Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren First Quarter Fiscal Year 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions on how to ask a question will be given at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mrs. Evren Kopelman. Please go ahead.

Good morning and thank you for joining us on Ralph Lauren's First Quarter Fiscal 2016 Conference Call. The agenda for this morning's call includes an overview of the quarter and an update on our broader strategic initiatives from Jacki Nemerov, our President and COO; followed by financial perspective on the first quarter from Bob Madore, our CFO; and concluding with commentary on our organizational restructure as well as our expectations for fiscal 2016 from Chris Peterson, our President of Global Brands. After the company's prepared remarks, we will open the call for your questions, which we ask that you limit to one per caller. During today's call, we will be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Forward-looking statements are not guarantees and our actual results may differ materially from those expressed or implied in the forward-looking statements. Our expectations contain many risks and uncertainties. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. And now I'd like to turn the call over to Jacki. Jackwyn L. Nemerov - President, Chief Operating Officer & Director: Thank you, Evren, and good morning, everyone. In the first quarter of our new fiscal year, we delivered revenues in line with our guidance and profits that were better than our expectations. This was driven by the company's attention to careful, disciplined operational and expense management. We are pleased with these results in the context of the environment in which we operate and we are on track to deliver our plan for the fiscal year. We see the year developing as one of steady quarter-by-quarter improvement. Looking at the first half, we are negatively impacted by the Easter calendar, significant foreign exchange…

Thanks, Bob, and good morning, everyone. I'm excited to share an update on our transition to the new global brand management organization structure we spoke about on our last call, as we have made significant progress. In the last 90 days, we established six global brand groups, and I'm pleased to report that we have filled all of the global brand president roles. These presidents reflect an equal balance of Ralph Lauren veterans with significant experience inside our organization, and outside talent with critical category expertise. In addition to the six brand presidents, we have also begun to identify the design, merchandising, marketing and finance leads for their respective teams and are pleased with the way these groups are forming. A key element of our new operating model is the introduction of a global line planning process. This is the end-to-end process by which we design, merchandise and plan our assortments. We have kicked it off in our Polo Men's business as a pilot for the fall 2016 season. We will use learnings from this pilot to inform its roll-out across the other brands in spring 2017 and beyond. We expect this new process to improve brand equity and revenue growth by creating better assortments and more consistent brand messaging, and drive operating efficiencies at the same time. The new organization structure and its accompanying processes will lead to a significant reduction in SKUs as well as sample and design costs, which will lead to better inventory turns, higher gross margins and meaningful SG&A cost savings. We expect to see the benefits from the global line planning process in the next 18 months to 24 months as it rolls out across the portfolio. We also implemented the head count reduction that we spoke about on our last call. These were…

The first question comes from Omar Saad with Evercore ISI.

Morning. Thanks for the update. I wanted to ask my questions around the retail business. The minus 2% comp, sounds like North America is the key driver there. Do you have a sense for what the comp might have looked like if you had chosen to go down the promotional path? And then what are your expectations for the environment? Do you expect the promotionality across retail to moderate and comp store sales trends to resume to more of a positive level? And also an update on the Polo store specifically would be great. Thanks.

Sure. So let me start with the comp trends. It was really a mixed environment that we were operating in around the world with a lot of different factors. So I would start by saying that about 20% of our sales are driven by foreign tourists globally in our retail stores. And you correctly mention that if you look at the international business, our retail comps were positive. So we were up internationally in our retail comps, both in Europe and in Asia. Part of that was driven by strong acceptance of the product. Part of that was driven by increased traffic flows from foreign tourists, particularly in Japan and Europe. In the U.S., the business was under a little bit more pressure, and that was largely driven by the foreign tourist trend. And so I think that's been one of the biggest drivers, as we spoke about previously. With regard to the e-commerce impact, it was a little bit of a different dynamic. So in the e-commerce comps, we saw strong double-digit growth in e-commerce comps in the international business where we continued to operate in a somewhat less promotional environment. In the U.S., as we saw the promotional environment escalating, we chose to stay focused on driving full-price sell-through and increasing the brand equity. And so we chose not to go down the promotional game. And we saw, as a result of that, that our average unit retails were up versus year ago. Our average transaction size was up versus year ago, but we did see a slowdown in the revenue growth as a result. And that's really what held back the overall e-commerce comp growth in the quarter, but we think it was the right move from a long-term perspective in terms of protecting the brand equity. The Polo Fifth Avenue store, I think we continue to be very encouraged about the Polo Fifth Avenue store in terms of the job that it's doing of showcasing the brand aesthetic and brand sensibility. We're continuing to learn in that store based on the consumer response. And we're continuing to adjust the product assortment to not only showcase the direction that the brand is moving with new product, but also getting the product assortments right for that consumer that's walking into the store. So I think we continue to feel very good about where we are with that store. Thank you.

