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 representatives of the Company, may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our current expectations about the Company's future operating results and financial condition, the implementation and results of our strategic plans and initiatives, store openings and closings, 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 "aim," "anticipate," "outlook," "estimate," "ensure," "commit," "expect," "project," "believe," "envision," "goal," "target," "can," "will," and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements. 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 any potential changes resulting from the execution of our long-term growth strategy, and our ability to effectively transfer knowledge and maintain adequate controls and procedures during periods of transition;

• the potential impact to our business resulting from inflationary pressures, including increases in the costs of raw materials, transportation, wages, healthcare, and other benefit-related costs;

• the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including potential business disruptions related to the war between Russia and Ukraine, civil and political unrest, diplomatic tensions between the U.S. and other countries, rising interest rates, and recent bank failures, among other factors described herein;

• the potential impact to our business resulting from supply chain disruptions, including those caused by capacity constraints, closed factories and/or labor shortages (stemming from pandemic diseases, labor disputes, strikes, or otherwise), scarcity of raw materials, port congestion, and scrutiny or detention of goods produced in certain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which could result in shipment approval delays leading to inventory shortages and lost sales;

• our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;

• our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;

• our ability to recruit and retain employees to operate our retail stores, distribution centers, and various corporate functions;

• the impact to our business resulting from a recession or 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;

• our ability to successfully implement our long-term growth strategy;

• our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories;

• our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence;

• our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers;

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• our ability to competitively price our products and create an acceptable value proposition for consumers;

• our ability to continue to maintain our brand image and reputation and protect our trademarks;

• our ability to achieve our goals regarding environmental, social, and governance practices, including those related to climate change and our human capital;

• 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 to our business resulting from pandemic diseases such as COVID-19, 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 customers, 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;

• the potential impact on our operations and on our suppliers and customers resulting from man-made or natural disasters, including pandemic diseases, severe weather, geological events, and other catastrophic events, such as terrorist attacks and military conflicts;

• 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 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 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 impact to our business resulting from the potential 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 or other countries, and any related impact to global stock markets, as well as our ability to implement mitigating sourcing strategies;

• 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;

• the potential impact to the trading prices of our securities if our operating results, Class A common stock share repurchase activity, and/or cash dividend payments differ from investors' expectations;

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• 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; 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 April 1, 2023 (the "Fiscal 2023 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 2024 will end on March 30, 2024 and will be a 52-week period ("Fiscal 2024"). Fiscal year 2023 ended on April 1, 2023 and was also a 52-week period ("Fiscal 2023"). The first quarter of Fiscal 2024 ended on July 1, 2023 and was a 13-week period. The first quarter of Fiscal 2023 ended on July 2, 2022 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 period ended July 1, 2023. In addition, this section includes a discussion of 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 period ended July 1, 2023 as compared to the three-month period ended July 2, 2022.

• Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of July 1, 2023, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the three months ended July 1, 2023 as compared to the three months ended July 2, 2022; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, our supplier finance program, our outstanding debt and covenant compliance, common stock repurchases, and payments of dividends; and (iv) a description of any material changes in our material cash requirements since April 1, 2023.

• 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 April 1, 2023.

• Critical accounting policies. This section discusses any significant changes in our critical accounting policies since April 1, 2023. 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 2023 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.

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OVERVIEW

Our Business

Our Company is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, 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.

We organize our business into the following three reportable segments:

*•*North America — Our North America segment, representing approximately 47% of our Fiscal 2023 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses primarily in the U.S. and Canada. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our outlet 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 29% of our Fiscal 2023 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Europe and emerging markets. In Europe, our retail business is primarily comprised of our Ralph Lauren stores, our outlet stores, our concession-based shop-within-shops, and our various digital commerce sites. Our wholesale business in Europe is comprised primarily 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 22% of our Fiscal 2023 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 outlet 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 2% of our Fiscal 2023 net revenues, which primarily consist of Ralph Lauren and Chaps branded royalty revenues earned through our global licensing alliances.

Approximately 53% of our Fiscal 2023 net revenues were earned outside of the U.S. See Note 16 to the accompanying consolidated financial statements for further discussion of our segment reporting structure.

