Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Special Note Regarding Forward-Looking Statements

Various statements in this Form 10-Q, or incorporated by reference into this Form 10-Q, in future filings by us with the Securities and Exchange Commission (the "SEC"), in our press releases, and in oral statements made from time to time by us or on our behalf constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our future operating results and sources of liquidity (especially in light of the COVID-19 pandemic), the implementation and impact of our strategic plans, initiatives and capital expenses, our plans regarding our quarterly cash dividend and Class A common stock repurchase programs, and our ability to meet environmental, social, and governance goals. Forward-looking statements are based on current expectations 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 and 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. These risks, uncertainties, and other factors 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;

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• 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;

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• 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; and

• our ability to make strategic acquisitions and successfully integrate the acquired businesses into our existing operations.

These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is included in our Annual Report on Form 10-K for the fiscal year ended March 27, 2021 (the "Fiscal 2021 10-K"). There are no material changes to such risk factors, nor have we identified any previously undisclosed risks that could materially adversely affect our business, operating results, and/or financial condition, as set forth in Part II, Item 1A — "Risk Factors" of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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 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.

INTRODUCTION

Management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of our results of operations, financial condition, and liquidity. MD&A is organized as follows:

• Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month and six-month periods ended September 25, 2021. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.

• Results of operations. This section provides an analysis of our results of operations for the three-month and six-month periods ended September 25, 2021 as compared to the three-month and six-month periods ended September 26, 2020.

• Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of September 25, 2021, 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 25, 2021 as compared to the six months ended September 26, 2020; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, our outstanding debt and covenant compliance, common stock repurchases, and payments of dividends; and (iv) a description of any material changes in our contractual and other obligations since March 27, 2021.

• Market risk management. This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since March 27, 2021.

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• Critical accounting policies. This section discusses any significant changes in our critical accounting policies since March 27, 2021. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal 2021 10-K.

• Recently issued accounting standards. This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued.

OVERVIEW

Our Business

Our Company is a global leader in the design, marketing, and distribution of premium lifestyle products, including apparel, footwear, accessories, home furnishings, fragrances, and hospitality. Our long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others.

We diversify our business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area or channel of distribution. We sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operations around the world. Our wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to third parties for specified periods the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel, eyewear, fragrances, and home furnishings.

We organize our business into the following three reportable segments:

*•*North America — Our North America segment, representing approximately 45% of our Fiscal 2021 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in the U.S. and Canada. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, and our digital commerce site, www.RalphLauren.com. Our wholesale business in North America is comprised primarily of sales to department stores, and to a lesser extent, specialty stores.

*•*Europe — Our Europe segment, representing approximately 27% of our Fiscal 2021 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Europe, the Middle East, and Latin America. In Europe, our retail business is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites. Our wholesale business in Europe is comprised of a varying mix of sales to both department stores and specialty stores, depending on the country, as well as to various third-party digital partners.

• Asia — Our Asia segment, representing approximately 23% of our Fiscal 2021 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our factory stores, our concession-based shop-within-shops, and our various digital commerce sites. In addition, we sell our products online through various third-party digital partner commerce sites. Our wholesale business in Asia is comprised primarily of sales to department stores, with related products distributed through shop-within-shops.

No operating segments were aggregated to form our reportable segments. In addition to these reportable segments, we also have other non-reportable segments, representing approximately 5% of our Fiscal 2021 net revenues, which primarily consist of (i) sales of Club Monaco branded products made through our retail and wholesale businesses in the U.S., Canada, and Europe, and our licensing alliances in Asia, and (ii) royalty revenues earned through our global licensing alliances, excluding Club Monaco. As discussed in Note 8 to our accompanying consolidated financial statements, we completed the sale of our Club Monaco business at the end of our first quarter Fiscal 2022.

Approximately 52% of our Fiscal 2021 net revenues were earned outside of the U.S. See Note 17 to the accompanying consolidated financial statements for further discussion of our segment reporting structure.

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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 25, 2021 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2022.

Recent Developments

COVID-19 Pandemic

Beginning in the fourth quarter of our 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 we operate, 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, we have experienced varying degrees of business disruptions and periods of closure of our stores, distribution centers, and corporate facilities, as have our wholesale customers, licensing partners, suppliers, and vendors. During the first quarter of Fiscal 2021 at the peak of the pandemic, the majority of our stores in key markets were closed for an average of 8 to 10 weeks due to government-mandated lockdowns and other restrictions, resulting in significant adverse impacts to our 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 our 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 our 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, our 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. Our wholesale and licensing businesses have experienced similar impacts, particularly in North America and Europe.

Throughout the course of the pandemic, our priority has been to ensure the safety and well-being of our employees, customers, and the communities in which we operate around the world. We continue to consider the guidance of local governments and global health organizations and have implemented new health and safety protocols in our stores, distribution centers, and corporate facilities. We also took various preemptive actions in the prior fiscal year to preserve cash and strengthen our 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, we cannot predict for how long and to what extent the pandemic will impact our business operations or the overall global economy. We will continue to assess our operations location-by-location, considering the guidance of local governments and global health organizations. See Item 1A — "Risk Factors — Risks Related to Macroeconomic Conditions — Infectious disease outbreaks, such as the COVID-19 pandemic, could have a material adverse effect on our business" in the Fiscal 2021 10-K for additional discussion regarding risks to our business associated with the COVID-19 pandemic.

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Fiscal 2021 Strategic Realignment Plan

We have undertaken efforts to realign our resources to support future growth and profitability, and to create a sustainable, enhanced cost structure. The key initiatives underlying these efforts involve evaluation of our: (i) team organizational structures and ways of working; (ii) real estate footprint and related costs across our corporate offices, distribution centers, and direct-to-consumer retail and wholesale doors; and (iii) brand portfolio.

In connection with the first initiative, on September 17, 2020, our Board of Directors approved a restructuring plan (the "Fiscal 2021 Strategic Realignment Plan") to reduce our global workforce. Additionally, during a preliminary review of our store portfolio during the second quarter of Fiscal 2021, we made the decision to close our Polo store on Regent Street in London.

Shortly thereafter, on October 29, 2020, we announced the planned transition of our Chaps brand to a fully licensed business model, consistent with our long-term brand elevation strategy and in connection with our third initiative (see "Transition of Chaps Brand to a Fully Licensed Business Model" further below for additional discussion).

Later, on February 3, 2021, our Board of Directors approved additional actions related to our real estate initiative. Specifically, we are in the process of further rightsizing and consolidating our global corporate offices to better align with our organizational profile and new ways of working. We also have closed, and expect to continue to close, certain of our stores to improve overall profitability. Additionally, we plan to complete the consolidation of our North America distribution centers in order to drive greater efficiencies, improve sustainability, and deliver a better consumer experience.

Finally, on June 26, 2021, in connection with our brand portfolio initiative, we sold our Club Monaco business to Regent, L.P. ("Regent"), a global private equity firm, with no resulting gain or loss on sale realized during the first quarter of Fiscal 2022. Regent acquired Club Monaco's assets and liabilities in exchange for potential future cash consideration payable by Regent, including earn-out payments based on Club Monaco meeting certain defined revenue thresholds over a five-year period. Accordingly, we may realize amounts in the future related to the receipt of such contingent consideration. Additionally, in connection with this divestiture, we will provide Regent with certain operational support for a transitional period of up to 12 months, varying by functional area.

In connection with these collective realignment initiatives, we expect to incur total estimated pre-tax charges of approximately $300 million to $350 million. Cumulative charges incurred since inception were $258.6 million, of which $21.8 million and $185.8 million were recorded during the six-month periods ended September 25, 2021 and September 26, 2020, respectively. Once substantially completed by the end of our Fiscal 2022, these actions are expected to result in gross annualized pre-tax expense savings of approximately $200 million to $240 million, a portion of which will be reinvested back into the business.

See Note 8 to our accompanying consolidated financial statements for additional discussion regarding charges recorded in connection with the Fiscal 2021 Strategic Restructuring Plan.

Transition of Chaps Brand to a Fully Licensed Business Model

On October 29, 2020, we announced the planned transition of our Chaps brand to a fully licensed business model, consistent with our long-term brand elevation strategy. Specifically, we have entered into a multi-year licensing partnership, which took effect on August 1, 2021 following a transition period, with an affiliate of 5 Star Apparel LLC, a division of the OVED Group, to manufacture, market, and distribute Chaps menswear and womenswear. The products will be sold at existing channels of distribution with opportunities for expansion into additional channels and markets globally.

This agreement is expected to create incremental value for the Company by enabling an even greater focus on elevating our core brands in the marketplace, reducing our direct exposure to the North America department store channel, and setting up Chaps to deliver on its potential with an experienced partner that is focused on nurturing the brand.