Thank you. The next question comes from Michael Binetti with UBS.

Hey, guys. Good morning. Thanks for a great update. Chris, since you like multipart questions, I want to ask you one here. I know it's been a topic of intense discussion, but fiscal 2017, as we look to our longer-term models particularly on the margins, you guys have a lot of projects going on with varying durations. And as we look at next year, you guys have been commenting with us all intra-quarter on a lot of these things, maybe just an update on a few of the buckets? I think you said e-commerce and SAP are going to peak out in dollar terms this year, maybe not decline next year, but no longer inflationary. There's the restructuring savings, if you could comment on how much of that you think would flow through to margins? Because if all of it did, that would be obviously very impactful to earnings. So want to maybe help us context that. And then currency, I know most competitors now are starting to talk about the lagging impacts of hedges rolling off next year. Maybe you could just help us contextualize that as we look at next year, will FX be a bigger or smaller impact to the margins versus this year? Thanks.

Yeah, sure. So I think you've got the three big elements that you mentioned in the question, but maybe I'll start with FX. So for FX, I think we said on the last call that we expected FX to be a hurt of about $185 million to operating income this year, which effectively accounts for most, if not all, of the margin decline in operating margin this year. If you look at that FX impact this year, about half of that is translational and half of that is transactional. The translational impact of currency rates stay where they are today, we would not have continuing into next fiscal year because we would have fully anniversaried it by the time we get to next fiscal year. We do expect, if FX rates stay where they are today, that we will have a lagging transactional hurt from FX that goes into next year, but we expect the magnitude of that transactional hurt to be slightly smaller than the transactional hurt that we're experiencing this year because of the timing of when our hedges roll off. On the infrastructure investments piece of that, I expect that the e-commerce re-platforming investment is likely to ramp up next year versus this year as we get closer to implementation. And so we're expecting to be spending more money on the e-commerce re-platforming project next year. But on the SAP project, we expect that investment to ramp down year-over-year. And so when you look at the infrastructure investments in total, it's too soon to say exactly how we net out, but probably we'll be in a similar place in fiscal 2017 in total when you look at the two projects together as where we are this year. And then, let's see, the third part of the question was on restructuring. And on restructuring savings, I think we've said that we expect to have a portion of the savings this year and a much more significant portion of the savings next year. So I do expect the restructuring savings to be a help to operating margin next year in a meaningful way. But obviously, how that nets out against the currency impact, I think it's still premature for us to say.

Thank you. The next question's from Kate McShane with Citi Research.

Thank you. Good morning. I wondered if you could be a little bit more specific about some of the promotional pressure that you saw during the quarter, how that differed quarter-over-quarter, what categories were more promotional than other categories, and finally how it differed between your wholesale partners and your own retail stores. Thank you.

Yeah. So I guess I'd characterize it by we didn't really see a change in promotional pressure in the international business. So what we're talking about here is really the U.S. business and the U.S. retail and wholesale environment. And I think as Jacki mentioned in the prepared remarks, what we saw was with the West Coast port slowdown, with the unseasonably cold winter, there was an overhang generally of product in the industry that resulted in a desire to clear some of that inventory across the industry. And that led to a number of our wholesale partners as well as a number of our branded competitors going deeper and more frequent in their promotional cadence than what they had done a year ago. And so I think we felt good about the way that we navigated through that because we tried to navigate through that in a way that both protected our brand equity and dealt with the market realities from a competitive environment. And I think we've got a strong track record of being able to navigate through those types of short-term issues both protecting the brand and dealing with the market realities that we're facing. Jackwyn L. Nemerov - President, Chief Operating Officer & Director: And we saw it broadly across pretty much every product category. In the men's business, the women's business and the children's business as well the home business. So it seemed to have affected all businesses in a very similar way. None of our businesses stood out in any specific way.

The one other comment I would make on that is we also saw that the foreign tourist decline to the U.S. also I think was a contributing factor that affected the whole industry in terms of inventory levels and promotional environment.

Thank you. The next question comes from David Glick with Buckingham Research Group.

