RALPH LAUREN CORP

Previous wording

•the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including potential business disruptions related to the Russia-Ukraine and Israel-Hamas wars, militant attacks on cargo vessels in the Red Sea, civil and political unrest, diplomatic tensions between the U.S. and other countries, rising interest rates, and bank failures, among other factors described herein;

Current wording

•the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including potential business disruptions related to ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraine and Israel-Hamas wars, other recent hostilities in the Middle East, and militant attacks on cargo vessels in the Red Sea, civil and political unrest, diplomatic tensions between the U.S. and other countries, high interest rates, and bank failures, among other factors described herein;

Previous wording

•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, port congestion, and scrutiny or detention of goods produced in certain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which could result in shipment approval delays leading to inventory shortages and lost sales, as well as potential shipping delays, inventory shortages, and/or higher freight costs resulting from the recent Red Sea crisis and/or disruptions to major waterways such as the Suez and Panama canals;

Current wording

•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, port congestion, and scrutiny or detention of goods produced in certain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which could result in shipment approval delays leading to inventory shortages and lost sales, as well as potential shipping delays, inventory shortages, and/or higher freight costs resulting from port strikes, the recent Red Sea crisis, and/or disruptions to major waterways such as the Suez and Panama canals;

Previous wording

In this Form 10-Q, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2025 will end on March 29, 2025 and will be a 52-week period ("Fiscal 2025"). Fiscal year 2024 ended on March 30, 2024 and was also a 52-week period ("Fiscal 2024"). The first quarter of Fiscal 2025 ended on June 29, 2024 and was a 13-week period. The first quarter of Fiscal 2024 ended on July 1, 2023 and was also a 13-week period.

Current wording

In this Form 10-Q, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2025 will end on March 29, 2025 and will be a 52-week period ("Fiscal 2025"). Fiscal year 2024 ended on March 30, 2024 and was also a 52-week period ("Fiscal 2024"). The second quarter of Fiscal 2025 ended on September 28, 2024 and was a 13-week period. The second quarter of Fiscal 2024 ended on September 30, 2023 and was also a 13-week period.

Previous wording

•Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month period ended June 29, 2024. 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.

Current wording

•Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month and six-month periods ended September 28, 2024. 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.

Previous wording

•Results of operations. This section provides an analysis of our results of operations for the three-month period ended June 29, 2024 as compared to the three-month period ended July 1, 2023.

Current wording

•Results of operations. This section provides an analysis of our results of operations for the three-month and six-month periods ended September 28, 2024 as compared to the three-month and six-month periods ended September 30, 2023.

Previous wording

•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of June 29, 2024, 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 the three months ended June 29, 2024 as compared to the three months ended July 1, 2023; (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 description of any material changes in our material cash requirements since March 30, 2024.

Current wording

•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of September 28, 2024, 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 the six months ended September 28, 2024 as compared to the six months ended September 30, 2023; (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 description of any material changes in our material cash requirements since March 30, 2024.

Previous wording

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. Accordingly, our operating results and cash flows for the three-month period ended June 29, 2024 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2025.

Current wording

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. Accordingly, our operating results and cash flows for the three-month and six-month periods ended September 28, 2024 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2025.

Previous wording

In connection with the preliminary phase of the NGT project, we incurred other charges of $2.3 million during the three-month period ended June 29, 2024, which were recorded within restructuring and other charges, net in the consolidated statements of operations.

Current wording

In connection with the preliminary phase of the NGT project, we incurred other charges of $5.7 million and $8.0 million during the three-month and six-month periods ended September 28, 2024, which were recorded within restructuring and other charges, net in the consolidated statements of operations.

Previous wording

The global economy and retail industry are impacted by many different factors. Changes in economic conditions, most notably persisting inflationary pressures (including increases in the cost of raw materials, transportation, and salaries & benefits), high interest rates, significant foreign currency volatility, bank failures, and concerns of a potential recession, continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as in an effort to reduce elevated inventory levels, many retailers (particularly in the U.S.) have become increasingly more promotional in an attempt to offset traffic declines and increase conversion. Furthermore, the department store sector has experienced numerous consolidations, restructurings, reorganizations, bankruptcies, and other ownership changes in recent times, as well as an increase in store closures. The future geopolitical landscape also remains particularly uncertain, with over 60 countries scheduled to hold national elections during 2024, including the U.S. presidential election in November. Any resulting changes in international trade relations, legislation and regulations (including those related to taxation and importation), or economic and monetary policies, or heightened diplomatic tensions or political and civil unrest, among other potential impacts, could adversely impact the global economy and our operating results.

