by 26% to $1.5 billion on a reported basis and was up 25% in constant currency. Foreign currency favorably impacted revenue growth by approximately 100 basis points in the second quarter.

Revenue performance for the Company's reportable segments in the second quarter compared to the prior year period was as follows:

• North America Revenue. North America revenue in the second quarter increased 30% to $703 million. In retail, comparable store sales in North America were up 31%, with a 31% increase in brick and mortar stores and a 32% increase in digital commerce. North America wholesale revenue increased 23%.

• Europe Revenue. Europe revenue in the second quarter increased 38% to $496 million on a reported basis and increased 36% in constant currency. In retail, comparable store sales in Europe were up 27%, with a 28% increase in brick and mortar stores and a 24% increase in digital commerce. Europe wholesale revenue increased 44% on a reported basis and increased 42% in constant currency.

• Asia Revenue. Asia revenue in the second quarter increased 14% to $270 million on a reported basis and 13% in constant currency. Comparable store sales in Asia increased 7%, with a 4% increase in our brick and mortar stores and a 69% increase in digital commerce.

Gross Profit. Gross profit for the second quarter of Fiscal 2022 was $1.015 billion and gross margin was 67.5%. Adjusted gross margin was 67.3%, 80 basis points above the prior year on a reported basis and up 50 basis points in constant currency, with better pricing and promotions and product mix more than offsetting increased freight headwinds and unusual COVID mix benefits from the prior year period. Compared to second quarter Fiscal 2020, adjusted gross margins expanded 580 basis points on a reported basis on strong AUR growth.

Operating Expenses. Operating expenses in the second quarter of Fiscal 2022 were $763 million on a reported basis. On an adjusted basis, operating expenses were $755 million, up 17% to last year, primarily driven by higher compensation expense following staff furloughs and store closures due to COVID-19 in the prior year period, along with increased marketing investments as planned. Adjusted operating expense rate was 50.2%, compared to 53.9% in the prior year period.

Operating Income. Operating income for the second quarter of Fiscal 2022 was $252 million and operating margin was 16.7% on a reported basis. Adjusted operating income was $257 million and operating margin was 17.1%, 450 basis points above the prior year. Operating income for the Company’s reportable segments in the second quarter compared to the prior year period was as follows:

• North America Operating Income. North America operating income in the second quarter was $171 million on a reported basis and $168 million on an adjusted basis. Adjusted North America operating margin was 23.8%, up 210 basis points to last year.

• Europe Operating Income. Europe operating income in the second quarter was $162 million on both a reported basis and an adjusted basis. Adjusted Europe operating margin was 32.6%, up 480 basis points to last year. Foreign currency favorably impacted adjusted operating margin rate by 20 basis points in the second quarter.

• Asia Operating Income. Asia operating income in the second quarter was $43 million on both a reported basis and an adjusted basis. Adjusted Asia operating margin was 16.1%, down 130 basis points to last year. Foreign currency favorably impacted adjusted operating margin rate by 80 basis points in the second quarter.

Net Income (Loss) and EPS. Net income in the second quarter of Fiscal 2022 was $193 million, or $2.57 per diluted share on a reported basis. On an adjusted basis, net income was $197 million, or $2.62 per diluted share. This compared to a net loss of $39 million, or ($0.53) per diluted share on a reported basis, and a net income of $107 million, or $1.44 per diluted share on an adjusted basis, for the second quarter of Fiscal 2021.

In the second quarter of Fiscal 2022, the Company had an effective tax rate of approximately 19% on both a reported basis and an adjusted basis. This compared to an effective tax rate of approximately (34%) on a reported basis and 25% on an adjusted basis in the prior year period.

Balance Sheet and Cash Flow Review

The Company ended the second quarter of Fiscal 2022 with $3.1 billion in cash and investments and $1.6 billion in total debt, compared to $2.4 billion and $1.6 billion, respectively, at the end of the second quarter of Fiscal 2021.

Inventory at the end of the second quarter of Fiscal 2022 was $928 million, up 5% compared to the prior year period.

Full Year Fiscal 2022 and Third Quarter Outlook

The Company continues to note the ongoing uncertainty and evolving situation surrounding COVID-19 impacting the timing and path of recovery in each market, including the potential for further outbreaks or resurgences of the pandemic across various markets as well as potential global supply chain disruptions. The full year Fiscal 2022 and third quarter guidance excludes restructuring-related and other charges, as described in the "Non-U.S. GAAP Financial Measures" section of this press release.

For Fiscal 2022, the Company now expects constant currency revenues to increase approximately 34% to 36% to last year on a 53-week reported basis. Foreign currency is expected to negatively impact revenue growth by approximately 20 basis points. The 53rd week is still expected to represent approximately 140 basis points of this year’s revenue growth.

The Company continues to expect operating margin for Fiscal 2022 of about 12.0% to 12.5%. This compares to operating margin of 4.8% in the prior year period and 10.3% in Fiscal 2020. Gross margin is now expected to increase at the high end of previous guidance of 50 to 70 basis points to last year, with stronger AUR growth and favorable product mix more than offsetting increased freight headwinds. Operating expenses continue to reflect the Company's plans to increase marketing and other strategic investments to support long-term growth, including a higher level of spend in the second half of the fiscal year.

