Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren Second 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. 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 Ralph Lauren's second quarter fiscal 2016 conference call. The agenda for this morning's call includes opening remarks from Stefan Larsson, the company's new Chief Executive Officer; an overview of the quarter, and an update on key strategic initiatives from Christ Peterson, President of Global Brands; followed by financial perspective on the second quarter as well as expectations for fiscal 2016 from Bob Madore, Chief Financial Officer. After the company's prepared remarks, we will open up 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 Stefan.

Thank you, Evren. Good morning, everyone. It's a true pleasure to be on the call this morning. I want to start by thanking Ralph and the board for the trust that they have put in me to become the CEO and work by Ralph's side to grow this great company into the future. I also want to take the opportunity and thank Chris and the whole Ralph Lauren team for the great work they have done in creating a very strong foundation to build on. This is a really, really great company. Ralph's dreams and vision about a better life, about style, about great quality, about specialness, story-telling, have built the brand into one of the most beloved brands in the world. It started with the idea about a different tie and it grew to become one of the most iconic brands in the world. This is my first week at the company. I have a lot to learn. The first week started with a board meeting and then an analyst call. I'm excited by that. I will spend my next few months in the role getting to know our teams, our customers, and our investors. For those of you who don't know me, I set the bar for performance really high. For 15 years, I was a part of the team that grew H&M from $3 billion to $17 billion. Most recently, I led Old Navy, where we drove three consecutive years of high performance and we added $1 billion in sales. Ralph and I share the same focus on striving for greatness. We never settle, and we love winning, and my job is to make sure we deliver on Ralph's creative vision and drive performance on the highest of levels, from both a brand, customer, and shareholder perspective. I joined because I believe in Ralph. I believe in his vision. I believe it's more relevant than any time before. I believe in the brands. I believe in the teams. And together with Ralph and the team, I look forward to continue to grow this unique company over many years to come. So with that, over to you Chris.

Thanks, Stefan and good morning, everyone. We are pleased to be reporting better-than-expected second quarter results this morning. On a constant currency basis, revenues were up 4%, and diluted earnings per share was up 13% versus a year ago, excluding one-time charges. Profits were significantly better than our expectations entering the quarter driven by stronger-than-expected operating margins. This was driven by both gross margin and SG&A improvement. On gross margins, we are beginning to benefit from the initial phases of the SKU and style rationalization, lower negotiated source income cost, increased full-price sell-throughs and mix benefits. SG&A was also significantly better than forecast due to earlier-than-expected cost savings from the global brand reorganization and disciplined expense management. We are pleased to see margin benefits from these initiatives already and expect to see topline benefits as well as the new global line planning process is implemented. Now let me provide an overview of the quarter. We continued to see the impact of currency movements on foreign tourist traffic around the world. The stronger U.S. dollar reduced foreign tourist traffic in the U.S., while the weaker euro and Japanese yen had the opposite effect in those markets. In Europe, our revenue was up double-digits in constant currency similar to the first quarter. Growth was driven by increased sales to both local customers and tourists. Wholesale demand was particularly strong, with robust sell-throughs that drove strong reorders. All brands across the portfolio performed well and by region, Northern and Central Europe performed the best. In Asia, second quarter revenue was up 7% in constant currency, with double-digit growth in Japan, China, Southeast Asia, and Australia. We are successfully elevating our brand in these markets through targeted merchandising strategies and marketing initiatives. Full-price selling is up year-over-year, driving better sales and margins. We are…

The first question comes from Omar Saad with Evercore ISI.

Thank you. Good morning. Nice quarter, guys. Stefan, I know it's your first week, so I'm not going to ask you any detailed questions on the company, but I would love to get your view kind of on the global apparel fashion landscape, how you see it evolving, especially given your experiences at H&M and Old Navy which are two very different brands than Ralph Lauren. And then kind of accordingly, how does that shape your view of what the biggest opportunities are at Ralph Lauren? Thanks.

