Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren Second Quarter Fiscal Year 2022 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 over the conference to our host, Ms. Corinna Van der Ghinst. Please go ahead.

Good morning. And thank you for joining Ralph Lauren's Second Quarter Fiscal 2022 conference call. With me today are Patrice Louvet, the Company's President and Chief Executive Officer, and Jane Nielsen, Chief Operating Officer and Chief Financial Officer. After 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. Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results, you should refer to this morning's earnings release and to our SEC filings that can be found on our Investor Relations website. And now I will turn the call over to Patrice.

Thank you, Corrie. Good morning, everyone. And thank you for joining today's call. We are delivering strong progress on our fiscal '22 plan with second quarter performance exceeding our expectations across all key financial and consumer engagement metrics. Our brand elevation strategy, which cuts across our product, marketing, and distribution channels, is resonating with consumers in every region. We're driving these results despite greater-than-expected disruptions in the global supply chain and extended COVID restrictions in key markets like Japan. While we continue to face a volatile environment, the work we have done to build a resilient supply chain over the last several years, along with our significant AUR elevation, will continue to be competitive advantages as we navigate emerging challenges and mitigate risks. To give you some context and color, our supply chain is intentionally diversified across multiple markets, a key initiative we started over four years ago. This allows us to quickly shift production when certain markets are affected by COVID or other issues. We've created a strategic supplier program, whereby we prioritize our partners with a presence across multiple markets, ensuring that the maintenance of these shifts happens even more seamlessly. We have proven pricing power, elevating our AUR across every channel and geography over the last 4.5 years, giving us room to absorb near-term pressures we've seen in our business such as tariffs and current inflationary headwinds. This built-in agility gives us confidence as we continue to navigate a volatile global operating environment ahead, but I want to be clear that this is not just about our ability to play defense. Even as macro challenges arise or subside, Ralph Lauren is firmly driving to position the Company for long-term sustainable growth. We are leveraging our strong momentum to further accelerate investments across brand-building, personalization, new customer recruiting, digital, and key markets and categories in the months ahead. Reflecting on the last quarter, a few key highlights: our overall recovery is outpacing our expectations, led by out-performance in Europe and North America, with Asia in line with our plan, and positive to fiscal 2020 despite extended COVID measures, as our product assortments resonated strongly with consumers globally. Our digital momentum continues, following our reset work across product, pricing, and promotions last year. In our digital operating margins continued to be strongly accretive to our overall Company margin rate. Moreover, our elevation strategy is translating across all channels, including positive trends in wholesale across regions. On top of all this, we made further progress toward our long-term target of mid-teens operating margins, with second quarter margins of 17% representing the highest Q2 rate since Fiscal 13, achieved even as we continue to reinvest for future growth and plan to increase returns to shareholders over the next several quarters. Our performance demonstrates our team's strong execution against the five strategic pillars that we outlined at the start of our Next Great Chapter plan. Let me share a few highlights from the quarter across each one. First, our efforts to win over a new generation. We continued to invest in our brand-building initiatives to drive new customer acquisition and retention to fuel long-term growth. In the second quarter, we further strengthened our brand consideration, purchase intent, and net promoter scores globally while Ralph Lauren brand sentiment also improved across every region. Some of our key campaigns underpinning these results included the continuation of our summer sports program, with the U.S. Open Tennis Championships here in New York, and Team USA's victory at the 2021 Ryder Cup in golf. These came on the heels of our sponsorship of the U.S. Olympic team in Tokyo earlier in the quarter. Together, these campaigns generated over 71 billion media impressions in the second quarter as we continue to inspire new generations of athletes and dreamers. In September, we celebrated the return of fashion's biggest night, the Met Gala, and what better opportunity to showcase this year's theme of American fashion than with one of the most iconic American brands, Ralph Lauren. Celebrities and influencers from Jennifer Lopez and Ben Affleck to Chance the Rapper and Lily Aldridge were featured in our designs, driving strong engagement and traffic to our channels. Ralph's design of Lily Collins' wedding dress, some of you may know her as Emily in Paris, garnered worldwide media attention. We were excited to announce a new collaboration this quarter with Zepeto, a metaverse or virtual world where users' avatars can socialize and create content. This partnership represents the latest frontier in digital engagement where users can purchase exclusive digital Ralph Lauren apparel for their 3D avatars for the first time ever. Early engagement has outpaced our expectations, with 100,000 items already sold in just a few weeks. In total, we added 1.4 million new consumers to our direct-to-consumer channels alone this quarter, a 19% increase compared to last year. Our total social media followers continue to grow, reaching 46.9 million globally, led by Instagram. Moving to our second key initiative, energize