Current wording

The global economy and retail industry are impacted by many different factors. Changes in economic conditions, most notably persisting inflationary pressures (including increases in the cost of raw materials, transportation, and salaries & benefits), organized labor disputes, high interest rates, significant foreign currency volatility, bank failures, and concerns of a potential recession, continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as in an effort 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 experienced numerous consolidations, restructurings, reorganizations, bankruptcies, and other ownership changes in recent times, as well as an increase in store closures. The future geopolitical landscape also remains particularly uncertain, with over 60 countries holding national elections during 2024, including the recent U.S. presidential election. Any resulting changes in international trade relations, legislation and regulations (including those related to taxation and importation), or economic and monetary policies, or heightened diplomatic tensions or political and civil unrest, among other potential impacts, could adversely impact the global economy and our operating results.

Previous wording

The global economy has also been negatively impacted by ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraine and Israel-Hamas wars, other recent hostilities in the Middle East, and militant attacks on cargo vessels in the Red Sea. 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, impacted 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 volatility in financial markets, among other factors, which have adversely impacted consumer sentiment and confidence. Although our business has not been significantly impacted by the recent Red Sea crisis, we have experienced some shipping delays impacting the timing of receipts, and the continuation of such disruptions over a prolonged period could result in further inventory receipt delays and/or higher freight costs in the near-term 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.

Current wording

The global economy has also been negatively impacted by ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraine and Israel-Hamas wars, other recent hostilities in the Middle East, and militant attacks on cargo vessels in the Red Sea. 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, impacted 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 volatility in financial markets, 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.

Previous wording

We have implemented various strategies globally to help address many of these current challenges and continue to build a foundation for long-term profitable growth centered around strengthening our consumer-facing areas of product, stores, and marketing across channels and driving a more efficient operating model. Our strategy for mitigating inflationary pressures includes numerous levers, including our commitment to driving average unit retail growth, leveraging our diversified supply chain and strong supplier relationships, elevating our product sustainability efforts, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts. We have also taken earlier receipts of inventory and strategically utilize faster means of transportation when necessary to maximize full-price selling windows. While we remain agile and mindful of the increasing competitive promotional 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.

Current wording

We have implemented various strategies globally to help address many of these current challenges and continue to build a foundation for long-term profitable growth centered around strengthening our consumer-facing areas of product, stores, and marketing across channels and driving a more efficient operating model. Our strategy for mitigating inflationary pressures includes numerous levers, including our commitment to driving average unit retail growth, leveraging our diversified supply chain and strong supplier relationships, elevating our product sustainability efforts, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts. We have also taken earlier receipts of inventory and strategically utilized faster means of transportation (i.e., air freight) when necessary to maximize full-price selling windows, as well as diverted certain near-term shipments to U.S. West Coast ports to mitigate risk should strikes on the East and Gulf Coasts resume on January 15, 2025. While we remain agile and mindful of the increasingly competitive promotional 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.

Previous wording

During the three months ended June 29, 2024, we reported net revenues of $1.512 billion, net income of $168.6 million, and net income per diluted share of $2.61, as compared to net revenues of $1.496 billion, net income of $132.1 million, and net income per diluted share of $1.96 during the three months ended July 1, 2023. The comparability of our operating results has been affected by net restructuring-related charges and certain other benefits (charges). We also continue to experience varying degrees of business disruptions resulting from the current macroeconomic environment, including inflationary pressures, ongoing military conflicts taking place in various parts of the world, and foreign currency volatility, among other factors.

Current wording

During the three months ended September 28, 2024, we reported net revenues of $1.726 billion, net income of $147.9 million, and net income per diluted share of $2.31, as compared to net revenues of $1.633 billion, net income of $146.9 million, and net income per diluted share of $2.19 during the three months ended September 30, 2023. During the six months ended September 28, 2024, we reported net revenues of $3.238 billion, net income of $316.5 million, and net income per diluted share of $4.93, as compared to net revenues of $3.130 billion, net income of $279.0 million, and net income per diluted share of $4.15 during the six months ended September 30, 2023. The comparability of our operating results has been affected by net restructuring-related charges and certain other charges (benefits). We also continue to experience varying degrees of business disruptions resulting from the current macroeconomic environment, including global supply chain disruptions resulting from organized labor disputes, inflationary pressures, ongoing military conflicts taking place in various parts of the world, and foreign currency volatility, among other factors.