Our business is typically affected by seasonal trends, with higher levels of retail sales in our second and third fiscal quarters and higher wholesale sales in our second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting our retail business and timing of seasonal wholesale shipments. As a result of changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly operating trends and working capital requirements may not be indicative of our future performance. In addition, fluctuations in sales, operating income (loss), and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes in weather patterns. Accordingly, our operating results and cash flows for the three-month period ended July 1, 2023 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2024.

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Global Economic Conditions and Industry Trends

The global economy and retail industry are impacted by many different factors. For example, changes in economic conditions in the U.S., most notably inflationary pressures (including increases in the cost of raw materials, transportation, and salaries & benefits), rising interest rates, significant foreign currency volatility, recent bank failures, and concerns of a potential recession, continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as in an effort to reduce elevated inventory levels, many U.S. retailers have become increasingly more promotional in an attempt to offset traffic declines and increase conversion. Certain other worldwide events and factors, such as international trade relations, new legislation and regulations, taxation or monetary policy changes, political and civil unrest, and growing diplomatic tensions, among other factors, have also adversely impacted the global economy. The continuation of these trends could have a material adverse effect on our business or operating results.

The global economy has also been negatively impacted by the Russia-Ukraine war. Several countries including the U.S. have imposed significant economic sanctions against Russia, including export controls and other trade restrictions with Russian entities. We have also voluntarily elected to suspend operations in Russia. While the suspension of our operations in Russia has not resulted in a material impact to our consolidated financial statements, our business has been impacted by the broader macroeconomic implications resulting from the war, including unfavorable foreign currency exchange rates, increases in energy prices, food shortages, and volatility in financial markets, among other factors, which have adversely impacted consumer sentiment and confidence. It is not clear at this time how long the conflict will endure, or if it will escalate further with additional countries declaring war against each other, which could further compound the adverse impact to the global economy.

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

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 2023 10-K.

Summary of Financial Performance

Operating Results

During the three months ended July 1, 2023, we reported net revenues of $1.496 billion, net income of $132.1 million, and net income per diluted share of $1.96, as compared to net revenues of $1.491 billion, net income of $123.4 million, and net income per diluted share of $1.73 during the three months ended July 2, 2022. The comparability of our operating results has been affected by net restructuring-related charges and certain other benefits (charges). We also continue to experience varying degrees of business disruptions resulting from the current macroeconomic environment, including ongoing inflationary pressures, the war in Ukraine, and foreign currency volatility.

Our operating performance for the three months ended July 1, 2023 reflected revenue increases of 0.4% on a reported basis and 1.2% on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. Net revenue growth was driven by our international businesses, which more than offset declines in North America.

Our gross profit as a percentage of net revenues increased by 180 basis points to 69.0% during the three months ended July 1, 2023, primarily driven by lower non-routine inventory charges recorded during the three months ended July 1, 2023 as compared to the prior fiscal year period, lower freight costs, favorable geographic and channel mix, and higher pricing, partially offset by higher product costs and unfavorable foreign currency effects.

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Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues during the three months ended July 1, 2023 increased by 50 basis points to 55.5%, primarily driven by higher compensation-related expenses and rent and occupancy costs, partially offset by lower marketing and advertising expenses resulting from a shift in timing of certain marketing investments.

Net income increased by $8.7 million to $132.1 million during the three months ended July 1, 2023 as compared to the three months ended July 2, 2022, primarily due to a $17.2 million increase in non-operating income, net, partially offset by an $8.8 million decline in our operating income. Net income per diluted share increased by $0.23 to $1.96 per share during the three months ended July 1, 2023 driven by the higher level of net income and lower weighted-average diluted shares outstanding.

During the three-month periods ended July 1, 2023 and July 2, 2022, our operating results were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $33.7 million and $14.8 million, respectively, which had an after-tax effect of reducing net income by $25.9 million, or $0.38 per diluted share, and $11.2 million, or $0.15 per diluted share, respectively.