core products and accelerate high potential underdeveloped categories. Ralph and our design teams continue to inspire consumers around the world as they begin to incorporate sophisticated, casual styles back into their closets while still seeking elevated comfort with categories like loungewear. We are uniquely positioned to capture this evolving hybrid way of dressing, given the breadth of our portfolio. We're also making strong progress on our high potential categories like outerwear and denim. During the second quarter, we drove our core sportswear categories along with seasonal styles such as transitional sweaters and fleece as we headed into early fall selling. On the men's side, we saw strength across bottoms, including denim, active styles, and shorts, as well as sweaters and performance suits. Though a small part of our business prior to COVID, tailored clothing and dress shirts continued to show sequential improvement. In women's, we drove outsized performance in sweaters, sweatshirts, mid-layer knits, and bottoms. Outerwear, including transitional quilted jackets, updated blazers, and denim jackets also grew double-digits compared to last year. This should bode well for the key outerwear selling period during the upcoming holiday. We also launched our new Ralph's Club fragrance globally with a digital-first campaign featuring Lucas Haba and Gigi Hadid. This marked our first major fragrance launch in China, and in its first month, it ranked among the top three men's fragrances in key markets around the globe, including the U.S. More than 75% of purchases on ralphlauren.com were made by consumers who were new to the brand. This takes me to our third key initiative: drive targeted expansion in our regions and channels. We continued the build-out of our brand, elevating key city ecosystems around the world in the second quarter, with 35 new stores in concessions opening in top cities globally and 13 locations closed. The majority of these store openings were in Asia, particularly in the Chinese Mainland, which continues to represent a significant long-term growth opportunity for our brand. Despite COVID-related shutdowns in July and August, our mainland sales were still up more than 25% compared to last year and more than 70% year-on-year in constant currency. Comp trends rebounded quickly in September once restrictions were lifted. We opened our second emblematic store experience in China at Shanghai's Kerry Center this quarter, following our first opening in Beijing this spring. The emblematic concept provides an example of how we are transforming the retail experience with digital integration throughout, exciting in-store activations, and hospitality features like Ralph's coffee that are fueling new consumer acquisition. Early performance is well ahead of our expectations, and these stores are also lifting overall growth trends in their respective omnichannel ecosystems. Moving to our priority of leading with digital. Our global digital ecosystem, including our directly operated sites, department store.com, pure players, and social commerce, grew approximately 45% in the quarter in constant currency, and 50% compared to last year. Our digital momentum continues even as traffic returns to physical stores, driving a benefit to our overall operating margin mix. This is the result of our continued digital investments focused on content creation, data analytics, and AI to serve our consumers through an elevated, connected retail experience. Now, touching on our work to operate with discipline to fuel growth, as I mentioned, our teams continue to operate with agility and focus to mitigate supply chain headwinds, delivering better-than-expected gross and operating margins in the second quarter. At the same time, we continued to drive expense discipline as we accelerate both near-term and multiyear investments in the back half of the year to fuel long-term growth. Lastly, on our brand portfolio, we successfully transitioned Chaps from our North America wholesale business to a licensed model in the second quarter, as previously announced. This completes our exit from moderate-priced U.S. department stores, enabling our teams to focus on our core namesake brands and elevated positioning in the marketplace. I also want to take a moment to highlight our ongoing work to integrate citizenship and sustainability into everything we do. We recently announced the launch of the U.S. Regenerative Cotton Fund in partnership with the Soil Health Institute. Funded by the Ralph Lauren corporate foundation, this program works directly with farmers to transition 1 million acres of American cotton crop land to regenerative production. In all, it is set to eliminate 1 million metric tons of carbon dioxide equivalent from the atmosphere by 2026, both increasing sustainable cotton supply and making important progress in the urgent call to action on climate. We are proud to share today that this program is being recognized at the COP26 International Meeting on climate as an innovation partner by the Agriculture Innovation Mission for Climate. Additionally, this quarter, we joined the Global Fashion Agenda strategic partner group to prioritize sustainability in fashion, as well as the Ellen MacArthur Foundation as a partner in its mission to create a circular economy for our apparel. We were also honored to be recognized as one of the 2021 Best Places to Work for people with disabilities by the Disability Equality Index, and as one of the world's best employers of 2021 by Forbes. In closing, Ralph and I are strongly encouraged by the Company's progress through the first half of the fiscal year. All channels and geographies are showing strong momentum as we build on the healthier foundation we set over the past 18 months. Our performance, along with the resilience of our supply chain and pricing power in the market, gives us confidence as we accelerate our investments in the back half to support long-term growth. So, with that, I'll turn it over to Jane to discuss our financial results, and I'll join her at the end to answer your questions.