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Global Economic Conditions and Industry Trends

The global economy and retail industry are impacted by many different factors. The COVID-19 pandemic has resulted in heightened uncertainty surrounding the future state of the global economy, as well as significant volatility in global financial markets. As discussed in "Recent Developments," governments worldwide have periodically imposed varying degrees of preventative and protective actions throughout the course of the pandemic, 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 actions, together with changes in consumers' willingness to congregate in populated areas and lower levels of disposal income due to high unemployment rates, have resulted in significant business disruptions across a wide array of industries and an overall decline of the global economy since the outbreak of the pandemic. Despite the introduction of COVID-19 vaccines and recent improvements in the global economy as a whole, resurgences and outbreaks continue to occur in certain geographic locations, including those resulting from variants of the virus, such as the Delta variant. Accordingly, it is not clear at this time how much longer and to what extent the pandemic will last.

The global economy has also been impacted by the domestic and international political environment, including volatile international trade relations and civil and political unrest taking place in certain parts of the world. The U.S. in particular has experienced civil unrest centered around racial inequality and political allegiances. Additionally, the United Kingdom recently withdrew from the European Union, commonly referred to as "Brexit," whereby it ceased to be a member effective January 31, 2020. In December 2020, the United Kingdom and the European Union entered into an agreement that defines their future relationship, including terms of trade, that among its provisions resulted in new tariffs on goods imported to the United Kingdom from the European Union that were manufactured elsewhere, as well as additional administrative effort to import and export goods, adding friction and cost to transportation. Further, certain other worldwide events and factors, including diplomatic tensions between the U.S. and China, acts of terrorism, taxation or monetary policy changes, inflation, fluctuations in commodity prices, and rising healthcare costs, also increase volatility in the global economy.

The retail landscape in which we operate has been significantly disrupted by the COVID-19 pandemic, including periods of temporary closures of stores and distribution centers and declines in retail traffic, tourism, and consumer spending on discretionary items. Prior to the COVID-19 pandemic, consumers had been increasingly shifting their shopping preference from physical stores to online. This shift in preference has accelerated during the pandemic and could be further amplified in the future as consumers may continue to prefer to avoid populated locations, such as shopping centers, in fear of exposing themselves to infectious diseases. Even before the pandemic, many retailers, including certain of our large wholesale customers, have been highly promotional and have aggressively marked down their merchandise on a periodic basis in an attempt to offset declines in physical store traffic. The retail industry, particularly in the U.S., has also experienced numerous bankruptcies, restructurings, and ownership changes in recent years. Despite recent improvements in the global economy, supply chain-related risks continue to exist as manufacturers and transportation providers alike are finding it difficult to meet increased consumer demand. The continuation of these industry trends could have a material adverse effect on our business or operating results.

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. In response to the COVID-19 pandemic, during the prior fiscal year we took preemptive actions to preserve cash and strengthen our liquidity position, as described in our Fiscal 2021 10-K, which better enabled us to continue to execute upon our long-term growth strategy despite unfavorable economic conditions. Investing in our digital ecosystem remains a primary focus and is a key component of our integrated global omni-channel strategy and driving consumer engagement, particularly in light of the current COVID-19 pandemic, which has and could continue to reshape consumer shopping preferences. We also continue to drive consumer engagement and global brand awareness through our sports sponsorships, which most recently include the U.S. Open Tennis Championships and Team U.S.A. in both the Ryder Cup and the Tokyo Olympics. Additionally, we have accelerated our marketing investments, with a focus on supporting new customer acquisition, digitally-amplified brand campaigns, and resumption of in-store programs as markets continue to reopen worldwide. We also continue to take deliberate actions to ensure promotional consistency across channels and to enhance the overall brand and shopping experience, including better aligning shipments and inventory levels with underlying demand. We also remain committed to optimizing our wholesale distribution channel and enhancing our department store consumer experience. In connection with our long-term brand elevation strategy, we successfully transitioned our Chaps business to a fully licensed business model during the second quarter of Fiscal 2022 as planned and completed the sale of our Club Monaco business at the end of the first quarter of Fiscal 2022, thereby enabling our teams to focus our resources on our core brands.

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We will continue to monitor these conditions and trends and will evaluate and adjust our operating strategies and foreign currency and cost management opportunities to help mitigate the related impacts on our results of operations, while remaining focused on the long-term growth of our business and protecting and elevating the value of our brand.

For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A — "Risk Factors" in our Fiscal 2021 10-K.

Summary of Financial Performance

Operating Results

During the three months ended September 25, 2021, we reported net revenues of $1.504 billion, net income of $193.3 million, and net income per diluted share of $2.57, as compared to net revenues of $1.194 billion, a net loss of $39.1 million, and net loss per diluted share of $0.53 during the three months ended September 26, 2020. During the six months ended September 25, 2021, we reported net revenues of $2.880 billion, net income of $358.0 million, and net income per diluted share of $4.75, as compared to net revenues of $1.681 billion, a net loss of $166.8 million, and net loss per diluted share of $2.27 during the six months ended September 26, 2020. The comparability of our operating results has been affected by adverse impacts related to COVID-19 business disruptions, as well as restructuring-related charges, impairment of assets, and certain other benefits (charges), as discussed further below.

Our operating performance for the three-month and six-month periods ended September 25, 2021 reflected revenue increases of 26.0% and 71.4%, respectively, on a reported basis and 25.0% and 68.8%, respectively, on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. The increase in net revenues reflected growth across all regions largely driven by a reduction in store closures and other COVID-19-related business disruptions experienced during the current fiscal year periods as compared to the comparable prior year periods, coupled with continued growth in our digital commerce operations and overall stronger consumer demand.

Our gross profit as a percentage of net revenues increased by 50 basis points to 67.5% during the three months ended September 25, 2021 and increased by 60 basis points to 68.9% during the six months ended September 25, 2021, primarily driven by improved product mix, pricing, and lower levels of promotional activity, partially offset by higher product costs and the absence of unusual geographic and channel mix benefits experienced during the prior fiscal year periods in connection with COVID-19-related business disruptions in North America and Europe.

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues during the three months ended September 25, 2021 declined by 240 basis points to 50.2% and declined by 1,610 basis points to 51.5% during the six months ended September 25, 2021, primarily driven by operating leverage on higher net revenues, partially offset by higher expenses across various categories as we returned to more normalized operations in comparison to the prior fiscal year periods.

Net income increased by $232.4 million to $193.3 million during the three months ended September 25, 2021 as compared to the three months ended September 26, 2020, primarily due to a $272.2 million increase in our operating income, partially offset by a $34.8 million increase in our income tax provision. Net income per diluted share increased by $3.10 to $2.57 per share during the three months ended September 25, 2021 driven by the higher level of net income. Net income increased by $524.8 million to $358.0 million during the six months ended September 25, 2021 as compared to the six months ended September 26, 2020, primarily due to a $660.8 million increase in our operating income, partially offset by a $125.0 million increase in our income tax provision. Net income per diluted share increased by $7.02 to $4.75 per share during the six months ended September 25, 2021 driven by the higher level of net income.

Our operating results during the three-month periods ended September 25, 2021 and September 26, 2020 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $4.7 million and $171.2 million, respectively, which had an after-tax effect of reducing net income by $3.7 million, or $0.05 per diluted share, and $146.2 million, or $1.97 per diluted share, respectively. During the six-month periods ended September 25, 2021 and September 26, 2020, our operating results were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $15.1 million and $165.1 million, respectively, which had an after-tax effect of reducing net income by $11.4 million, or $0.15 per diluted share, and $140.7 million, or $1.91 per diluted share, respectively.

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Financial Condition and Liquidity

We ended the second quarter of Fiscal 2022 in a net cash and investments position (cash and cash equivalents plus investments, less total debt) of $1.426 billion, as compared to $1.144 billion as of the end of Fiscal 2021. The increase in our net cash and investments position at September 25, 2021 as compared to March 27, 2021 was primarily due to operating cash flows of $464.2 million, partially offset by our use of cash to invest in our business through $63.4 million in capital expenditures, to make dividend payments of $50.5 million, and to support Class A common stock repurchases of $39.9 million, representing withholdings in satisfaction of tax obligations for stock-based compensation awards.

Net cash provided by operating activities was $464.2 million during the six months ended September 25, 2021, compared to net cash used in operating activities of $12.7 million during the six months ended September 26, 2020. The 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.

Our equity increased to $2.863 billion as of September 25, 2021 compared to $2.604 billion as of March 27, 2021, due to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our dividends declared during the six months ended September 25, 2021.

Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition

The comparability of our operating results for the three-month and six-month periods ended September 25, 2021 and September 26, 2020 has been affected by certain events, including:

• pretax charges incurred in connection with our restructuring activities, as well as certain other asset impairments and other benefits (charges), including those related to COVID-19 business disruptions, as summarized below (references to "Notes" are to the notes to the accompanying consolidated financial statements):

						Three Months Ended												Six Months Ended
						September 25, 2021						September 26, 2020						September 25, 2021						September 26, 2020
						(millions)
Impairment of assets (see Note 7)						$	(0.7)					$	(31.0)					$	(19.3)					$	(33.1)
Restructuring and other charges (see Note 8)						(7.7)						(160.5)						(8.4)						(167.5)
Non-routine inventory benefits, net**(a)**						3.5						5.4						11.5						4.1
COVID-19-related bad debt expense reversals**(b)**						0.2						14.9						1.1						31.4
Total charges						$	(4.7)					$	(171.2)					$	(15.1)					$	(165.1)

**(a)**Non-routine inventory benefits are recorded within cost of goods sold in the consolidated statements of operations. The net benefits recorded during the fiscal periods presented primarily related to reversals of amounts previously recorded in connection with COVID-19 business disruptions.