Financial Condition and Liquidity

We ended the first quarter of Fiscal 2024 in a net cash and short-term investments position (calculated as cash and cash equivalents, plus short-term investments, less total debt) of $541.3 million, as compared to $427.2 million as of the end of Fiscal 2023. The increase in our net cash and short-term investments position was primarily due to our operating cash flows of $270.7 million, partially offset by our use of cash to support Class A common stock repurchases of $56.8 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $49.2 million, and to invest in our business through $39.6 million in capital expenditures.

Net cash provided by operating activities was $270.7 million during the three months ended July 1, 2023, as compared to $45.3 million during the three months ended July 2, 2022. The net increase in cash provided by operating activities was due to a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period, partially offset by a decline in net income before non-cash charges.

Our equity increased to $2.441 billion as of July 1, 2023 compared to $2.431 billion as of April 1, 2023 due to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our share repurchase activity and dividends declared during the three months ended July 1, 2023.

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

The comparability of our operating results for the three-month periods ended July 1, 2023 and July 2, 2022 has been affected by certain events, including:

• pretax charges incurred in connection with our restructuring activities, as well as certain other benefits (charges), as summarized below (references to "Notes" are to the notes to the accompanying consolidated financial statements):

												Three Months Ended
																		July 1, 2023						July 2, 2022
																		(millions)
Restructuring and other charges, net (see Note 7)																		$	(35.6)					$	(5.6)
Non-routine inventory benefits (charges)(a)																		1.8						(11.6)
Non-routine bad debt expense reversals**(b)**																		0.1						2.4
Total charges																		$	(33.7)					$	(14.8)

**(a)**Non-routine inventory benefits (charges) are recorded within cost of goods sold in the consolidated statements of operations. The benefits recorded during the three months ended July 1, 2023 primarily related to reversals of amounts previously recognized in connection with the COVID-19 pandemic (approximately $1 million) and delays in U.S. customs shipment reviews and approvals (approximately $1 million). The charges recorded during the three months ended July 2, 2022 primarily related to the Russia-Ukraine war.

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**(b)**Non-routine bad debt expense reversals are recorded within SG&A expenses in the consolidated statements of operations. The reversals recorded during the three-month periods ended July 1, 2023 and July 2, 2022 primarily related to charges previously recognized in connection with the Russia-Ukraine war.

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 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.

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RESULTS OF OPERATIONS

Three Months Ended July 1, 2023 Compared to Three Months Ended July 2, 2022

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
						July 1, 2023						July 2, 2022						$ Change						% / bps Change
						(millions, except per share data)
Net revenues						$	1,496.5					$	1,490.6					$	5.9					0.4		%
Cost of goods sold						(464.5)						(489.2)						24.7						(5.1		%)
Gross profit						1,032.0						1,001.4						30.6						3.1		%
Gross profit as % of net revenues						69.0		%				67.2		%										180 bps
Selling, general, and administrative expenses						(830.0)						(820.6)						(9.4)						1.2		%
SG&A expenses as % of net revenues						55.5		%				55.0		%										50 bps
Restructuring and other charges, net						(35.6)						(5.6)						(30.0)						535.8		%
Operating income						166.4						175.2						(8.8)						(5.0		%)
Operating income as % of net revenues						11.1		%				11.8		%										(70 bps)
Interest expense						(10.0)						(11.8)						1.8						(15.2		%)
Interest income						15.7						3.6						12.1						337.2		%
Other expense, net						(1.5)						(4.8)						3.3						(67.6		%)
Income before income taxes						170.6						162.2						8.4						5.2		%
Income tax provision						(38.5)						(38.8)						0.3						(0.7		%)
Effective tax rate**(a)**						22.6		%				23.9		%										(130 bps)
Net income						$	132.1					$	123.4					$	8.7					7.0		%
Net income per common share:
Basic						$	2.01					$	1.76					$	0.25					14.2		%
Diluted						$	1.96					$	1.73					$	0.23					13.3		%

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

Net Revenues. Net revenues increased by $5.9 million, or 0.4%, to $1.496 billion during the three months ended July 1, 2023 as compared to the three months ended July 2, 2022, including unfavorable foreign currency effects of $11.8 million. On a constant currency basis, net revenues increased by $17.7 million, or 1.2%. Net revenue growth was driven by our international businesses, which more than offset declines in North America.