Thank you, Patrice. And good morning, everyone. Our second quarter results outperformed our expectations with progress across each of our key strategic initiatives, even amid continued COVID and supply chain headwinds around the world. Performance this quarter was driven by strong top-line growth led by our full-price wholesale channels globally, and broad-based outperformance in Europe. Continued digital momentum across owned and third-party channels, further gross margin expansion on top of last year's COVID mix benefits, with double-digit AUR growth and elevated product mix more than offsetting higher freight. Second quarter revenues increased 26% compared to last year with positive growth in every region, led by Europe and North America. Compared to second quarter fiscal 2020, revenues declined 12%. However, this included approximately 8 points of negative impact from last year's strategic reset of our distribution and our Chaps business, which moved to a licensed model. Total digital ecosystem sales grew approximately 45% in constant currency to last year and 50% compared to fiscal 2020, including 35% growth in our own digital business. Momentum continued across every region reflecting our strong assortments, expanded connected retail capabilities, and high-impact marketing. Digital margins were also strongly accretive to our second quarter profitability, consistent with last year and about 1,300 basis points higher than fiscal 2020. Total Company adjusted gross margin was 67.3% in the second quarter, up 80 basis points compared to last year on a reported basis and 50 basis points in constant currency. Despite increased freight headwinds of approximately 150 basis points, gross margins were better than expected despite lapping last year's unusual COVID mix benefits driven by better pricing and promotion along with favorable product mix and last year's supply chain organization streamlining. Adjusted gross margins increased 580 basis points compared to last year. Second quarter AUR grew 14% compared to 26% growth last year, with increases across every region. This represents our 18th consecutive quarter of AUR gains as we continue on our brand elevation journey and gives us strong confidence in our sustained pricing power as we mitigate mid-to-high single-digit product cost inflation starting in the second half of the year. Adjusted operating expenses increased 17% compared to last year, totaling $755 million, declining 5% compared to fiscal 2020, reflecting our restructuring savings. The increase compared to last year was driven by higher marketing and compensation as we lapped last year's furlough and store closures due to COVID. Marketing increased 83% to 6.1% of sales in the quarter, with a focus on new customer acquisition and long-term brand-building initiatives. Operating expenses were below our initial plan as we shifted about $25 million of investments into the second half of the year, based on COVID disruptions. In the second half, we will increase marketing and talent investments to support growth this holiday and in customer acquisition to drive long-term growth. Adjusted operating margin for the second quarter was 17.1%, up 450 basis points compared to last year and 220 basis points compared to fiscal 2020. This was above our guidance of 13% to 14% margin, largely driven by improvements in Europe and North America Wholesale. Looking at segment performance, starting with North America, second quarter revenue increased 30% compared to last year, supported by strong product assortments, new customer acquisition, and market share gains. Compared to fiscal 2020, North America revenues declined 20%, but included a 15-point headwind from our strategic distribution reset and Chaps. In North America, retail revenues grew 34% compared to last year. Comparisons increased on improved traffic and 23% AUR growth, reflecting our continued elevation around product, marketing, and more targeted pricing and promotions. Brick-and-mortar comparisons increased 31% driven by double-digit growth in AUR, basket sizes, and traffic. Although foreign tourist sales improved significantly compared to last year, they were still down more than 80% compared to fiscal 2020 due to continued softness in international travel. Comparisons in our owned digital commerce business grew 32% this quarter. This was driven by a strong