Previous wording

Our operating performance for the three months ended June 29, 2024 as compared to the prior fiscal year period reflected revenue increases of 1.1% on a reported basis and 2.8% on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. Net revenue growth was led by our direct-to-consumer channels and international businesses.

Current wording

Our operating performance for the three-month and six-month periods ended September 28, 2024 as compared to the prior fiscal year periods reflected revenue increases of 5.7% and 3.5%, respectively, on a reported basis and 5.6% and 4.3%, respectively, on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. Net revenue growth was led by our direct-to-consumer channels and international businesses.

Previous wording

Our gross profit as a percentage of net revenues increased by 150 basis points to 70.5% during the three months ended June 29, 2024 as compared to the prior fiscal year period, primarily driven by favorable product, channel, and geographic mix shifts, lower cotton costs, and average unit retail ("AUR") growth, partially offset by higher other product costs and unfavorable foreign currency effects.

Current wording

Our gross profit as a percentage of net revenues increased by 150 basis points to 67.0% during the three months ended September 28, 2024 and by 140 basis points to 68.6% during the six months ended September 28, 2024, as compared to the prior fiscal year periods, primarily driven by favorable product, channel, and geographic mix shifts, lower cotton costs, and average unit retail ("AUR") growth, partially offset by higher other non-freight-related product costs.

Previous wording

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues during the three months ended June 29, 2024 increased by 70 basis points to 56.2% as compared to the prior fiscal year period, driven by higher marketing investments due to the planned timing of key campaign events.

Current wording

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues during the three months ended September 28, 2024 increased by 60 basis points to 55.5% and by 60 basis points to 55.8% during the six months ended September 28, 2024 as compared to the prior fiscal year periods, 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 marketing investments due to the planned timing of key campaign events.

Previous wording

We ended the first quarter of 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 $619.4 million, as compared to $642.7 million as of the end of Fiscal 2024. The decrease in our net cash and short-term investments position was primarily due to our use of cash to support Class A common stock repurchases of $201.2 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $47.5 million, to invest in our business through $33.4 million in capital expenditures, and the unfavorable effect of exchange rate changes on our cash, cash equivalents, and restricted cash of $13.1 million, partially offset by our operating cash flows of $277.3 million.

Current wording

We ended the second quarter of 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 $548.2 million, as compared to $642.7 million as of the end of Fiscal 2024. The decrease in our net cash and short-term investments position was primarily due to our use of cash to support Class A common stock repurchases of $330.2 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $98.9 million, and to invest in our business through $75.1 million in capital expenditures, partially offset by our operating cash flows of $374.5 million and the favorable effect of exchange rate changes of $36.8 million primarily related to our cash and cash equivalents.

Previous wording

Net cash provided by operating activities was $277.3 million during the three months ended June 29, 2024, as compared to $270.7 million during the three months ended July 1, 2023. The net increase in cash provided by operating activities was due to an increase in net income before non-cash charges, partially offset by a net unfavorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period.

Current wording

Net cash provided by operating activities was $374.5 million during the six months ended September 28, 2024, as compared to $343.6 million during the six months ended September 30, 2023. The net increase in cash provided by operating activities was due to an increase in net income before non-cash charges, partially offset by a net unfavorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period.

Previous wording

Our equity decreased to $2.367 billion as of June 29, 2024 compared to $2.450 billion as of March 30, 2024 due to our share repurchase activity and dividends declared during the three months ended June 29, 2024, partially offset by our comprehensive income and the net impact of stock-based compensation arrangements.

Current wording

Our equity decreased to $2.442 billion as of September 28, 2024 compared to $2.450 billion as of March 30, 2024 due to our share repurchase activity and dividends declared during the six months ended September 28, 2024, partially offset by our comprehensive income and the net impact of stock-based compensation arrangements.

Previous wording

The comparability of our operating results for the three-month periods ended June 29, 2024 and July 1, 2023 has been affected by certain events, including:

Current wording

The comparability of our operating results for the three-month and six-month periods ended September 28, 2024 and September 30, 2023 has been affected by certain events, including:

Previous wording

(a)Non-routine inventory benefits are recorded within cost of goods sold in the consolidated statements of operations. The benefits recorded during the three months ended July 1, 2023 primarily related to reversals of amounts previously recognized in connection with the COVID-19 pandemic (approximately $1 million) and delays in U.S. customs shipment reviews and approvals (approximately $1 million).