**(b)**COVID-19-related bad debt expense reversals are recorded within SG&A expenses in the consolidated statements of operations.

• other adverse impacts related to COVID-19 business disruptions during the three-month and six-month periods ended September 25, 2021 and September 26, 2020.

Because we are a global company, the comparability of our operating results reported in U.S. Dollars is also affected by foreign currency exchange rate fluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. Such fluctuations can have a significant effect on our reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), our discussions often contain references to constant currency measures, which are calculated by translating current-year and prior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency. We present constant currency financial information, which is a non-U.S. GAAP financial measure, as a supplement to our reported operating results. We use constant currency information to provide a framework for assessing how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe this information is useful to investors for facilitating comparisons of operating results and better identifying trends in our businesses. The constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance

			46

with U.S. GAAP. Reconciliations between this non-U.S. GAAP financial measure and the most directly comparable U.S. GAAP measure are included in the "Results of Operations" section where applicable.

Our discussion also includes reference to comparable store sales. Comparable store sales refer to the change in sales of our stores that have been open for at least 13 full fiscal months. Sales from our digital commerce sites are also included within comparable sales for those geographies that have been serviced by the related site for at least 13 full fiscal months. Sales for stores or digital commerce sites that are closed or shut down during the year are excluded from the calculation of comparable store sales. Sales for stores that are either relocated, enlarged (as defined by gross square footage expansion of 25% or greater), or generally closed for 30 or more consecutive days for renovation are also excluded from the calculation of comparable store sales until such stores have been operating in their new location or in their newly renovated state for at least 13 full fiscal months. All comparable store sales metrics are calculated on a constant currency basis.

Our "Results of Operations" discussion that follows includes the significant changes in operating results arising from these items affecting comparability. However, unusual items or transactions may occur in any period. Accordingly, investors and other financial statement users should consider the types of events and transactions that have affected operating trends.

			47

RESULTS OF OPERATIONS

Three Months Ended September 25, 2021 Compared to Three Months Ended September 26, 2020

The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers.

						Three Months Ended
						September 25, 2021						September 26, 2020						$ Change						% / bps Change
						(millions, except per share data)
Net revenues						$	1,504.1					$	1,193.5					$	310.6					26.0		%
Cost of goods sold						(488.9)						(394.1)						(94.8)						24.0		%
Gross profit						1,015.2						799.4						215.8						27.0		%
Gross profit as % of net revenues						67.5		%				67.0		%										50 bps
Selling, general, and administrative expenses						(754.9)						(628.2)						(126.7)						20.2		%
SG&A expenses as % of net revenues						50.2		%				52.6		%										(240 bps)
Impairment of assets						(0.7)						(31.0)						30.3						(97.7		%)
Restructuring and other charges						(7.7)						(160.5)						152.8						(95.2		%)
Operating income (loss)						251.9						(20.3)						272.2						NM
Operating income (loss) as % of net revenues						16.7		%				(1.7		%)										1,840 bps
Interest expense						(13.6)						(12.8)						(0.8)						5.7		%
Interest income						1.2						2.2						(1.0)						(43.9		%)
Other income (expense), net						(1.4)						1.8						(3.2)						NM
Income (loss) before income taxes						238.1						(29.1)						267.2						NM
Income tax provision						(44.8)						(10.0)						(34.8)						348.5		%
Effective tax rate**(a)**						18.8		%				(34.4		%)										5,320 bps
Net income (loss)						$	193.3					$	(39.1)					$	232.4					NM
Net income (loss) per common share:
Basic						$	2.61					$	(0.53)					$	3.14					NM
Diluted						$	2.57					$	(0.53)					$	3.10					NM

**(a)**Effective tax rate is calculated by dividing the income tax provision by income (loss) before income taxes.

NM Not meaningful.

Net Revenues. Net revenues increased by $310.6 million, or 26.0%, to $1.504 billion during the three months ended September 25, 2021 as compared to the three months ended September 26, 2020, including net favorable foreign currency effects of $11.9 million. On a constant currency basis, net revenues increased by $298.7 million, or 25.0%. The increase in net revenues reflected growth across all regions largely driven by a reduction in store closures and other COVID-19-related disruptions experienced during the current fiscal year period as compared to the prior fiscal year period, coupled with continued growth in our digital commerce operations and overall stronger consumer demand.

The following table summarizes the percentage change in our consolidated comparable store sales for the three months ended September 25, 2021 as compared to the prior fiscal year period:

						% Change
Digital commerce						33		%
Brick and mortar						21		%
Total comparable store sales						23		%

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Our global average store count decreased by 52 stores and concession shops during the three months ended September 25, 2021 compared with the three months ended September 26, 2020, largely driven by the sale of our Club Monaco business on June 26, 2021, partially offset by new openings in Asia. The following table details our retail store presence by segment as of the periods presented:

						September 25, 2021						September 26, 2020
Freestanding Stores:
North America						235						230
Europe						94						95
Asia						164						145
Other non-reportable segments						—						72
Total freestanding stores						493						542
Concession Shops:
North America						1						2
Europe						29						29
Asia						628						619
Other non-reportable segments						—						4
Total concession shops						658						654
Total stores						1,151						1,196

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 app in North America and the United Kingdom. We also sell products online through various third-party digital partner commerce sites, primarily in Asia.

Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior fiscal year period, are provided below:

						Three Months Ended												$ Change						Foreign Exchange Impact						$ Change						% Change
						September 25, 2021						September 26, 2020						As Reported									Constant Currency						As Reported						Constant Currency
						(millions)
Net Revenues:
North America						$	703.1					$	542.9					$	160.2					$	1.5					$	158.7					29.5		%				29.2		%
Europe						495.5						359.5						136.0						8.0						128.0						37.8		%				35.6		%
Asia						269.9						236.6						33.3						2.4						30.9						14.1		%				13.1		%
Other non-reportable segments						35.6						54.5						(18.9)						—						(18.9)						(34.7		%)				(34.7		%)
Total net revenues						$	1,504.1					$	1,193.5					$	310.6					$	11.9					$	298.7					26.0		%				25.0		%

North America net revenues — Net revenues increased by approximately $160.2 million, or 29.5%, during the three months ended September 25, 2021 as compared to the three months ended September 26, 2020, including net favorable foreign currency effects of $1.5 million. On a constant currency basis, net revenues increased by $158.7 million, or 29.2%.

The $160.2 million net increase in North America net revenues was driven by:

*•*a $107.2 million net increase related to our North America retail business, reflecting a reduction in store closures and other COVID-19-related disruptions and the continued growth in our digital commerce operations. On a constant currency basis, net revenues increased by $106.2 million, reflecting increases of $94.5 million in comparable store sales and $11.7 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business:

			49

						% Change
Digital commerce						32		%
Brick and mortar						31		%
Total comparable store sales						31		%

*•*a $53.0 million net increase related to our North America wholesale business, driven by minimal shipments during the comparable prior fiscal year period due to significant COVID-19-related business disruptions, coupled with overall stronger consumer demand.

Europe net revenues — Net revenues increased by $136.0 million, or 37.8%, during the three months ended September 25, 2021 as compared to the three months ended September 26, 2020, including net favorable foreign currency effects of $8.0 million. On a constant currency basis, net revenues increased by $128.0 million, or 35.6%.

The $136.0 million net increase in Europe net revenues was driven by:

• an $80.7 million net increase related to our Europe wholesale business largely driven by minimal shipments during the comparable prior fiscal year period due to significant COVID-19-related business disruptions, overall stronger consumer demand, and net favorable foreign currency effects of $3.0 million.

*•*a $55.3 million net increase related to our Europe retail business, reflecting a reduction in store closures and other COVID-19-related disruptions and the continued growth in our digital commerce operations, as well as net favorable foreign currency effects of $5.0 million. On a constant currency basis, net revenues increased by $50.3 million, reflecting increases of $42.8 million in comparable store sales and $7.5 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:

						% Change
Digital commerce						24		%
Brick and mortar						28		%
Total comparable store sales						27		%

Asia net revenues — Net revenues increased by $33.3 million, or 14.1%, during the three months ended September 25, 2021 as compared to the three months ended September 26, 2020, including net favorable foreign currency effects of $2.4 million. On a constant currency basis, net revenues increased by $30.9 million, or 13.1%.