The following table summarizes the percentage change in our consolidated comparable store sales for the three months ended July 1, 2023 as compared to the prior fiscal year period:

						% Change
Digital commerce						(1		%)
Brick and mortar						2		%
Total comparable store sales						2		%

Our global average store count increased by 67 stores and concession shops during the three months ended July 1, 2023 compared with the three months ended July 2, 2022, driven by new openings primarily in Asia.

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						July 1, 2023						July 2, 2022
Freestanding Stores:
North America						237						238
Europe						104						97
Asia						219						191
Total freestanding stores						560						526
Concession Shops:
North America						1						1
Europe						27						29
Asia						693						678
Total concession shops						721						708
Total stores						1,281						1,234

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. 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
						July 1, 2023						July 2, 2022						As Reported									Constant Currency						As Reported						Constant Currency
						(millions)
Net Revenues:
North America						$	631.7					$	700.7					$	(69.0)					$	(1.6)					$	(67.4)					(9.8		%)				(9.6		%)
Europe						450.5						415.6						34.9						5.4						29.5						8.4		%				7.1		%
Asia						377.5						334.1						43.4						(15.6)						59.0						13.0		%				17.7		%
Other non-reportable segments						36.8						40.2						(3.4)						—						(3.4)						(8.5		%)				(8.5		%)
Total net revenues						$	1,496.5					$	1,490.6					$	5.9					$	(11.8)					$	17.7					0.4		%				1.2		%

North America net revenues — Net revenues decreased by $69.0 million, or 9.8%, during the three months ended July 1, 2023 as compared to the three months ended July 2, 2022. On a constant currency basis, net revenues decreased by $67.4 million, or 9.6%.

The $69.0 million decline in North America net revenues was driven by:

• a $42.2 million decrease related to our North America wholesale business largely driven by the return to a more normalized timing of shipments following last year's supply chain disruption; and

• a $26.8 million decrease related to our North America retail business. On a constant currency basis, net revenues decreased by $25.8 million, reflecting decreases of $23.5 million in comparable store sales and $2.3 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						(8		%)
Brick and mortar						(5		%)
Total comparable store sales						(6		%)

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Europe net revenues — Net revenues increased by $34.9 million, or 8.4%, during the three months ended July 1, 2023 as compared to the three months ended July 2, 2022. On a constant currency basis, net revenues increased by $29.5 million, or 7.1%.

The $34.9 million increase in Europe net revenues was driven by:

*•*a $24.1 million increase related to our Europe wholesale business largely driven by a shift in timing of certain shipments into the first quarter of Fiscal 2024, as well as favorable foreign currency effects of $2.7 million; and

*•*a $10.8 million increase related to our Europe retail business, inclusive of favorable foreign currency effects of $2.7 million. On a constant currency basis, net revenues increased by $8.1 million, reflecting increases of $5.1 million in comparable store sales and $3.0 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						8		%
Brick and mortar						1		%
Total comparable store sales						2		%

Asia net revenues — Net revenues increased by $43.4 million, or 13.0%, during the three months ended July 1, 2023 as compared to the three months ended July 2, 2022. On a constant currency basis, net revenues increased by $59.0 million, or 17.7%.

The $43.4 million increase in Asia net revenues was driven by:

*•*a $38.2 million increase related to our Asia retail business, inclusive of unfavorable foreign currency effects of $14.6 million. On a constant currency basis, net revenues increased by $52.8 million, reflecting increases of $34.2 million in comparable store sales and $18.6 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						11		%
Brick and mortar						14		%
Total comparable store sales						13		%

• a $5.2 million increase related to our Asia wholesale business, inclusive of unfavorable foreign currency effects of $1.0 million.