Current wording

(a)Non-routine inventory benefits are recorded within cost of goods sold in the consolidated statements of operations. The benefits recorded during the three months ended September 30, 2023 primarily related to reversals of amounts previously recognized in connection with delays in U.S. customs shipment reviews and approvals. The benefits recorded during the six months ended September 30, 2023 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 $1 million).

Previous wording

(b)Non-routine bad debt expense reversals are recorded within SG&A expenses in the consolidated statements of operations. The reversals recorded during the three months ended July 1, 2023 primarily related to charges previously recognized in connection with the Russia-Ukraine war.

Current wording

(b)Non-routine bad debt expense reversals are recorded within SG&A expenses in the consolidated statements of operations. The reversals recorded during the three-month and six-month periods ended September 30, 2023 primarily related to charges previously recognized in connection with the Russia-Ukraine war.

Previous wording

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 Ralph Lauren app in the U.S. We also sell products online through various third-party digital partner commerce sites, primarily in Asia.

Current wording

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.

Previous wording

•a $5.7 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $6.1 million, reflecting increases of $4.4 million in comparable store sales and $1.7 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business:

Current wording

•a $29.5 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $29.8 million, reflecting increases of $25.4 million in comparable store sales and $4.4 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business:

Previous wording

The $28.6 million increase in Europe net revenues was driven by:

Current wording

The $39.1 million increase in Europe net revenues was driven by:

Previous wording

The $13.4 million increase in Asia net revenues was driven by:

Current wording

The $31.8 million increase in Asia net revenues was driven by:

Previous wording

This increase was partially offset by a $5.3 million decline related to our Asia wholesale business, inclusive of unfavorable foreign currency effects of $1.2 million.

Current wording

This increase was partially offset by a $6.3 million decline related to our Asia wholesale business, inclusive of unfavorable foreign currency effects of $0.3 million.

Previous wording

Gross Profit. Gross profit increased by $33.8 million, or 3.3%, to $1.066 billion for the three months ended June 29, 2024, including unfavorable foreign currency effects of $24.8 million. Gross profit as a percentage of net revenues increased to 70.5% for the three months ended June 29, 2024 from 69.0% for the three months ended July 1, 2023. The 150 basis point increase was primarily driven by favorable product, channel, and geographic mix shifts, lower cotton costs, and AUR growth, partially offset by higher other product costs and unfavorable foreign currency effects.

Current wording

Gross Profit. Gross profit increased by $85.6 million, or 8.0%, to $1.156 billion for the three months ended September 28, 2024, including unfavorable foreign currency effects of $2.3 million. Gross profit as a percentage of net revenues increased to 67.0% for the three months ended September 28, 2024 from 65.5% for the three months ended September 30, 2023. The 150 basis point increase was primarily driven by favorable product, channel, and geographic mix shifts, lower cotton costs, and AUR growth, partially offset by higher other non-freight-related product costs.

Previous wording

Selling, General, and Administrative Expenses. SG&A expenses include costs relating to compensation and benefits, rent and occupancy, marketing and advertising, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased by $19.9 million, or 2.4%, to $849.9 million for the three months ended June 29, 2024, including favorable foreign currency effects of $13.8 million. SG&A expenses as a percentage of net revenues increased to 56.2% for the three months ended June 29, 2024 from 55.5% for the three months ended July 1, 2023. The 70 basis point increase was driven by higher marketing investments due to the planned timing of key campaign events.

Current wording

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 $62.1 million, or 6.9%, to $958.4 million for the three months ended September 28, 2024, including unfavorable foreign currency effects of $1.5 million. SG&A expenses as a percentage of net revenues increased to 55.5% for the three months ended September 28, 2024 from 54.9% for the three months ended September 30, 2023. The 60 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 marketing investments due to the planned timing of key campaign events.

Previous wording

The $19.9 million increase in SG&A expenses was driven by:

Current wording

The $62.1 million increase in SG&A expenses was driven by:

Previous wording

Operating Income. Operating income increased by $42.1 million, or 25.3%, to $208.5 million for the three months ended June 29, 2024, reflecting unfavorable foreign currency effects of $11.0 million. Our operating results during the three-month periods ended June 29, 2024 and July 1, 2023 were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $7.4 million and $33.7 million, respectively. Operating income as a percentage of net revenues was 13.8% for the three months ended June 29, 2024, reflecting a 270 basis point increase from the prior fiscal year period. The increase 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 the three months ended June 29, 2024 as compared to the prior fiscal year period, partially offset by the increase in SG&A expenses as a percentage of net revenues, all as previously discussed.