The $33.3 million net increase in Asia net revenues was driven by:

*•*a $29.1 million net increase related to our Asia retail business, reflecting a reduction in store closures and other COVID-19-related disruptions and the continued growth in our digital commerce operations, as well as net favorable foreign currency effects of $2.3 million. On a constant currency basis, net revenues increased by $26.8 million, reflecting increases of $13.5 million in comparable store sales and $13.3 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business, inclusive of adverse impacts related to COVID-19 business disruptions:

						% Change
Digital commerce						69		%
Brick and mortar						4		%
Total comparable store sales						7		%

• a $4.2 million net increase related to our Asia wholesale business, largely driven by South Korea and Australia.

			50

Gross Profit. Gross profit increased by $215.8 million, or 27.0%, to $1.015 billion for the three months ended September 25, 2021, including net favorable foreign currency effects of $12.1 million. Gross profit as a percentage of net revenues increased to 67.5% for the three months ended September 25, 2021 from 67.0% for the three months ended September 26, 2020. The 50 basis point increase was primarily driven by improved product mix, pricing, and lower levels of promotional activity, partially offset by higher product costs and the absence of unusual geographic and channel mix benefits experienced during the prior fiscal year period in connection with COVID-19-related business disruptions in North America and Europe.

Gross profit as a percentage of net revenues is dependent upon a variety of factors, including changes in the relative sales mix among distribution channels, changes in the mix of products sold, pricing, the timing and level of promotional activities, foreign currency exchange rates, and fluctuations in material costs. These factors, among others, may cause gross profit as a percentage of net revenues to fluctuate from period to period.

Selling, General, and Administrative Expenses. SG&A expenses include costs relating to compensation and benefits, advertising and marketing, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased by $126.7 million, or 20.2%, to $754.9 million for the three months ended September 25, 2021, including net unfavorable foreign currency effects of $6.8 million. The increase in SG&A expenses reflects a reduction in the magnitude of COVID-19 business disruptions and our related mitigating actions, which during the prior fiscal year period included (i) lower compensation-related expenses largely driven by employee furloughs and COVID-19-related government subsidies and (ii) lower rent and occupancy costs largely driven by reduced percentage-of-sales-based rent due to widespread store closures and a reduction in traffic, as well as rent abatements negotiated with certain of our landlords. The increase in SG&A expenses also reflects lower favorable COVID-19-related bad debt expense adjustments recorded during the three months ended September 25, 2021 as compared to the prior fiscal year period, offset by expense savings associated with the disposition of our Club Monaco business at the end of the first quarter of Fiscal 2022. SG&A expenses as a percentage of net revenues declined to 50.2% for the three months ended September 25, 2021 from 52.6% for the three months ended September 26, 2020. The 240 basis point improvement was primarily due to operating leverage on higher net revenues, partially offset by higher expenses across various categories as we returned to more normalized operations in comparison to the prior fiscal year period.

The $126.7 million increase in SG&A expenses was driven by:

						Three Months Ended September 25, 2021 Compared to Three Months Ended September 26, 2020
						(millions)
SG&A expense category:
Compensation-related expenses						$	53.8
Marketing and advertising expenses						41.5
Selling-related expenses						9.9
Bad debt expense						9.0
Other						12.5
Total increase in SG&A expenses						$	126.7

We have been carefully evaluating our organizational and operating cost structures to better support long-term growth, with a focus on our (i) team organizational structures and ways of working; (ii) real estate footprint and related costs across corporate offices, distribution centers, and direct-to-consumer retail and wholesale doors; and (iii) brand portfolio. Additionally, we continue to closely manage our discretionary spending.

Impairment of Assets. During the three-month periods ended September 25, 2021 and September 26, 2020, we recorded non-cash impairment charges of $0.7 million and $31.0 million, respectively, to write-down certain long-lived assets. See Note 7 to the accompanying consolidated financial statements.

Restructuring and Other Charges. During the three-month periods ended September 25, 2021 and September 26, 2020, we recorded restructuring charges of $2.6 million and $157.6 million, respectively, consisting of severance and benefit costs and other cash charges. Additionally, during the three-month periods ended September 25, 2021 and September 26, 2020, we recorded other charges of $5.1 million and $2.9 million, respectively, related to rent and occupancy costs associated with

			51

certain previously exited real estate locations for which the related lease agreements have not yet expired. See Note 8 to the accompanying consolidated financial statements.

Operating Income (Loss). We reported operating income of $251.9 million for the three months ended September 25, 2021, as compared to an operating loss of $20.3 million for the three months ended September 26, 2020. The increase in operating income reflects the return to more normalized operations in comparison to the prior fiscal year period, as previously discussed, as well as net favorable foreign currency effects of $5.3 million. Our operating results during the three-month periods ended September 25, 2021 and September 26, 2020 were also negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $4.7 million and $171.2 million, respectively. Operating income as a percentage of net revenues was 16.7% for the three months ended September 25, 2021, reflecting a 1,840 basis point increase from the prior fiscal year period. The increase in operating income as a percentage of net revenues was primarily driven by lower net restructuring-related charges, impairment of assets, and certain other charges (benefits) recorded during the three months ended September 25, 2021 as compared to the prior fiscal year period, the decrease in SG&A expenses as a percentage of net revenues, and the increase in our gross margin, all as previously discussed.

Operating income (loss) and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:

						Three Months Ended
			September 25, 2021												September 26, 2020
			Operating Income (Loss)						Operating Margin						Operating Income (Loss)						Operating Margin						$ Change						Margin Change
			(millions)												(millions)												(millions)
Segment:
North America						$	170.6					24.3%						$	123.3					22.7%						$	47.3					160 bps
Europe						161.8						32.6%						83.6						23.3%						78.2						930 bps
Asia						43.4						16.1%						41.1						17.3%						2.3						(120) bps
Other non-reportable segments						32.3						90.7%						15.2						27.9%						17.1						6,280 bps
						408.1												263.2												144.9
Unallocated corporate expenses						(148.5)												(123.0)												(25.5)
Unallocated restructuring and other charges						(7.7)												(160.5)												152.8
Total operating income (loss)						$	251.9					16.7%						$	(20.3)					(1.7%)						$	272.2					1,840 bps

North America operating margin improved by 160 basis points, primarily due to the favorable impacts of approximately 120 basis points related to our wholesale business, largely attributable to a decline in SG&A expenses as a percentage of net revenues driven by operating leverage on higher net revenues, and approximately 90 basis points related to our retail business, largely driven by an increase in our gross margin. These improvements in operating margin were partially offset by the net unfavorable impact of 50 basis points attributable to lower favorable COVID-19-related bad debt expense and non-routine inventory adjustments during the three months ended September 25, 2021 as compared to the prior fiscal year period, partially offset by lower impairment of assets recorded during the current fiscal year period.

Europe operating margin improved by 930 basis points, primarily due to the favorable impacts of approximately 290 basis points and 150 basis points related to our wholesale and retail businesses, respectively, both largely attributable to a decline in SG&A expenses as a percentage of net revenues driven by operating leverage on higher net revenues. The basis point improvement of our wholesale business also reflected an increase in our gross margin, while the improvement in our retail business reflected a decline in our gross margin. The overall improvement in operating margin also reflected the net favorable impact of 450 basis points attributable to lower impairment of assets recorded during the three months ended September 25, 2021 as compared to the prior fiscal year period, partially offset by lower favorable COVID-19-related bad debt expense adjustments recorded during the current fiscal year period. The remaining 40 basis point improvement in operating margin was attributable to other factors, including favorable foreign currency effects and channel mix.

Asia operating margin declined by 120 basis points, primarily due to the unfavorable impact of approximately 250 basis points related to our retail business, largely driven by an increase in SG&A expenses as a percentage of net revenues, partially offset by an increase in our gross margin. This decline in operating margin was partially offset by the favorable impacts of 80 basis points attributable to foreign currency effects, 20 basis points attributable to our wholesale business, and 30 basis points attributable to other factors, including channel mix.

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Unallocated corporate expenses increased by $25.5 million to $148.5 million during the three months ended September 25, 2021. The increase in unallocated corporate expenses was due to higher compensation-related expenses of $25.2 million and higher marketing and advertising expenses of $7.7 million, partially offset by higher intercompany sourcing commission income of $5.7 million (which is offset at the segment level and eliminates in consolidation) and lower other expenses of $1.7 million.

Unallocated restructuring and other charges decreased by $152.8 million to $7.7 million during the three months ended September 25, 2021, as previously discussed above and in Note 8 to the accompanying consolidated financial statements.

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-month periods ended September 25, 2021 and September 26, 2020, we reported non-operating expense, net, of $13.8 million and $8.8 million, respectively. The $5.0 million increase in non-operating expense, net was driven by:

*•*a $3.2 million decline in other income (expense), net, primarily driven by lower net foreign currency gains during the three months ended September 25, 2021 as compared to the prior fiscal year period; and

• a $1.0 million decline in interest income, primarily driven by lower interest rates in financial markets.

Income Tax Provision. The income tax provision represents federal, foreign, state and local income taxes. Our effective tax rate will change from period to period based on various factors including, but not limited to, the geographic mix of earnings, the timing and amount of foreign dividends, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies.