Gross Profit. Gross profit increased by $30.6 million, or 3.1%, to $1.032 billion for the three months ended July 1, 2023, including unfavorable foreign currency effects of $15.2 million. Gross profit as a percentage of net revenues increased to 69.0% for the three months ended July 1, 2023 from 67.2% for the three months ended July 2, 2022. The 180 basis point increase was primarily driven by lower non-routine inventory charges recorded during the three months ended July 1, 2023 as compared to the prior fiscal year period, lower freight costs, favorable geographic and channel mix, and higher pricing, partially offset by higher product costs and unfavorable foreign currency effects.

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 $9.4 million, or 1.2%, to $830.0 million for the three months ended July 1, 2023, including favorable foreign currency effects of $8.1 million. SG&A expenses as a percentage of net revenues increased to 55.5% for the three months ended July 1, 2023 from 55.0% for the three months ended July 2, 2022. The 50 basis point increase was largely driven by operating deleverage as SG&A expense growth outpaced revenue growth.

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The $9.4 million increase in SG&A expenses was driven by:

						Three Months Ended July 1, 2023 Compared to Three Months Ended July 2, 2022
						(millions)
SG&A expense category:
Compensation-related expenses						$	23.7
Rent and occupancy costs						8.0
Marketing and advertising expenses						(20.9)
Other						(1.4)
Total net increase in SG&A expenses						$	9.4

Restructuring and Other Charges, Net. During the three-month periods ended July 1, 2023 and July 2, 2022, we recorded net restructuring charges and benefits of $30.5 million and $0.7 million, respectively, primarily consisting of severance and benefits costs, as well as other charges of $5.1 million and $4.9 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 7 to the accompanying consolidated financial statements.

Operating Income. Operating income decreased by $8.8 million, or 5.0%, to $166.4 million for the three months ended July 1, 2023, reflecting unfavorable foreign currency effects of $7.1 million. Our operating results during the three-month periods ended July 1, 2023 and July 2, 2022 were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $33.7 million and $14.8 million, respectively. Operating income as a percentage of net revenues was 11.1% for the three months ended July 1, 2023, reflecting a 70 basis point decline from the prior fiscal year period. The decline in operating income as a percentage of net revenues was primarily driven by higher net restructuring-related charges and certain other charges (benefits) recorded during the three months ended July 1, 2023 as compared to the prior fiscal year period, as well as the increase in SG&A expenses as a percentage of net revenues, partially offset by the increase in our gross margin, all as previously discussed.

Operating income 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
			July 1, 2023												July 2, 2022
			Operating Income						Operating Margin						Operating Income						Operating Margin						$ Change						Margin Change
			(millions)												(millions)												(millions)
Segment:
North America						$	125.3					19.8%						$	132.8					19.0%						$	(7.5)					80 bps
Europe						97.2						21.6%						73.2						17.6%						24.0						400 bps
Asia						93.3						24.7%						78.7						23.5%						14.6						120 bps
Other non-reportable segments						33.8						91.9%						37.2						92.4%						(3.4)						(50 bps)
						349.6												321.9												27.7
Unallocated corporate expenses						(147.6)												(141.1)												(6.5)
Unallocated restructuring and other charges, net						(35.6)												(5.6)												(30.0)
Total operating income						$	166.4					11.1%						$	175.2					11.8%						$	(8.8)					(70 bps)

North America operating margin improved by 80 basis points, primarily due to the favorable impact of 140 basis points attributable to lower non-routine inventory charges recorded during the three months ended July 1, 2023 as compared to the prior fiscal year period. The overall improvement in operating margin was partly offset by the net unfavorable impact of approximately 60 basis points largely driven by an increase in SG&A expenses as a percentage of net revenues, partially offset by an increase in gross margin.

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Europe operating margin improved by 400 basis points, primarily due to the favorable impact of 420 basis points largely driven by a decline in SG&A expenses as a percentage of net revenues and an increase in gross margin. The overall improvement in operating margin also reflected the favorable impact of 20 basis points related to lower non-routine inventory charges and bad debt expense adjustments recorded during the three months ended July 1, 2023 as compared to the prior fiscal year period. These improvements in operating margin were partly offset by unfavorable foreign currency effects of 40 basis points.

Asia operating margin improved by 120 basis points, primarily due to the net favorable impact of approximately 190 basis points largely driven by a decline in SG&A expenses as a percentage of net revenues, partially offset by a decline in gross margin. This improvement in operating margin was partly offset by unfavorable foreign currency effects of 70 basis points.