Thank you, Omar. And I'll start with – I hear it as two questions, one being my view on the global landscape. So, I believe that independent of where you're in the market today, in fashion apparel, you have to be special, you have to be unique, you have to be exciting, you have to stand for something, you have to be consistent, you have to focus on quality, you have to focus on the experience, and you have to deliver something great. So that's very much what attracted me when I had that first dinner with Ralph. I realized that this is his vision. This is how he has built this great company and that's why I said in my opening remarks that I believe that vision is more relevant than ever before, given what I see happening out there. And coming to the biggest opportunity – that connects to me to the biggest opportunities, I believe that Ralph's vision that started with ties and a drawer at the Empire State building and has built into where we stand right now is just a beginning. I believe that there are really good days ahead of us.

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

Hey. Good morning, guys. Congrats on a great quarter in a tough environment. I guess just two questions. I apologize if they are a little wordy. So, I was a little surprised by the magnitude of the gross margin improvement from the SKU improvement you guys made this early, considering you told us the roll out of the global SKU program will really be only in place for one brand, Polo, I think, by fall of 2016. It sounds like you went through a smaller manual process today and it translated to a lot of improvement. Can you give us any quantitative metrics to help us think about how much you lowered SKUs by this quarter and how that may – what the magnitude of that is relative to what we're going to see next year in the fall as you roll it out? And then as a follow-up, you've had us focused on some investment buckets for the past few years. You've commented on e-commerce and SAP spend peaking this year. I think you'll have less intensity in flagship openings next year, so maybe the retail investment isn't quite as intense, but maybe if we start adding up those buckets up again, can you give us your early thoughts based on the components as you see them today for your ability to leverage margins in fiscal 2017? Thank you. Robert L. Madore - Chief Financial Officer & Senior Vice President: Sure. So, let me take the first part of that first. So, I think the results obviously came in significantly better than we expected this quarter when we gave guidance on the quarter and really about – we beat the operating margin expectation that we had by about 200 basis points. And if you look at that beat, about…

Thank you. Robert L. Madore - Chief Financial Officer & Senior Vice President: Next call.

The next question is from Bob Drbul with Nomura Securities.

Hi. Good morning. You mentioned that the inventory levels at retail and in department stores were elevated a bit. I guess, when you look at the forecast that you laid out for the rest of this fiscal year, can you just walk us through some of the markdown assumptions that you will see necessary and sort of how you're thinking about the markdown support to department stores versus your own retail operations?

Yeah. So, I think we feel very good about the currency of our inventory. So when we look at our inventory, the currency of our inventory is very well-positioned from a current season and future season basis versus a prior season inventory. The inventory growth that we've had in our inventory versus year ago is really to support new store activity and new product introductions like Polo Sport around the world. When we look at the U.S. department store channel, I think that's the place where we see a little bit of elevated inventory across the channel that is not just in our business, but broadly defined in many of the competitors. And I think it's a function of the foreign tourist traffic being down in the U.S. as well as the unseasonably warm start to the fall season. And so as we approach the holiday selling period, which is obviously the biggest selling period of the year for our industry, we felt like it was the right thing to take a prudent approach to that given where we're headed. We've got a long history of navigating through this in a very strong way, and we've got real expertise within the company to help us do this. And what we're trying to do is keep our inventory fresh and current, exit the season in a positive way as we transition to the next season, but do that in a way that protects the brand equity in the consumers' eyes. And so that's what we're going to be doing as we've done for many years.

Thank you. The next question comes from Kate McShane with Citigroup.

Hi. Thank you. Good morning.

Good morning.

Just on the outlook for the back half of the year, why don't you think some of your, excuse me, expense management and lower sourcing costs impacting the back half more? Are there any expenses that shifted out of this quarter into the next quarter, and is the caution on the back half of the year more from the cancelations or the potential for cancelations or more from anticipated markdowns at your wholesale partners?

Yeah. So, I think that – we haven't seen expense shifts that have gone from the second quarter to the third quarter. So, I think we're being prudent given the environment that we see as we head through the back half of the year. So, the guidance for the back half of the year is really more a function of that. We have not seen cancelation in orders. And in fact, if you look broadly across the business, it's really a mixed environment. In Europe, our reorder rate is stronger than it's ever been. And so we're seeing real strength in the wholesale channel in Europe, and we're chasing to catch up with the reorder rate there. In the U.S., I think we're being cautious given the environment that we're facing. We're wanting to manage the markdown allowances in a prudent manner that, as I mentioned on the previous question, positions us well as we exit the fall season and transition into the spring season.