We reported an income tax provision of $44.8 million and an effective tax rate of 18.8% for the three months ended September 25, 2021, as compared to an income tax provision of $10.0 million and an effective tax rate of (34.4%) for the three months ended September 26, 2020. The $34.8 million increase in our income tax provision was primarily driven by the increase in our pretax income, partially offset by the absence of valuation allowances recorded against certain deferred tax assets in the prior fiscal year period, favorable tax impacts related to earnings generated in lower taxed jurisdictions versus the U.S., and favorable permanent adjustments. See Note 9 to the accompanying consolidated financial statements.

Net Income (Loss). We reported net income of $193.3 million for the three months ended September 25, 2021, as compared to a net loss of $39.1 million for the three months ended September 26, 2020. The $232.4 million increase in net income was primarily due to the increase in our operating income, partially offset by the increase in our income tax provision, both as previously discussed. Our operating results during the three-month periods ended September 25, 2021 and September 26, 2020 included net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $4.7 million and $171.2 million, respectively, which had an after-tax effect of reducing net income by $3.7 million and $146.2 million, respectively.

Net Income (Loss) per Diluted Share. We reported net income per diluted share of $2.57 for the three months ended September 25, 2021, as compared to a net loss per diluted share of $0.53 for the three months ended September 26, 2020. The $3.10 per share increase was driven by the higher level of net income, as previously discussed. Net income per diluted share for the three-month periods ended September 25, 2021 and September 26, 2020 were also negatively impacted by $0.05 per share and $1.97 per share, respectively, as a result of net restructuring-related charges, impairment of assets, and certain other charges (benefits), as previously discussed.

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Six Months Ended September 25, 2021 Compared to Six Months Ended September 26, 2020

The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers.

						Six Months Ended
						September 25, 2021						September 26, 2020						$ Change						% / bps Change
						(millions, except per share data)
Net revenues						$	2,880.4					$	1,681.0					$	1,199.4					71.4		%
Cost of goods sold						(897.1)						(532.9)						(364.2)						68.3		%
Gross profit						1,983.3						1,148.1						835.2						72.8		%
Gross profit as % of net revenues						68.9		%				68.3		%										60 bps
Selling, general, and administrative expenses						(1,483.1)						(1,135.8)						(347.3)						30.6		%
SG&A expenses as % of net revenues						51.5		%				67.6		%										(1,610 bps)
Impairment of assets						(19.3)						(33.1)						13.8						(41.6		%)
Restructuring and other charges						(8.4)						(167.5)						159.1						(95.0		%)
Operating income (loss)						472.5						(188.3)						660.8						NM
Operating income (loss) as % of net revenues						16.4		%				(11.2		%)										2,760 bps
Interest expense						(26.9)						(22.4)						(4.5)						20.0		%
Interest income						3.0						5.1						(2.1)						(40.9		%)
Other income (expense), net						(0.5)						3.9						(4.4)						NM
Income (loss) before income taxes						448.1						(201.7)						649.8						NM
Income tax benefit (provision)						(90.1)						34.9						(125.0)						NM
Effective tax rate**(a)**						20.1		%				17.3		%										280 bps
Net income (loss)						$	358.0					$	(166.8)					$	524.8					NM
Net income (loss) per common share:
Basic						$	4.84					$	(2.27)					$	7.11					NM
Diluted						$	4.75					$	(2.27)					$	7.02					NM

**(a)**Effective tax rate is calculated by dividing the income tax benefit (provision) by income (loss) before income taxes.

NM Not meaningful.

Net Revenues. Net revenues increased by $1.199 billion, or 71.4%, to $2.880 billion during the six months ended September 25, 2021 as compared to the six months ended September 26, 2020, including net favorable foreign currency effects of $43.7 million. On a constant currency basis, net revenues increased by $1.156 billion, or 68.8%. The increase in net revenues reflected growth across all regions largely driven by a reduction in store closures and other COVID-19-related disruptions experienced during the current fiscal year period as compared to the prior fiscal year period, coupled with continued growth in our digital commerce operations and overall stronger consumer demand.

The following table summarizes the percentage change in our consolidated comparable store sales for the six months ended September 25, 2021 as compared to the prior fiscal year period:

						% Change
Digital commerce						37		%
Brick and mortar						59		%
Total comparable store sales						55		%

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Our global average store count decreased by 30 stores and concession shops during the six months ended September 25, 2021 compared with the six months ended September 26, 2020, largely driven by the sale of our Club Monaco business on June 26, 2021, partially offset by new openings in Asia.

Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior fiscal year period, are provided below:

						Six Months Ended												$ Change						Foreign Exchange Impact						$ Change						% Change
						September 25, 2021						September 26, 2020						As Reported									Constant Currency						As Reported						Constant Currency
						(millions)
Net Revenues:
North America						$	1,365.2					$	708.0					$	657.2					$	2.8					$	654.4					92.8		%				92.4		%
Europe						850.4						480.2						370.2						26.2						344.0						77.1		%				71.7		%
Asia						558.1						408.5						149.6						14.6						135.0						36.6		%				33.1		%
Other non-reportable segments						106.7						84.3						22.4						0.1						22.3						26.5		%				26.4		%
Total net revenues						$	2,880.4					$	1,681.0					$	1,199.4					$	43.7					$	1,155.7					71.4		%				68.8		%

North America net revenues — Net revenues increased by $657.2 million, or 92.8%, during the six months ended September 25, 2021 as compared to the six months ended September 26, 2020, including net favorable foreign currency effects of $2.8 million. On a constant currency basis, net revenues increased by $654.4 million, or 92.4%.

The $657.2 million net increase in North America net revenues was driven by:

*•*a $376.8 million net increase related to our North America retail business, reflecting a reduction in store closures and other COVID-19-related disruptions and the continued growth in our digital commerce operations. On a constant currency basis, net revenues increased by $375.0 million, reflecting increases of $346.8 million in comparable store sales and $28.2 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our North America retail business:

						% Change
Digital commerce						41		%
Brick and mortar						95		%
Total comparable store sales						77		%

• a $280.4 million net increase related to our North America wholesale business largely driven by minimal shipments during the comparable prior fiscal year period due to significant COVID-19-related business disruptions, coupled with overall stronger consumer demand.

Europe net revenues — Net revenues increased by $370.2 million, or 77.1%, during the six months ended September 25, 2021 as compared to the six months ended September 26, 2020, including net favorable foreign currency effects of $26.2 million. On a constant currency basis, net revenues increased by $344.0 million, or 71.7%.

The $370.2 million net increase in Europe net revenues was driven by:

• a $223.3 million net increase related to our Europe wholesale business largely driven by minimal shipments during the comparable prior fiscal year period due to significant COVID-19-related business disruptions, overall stronger consumer demand, and net favorable foreign currency effects of $11.1 million; and

*•*a $146.9 million net increase related to our Europe retail business, reflecting a reduction in store closures and other COVID-19-related disruptions and the continued growth in our digital commerce operations, as well as net favorable foreign currency effects of $15.1 million. On a constant currency basis, net revenues increased by $131.8 million, reflecting increases of $120.0 million in comparable store sales and $11.8 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Europe retail business:

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						% Change
Digital commerce						23		%
Brick and mortar						60		%
Total comparable store sales						51		%

Asia net revenues — Net revenues increased by $149.6 million, or 36.6%, during the six months ended September 25, 2021 as compared to the six months ended September 26, 2020, including net favorable foreign currency effects of $14.6 million. On a constant currency basis, net revenues increased by $135.0 million, or 33.1%.

The $149.6 million net increase in Asia net revenues was driven by:

*•*a $135.4 million net increase related to our Asia retail business, reflecting a reduction in store closures and other COVID-19-related disruptions and the continued growth in our digital commerce operations, as well as net favorable foreign currency effects of $13.9 million. On a constant currency basis, net revenues increased by $121.5 million, reflecting increases of $80.3 million in comparable store sales and $41.2 million in non-comparable store sales. The following table summarizes the percentage change in comparable store sales related to our Asia retail business:

						% Change
Digital commerce						55		%
Brick and mortar						21		%
Total comparable store sales						23		%

• a $14.2 million net increase related to our Asia wholesale business, reflecting increases across all regions, most notably in Australia, South Korea, and Japan.

Gross Profit. Gross profit increased by $835.2 million, or 72.8%, to $1.983 billion for the six months ended September 25, 2021, including net favorable foreign currency effects of $42.1 million. Gross profit as a percentage of net revenues increased to 68.9% for the six months ended September 25, 2021 from 68.3% for the six months ended September 26, 2020. The 60 basis point increase was primarily driven by improved product mix, pricing, and lower levels of promotional activity, partially offset by higher product costs and the absence of unusual geographic and channel mix benefits experienced during the prior fiscal year period in connection with COVID-19-related business disruptions in North America and Europe.