product offering along with high-quality new consumer acquisition and retention of last year's new consumers, resulting in higher full-price sales. New consumers increased 12% compared to last year and more than 50% compared to fiscal 2020, with retention of the new consumers acquired last year improving significantly as we become increasingly effective at targeting and personalization. In North America wholesale, revenues increased 23% compared to last year. This was ahead of our expectations as the foundational work we completed through COVID to reset our inventories, elevate our product mix, exit lower-tier wholesale doors, and significantly reduce off-price penetration is delivering improved top-line growth and quality of sales. Total sell-out was up low double-digits in the second quarter compared to fiscal 2020, led by continued market share gains in men's, kids, and home. Lauren women's is stabilizing sequentially, including share gains in women's ready-to-wear. Overall, wholesale AUR growth continues to accelerate up 30% compared to fiscal 2020 as we elevate our assortments and pull back on seasonal promotions in the channel. Our momentum on wholesale.com drove digital sellout growth of more than 45% compared to both last year and fiscal 2020. All of this is enabled by our healthier brand positioning in wholesale. Moving on to Europe, second quarter revenue increased 38% on a reported basis and 36% in constant currency, above our expectations. Revenue continued a positive growth trend compared to fiscal 2020 this quarter, with all key markets performing better than planned, led by Germany and France. The U.K., our largest market in the region and earliest to reopen this spring, also continued to perform better than planned due to strong demand. Europe comparisons increased 27% in the quarter. Brick-and-mortar comparisons were up 28% driven by improved traffic, AUR, and basket sizes. Digital commerce comparisons increased 24% on top of a 26% comparison last year when COVID-related closures shifted more business online. Europe wholesale exceeded our expectations again this quarter driven by stronger sell-out and reorders at both digital wholesale as well as traditional wholesale accounts. Turning to Asia, revenue increased 14% on a reported basis and 13% in constant currency. Our Asia retail comparisons increased 7% with a 69% growth in digital commerce and 4% growth in brick-and-mortar stores. Continued strong momentum in China and Korea this quarter more than offset extended COVID restrictions in Japan, our largest market in the region, as well as Australia, Malaysia, and Singapore. In total, COVID-related closures and operating restrictions negatively impacted Asia sales by about 3.5% in the quarter. While the Chinese Mainland still grew more than 25% this quarter, our performance was also tempered by COVID lockdowns from late July through August. On a positive note, mainland comparisons rebounded quickly in September once stores reopened; Japan comparisons also started to improve toward the end of the quarter as the government lifted all states of emergency following the end of our fiscal Q2. Our digital ecosystem continued to accelerate in Asia. In Q2, this was supported by our successful Chuseok Thanksgiving holiday campaign in Korea, Qixi Valentine’s Day in China, and overall momentum in our newer digital flagships in China, Japan, and Hong Kong. Moving onto the balance sheet, we ended the quarter with $3.1 billion in cash and investments and $1.6 billion in total debt, which compares to $2.4 billion in cash and investments and $1.6 billion in total debt last year. Net inventory increased 5%, modestly below our plan due to global supply chain delays. While we expect continued variability of inventory flows from quarter to quarter, we believe our inventories are well-positioned across key categories and channels to meet demand for the upcoming holiday and spring '22 seasons. Overall, we expect to improve our inventory positions as supply chain headwinds subside and plan to end the year with inventories better aligned to sales growth. As we move into the second half of this fiscal year, we are re-committing to our long-term capital allocation priorities outlined prior to COVID. This includes, first, reinvesting in our strategic growth priorities, including brand marketing and elevation, digital, and