For third quarter Fiscal 2022, revenues are expected to increase approximately 14% to 16% in constant currency to last year. Foreign currency is expected to negatively impact revenue growth by approximately 140 basis points.

Operating margin for the third quarter is expected in the range of 13.0% to 13.5%, roughly in-line with last year, with modest gross margin expansion partly offset by a shift in the timing of investments from the second quarter, increased freight expenses, normalizing channel mix shift compared to the prior year's COVID disruptions and about 30 basis points of negative impact from foreign currency.

The full year Fiscal 2022 tax rate is now expected to be approximately 21% to 22%, assuming a continuation of current tax laws. Third quarter Fiscal 2022 tax rate is expected to be approximately 22% to 23%.

The Company expects to resume its share repurchase program starting in the second half of Fiscal 2022, following the filing of our second quarter Fiscal 2022 Quarterly Report on Form 10-Q, with approximately $580 million remaining under its current authorization.

Conference Call

As previously announced, the Company will host a conference call and live online webcast today, Tuesday, November 2, 2021, 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 517-623-4963 or 800-857-5209. To access the conference call, listeners should dial in by 8:45 a.m. Eastern and request to be connected to the Ralph Lauren Second Quarter 2022 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, Tuesday, November 2, 2021 through 6:00 P.M. Eastern, Tuesday, November 9, 2021 by dialing 203-369-2040 or 866-517-3728 and entering passcode 9481.

ABOUT RALPH LAUREN

Ralph Lauren Corporation (NYSE:RL) is a global leader in the design, marketing and distribution of premium lifestyle products in five categories: apparel, footwear & accessories, home, fragrances and hospitality. For more than 50 years, Ralph Lauren has sought to inspire the dream of a better life through authenticity and timeless style. Its reputation and distinctive image have been developed across a wide range of products, brands, distribution channels and international markets. The Company’s brand names—which 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—constitute one of the world’s most widely recognized families of consumer brands. For more information, go to https://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, may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include 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, earnings, quarterly cash dividend and Class A common stock repurchase programs, and environmental, social, and governance goals and are indicated by words or phrases such as "anticipate," "outlook," "estimate," "expect," "project," "believe," "envision," "goal," "target," "can," "will," 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 certain 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, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, including those resulting from the recent reduction to our global workforce in connection with our long-term growth strategy, and our ability to effectively transfer knowledge and maintain adequate controls and procedures during periods of transition; the impact to our business resulting from the COVID-19 pandemic, including periods of reduced operating hours and capacity limits and/or temporary closure of our stores, distribution centers, and corporate facilities, as well as those of our wholesale customers, licensing partners, suppliers, and vendors, and potential changes to consumer behavior, spending levels, and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations; our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; the impact to our business resulting from potential costs and obligations related to the early or temporary closure of our stores or termination of our long-term, non-cancellable leases; our ability to maintain adequate levels of liquidity to provide for our cash needs, including our debt obligations, tax obligations, capital expenditures, and potential payment of dividends and repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; the impact to our business resulting from changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory; the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including business disruptions related to pandemic diseases such as COVID-19, civil and political unrest such as the recent protests in the U.S., diplomatic tensions between the U.S. and China, and inflation; the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; our ability to successfully implement our long-term growth strategy; our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories; our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence; our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers; our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to competitively price our products and create an acceptable value proposition for consumers; our ability to access capital markets and maintain compliance with covenants associated with our existing debt instruments; a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as 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, trade and labor restrictions, and related laws that may reduce the flexibility of our business; the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from trade developments between the U.S. and China, as well as the trade agreement reached in December 2020 between the United Kingdom and the European Union, and any related impact to global stock markets, as well as our ability to implement mitigating sourcing strategies; the potential impact to our business resulting from supply chain disruptions, including those caused by capacity constraints, closed factories and/or labor shortages (stemming from pandemic diseases, labor disputes, strikes, or otherwise), scarcity of raw materials, and port congestion, which could result in inventory shortages and lost sales; the potential impact to our business resulting from increases in the costs of raw materials, transportation, and labor, including wages, healthcare, and other benefit-related costs; our ability to recruit and retain employees to operate our retail stores, distribution centers, and various corporate functions; our ability and the ability of our third-party service providers to secure our respective facilities and systems from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, ransomware, or similar Internet or email events; our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms; the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible; the potential impact on our operations and on our suppliers and customers resulting from man-made or natural disasters, including pandemic diseases such as COVID-19, severe weather, geological events, and other catastrophic events; changes in our tax obligations and effective tax rate due to a variety of factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated; our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation; the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors' expectations; our ability to maintain our credit profile and ratings within the financial community; our intention to introduce new products or brands, or enter into or renew alliances; changes in the business of, and our relationships with, major wholesale customers and licensing partners; our ability to achieve our goals regarding environmental, social, and governance practices, including those related to our human capital; our ability to make strategic acquisitions and successfully integrate the acquired businesses into our existing operations; 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.

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