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

Yes. Good morning. Thank you. Just a question on your Polo retail strategy, obviously it's one of your key growth pillars. The Men's business is obviously a very well-established business in wholesale and retail. Women's in Polo is a newer business, I presume, to attract a younger consumer. Can you share with us your learning so far and what, if any, repositioning you have to do from an assortment perspective, maybe from casual to dressier or how are you feeling about the Polo Women's business and is this still just an important growth initiative as it was positioned certainly over the last year? Thank you.

Yeah. No, you're exactly right. So, we feel very good about the Polo Men's business which is historically one of the strongest businesses in the company. The Polo Women's business, we launched I guess about a year ago and we've seen what I would say as good results to date. The business has been stronger internationally than it has in the U.S. as we've started off. In the international markets in Europe and in Asia, we largely replaced a Blue Label business that was discontinued and we took many of the locations that were Blue Label locations and converted them to Women's Polo locations. And that business, the Women's Polo business, has now not only surpassed the size of the Blue Label business, but at price points that are below where Blue Label was. So, the unit velocity of the Polo Women's business internationally is more than double the unit velocity rate of the Blue Label business. And we see significant expansion opportunities for distribution of Women's Polo around the world. In the U.S., where we didn't have a very well-developed Blue Label business, we launched Women's Polo in incremental spaces into the marketplace. I think we're off to a good start in that business. We see it as a critical element of the company's future growth strategy, and we're working to take learnings from the initial seasons and develop them into the line as part of the line planning process that we're kicking off for Women's Polo as we go forward. So, I think we're encouraged by the start that we've had, but there's more to do, and certainly a lot more opportunity ahead of us, because, as you know, the Women's fashion and apparel business is bigger than Men's. And with the strength of the Polo brand and the strength of Polo Men's, we continue to see a big opportunity in Polo Women's.

Thank you. The next question comes from Christian Buss with Credit Suisse. Christian Roland Buss - Credit Suisse Securities (USA) LLC (Broker): Yes, hello. I was wondering if you could talk a little bit about the line planning process and what kind of changes you're making there. If you could talk about sort of how far into the 2016 design season you are now, and where the real opportunities are for improvement of the design process and the cleaning up of the design process?

Sure. So as I mentioned a little bit in the prepared remarks, we started with a pilot of the line planning process on the Men's Polo line, which is our biggest line for fall of 2016, and we've now largely completed that pilot process. And it's interesting because the way that we did the pilot process is we started with a hindsighting approach of looking at prior seasons. We also then engaged all of the region and channel leaders around the world to bring in consumer input and feedback into develop – which we used to develop category and classification strategies and develop specific targets for price points, margins, SKUs by category and classification which then led to an architecture that we handed off to the design community. And I have to say the design community did an outstanding job of using that feedback and designing a line that is very compelling. So that line that was designed has now been shared back with the regions and the channel teams and the response from the region and channel teams has been terrific to the design community's progress in terms of product innovation. I'm not going to talk about all of the product innovation at this point because I don't want to give away too much of our secrets. But I referenced a couple of the items that you're going see as we move into the fall 2016 Men's Polo line. You are going to see us having lighter weight fabrics, a more wear-now sensibility. About half of the Polo distribution is in warm weather climate locations. And we felt like we had a big opportunity to design into that so that both for the early part of the fall season in the Northern climate stores, and the majority of the fall season in the warm climate stores we had product that was more compelling, more innovative and more attractive for those target locations. And I think we've delivered on that. And there's a series of themes like that that you're going to see as we go through that. So that's where we are really for the fall process on the line planning process. We're really kicking off the line planning process for the spring 2017 season for the majority of the balance of the brands and categories. And so, I expect that we'll see similar results for the spring 2017 season as we get through the process on the other brands.

Thank you. The next question comes from Rick Patel with Stephens.