expansion of our key city ecosystems to drive long-term sustainable growth. Second, with peak pandemic closures likely behind us, we are focused on returning 100% of our free cash flow to shareholders in the form of dividends and share repurchases. We reinstated our dividend in the first quarter and expect this to grow in line with durable net income growth. We expect to resume our share repurchase program starting in the second half of this fiscal year, with about $580 million remaining under our current share authorization. Looking ahead, our outlook is based on our best assessment of the current macro environment, including global supply chain challenges and COVID-related disruptions. We expect the quarterly cadence this year to remain volatile due to dynamic conditions across our markets. For fiscal 22, we are raising our revenue growth to 34% to 36% growth compared to last year in constant currency on a 53-week basis, excluding approximately $700 million in annualized revenue we reset during the pandemic. This includes department store exits, off-price, and distribution reductions, and the licensing and sale of Chaps and Club Monaco. This implies revenues up high single-digits to fiscal '20. Foreign currency is expected to negatively impact full-year revenues by about 20 basis points. We expect gross margins to expand at the high end of our prior range of 50 to 70 basis points, or roughly 450 basis point increase from last year. Our outlook improved on more favorable pricing and product mix this year, despite increased freight costs, which we now expect to be in the range of a 130 to 150 basis points due to our plans to use more air freight to fulfill strong demand in the back half. As a reminder, we renegotiated our ocean freight rates for the year in Q1. Raw materials, notably, cotton, will be purchased roughly a year in advance, resulting in slightly favorable product costs through the first half of fiscal '22. This is followed by mid-to-high single-digit estimated cost increases in our second half ending March and through calendar 2022, which we expect to more than offset with continued AUR growth and productivity improvements. We raised our AUR outlook to high single-digit growth this year, above our long-term annual guidance of low to mid-single digits as we continue our elevation work. We still expect operating margins of 12% to 12.5%, which compares to a 4.8% operating margin last year and 10.3% in fiscal '20. We continue to expect operating margin rates for the back half of the year to moderate from first half levels based on increased second half marketing investments of approximately 7% to 8% of sales, reaching our full-year target of at least 6% of sales this year, and increased air freight expense in the back half of the year, and our assumption of a more normalized channel mix compared to last year's COVID disruptions. For the full year, our increased revenue outlook implies high teens operating profit dollar growth compared to last year and pre-COVID levels. For the third quarter, we expect constant currency revenues to increase approximately 14% to 15%. Foreign currency is expected to negatively impact revenues by about a 140 basis points. While our teams are still actively focused on managing through global supply chain disruptions, we remain confident in our ability to deliver the right product at appropriate levels to meet consumer demand over the holiday selling period. We expect operating margins of about 13% to 13.5% in the third quarter, roughly in line with last year. This assumes modest gross margin expansion, largely offset by the timing shift in strategic investments, input cost inflation, and mix headwinds, as I noted a moment ago. We now expect the full-year tax rate to be about 21% to 22%, with a third quarter tax rate of around 22% to 23%. In closing, our strong first-half performance underscored the timelessness of Ralph's creative vision, the power of our brand, and our strengthening consumer base. With these as our foundation, we will leverage our momentum and invest in the key strategic initiatives that will support our long-term growth. And within a highly dynamic global environment, our teams around the world are executing with agility and playing offense to deliver long-term value creation for all our stakeholders. With that, let's open up the call for your questions.