Selling, General, and Administrative Expenses. SG&A expenses increased by $347.3 million, or 30.6%, to $1.483 billion for the six months ended September 25, 2021, including net unfavorable foreign currency effects of $24.5 million. The increase in SG&A expenses reflects a reduction in the magnitude of COVID-19 business disruptions and our related mitigating actions, which during the prior fiscal year period included (i) lower compensation-related expenses driven by employee furloughs, reduced pay for our executives, senior management team, and Board of Directors, as well as COVID-19-related government subsidies, and (ii) lower rent and occupancy costs largely driven by reduced percentage-of-sales-based rent due to widespread store closures and a reduction in traffic, as well as rent abatements negotiated with certain of our landlords. The increase in SG&A expenses also reflects lower favorable COVID-19-related bad debt expense adjustments recorded during the six months ended September 25, 2021 as compared to the prior fiscal year period, offset by expense savings associated with the disposition of our Club Monaco business at the end of the first quarter of Fiscal 2022. SG&A expenses as a percentage of net revenues declined to 51.5% for the six months ended September 25, 2021 from 67.6% for the six months ended September 26, 2020. The 1,610 basis point decline was primarily driven by operating leverage on higher net revenues, partially offset by higher expenses across various categories as we returned to more normalized operations in comparison to the prior fiscal year period.

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The $347.3 million increase in SG&A expenses was driven by:

						Six Months Ended September 25, 2021 Compared to Six Months Ended September 26, 2020
						(millions)
SG&A expense category:
Compensation-related expenses						$	147.1
Marketing and advertising expenses						80.2
Rent and occupancy costs						32.2
Selling-related expenses						29.9
Bad debt expense						24.5
Shipping and handling costs						18.6
Other						14.8
Total increase in SG&A expenses						$	347.3

Impairment of Assets. During the six-month periods ended September 25, 2021 and September 26, 2020, we recorded non-cash impairment charges of $19.3 million and $33.1 million, respectively, to write-down certain long-lived assets. See Note 7 to the accompanying consolidated financial statements.

Restructuring and Other Charges. During the six-month periods ended September 25, 2021 and September 26, 2020, we recorded restructuring charges of $2.5 million and $160.2 million, respectively, primarily consisting of severance and benefits costs, as well as other charges of $5.9 million and $7.3 million, respectively, primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. See Note 8 to the accompanying consolidated financial statements.

Operating Income (Loss). We reported operating income of $472.5 million for the six months ended September 25, 2021, as compared to an operating loss of $188.3 million for the six months ended September 26, 2020. The increase in operating income reflects the return to more normalized operations in comparison to the prior fiscal year period, as previously discussed, as well as net favorable foreign currency effects of $17.6 million. Our operating results during the six-month periods ended September 25, 2021 and September 26, 2020 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $15.1 million and $165.1 million, respectively. Operating income as a percentage of net revenues was 16.4% for the six months ended September 25, 2021, reflecting a 2,760 basis point increase from the prior fiscal year period. The increase in operating income as a percentage of net revenues was primarily driven by lower net restructuring-related charges, impairment of assets, and certain other charges (benefits) recorded during the six months ended September 25, 2021 as compared to the prior fiscal year period, the decrease in SG&A expenses as a percentage of net revenues, and the increase in our gross margin, all as previously discussed.

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Operating income (loss) and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:

						Six Months Ended
			September 25, 2021												September 26, 2020
			Operating Income (Loss)						Operating Margin						Operating Income (Loss)						Operating Margin						$ Change						Margin Change
			(millions)												(millions)												(millions)
Segment:
North America						$	356.9					26.1%						$	98.5					13.9%						$	258.4					1,220 bps
Europe						256.3						30.1%						66.7						13.9%						189.6						1,620 bps
Asia						103.8						18.6%						51.2						12.5%						52.6						610 bps
Other non-reportable segments						67.7						63.4%						16.1						19.1%						51.6						4,430 bps
						784.7												232.5												552.2
Unallocated corporate expenses						(303.8)												(253.3)												(50.5)
Unallocated restructuring and other charges						(8.4)												(167.5)												159.1
Total operating income (loss)						$	472.5					16.4%						$	(188.3)					(11.2%)						$	660.8					2,760 bps

North America operating margin improved by 1,220 basis points, primarily due to the favorable impacts of approximately 870 basis points and 560 basis points related to our retail and wholesale businesses, respectively, both largely driven by a decline in SG&A expenses as a percentage of net revenues driven by operating leverage on higher net revenues, as well as an increase in our gross margin. These improvements in operating margin were partially offset by the unfavorable impact of 210 basis points attributable to lower net favorable COVID-19-related bad debt expense and non-routine inventory adjustments recorded during the six months ended September 25, 2021 as compared to the prior fiscal year period, partially offset by lower impairment of assets recorded during the current fiscal year period.

Europe operating margin improved by 1,620 basis points, primarily due to the favorable impacts of approximately 630 basis points and 560 basis points related to our wholesale and retail businesses, respectively, both largely driven by a decline in SG&A expenses as a percentage of net revenues driven by operating leverage on higher net revenues. The basis point improvement of our wholesale business also reflected an increase in our gross margin, while the improvement in our retail business reflected a decline in our gross margin. The overall improvement in operating margin also reflected the favorable impact of 330 basis points attributable to lower impairment of assets during the six months ended September 25, 2021 as compared to the prior fiscal year period, partially offset by lower favorable COVID-19-related bad debt expense adjustments recorded during the current fiscal year period. The remaining improvement in operating margin was driven by favorable channel mix of approximately 80 basis points and foreign currency effects of 20 basis points.

Asia operating margin improved by 610 basis points, primarily due to the favorable impacts of approximately 350 basis points and 70 basis points related to our retail and wholesale businesses, respectively, both largely driven by a decline in SG&A expenses as a percentage of net revenues driven by operating leverage on higher net revenues. The basis point improvement of our retail business also reflected an increase in our gross margin. The overall improvement in operating margin also reflected approximately 110 basis points attributable to favorable foreign currency effects, as well as approximately 50 basis points attributable to lower non-routine inventory charges and impairment of assets recorded during the six months ended September 25, 2021 as compared to the prior fiscal year period. The remaining 30 basis point improvement was primarily driven by favorable channel mix.

Unallocated corporate expenses increased by $50.5 million to $303.8 million during the six months ended September 25, 2021. The increase in unallocated corporate expenses was due to higher compensation-related expenses of $57.3 million, higher impairment charges of $17.5 million, and higher marketing and advertising expenses of $12.3 million, partially offset by higher intercompany sourcing commission income of $26.9 million (which is offset at the segment level and eliminates in consolidation) and lower other expenses of $9.7 million.

Unallocated restructuring and other charges decreased by $159.1 million to $8.4 million during the six months ended September 25, 2021, as previously discussed above and in Note 8 to the accompanying consolidated financial statements.

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Non-operating Income (Expense), Net. During the six-month periods ended September 25, 2021 and September 26, 2020, we reported non-operating expense, net of $24.4 million and $13.4 million, respectively. The $11.0 million increase in non-operating expense, net was driven by:

*•*a $4.5 million increase in interest expense, primarily driven by the higher average level of outstanding debt during the six months ended September 25, 2021 as compared to the prior fiscal year period (see "Financial Condition and Liquidity — Cash Flows");

• a $4.4 million decline in other income (expense), net, primarily driven by lower net foreign currency gains during the six months ended September 25, 2021 as compared to the prior fiscal year period; and

• a $2.1 million decline in interest income, primarily driven by lower interest rates in financial markets.

Income Tax Benefit (Provision). We reported an income tax provision of $90.1 million and an effective tax rate of 20.1% for the six months ended September 25, 2021, as compared to an income tax benefit of $34.9 million and an effective tax rate of 17.3% for the six months ended September 26, 2020. The $125.0 million increase in our income tax provision was driven by the higher level of pretax income, as well as the absence of an income tax benefit recorded during the prior fiscal year period in connection with expected net operating loss carrybacks allowed under the CARES Act and unfavorable tax adjustments related to audit settlements, partially offset by favorable tax benefits related to earnings generated in lower taxed jurisdictions versus the U.S. and stock-based compensation. See Note 9 to the accompanying consolidated financial statements.

Net Income (Loss). We reported net income of $358.0 million for the six months ended September 25, 2021, as compared to a net loss of $166.8 million for the six months ended September 26, 2020. The $524.8 million increase in net income was primarily due to the increase in our operating income, partially offset by the increase in our income tax provision, both as previously discussed. Our operating results during the six-month periods ended September 25, 2021 and September 26, 2020 were negatively impacted by net restructuring-related charges, impairment of assets, and certain other charges (benefits) totaling $15.1 million and $165.1 million, respectively, which had an after-tax effect of reducing net income by $11.4 million and $140.7 million, respectively.

Net Income (Loss) per Diluted Share. We reported net income per diluted share of $4.75 for the six months ended September 25, 2021, as compared to a net loss per diluted share of $2.27 for the six months ended September 26, 2020. The $7.02 per share increase was driven by the higher level of net income, as previously discussed. Net income per diluted share for the six-month periods ended September 25, 2021 and September 26, 2020 were also negatively impacted by $0.15 per share and $1.91 per share, respectively, related to net restructuring-related charges, impairment of assets, and certain other charges (benefits), as previously discussed.