Thank you very much. Two questions, one, Jacki, if you can give us an update, obviously accessories is a big growth initiative for the company, that category seems to be getting more challenging, and the progress you're making toward growth in that business. And then secondly, if you look across your U.S. wholesale business, historically you guys have talked about here a low to mid-single digit growth. And I'm just wondering given the more challenging season that we just went through, whether you can still expect that kind of bookings and growth as we head through and into next year. Thank you. Jackwyn L. Nemerov - President, Chief Operating Officer & Director: Yes. Well, our accessory category continues to grow faster than our overall company average. So we're really seeing very good momentum, both for our Ralph Lauren brand and our Lauren and Polo brands. And we've grown our accessory business at a 20% CAGR since 2008, and that really, today, represents a high-single-digit percentage of our total sales. We're seeing strength in both handbags and footwear, and our international full-price sell-throughs have been extremely strong, both in men's, women's and across footwear and accessories. So we're seeing great traction in the world of Ricky. We have double-digit sales growth this year in that category. So we're really continuing to fuel that opportunity and we're expanding that line through new colors, silhouettes and materials. With the introduction of the Ricky Drawstring, we've had great success with that and are expanding that as well. In the U.S. wholesale business, I think the low to mid-single is something that we are comfortable with, and we continue to perform at or better than the customer. So I think that particularly with some of our new introductions in our Polo Sport opportunity that we're just in the beginning stages of this month, the continuation of Polo Women's, so I think we've got a lot of opportunity ahead of us in terms of some of these new introductions. The Denim & Supply business has been extremely strong. Denim, as a foundation of that business, has continued to grow and strengthen and we are feeling that in the undercurrents of that business and we play strongly in that category across Polo, across our women's business, in Polo Women's in particular, our Lauren brand, and so that category and Polo Men's as well. So I think that category we see as an increasing strong part of our opportunity going forward as well.

Thank you. The next question comes from Christian Buss with Credit Suisse. Christian, your line is open. Please go ahead with your question. Christian Roland Buss - Credit Suisse Securities (USA) LLC (Broker): Yes. Hello. I was wondering if you could talk a little bit about inventory levels in the channel and your comfort with your own inventory levels.

Sure, yeah. We saw our inventory was up about 8% at the end of the quarter, and we feel very comfortable with the inventory levels in the content of that inventory. If you look at the inventory at the end of the quarter and what drove the increase, it really was impacted by the timing of receipt plans as well as getting ready for the launch of Polo Sport, the expansion of Polo Women's and the opening of new stores. So when we look at the underlying factors that we're getting ready for going forward, we feel very confident and comfortable with the inventory content and level.

Thank you. The next question is from Lindsay Drucker Mann with Goldman Sachs. Lindsay B. Drucker Mann - Goldman Sachs & Co.: Thanks. Good morning, everyone. I just wanted to follow up on two things. Number one, Jacki, you commented that you saw business pick up at the beginning of the quarter. I was hoping you could just put a little more color around channel, region or where you saw some of the strengthening. And then second, if you could just go through in a bit more detail the drivers of your EBIT margin outlook, what are the kind of bucket, the key drivers of compression or where you're seeing any offset for your Q2 outlook? Thanks. Jackwyn L. Nemerov - President, Chief Operating Officer & Director: I think that from our perspective, we saw a strengthening in our e-commerce business. We saw a strengthening in our overall retail business. And while the first month of our quarter tends to be more promotional, because that's just the nature of the July timing, we started to also see a strengthening of the full-price business. As we continue to sell down whatever sale we had left at this point, we also saw a nice uptick in our full-price business across the board. So I think, pretty much across all of our segments, we saw a nice increase.

And if you look at the EBIT margin or the operating margin compression in the second quarter, I think it's really driven by the way that the fiscal year lays out. So in the second quarter, we're still impacted in a significant way by foreign exchange and we're impacted by the investments in the infrastructure investment, the e-commerce and the SAP investments. But we don't yet have the benefit, which we expect to start getting in the back half of the year, of the pricing actions that we've taken to offset the foreign exchange; the cost reductions that we've negotiated with our manufacturing and sourcing partners, which flow more directly into the back half of the year; the beginning of the restructuring savings, which we expect to flow more in the back half of the year; as well as the benefit of new store openings, which we expect to be more pronounced in the back half of the year. We also expect the foreign exchange impact to be smaller in the fourth quarter. And so I think the second quarter is still bearing the brunt of all of the foreign exchange and the infrastructure investments without the benefit of the actions that we've taken to offset that, which we expect to flow more into Q3 and Q4.

Thank you. The next question comes from Paul Swinand with Morningstar.

Hi. Good morning, and thanks for taking the questions. I just wanted to ask, some of our investors have said with all this restructuring, is there any chance that there could be damage to the brand in the long run and is there any way you can give us some color or assurance that – I mean I think it could actually be positive for the brand, but could you explain that, maybe?

Sure. I think we believe that this is going to be very positive for the brands as we move into the new structure, because effectively what we're doing is we're going to be focused in creating organizations that are single-mindedly focused by brand at driving the brand equity and brand consistency around the world. So one of the reasons that we've moved into this model was that, as we looked at our previous operating model, as we started to take back licenses from the different geographies and license partners around the world, what we found was that we had different merchandise assortments around the world in like locations. We had a fragmented set of marketing campaigns because of that disparate assortments around the world. And we think, by moving to this global brand structure with the global line planning process, we're going to be able to drive a more consistent look and feel of the brand, more consistent marketing campaigns. And that's going to drive an improvement in brand equity, which we think will allow us to showcase more clearly the design vision of the brand in all of the locations that consumers interact with our products around the world.