One moment please for the first question. First question comes from Dana Telsey, Telsey Advisory Group.

Good morning, everyone. Congratulations on the continued progress and performance. I wanted to ask you about some of the drivers of your recent out-performance that you mentioned earlier. What elements do you see as sustainable moving forward, considering the changing environment? Where do you identify the biggest risk to your strong performance in the future? Also, could you touch on the growth of your digital margins and your expectations for that? That would be helpful. Thank you.

Good morning. Thank you for your question. We're certainly encouraged by the strong first half we've had this fiscal year, and what's really important to note from a mindset standpoint is we still have massive runway ahead of us. To a large extent, our brand continues to be much bigger than our business. So our performance so far has given us proof points and the confidence to continue investing in the multiple that we have ahead of us. There are four key drivers that I would highlight. The first, which is really our lifeblood, is customers. New customer acquisition and you've seen the numbers this past quarter up 19% year-over-year; we're bringing in a younger consumer, a higher value consumer, a more profitable consumer, a less promotion-sensitive consumer. We're very excited about that momentum and will continue to invest in this space to expand our footprint and also drive retention. We have seen very good progress on retention for customers that we brought over the past few quarters. The second area is around product and the breadth of our product portfolio, which we've talked about in prior forms, really sets us apart from many other brands in this space. We have a lifestyle portfolio that ranges from tuxedos and evening gowns all the way to sweatshirts. As you see consumers progressively reinvest into more elevated casual, we're well-positioned to meet that demand. That's part of what's driven the success in Q2: this ability to meet this hybrid customer expectation, both more elevated products and also continued interest in athleisure. We've been able to balance both well. On top of that, we've talked a lot about our high potential underdeveloped categories, and we've seen nice momentum in these categories, but again, we're still relatively early days in sneakers, outerwear, and denim, for example. So much more runway there. The third area is digital. As you know, we've done a lot of work to reset here, focusing on products, pricing, and brand presentation. We're seeing good momentum in this channel across our own sites, with a 35% increase across pure players and breaking clicks up 57% this past quarter, total digital up 45%. What's exciting is the momentum on digital continues even as stores are reopening; we're seeing an omnichannel mindset where consumers continue to engage both digitally and in stores. We will, of course, continue to invest in capabilities in this space, functionality, and connected retail experience. Notably, our margin in digital continues to be accretive to our total Company margin. It is one of our most exciting achievements over the past year and the team has done a fantastic job resetting product pricing, promotion, and operations cost structure in a manner that is accretive across all three regions. Our expectations are that we will continue to see digital grow as our fastest channel for the foreseeable future. The final area I would call out is our focus on key cities. We no longer look at markets primarily by country; we really view them as key cities and are building a connected omnichannel ecosystem in each of these key cities. This approach is yielding strong responses from consumers where we have made these investments. You have seen examples of exciting developments in Shanghai and Beijing. I believe we have a long runway in our ability to build these ecosystems around the world. So four key drivers certainly played significant roles in our Q2 performance and will continue to play out in the long term. Regarding risks, the biggest risks we face are clearly macro-related, from supply chain to cost inflation headwinds. These are very real challenges we’ve touched upon in the script. We actually believe we are well-positioned to mitigate them due to our brand pricing power, with 18 quarters in a row of AUR growth and multiple levers to drive AUR. Additionally, our newly diversified, agile, and faster supply chain is not dependent on just one specific supplier or country. These headwinds are challenging, but we are confident in our ability to navigate them. The last thing I would point out is that the biggest mistake we could make during these difficult times is to shift to defense-mode. As you can see from our plans, we are on offense, executing while simultaneously mitigating headwinds and investing in our business to fuel our momentum next quarter and beyond. Thank you for your question, Dana.

Thank you. The next question comes from Jay Sole with UBS.

Great. Thank you so much. I have a two-part question. My first question is, can we talk a little more about the current cost inflation environment? How are you expecting increased costs to impact your ability to drive long-term AUR and operating margin from here? And my second question is about the pace of share buybacks. Do you expect to use all of the authorization you have available in the current fiscal year? Thanks so much.