Unallocated corporate expenses increased by $6.5 million to $147.6 million during the three months ended July 1, 2023. The increase in unallocated corporate expenses was due to higher compensation-related expenses of $13.0 million and lower intercompany sourcing commission income of $8.7 million (which is offset at the segment level and eliminates in consolidation), partially offset by lower consulting fees of $3.1 million, lower marketing and advertising expenses of $2.5 million, lower selling-related expenses of $2.4 million, and lower other expenses of $7.2 million.

Unallocated restructuring and other charges, net increased by $30.0 million to $35.6 million during the three months ended July 1, 2023, as previously discussed above and in Note 7 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 months ended July 1, 2023, we reported non-operating income, net of $4.2 million as compared to non-operating expense, net of $13.0 million during the three months ended July 2, 2022. The $17.2 million increase in non-operating income, net was driven by:

• a $12.1 million increase in interest income, primarily driven by higher interest rates in financial markets;

• a $3.3 million decline in other expense, net, primarily driven by lower net foreign currency losses during the three months ended July 1, 2023 as compared to the prior fiscal year period; and

• a $1.8 million decrease in interest expense, primarily driven by the lower average level of outstanding debt during the three months ended July 1, 2023 as compared to the prior fiscal year period resulting from our repayment of the 1.700% Senior Notes that matured on June 15, 2022 (see "Financial Condition and Liquidity — Cash Flows").

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.

The income tax provision and effective tax rate for the three months ended July 1, 2023 were $38.5 million and 22.6%, respectively, compared to $38.8 million and 23.9%, respectively, for the three months ended July 2, 2022. The $0.3 million decrease in our income tax provision was driven by a 130 basis point decline in our effective tax rate, partially offset by the increase in our pretax income. The decline in our effective tax rate was primarily due to the absence of unfavorable prior year adjustments related to certain deferred tax assets and receivables as well as an increase of the favorable tax impact of earnings generated in lower taxed foreign jurisdictions versus the U.S., partially offset by the absence of favorable audit-related adjustments taken in the prior year. See Note 8 to the accompanying consolidated financial statements.

Net Income. Net income increased to $132.1 million for the three months ended July 1, 2023, from $123.4 million for the three months ended July 2, 2022. The $8.7 million increase in net income was primarily due to an increase in non-operating income, net, partially offset by the decline in our operating income, both as previously discussed. Our operating results during the three-month periods ended July 1, 2023 and July 2, 2022 were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $33.7 million and $14.8 million, respectively, which had an after-tax effect of reducing net income by $25.9 million and $11.2 million, respectively.

Net Income per Diluted Share. Net income per diluted share increased to $1.96 for the three months ended July 1, 2023, from $1.73 for the three months ended July 2, 2022. The $0.23 per share increase was driven by the higher level of net income, as previously discussed, and lower weighted-average diluted shares outstanding during the three months ended July 1, 2023 driven by our share repurchases during the last twelve months. Net income per diluted share for the three-month periods ended July 1, 2023 and July 2, 2022 were also negatively impacted by $0.38 per share and $0.15 per share, respectively, attributable to net restructuring-related charges 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 July 1, 2023 and April 1, 2023:

						July 1, 2023						April 1, 2023						$ Change
						(millions)
Cash and cash equivalents						$	1,607.2					$	1,529.3					$	77.9
Short-term investments						73.1						36.4						36.7
Long-term debt**(a)**						(1,139.0)						(1,138.5)						(0.5)
Net cash and short-term investments						$	541.3					$	427.2					$	114.1
Equity						$	2,441.0					$	2,430.5					$	10.5

**(a)**See Note 9 to the accompanying consolidated financial statements for discussion of the carrying values of our debt.

The increase in our net cash and short-term investments position at July 1, 2023 as compared to April 1, 2023 was primarily due to our operating cash flows of $270.7 million, partially offset by our use of cash to support Class A common stock repurchases of $56.8 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to make dividend payments of $49.2 million, and to invest in our business through $39.6 million in capital expenditures.