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FINANCIAL CONDITION AND LIQUIDITY

Financial Condition

The following table presents our financial condition as of September 25, 2021 and March 27, 2021:

						September 25, 2021						March 27, 2021						$ Change
						(millions)
Cash and cash equivalents						$	2,387.9					$	2,579.0					$	(191.1)
Short-term investments						673.1						197.5						475.6
Current portion of long-term debt**(a)**						(499.1)						—						(499.1)
Long-term debt**(a)**						(1,135.5)						(1,632.9)						497.4
Net cash and investments**(b)**						$	1,426.4					$	1,143.6					$	282.8
Equity						$	2,862.8					$	2,604.4					$	258.4

**(a)**See Note 10 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.

(b)"Net cash and investments" is defined as cash and cash equivalents, plus investments, less total debt.

The increase in our net cash and investments position at September 25, 2021 as compared to March 27, 2021 was primarily due to operating cash flows of $464.2 million, partially offset by our use of cash to invest in our business through $63.4 million in capital expenditures, to make dividend payments of $50.5 million, and to support Class A common stock repurchases of $39.9 million, representing withholdings in satisfaction of tax obligations for stock-based compensation awards.

The increase in our equity was attributable to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our dividends declared during the six months ended September 25, 2021.

Cash Flows

The following table details our cash flows for the six-month periods ended September 25, 2021 and September 26, 2020:

						Six Months Ended
						September 25, 2021						September 26, 2020						$ Change
						(millions)
Net cash provided by (used in) operating activities						$	464.2					$	(12.7)					$	476.9
Net cash provided by (used in) investing activities						(542.4)						13.8						(556.2)
Net cash provided by (used in) financing activities						(102.1)						367.3						(469.4)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash						(11.0)						23.6						(34.6)
Net increase (decrease) in cash, cash equivalents, and restricted cash						$	(191.3)					$	392.0					$	(583.3)

Net Cash Provided by (Used in) Operating Activities. Net cash provided by operating activities was $464.2 million during the six months ended September 25, 2021, as compared to net cash used in operating activities of $12.7 million during the six months ended September 26, 2020. The $476.9 million 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.

The net unfavorable change related to our operating assets and liabilities, including our working capital, was primarily driven by:

• a net unfavorable change in our accounts payable and accrued liabilities, driven by an unfavorable change in our restructuring reserve due to a decrease in restructuring charges recorded during the first half of Fiscal 2022 as compared to the prior fiscal year period, partially offset by a favorable change in our dividends payable related to the temporary suspension and subsequent resumption of our quarterly cash dividend program, as well as a

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favorable change in our accounts payable driven by an increase in our expenses during the second quarter of Fiscal 2022 as compared to the prior fiscal year period; and

• a year-over-year increase in our inventory levels largely to support revenue growth.

These decreases related to our operating assets and liabilities were partially offset by:

• a favorable change related to our accounts receivable, largely driven by a return to more normalized operations in comparison to the prior fiscal year period.

Net Cash Provided by (Used in) Investing Activities. Net cash used in investing activities was $542.4 million during the six months ended September 25, 2021, as compared to cash provided by investing activities of $13.8 million during the six months ended September 26, 2020. The $556.2 million net decrease in cash provided by investing activities was primarily driven by:

• a $541.4 million decrease in proceeds from sales and maturities of investments, less purchases of investments. During the six months ended September 25, 2021, we made net purchases of investments of $476.9 million, as compared to receiving net proceeds from sales and maturities of investments of $64.5 million during the six months ended September 26, 2020; and

• a $9.5 million increase in capital expenditures. During the six months ended September 25, 2021, we spent $63.4 million on capital expenditures, as compared to $53.9 million during the six months ended September 26, 2020. Our capital expenditures during the six months ended September 25, 2021 primarily related to store openings and renovations, as well as enhancements to our information technology systems.

Over the course of Fiscal 2022, we continue to expect to spend approximately $250 million to $275 million on capital expenditures, in-line with our pre-pandemic levels, primarily related to store openings and renovations, as well as further investment in our digital infrastructure.

Net Cash Provided by (Used in) Financing Activities. Net cash used in financing activities was $102.1 million during the six months ended September 25, 2021, as compared to net cash provided by financing activities of $367.3 million during the six months ended September 26, 2020. The $469.4 million net decrease in cash provided by financing activities was primarily driven by a $466.9 million decrease in cash proceeds from the issuance of debt, less debt repayments. During the six months ended September 25, 2021, we did not issue or repay any debt. On a comparative basis, during the six months ended September 26, 2020, we received $1.242 billion in proceeds from the issuance of our 1.700% unsecured notes and 2.950% unsecured senior notes, a portion of which was used to repay $475.0 million of borrowings previously outstanding under our credit facilities and our previously outstanding $300.0 million principal amount of unsecured 2.625% senior notes that matured August 18, 2020.

Sources of Liquidity

Our primary sources of liquidity are the cash flows generated from our operations, our available cash and cash equivalents and short-term investments, availability under our credit and overdraft facilities and commercial paper program, and other available financing options.

During the six months ended September 25, 2021, we generated $464.2 million of net cash flows from our operations. As of September 25, 2021, we had $3.061 billion in cash, cash equivalents, and short-term investments, of which $1.242 billion were held by our subsidiaries domiciled outside the U.S. We are not dependent on foreign cash to fund our domestic operations. Undistributed foreign earnings that were subject to the Tax Cuts and Jobs Act's one-time mandatory transition tax as of December 31, 2017 are not considered to be permanently reinvested and may be repatriated to the U.S. in the future with minimal or no additional U.S. taxation. We intend to permanently reinvest undistributed foreign earnings generated after December 31, 2017 that were not subject to the one-time mandatory transition tax. However, if our plans change and we choose to repatriate post-2017 earnings to the U.S. in the future, we would be subject to applicable U.S. and foreign taxes.

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The following table presents the total availability, borrowings outstanding, and remaining availability under our credit and overdraft facilities and Commercial Paper Program as of September 25, 2021:

						September 25, 2021
Description**(a)**						Total Availability						Borrowings Outstanding						Remaining Availability
						(millions)
Global Credit Facility and Commercial Paper Program**(b)**						$	500					$	10		(c)			$	490
Pan-Asia Credit Facilities						33						—						33
Japan Overdraft Facility						45						—						45

**(a)**As defined in Note 10 to the accompanying consolidated financial statements.

**(b)**Borrowings under the Commercial Paper Program are supported by the Global Credit Facility. Accordingly, we do not expect combined borrowings outstanding under the Commercial Paper Program and the Global Credit Facility to exceed $500 million.

**(c)**Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of September 25, 2021.

We believe that the Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as of September 25, 2021, there were eight financial institutions participating in the Global Credit Facility, with no one participant maintaining a maximum commitment percentage in excess of 20%. In accordance with the terms of the agreement, we have the ability to expand our borrowing availability under the Global Credit Facility to $1 billion through the full term of the facility, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments.

Borrowings under the Pan-Asia Credit Facilities and Japan Overdraft Facility (collectively, the "Pan-Asia Borrowing Facilities") are guaranteed by the parent company and are granted at the sole discretion of the participating banks (as described within Note 10 to the accompanying consolidated financial statements), subject to availability of the respective banks' funds and satisfaction of certain regulatory requirements. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the Global Credit Facility and the Pan-Asia Borrowing Facilities in the event of our election to draw additional funds in the foreseeable future.

Our sources of liquidity are used to fund our ongoing cash requirements, including working capital requirements, global retail store and digital commerce expansion, construction and renovation of shop-within-shops, investment in infrastructure, including technology, acquisitions, joint ventures, payment of dividends, debt repayments, Class A common stock repurchases, settlement of contingent liabilities (including uncertain tax positions), and other corporate activities, including our restructuring actions. We believe that our existing sources of cash, the availability under our credit facilities, and our ability to access capital markets will be sufficient to support our operating, capital, and debt service requirements for the foreseeable future, the ongoing development of our businesses, and our plans for further business expansion. However, prolonged periods of adverse economic conditions or business disruptions in any of our key regions, or a combination thereof, such as those resulting from pandemic diseases and other catastrophic events, could impede our ability to pay our obligations as they become due or return value to our shareholders, as well as delay previously planned expenditures related to our operations.

See Note 10 to the accompanying consolidated financial statements and Note 11 of the Fiscal 2021 10-K for additional information relating to our credit facilities.

Debt and Covenant Compliance

In August 2018, we completed a registered public debt offering and issued $400 million aggregate principal amount of unsecured senior notes due September 15, 2025, which bear interest at a fixed rate of 3.750%, payable semi-annually (the "3.750% Senior Notes"). In June 2020, we completed another registered public debt offering and issued an additional $500 million aggregate principal amount of unsecured senior notes due June 15, 2022, which bear interest at a fixed rate of 1.700%, payable semi-annually (the "1.700% Senior Notes"), and $750 million aggregate principal amount of unsecured senior notes due June 15, 2030, which bear interest at a fixed rate of 2.950%, payable semi-annually (the "2.950% Senior Notes").