Current wording

Operating Income. Operating income increased by $14.4 million, or 8.8%, to $178.9 million for the three months ended September 28, 2024, reflecting unfavorable foreign currency effects of $3.8 million. Our operating results during the three-month periods ended September 28, 2024 and September 30, 2023 were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $18.4 million and $7.2 million, respectively. Operating income as a percentage of net revenues was 10.4% for the three months ended September 28, 2024, reflecting a 30 basis point increase from the prior fiscal year period. The increase 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, as well as higher net restructuring-related charges and certain other charges (benefits) recorded during the three months ended September 28, 2024 as compared to the prior fiscal year period, all as previously discussed.

Previous wording

North America operating margin declined by 10 basis points, primarily due to the unfavorable impact of approximately 40 basis points attributable to channel mix and the unfavorable impact of 20 basis points attributable to the absence of non-routine inventory benefits recorded during the three months ended June 29, 2024 as compared to the prior fiscal year period. This decline in overall operating margin was partially offset by the net favorable impact of approximately 50 basis points driven by an increase in gross margin, partially offset by an increase in SG&A expenses as a percentage of net revenues.

Current wording

North America operating margin improved by 110 basis points, primarily due to the net favorable impact of approximately 170 basis points driven by an increase in gross margin and a decrease in SG&A expenses as a percentage of net revenues. This overall improvement in operating margin was partially offset by the unfavorable impact of approximately 30 basis points attributable to channel mix and the unfavorable impact of 30 basis points attributable to the absence of non-routine inventory benefits during the three months ended September 28, 2024 as compared to those recorded during the prior fiscal year period.

Previous wording

Unallocated corporate expenses increased by $13.7 million to $161.3 million during the three months ended June 29, 2024. The increase in unallocated corporate expenses was due to higher marketing and advertising expenses of $7.9 million, lower intercompany sourcing commission income of $4.4 million (which is offset at the segment level and eliminated in consolidation), higher non-income taxes of $3.1 million, and higher other expenses of $4.4 million, partially offset by lower rent and occupancy expenses of $6.1 million.

Current wording

Unallocated corporate expenses increased by $19.0 million to $190.3 million during the three months ended September 28, 2024. The increase in unallocated corporate expenses was due to higher compensation-related expenses of $11.0 million, higher non-income taxes of $9.0 million, and higher marketing and advertising expenses of $7.9 million, partially offset by lower rent and occupancy expenses of $5.2 million and lower other expenses of $3.7 million.

Previous wording

Unallocated restructuring and other charges, netdecreased by $28.2 million to $7.4 million during the three months ended June 29, 2024, as previously discussed above and in Note 7 to the accompanying consolidated financial statements.

Current wording

Unallocated restructuring and other charges, netincreased by $9.1 million to $18.4 million during the three months ended September 28, 2024, as previously discussed above and in Note 7 to the accompanying consolidated financial statements.

Previous wording

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 the three months ended June 29, 2024, we reported non-operating income, net of $8.1 million as compared to $4.2 million during the three months ended July 1, 2023. The $3.9 million increase in non-operating income, net was mainly due to a $4.4 million increase in interest income driven by the higher average on-hand cash, cash equivalents, and short-term investments balance during the current fiscal year period as compared to the prior fiscal year period and higher interest rates in financial markets.

Current wording

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 the three months ended September 28, 2024, we reported non-operating income, net, of $9.2 million as compared to $1.0 million during the three months ended September 30, 2023. The $8.2 million increase in non-operating income, net was mainly due to a $7.5 million increase in other income (expense), net primarily driven by higher net foreign currency gains during the three months ended September 28, 2024 as compared to the prior fiscal year period.

Previous wording

The income tax provision and effective tax rate for the three months ended June 29, 2024 were $48.0 million and 22.1%, respectively, compared to $38.5 million and 22.6%, respectively, for the three months ended July 1, 2023. The $9.5 million increase in our income tax provision was primarily driven by an increase in our pretax income, partially offset by a 50 basis point decline in our effective tax rate. The decline in our effective tax rate was primarily due to the impact of favorable state and local tax credits received during the three months ended June 29, 2024. See Note 8 to the accompanying consolidated financial statements.