The increase in our equity was attributable to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our share repurchase activity and dividends declared during the three months ended July 1, 2023.

Cash Flows

The following table details our cash flows for the three-month periods ended July 1, 2023 and July 2, 2022:

						Three Months Ended
						July 1, 2023						July 2, 2022						$ Change
						(millions)
Net cash provided by operating activities						$	270.7					$	45.3					$	225.4
Net cash provided by (used in) investing activities						(77.5)						365.6						(443.1)
Net cash used in financing activities						(112.0)						(788.6)						676.6
Effect of exchange rate changes on cash, cash equivalents, and restricted cash						(3.9)						(30.0)						26.1
Net increase (decrease) in cash, cash equivalents, and restricted cash						$	77.3					$	(407.7)					$	485.0

Net Cash Provided by Operating Activities. Net cash provided by operating activities was $270.7 million during the three months ended July 1, 2023, as compared to $45.3 million during the three months ended July 2, 2022. The $225.4 million net increase in cash provided by operating activities was due to a net favorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period, partially offset by a decline in net income before non-cash charges.

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

*•*a favorable change related to our inventories, largely driven by a more normalized receipt cadence;

• a favorable change related to our accounts receivable, largely driven by a decline in wholesale net revenues and timing of cash receipts;

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*•*a net favorable change in our accrued liabilities largely driven by the impact of a lower bonus achievement level realized during Fiscal 2023 as compared to Fiscal 2022, as well as a favorable change in our restructuring reserve due to an increase in restructuring charges recorded during the current fiscal year period as compared to the prior fiscal year period, partially offset by an unfavorable change in accounts payable driven by the timing of cash payments; and

• a favorable change related to our prepaid expenses and other current assets, largely driven by the timing of cash payments.

Net Cash Provided by (Used in) Investing Activities. Net cash used in investing activities was $77.5 million during the three months ended July 1, 2023, as compared to net cash provided by investing activities of $365.6 million during the three months ended July 2, 2022. The $443.1 million net increase in cash used in investing activities was primarily driven by:

• a $448.9 million decrease in proceeds from sales and maturities of investments, less purchases of investments. During the three months ended July 1, 2023, we made net investment purchases of $37.9 million, as compared to receiving net proceeds from sales and maturities of investments of $411.0 million during the three months ended July 2, 2022.

During the three months ended July 1, 2023, we spent $39.6 million on capital expenditures, which was up slightly versus the comparable prior fiscal year period. Over the course of Fiscal 2024, we expect to spend approximately $250 million to $275 million on capital expenditures primarily related to store opening and renovations, as well as enhancements to our information technology systems.

Net Cash Used in Financing Activities. Net cash used in financing activities was $112.0 million during the three months ended July 1, 2023, as compared to $788.6 million during the three months ended July 2, 2022. The $676.6 million net decrease in cash used in financing activities was primarily driven by:

• a $500.0 million decrease in cash used to repay debt. During the three months ended July 1, 2023, we did not issue or repay any debt. On a comparative basis, during the three months ended July 2, 2022, we repaid our previously outstanding $500.0 million principal amount of unsecured 1.700% senior notes that matured on June 15, 2022; and

• a $177.9 million decrease in cash used to repurchase shares of our Class A common stock. During the three months ended July 1, 2023, we used $50.0 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $6.8 million in shares of our Class A common stock were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards under our long-term stock incentive plans. On a comparative basis, during the three months ended July 2, 2022, we used $213.3 million to repurchase shares of our Class A common stock pursuant to our common stock repurchase program, and an additional $21.4 million in shares of our Class A common stock were surrendered or withheld for taxes.

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 three months ended July 1, 2023, we generated $270.7 million of net cash flows from our operations. As of July 1, 2023, we had $1.680 billion in cash, cash equivalents, and short-term investments, of which $820.7 million 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 generated on or before December 31, 2017 that were subject to the one-time mandatory transition tax in connection with U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA") 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 July 1, 2023:

						July 1, 2023
Description**(a)**						Total Availability						Borrowings Outstanding						Remaining Availability
						(millions)
Global Credit Facility and Commercial Paper Program**(b)**						$	750					$	12		(c)			$	738
Pan-Asia Credit Facilities						36						—						36
Pan-Asia Overdraft Facilities						48						—						48

**(a)**As defined in Note 9 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 $750 million.

**(c)**Represents outstanding letters of credit for which we were contingently liable under the Global Credit Facility as of July 1, 2023.