Thank you. The next question's from Matthew Boss with JPMorgan.

Hey, good morning. So from a margin perspective, the retail operating margins have been negative, say, the past six quarters straight. As we move forward, and if you try to parse out foreign exchange, I guess I'm trying to dig in, what kind of retail comp do you think you need to see the fixed cost deleverage either stabilize or actually turn to leverage in the model? And then separately, excluding the Easter receipt shift, would operating margins at wholesale have actually been up this quarter?

So let me take the second piece first. So the Easter shift accounted for about $50 million or so of revenue shift between Q4 and Q1. So if you looked at the wholesale business between Q4 of last year and Q1 of this year, if you put those two together, the wholesale business globally would have been up 2% in constant currency. And if you look at the wholesale business just in Q1 without the Easter shift, the wholesale business would have been up marginally even in the first quarter on a standalone basis without that Easter shift impact. The Easter shift really accounted for all of the margin compression, effectively, in the wholesale business. So we don't think that there is an underlying trend issue with regard to margin compression in wholesale that we're seeing. If you look back to the first part of your question, which is around the retail comp trend, I think the margin compression that we're seeing this year is really a function of foreign exchange more than a function of retail comps. And so I don't think we've got an issue that we're relying on significant retail comp growth in order to drive operating leverage going forward. I think we believe we can drive operating leverage going forward even in a environment of relatively muted retail comp growth. That being said, we're shooting to try to improve our retail comp figures going forward and we think that the global brand structure is going to play a key role in that process.

Thank you. The final question comes from Jay Sole with Morgan Stanley. Jay Sole - Morgan Stanley & Co. LLC: Thanks. Good morning. I've got two questions. The first, the press release mentioned in the last 90 days the company established six global brand groups and filled a lot of roles. What's the next step? Can you set up a roadmap for us for what to look for over the next 90 days? And then the other question is on Polo Women's. Polo shirts, khakis, underwear are such staples in the Polo Men's business. Can those categories also be staples in women's Polo? And if not, what's really going to drive Polo Women's from a product perspective?

Sure. So I'll take the brand part of the question. So over the next 90 days, what we're expecting with the global brand groups is to get the balance of the teams formed. We've made good progress. As I mentioned, we've filled all the president roles. We've made good progress on many of the key leadership positions in those, but we still have work to do to finalize the entirety of those brand structures. We also are beginning a strategy process in each of the global brand groups to look at what the global strategy is for that and we expect to make progress on that in the next 90 days. We won't be complete on that, but we're going to make significant process. The other key piece, which I spoke about in the prepared remarks, is the global line planning process, which we expect to have kicked off, at least initiated, in almost all of the brand groups over the course of the next 90 days. We're starting with men's Polo for the fall 2016 season. We kicked off that pilot in May. And so that group got a head start, which we have learned a significant amount from, and I think we're very encouraged by what we're seeing from that line planning process approach. And I think we'll begin to kick off in many of the other brands for the spring 2017 season and those kick-offs of that process will happen in the next 90 days. Jackwyn L. Nemerov - President, Chief Operating Officer & Director: On the women's Polo business, you're absolutely right, but what's so interesting about the women's business is that we're finding key core categories in Polo Women's that are as meaningful as those categories in Polo Men's. Starting off with items like our cable cashmere sweater, in the spring season we do a cotton version, those categories have performed extremely well. We have a great Polo shirt business that is consistent and strong in women's. We do, similar to men's, an expanded woven shirt business that we are really known for and that crisp shirt, whether it is the white shirt or multiple stripes and checks and so forth, also are as valuable in women's to us as they are in men's. And then, of course, we have key bottoms, if not the chino pant. But for us, the DNA is around our jogger (49:59), which continues to perform extremely well, as well as well as our cargo pant, another key thing that we are known for that have been extremely important and powerful as key bottoms statement. So while the women's business is driven certainly by fashion, we're able to augment that with these key strategies. Our signature blazer also is part of that core strategy. So in women's, it's more of a balance, but we have multiple staples that travel through our Polo Women's business that are important to us.

Okay. Thank you very much for dialing in today. I think we're very pleased with the start that we've had to the fiscal year in the first quarter. We're maintaining our outlook for the year and we're excited about the progress that we're making on the global brand management reorganization. As always, Evren, Bob and myself will be available for follow-up calls, and Jacki as needed. Thanks again.