Current wording

The income tax provision and effective tax rate for the three months ended September 28, 2024 were $40.2 million and 21.4%, respectively, as compared to $18.6 million and 11.2%, respectively, for the three months ended September 30, 2023. The $21.6 million increase in our income tax provision was primarily driven by the absence of a one-time tax benefit of $11.8 million recorded during the second quarter of 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 710 basis points, as well as an increase in our pretax income. The increase in our effective tax rate was also due to the absence of a prior year deferred tax benefit recognized as a result of tax rate changes enacted in the prior year period. See Note 8 to the accompanying consolidated financial statements.

Previous wording

Net Income. Net income increased to $168.6 million for the three months ended June 29, 2024, from $132.1 million for the three months ended July 1, 2023. The $36.5 million increase in net income was primarily due to the increases in our operating income and non-operating income, net, partially offset by an increase in our income tax provision, all as previously discussed. Our operating results during the three-month periods ended June 29, 2024 and July 1, 2023 were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $7.4 million and $33.7 million, respectively, which had an after-tax effect of reducing net income by $6.0 million and $25.9 million, respectively.

Current wording

Net Income. Net income increased to $147.9 million for the three months ended September 28, 2024, from $146.9 million for the three months ended September 30, 2023. The $1.0 million increase in net income was due to the increases in our operating income and non-operating income, net, partially offset by an increase in our income tax provision, all as previously discussed. Our operating results during the three-month periods ended September 28, 2024 and September 30, 2023 were negatively impacted by net restructuring-related charges and certain other charges (benefits) of $18.4 million and $7.2 million, respectively, which had an after-tax effect of reducing net income by $14.2 million and $5.8 million, respectively. Net income during the three months ended September 30, 2023 also reflected an income tax benefit of $11.8 million recorded in connection with Swiss tax reform and the European Union's anti-tax avoidance directive, as previously discussed.

Previous wording

Net Income per Diluted Share. Net income per diluted share increased to $2.61 for the three months ended June 29, 2024, from $1.96 for the three months ended July 1, 2023. The $0.65 per share increase was primarily driven by the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during the three months ended June 29, 2024 driven by our share repurchases during the last twelve months. Net income per diluted share for the three-month periods ended June 29, 2024 and July 1, 2023 were also negatively impacted by $0.09 per share and $0.38 per share, respectively, attributable to net restructuring-related charges and certain other charges (benefits), as previously discussed.

Current wording

Net Income per Diluted Share. Net income per diluted share increased to $2.31 for the three months ended September 28, 2024, from $2.19 for the three months ended September 30, 2023. The $0.12 per share increase was primarily driven by lower weighted-average diluted shares outstanding during the three months ended September 28, 2024 driven by our share repurchases during the last twelve months, and the higher level of net income, as previously discussed. Net income per diluted share for the three-month periods ended September 28, 2024 and September 30, 2023 were also negatively impacted by $0.23 per share and $0.09 per share, respectively, attributable to net restructuring-related charges and certain other charges (benefits), as previously discussed. Net income per diluted share during the three months ended September 30, 2023 was also favorably impacted by $0.18 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.

Previous wording

Net Revenues. Net revenues increased by $15.7 million, or 1.1%, to $1.512 billion during the three months ended June 29, 2024 as compared to the three months ended July 1, 2023, including unfavorable foreign currency effects of $26.1 million. On a constant currency basis, net revenues increased by $41.8 million, or 2.8%, driven by our direct-to-consumer channels and international businesses.

Current wording

Net Revenues. Net revenues increased by $108.7 million, or 3.5%, to $3.238 billion during the six months ended September 28, 2024 as compared to the six months ended September 30, 2023, driven by our direct-to-consumer channels and international businesses, partially offset by unfavorable foreign currency effects of $25.3 million. On a constant currency basis, net revenues increased by $134.0 million, or 4.3%.

Previous wording

Our global average store count decreased by 16 stores and concession shops during the three months ended June 29, 2024 compared with the three months ended July 1, 2023, largely driven by strategic store closures in North America and Asia.

Current wording

Our global average store count decreased by 18 stores and concession shops during the six months ended September 28, 2024 compared with the six months ended September 30, 2023, largely driven by strategic store closures in North America and Asia.

Previous wording

North America net revenues — Net revenues decreased by $23.5 million, or 3.7%, during the three months ended June 29, 2024 as compared to the three months ended July 1, 2023. On a constant currency basis, net revenues decreased by $23.0 million, or 3.6%.

Current wording

North America net revenues — Net revenues decreased by $1.8 million, or 0.1%, during the six months ended September 28, 2024 as compared to the six months ended September 30, 2023. On a constant currency basis, net revenues decreased by $0.9 million, or 0.1%.