We believe that the Global Credit Facility is adequately diversified with no undue concentration in any one financial institution. In particular, as of July 1, 2023, there were seven 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 $1.500 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 Pan-Asia Overdraft Facilities (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 9 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, 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 9 to the accompanying consolidated financial statements and Note 11 of the Fiscal 2023 10-K for additional information relating to our credit facilities.

Supplier Finance Program

We support a voluntary supplier finance program which provides certain of our inventory suppliers the opportunity, at their sole discretion, to sell their receivables due from us (which are generally due within 90 days) to a participating financial institution in exchange for receipt of a discounted payment amount made earlier than the payment term stipulated between us and the supplier. Our vendor payment terms and amounts due are not impacted by a supplier's decision to participate in the program. We have not pledged any assets and do not provide guarantees under the supplier finance program. Our payment obligations outstanding under our supplier finance program were $212.3 million and $122.2 million as of July 1, 2023 and April 1, 2023, respectively, and were recorded within accounts payable in the consolidated balance sheets.

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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 that were due and repaid on June 15, 2022 with cash on hand, which bore 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").

The indenture and supplemental indentures governing the 3.750% 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 $750 million senior unsecured revolving line of credit through June 30, 2028, which may be used for working capital needs, capital expenditures, certain investments, general corporate purposes, and for funding of acquisitions, as well as 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 certain 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 $1.500 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 9 to the accompanying consolidated financial statements. As of July 1, 2023, 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 9 to the accompanying consolidated financial statements and Note 11 of the Fiscal 2023 10-K for additional information relating to our debt and covenant compliance.

Common Stock Repurchase Program

On February 2, 2022, our Board of Directors approved an expansion of our existing common stock repurchase program that allowed us to repurchase up to an additional $1.500 billion of our Class A common stock, excluding related excise taxes. As of July 1, 2023, the remaining availability under our Class A common stock repurchase program was approximately $1.125 billion. Repurchases of shares of our Class A common stock are subject to overall business and market conditions.

As discussed in Note 8 to the accompanying consolidated financial statements, the Inflation Reduction Act ("IRA") was signed into law by President Biden in August 2022. Among its various provisions, the IRA imposes a 1% excise tax on share repurchases made after December 31, 2022.

See Note 13 to the accompanying consolidated financial statements for additional information relating to our Class A common stock repurchase program.

Dividends

We have generally maintained a regular quarterly cash dividend program on our common stock since 2003.

On May 18, 2022, our Board of Directors approved an increase to the quarterly cash dividend on our common stock from $0.6875 to $0.75 per share.

We intend to continue to pay regular dividends on outstanding shares of our common stock. However, any decision to declare and pay dividends in the future will ultimately 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 13 to the accompanying consolidated financial statements for additional information relating to our quarterly cash dividend program.

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Material Cash Requirements

There have been no substantial changes to our material cash requirements as disclosed in our Fiscal 2023 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 2023 10-K for detailed disclosure of our material cash requirements as of April 1, 2023.

MARKET RISK MANAGEMENT

As discussed in Note 13 of the Fiscal 2023 10-K and Note 11 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 July 1, 2023. However, we do have in aggregate $37.1 million of derivative instruments in net asset positions held across four 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 11 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 July 1, 2023.

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.

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. These 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.

			48

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 July 1, 2023, we had cash and cash equivalents on-hand of $1.607 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 $73.1 million of short-term investments, consisting of investments in time deposits with original maturities greater than 90 days.

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 11 to the accompanying consolidated financial statements for further detail of the composition of our investment portfolio as of July 1, 2023.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 3 of the Fiscal 2023 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 2023 10-K.

There have been no significant changes in the application of our critical accounting policies since April 1, 2023.

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.