Good morning. Nice quarter, and Stefan great to have you on the call. I have a question on e-commerce. So it seems like you did quite well globally, but if I recall correctly, there were some significant competitor promotions in the last quarter. I'm curious if they continued and perhaps limited the upside for this channel. And then secondly, just a question on e-commerce margins. Because it's managed by partners right now, but as you go live with your own websites in the coming years, what kind of margin uptick should we expect from bringing it in-house? Thank you.

Sure. So the global e-commerce revenue was up 10% in the second quarter, and this compared to the 2% increase we had in the first quarter. So we were encouraged by the acceleration of revenue growth in the e-commerce channel. I think that we continue to stay true to our promotional cadence, where as I mentioned on the last call, we decided to pull back a little bit in terms of the amount of business that we were doing on sale. But what we had this quarter were some omni-channel initiatives like buy online ship from store, hold online pick up in store, the new wait list functionality and product videos that drove higher average order value and the combination of those new omni-channel initiatives I think is what drove the return to stronger growth. And that was true both out internationally, but also true in the North America e-commerce business. Relative to the profitability, today we pay eBay Enterprise or the formerly GSI a percent of revenue for the service that they're providing on – that's a percent of e-commerce revenue. In addition to that, we're incurring charges associated with insourcing the platform. Once we convert off of the GSI platform to our insourced platform, that GSI fee will go to zero and so we're effectively double paying if you will today for both in-house and outsourced capability. We expect to convert off of the eBay, GSI platform over the next 12 months to 18 months. So I think you'll see us double paying for a 12-month to 18-month period and then you'll see us start to generate the benefit after that. The other point I would make is we expect the insourced capability and cost to be lower than the GSI fee that we're paying. So it's not just that we're getting more capability but we're getting more capability at a lower going cost structure.

Thank you. The next question comes from Lindsay Drucker Mann with Goldman Sachs. Lindsay Beth Drucker Mann - Goldman Sachs & Co.: Thanks. Good morning, everyone. I wanted to ask two quick ones. First, you've talked about price increases that you took – high single digit price increases that you took on products sold overseas, and I know that that product doesn't really hit the shelves until the spring season, but I was curious if you had any read. I know your customers have generally accepted the price increases. If there's any read that gives you more or less confidence that consumers will also accept them? And then, second, Chris, if you could just touch on, now that you're actually seeing some of the benefits from the work you've been doing over the last several quarters in improving efficiencies, line planning, SKU reduction and all that sort of stuff, whether you have sort of fresh perspective on what the margin recovery opportunity is for the business over the longer term as all of these things that you sound so encouraged by and all the long-term opportunity to improve efficiency really comes through? Thanks.

Sure. Let me start with the price increase question. So, I think, it's a little bit early to talk about the consumer reaction to the price increase, but I'll give you a little bit of what we're seeing, and it's encouraging, because we did see, and as you know, we took sort of mid- to high-single digit price increases in the – to respond to the currency devaluation in Europe, in Canada, in Japan and in Australia, which were the markets that were the most affected by devaluation. In Europe, which is the largest market that we've taken price increases in, we still haven't got the product on the floor in front of consumers, but we have gone through a wholesale market with the higher prices, and what we've seen from that market from wholesale orders is that the wholesale orders have been actually in line with our previous growth rate in terms of unit volume. And so the pricing has come on top of the unit volume, and so we're encouraged by that from a sell-in perspective where we're seeing that the pricing isn't a barrier to strong sell-in in the wholesale channel. We're also hearing that many of the competitors are taking pricing in the market as well. But we don't yet have the consumer read of what is the consumer reaction when that product shows up on the retail and wholesale floors. I expect that we'll get some early indication of that over the next three months or so. And then on the question on longer term margin, certainly we're very encouraged by the line planning work that we've done, the SKU reduction opportunity, the global brand reorganization from a cost savings, and from a efficiency of operation. I think, it's a little bit too soon to say what that means for longer term margins, but certainly we believe all of these things can contribute to a margin improvement story over the next three years to five years. And so we're very much shooting for an operating margin improvement story over that time period as many of these initiatives begin to take hold.