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The indenture and supplemental indentures governing the 3.750% Senior Notes, 1.700% Senior Notes, and 2.950% Senior Notes (as supplemented, the "Indenture") contain certain covenants that restrict our ability, subject to specified exceptions, to incur certain liens; enter into sale and leaseback transactions; consolidate or merge with another party; or sell, lease, or convey all or substantially all of our property or assets to another party. However, the Indenture does not contain any financial covenants.

We have a credit facility that provides for a $500 million senior unsecured revolving line of credit through August 12, 2024, which is also used to support the issuance of letters of credit and the maintenance of the Commercial Paper Program (the "Global Credit Facility"). Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and other currencies, including Euros, Hong Kong Dollars, and Japanese Yen. We have the ability to expand the borrowing availability under the Global Credit Facility to $1 billion, subject to the agreement of one or more new or existing lenders under the facility to increase their commitments. There are no mandatory reductions in borrowing ability throughout the term of the Global Credit Facility.

The Global Credit Facility contains a number of covenants, as described in Note 10 to the accompanying consolidated financial statements. As of September 25, 2021, no Event of Default (as such term is defined pursuant to the Global Credit Facility) has occurred under our Global Credit Facility. The Pan-Asia Borrowing Facilities do not contain any financial covenants.

See Note 10 to the accompanying consolidated financial statements and Note 11 of the Fiscal 2021 10-K for additional information relating to our debt and covenant compliance.

Common Stock Repurchase Program

On May 13, 2019, our Board of Directors approved an expansion of our existing common stock repurchase program that allowed us to repurchase up to an additional $600 million of Class A common stock. As of September 25, 2021, the remaining availability under our Class A common stock repurchase program was approximately $580 million. Repurchases of shares of Class A common stock are subject to certain restrictions under our Global Credit Facility and more generally overall business and market conditions. Accordingly, in response to business disruptions related to the COVID-19 pandemic, effective beginning in the first quarter of Fiscal 2021, we temporarily suspended our common stock repurchase program as a preemptive action to preserve cash and strengthen our liquidity position. However, we anticipate resuming activities under our Class A common stock repurchase program during the second half of Fiscal 2022.

See Note 14 to the accompanying consolidated financial statements for additional information relating to our Class A common stock repurchase program.

Dividends

Except as discussed below, we have maintained a regular quarterly cash dividend program on our common stock since 2003.

In response to business disruptions related to the COVID-19 pandemic, effective beginning in the first quarter of Fiscal 2021 we temporarily suspended our quarterly cash dividend program as a preemptive action to preserve cash and strengthen our liquidity position. On May 19, 2021, our Board of Directors approved the reinstatement of our quarterly cash dividend program at the pre-pandemic amount of $0.6875 per share. The second quarter Fiscal 2022 dividend of $0.6875 per share was declared on September 10, 2021, was payable to shareholders of record at the close of business on September 24, 2021, and was paid on October 8, 2021.

We intend to continue to pay regular dividends on our outstanding common stock. However, any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on our results of operations, cash requirements, financial condition, and other factors that the Board of Directors may deem relevant, including economic and market conditions.

See Note 14 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.

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Contractual and Other Obligations

There have been no material changes to our contractual and other obligations as disclosed in our Fiscal 2021 10-K, other than those which occur in the ordinary course of business. Refer to the "Financial Condition and Liquidity — Contractual and Other Obligations" section of the MD&A in our Fiscal 2021 10-K for detailed disclosure of our contractual and other obligations as of March 27, 2021.

MARKET RISK MANAGEMENT

As discussed in Note 13 of the Fiscal 2021 10-K and Note 12 to the accompanying consolidated financial statements, we are exposed to a variety of levels and types of risks, including the impact of changes in currency exchange rates on foreign currency-denominated balances, certain anticipated cash flows of our international operations, and the value of reported net assets of our foreign operations, as well as changes in the fair value of our fixed-rate debt obligations relating to fluctuations in benchmark interest rates. Accordingly, in the normal course of business we assess such risks and, in accordance with our established policies and procedures, may use derivative financial instruments to manage and mitigate them. We do not use derivatives for speculative or trading purposes.

Given our use of derivative instruments, we are exposed to the risk that the counterparties to such contracts will fail to meet their contractual obligations. To mitigate such counterparty credit risk, it is our policy to only enter into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings and certain other factors, adhering to established limits for credit exposure. Our established policies and procedures for mitigating credit risk include ongoing review and assessment of the creditworthiness of our counterparties. We also enter into master netting arrangements with counterparties, when possible, to further mitigate credit risk. As a result of the above considerations, we do not believe that we are exposed to undue concentration of counterparty risk with respect to our derivative contracts as of September 25, 2021. However, we do have in aggregate $16.1 million of derivative instruments in net asset positions held across five creditworthy financial institutions.

Foreign Currency Risk Management

We manage our exposure to changes in foreign currency exchange rates using forward foreign currency exchange and cross-currency swap contracts. Refer to Note 12 to the accompanying consolidated financial statements for a summary of the notional amounts and fair values of our outstanding forward foreign currency exchange and cross-currency swap contracts, as well as the impact on earnings and other comprehensive income of such instruments as of September 25, 2021.

Forward Foreign Currency Exchange Contracts

We enter into forward foreign currency exchange contracts to mitigate risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. Dollars. As part of our overall strategy for managing the level of exposure to such exchange rate risk, relating primarily to the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, the Swiss Franc, and the Chinese Renminbi, we generally hedge a portion of our related exposures anticipated over the next twelve months using forward foreign currency exchange contracts with maturities of two months to one year to provide continuing coverage over the period of the respective exposure.

Our foreign exchange risk management activities are governed by established policies and procedures. These policies and procedures provide a framework that allows for the management of currency exposures while ensuring the activities are conducted within our established guidelines. Our policies include guidelines for the organizational structure of our risk management function and for internal controls over foreign exchange risk management activities, including, but not limited to, authorization levels, transaction limits, and credit quality controls, as well as various measurements for monitoring compliance. We monitor foreign exchange risk using different techniques, including periodic review of market values and performance of sensitivity analyses.

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Cross-Currency Swap Contracts

We periodically designate pay-fixed rate, receive-fixed rate cross-currency swap contracts as hedges of our net investment in certain European subsidiaries.

Our pay-fixed rate, receive-fixed rate cross-currency swap contracts swap U.S. Dollar-denominated fixed interest rate payments based on the contract's notional amount and the fixed rate of interest payable on certain of our senior notes for Euro-denominated fixed interest rate payments, thereby economically converting a portion of our fixed-rate U.S. Dollar-denominated senior note obligations to fixed rate Euro-denominated obligations.

See Note 3 to the accompanying consolidated financial statements for further discussion of our foreign currency exposures and the types of derivative instruments used to hedge those exposures.

Investment Risk Management

As of September 25, 2021, we had cash and cash equivalents on-hand of $2.388 billion, consisting of deposits in interest bearing accounts, investments in money market deposit accounts, and investments in time deposits with original maturities of 90 days or less. Our other significant investments included $673.1 million of short-term investments, consisting of investments in time deposits with original maturities greater than 90 days; and $8.8 million of restricted cash held in escrow with certain banks as collateral, primarily to secure guarantees in connection with certain international tax matters and real estate leases.

We actively monitor our exposure to changes in the fair value of our global investment portfolio in accordance with our established policies and procedures, which include monitoring both general and issuer-specific economic conditions, as discussed in Note 3 to the accompanying consolidated financial statements. Our investment objectives include capital preservation, maintaining adequate liquidity, diversification to minimize liquidity and credit risk, and achievement of maximum returns within the guidelines set forth in our investment policy. See Note 12 to the accompanying consolidated financial statements for further detail of the composition of our investment portfolio as of September 25, 2021.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 3 of the Fiscal 2021 10-K. Our estimates are often based on complex judgments, assessments of probability, and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. For a complete discussion of our critical accounting policies, refer to the "Critical Accounting Policies" section of the MD&A in our Fiscal 2021 10-K.

There have been no significant changes in the application of our critical accounting policies since March 27, 2021.

Goodwill Impairment Assessment

We performed our annual goodwill impairment assessment using a qualitative approach as of the beginning of the second quarter of Fiscal 2022. In performing the assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affected the fair values and/or carrying amounts of our reporting units with allocated goodwill. These factors included external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and expected financial performance. Additionally, we also considered the results of our most recent quantitative goodwill impairment test, which was performed as of the end of Fiscal 2020 and incorporated assumptions related to COVID-19 business disruptions, the results of which indicated that the fair values of these reporting units significantly exceeded their respective carrying values. Based on the results of our qualitative goodwill impairment assessment, we concluded that it is not more likely than not that the fair values of our reporting units are less than their respective carrying values, and there were no reporting units at risk of impairment.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 4 to the accompanying consolidated financial statements for a description of certain recently issued accounting standards which have impacted our consolidated financial statements, or may impact our consolidated financial statements in future reporting periods.

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