Thank you. The next question is from Matthew Boss with JPMorgan.

Hey. Congrats on a nice quarter. So as we think about the go forward constant currency revenues, aside from the mid-single digit square footage growth which should continue, what's the best way to think about steady state, North America and Europe wholesale growth versus retail comps, again, in more of a steady state environment if we ever see one?

Yeah. So, you know, I think that we would like to return to a steady state environment, but we're not counting on returning to a steady state environment. So, I think, we're trying to manage the business in a volatile period where we are seeing significant moves in tourist traffic around the world. I do think if you look at Europe and the U.S. combined from a wholesale perspective, I think our view is that that channel is going to grow at sort of a low single-digit rate. We continue to believe that we can grow market share in that channel by entering new product categories and innovating on our product lines, so we think we might be able to grow a couple of points faster than the channel as we gain market share which we've pretty consistently done over the last 5 years to 10 years. And then I think our direct-to-consumer strategy of e-commerce and retail expansion is likely to remain a disproportionate growth driver for us going forward.

Thank you. The next question comes from Jay Sole with Morgan Stanley. Jay Sole - Morgan Stanley & Co. LLC: Hi. Good morning. Stefan, I want to ask you just a little bit more about your answer you gave to the first question. At Old Navy, you talked a lot about how aspirational is becoming mass-pirational, in that the democratization of fashion was a big reason that Old Navy was becoming more successful. Can you talk about how the Ralph Lauren and Polo brands can navigate through that environment and how, you know, what your vision is to keep the brand special and continue to perform well?

Okay. Thanks, Jay. I'll start with saying that I have a lot to learn. And what I already know though is that there are things happening out there, bigger changes in the environment, than ever before over the last 50 years in fashion apparel. And one change that I see is that the customer wants something special, and it has to be unique and there has to be a story. And you hear a lot of brands speaking about story telling. And then you can look back at what Ralph and the team has done. It's been years before anybody else in telling real stories, inviting customers into movie, sharing a dream of a better life. So I believe that there is a real strength in that going forward as well. And then I have to come back to you when it comes to after I've learned more about the brands, the consumer, the market, and started to work with the team here on crafting and – out, refining the growth strategy that we already have.

Thank you. The final question comes from Dana Telsey with Telsey Advisory Group.

Good morning, everyone. Can you hear me okay?

Yeah.

Great. I just wanted to – speed is a competitive advantage that certainly both of you have addressed. And Chris, just want to know how far along do you feel the business is currently in your speed initiative? And Stefan, what competencies of speed in your former jobs do you think could be brought over to Ralph Lauren over time? And, Chris, how do you see this as a margin enhancer also? Thank you.

Yeah. So I'll start and then I'll let Stefan finish. I think that part of what we're doing by moving to the global brand structure is about speed of decision making and speed of execution in the market. Because when you have a centralized point of view by brand that, with all of the functional groups represented as part of the brand team, it allows us to move in a faster way. I will say that we're not yet there from a moving as fast as I think we could in some areas, and a lot of that's because we're just at the beginning of the global brand structure. The global brand teams have been in place now for only a couple of months, and so I think they're both getting up to speed on the business, implementing line plans for the first time, developing brand strategies, we're starting to get brand financial reporting up to enable those teams to really manage the business on a more real-time basis, and so I think we're making progress, but there's more work to do.

Yes, and to build on what Chris said, and hi, Dana. I believe speed is important, I've received questions throughout my career on speed. I believe it has to be grounded in an original idea. So when I look at what Ralph and the team have done to build the company to where it stands right now is based on an authentic idea. And so it's about being authentic and it's being – it's about being current at the same time. And that's part of the changes I see in the market, and that's part of why I'm very excited to be here, because Ralph has created something original, and – and being very authentic to that, and working with the team to being more and more and more authentic. But at the same time making sure that we are current. So it's finding those two components and that will deliver something that the consumer will be excited about, and that will drive growth over time.

Okay. Thank you very much for joining this morning, and we will look forward to following up with you for additional questions, as always, as appropriate. Thank you very much.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.