Sure, good morning, Jay. Let me take your first question in two parts. First on the AUR trajectory, we are confident in our ability to continue our elevation journey. We expect to drive both positive AUR and gross margin expansion in the back half of fiscal '22 and through our long-term plan. Over the last 18 consecutive quarters of AUR growth, we've developed a proven multi-leveled approach to pricing that focuses on creating value for the consumer, and it’s working. We are comfortable with our overall long-term guidance of low to mid-single-digit AUR growth, yet we believe our AUR rates will likely be on the higher end over the next year as we factor in higher costs into our overall financial model. Regarding your operating margin question, we are still on track towards our goal of mid-teens operating margin. Our full-year fiscal '22 guidance places us firmly on a path toward around 200 basis points of expansion towards pre-COVID operating levels. We are planning to achieve this on a lower reset base of revenues and with our operating dollars significantly higher than prior COVID levels. Furthermore, our guidance already incorporates gross margin expansion despite cost inflation, and we are reinvesting back into the business because we have strong momentum. As Patrice mentioned, we firmly believe that now is the right time to invest for the long term. We have reset to a more profitable base while witnessing strong momentum in our brands and have the right tools to drive elevated AURs and gross margin. Now, regarding the pace of share buybacks, we have approximately $580 million remaining in our authorization. Historically, we've executed at about $500 million over the course of a fiscal year. I would expect to match or possibly exceed that pace as we close out the year, while obviously evaluating the market to ensure we are creating value through our share buybacks. Thank you. Next question, please.

Thank you. The next question comes from Michael Binetti with Credit Suisse.

Thanks for taking our question. So, Jane, maybe just a couple of quick items here. Can you help us aggregate how much North America slowed a little bit in both channels? Can you also help us think about how much the business transition line items impacted both channels in North America in the quarter? And I'm curious how much supply chain may have held back North America in Q2, just so we get an idea of the magnitude of what's going on there. And then I guess, Patrice, you've got the wholesale AURs up now for a couple of quarters in a row. We've heard good news on the retail side for a long time, but now that we've witnessed a couple of quarters of AURs going up in that channel, looking back at the 2018 Analyst Day, which I know feels like ancient history at this point, you expressed confidence in this business achieving mid-60s gross margins at that time. Given that AURs are now in a much better place than you had projected back then, what do you think is the potential going forward? Lastly, Jane, can you help us think about the sub-4% operating margin guidance for Q4? Could you clarify how much conservatism is baked in there versus actual costs that you're planning to rise in the business?

Sure. I will start with the first part of your question regarding aggregating North America growth. Moving into the second quarter, we are really encouraged by the strong overall performance in North America, as we have a much stronger foundation for growth. While we did assume a sequential slowdown year-over-year based on the reset work we completed in digital and wholesale in Q1, Q2 results were still in line or better than our expectations. We did see some traffic softness in outlet centers as the Delta variant began to rise mid to late summer, impacting overall traffic, although we were encouraged that our conversion and comps outpaced those traffic levels in the web. Supply chain challenges did play a role, as we had less air freight coming in during mid-summer, causing a delay in transitioning fall inventory on the floor. However, we became more aggressive in air freight as September closed out, and we saw a positive rise in comps in our outlet stores, which indicates that supply chain constraints did have an impact but are beginning to resolve. Regarding your question about wholesale AUR and growth potential, we are pleased with the progress in wholesale AUR and believe it’s early days in this journey. As mentioned earlier, wholesale AUR increased 30% year-over-year, and we are committed to smarter promotions, like-for-like pricing, and investing in higher-value items. All this progress aligns with our DTC strategy and shows great potential for continued growth in the wholesale segment. As for gross margin guidance, we remain committed to achieving mid-teens operating margins. We are confident in our ability to do so. For Q4, we anticipate it to be our smallest quarter traditionally. We are making substantial investments as noted, mainly in new consumer acquisition and digital initiatives that will not yield one-time returns but will rather provide long-term benefits. Potential upside could arise from higher-than-expected revenues or resolution of our supply chain challenges, which would allow for flow-through. However, we are also facing pressures in the second half from increased product costs as noted earlier, which is reflected in our operating margin guidance.

Regarding the wholesale AUR and gross margin expectations, we are genuinely pleased with the progress happening in wholesale. The positive momentum is really in its early stages, probably just the first inning. We saw an AUR growth of 30% in the U.S. wholesale segment versus last year, and the strong momentum is indicative. We are working diligently on the various levers: promotions, timing, and smarter investments into high-value items. We’re closely collaborating with our partners and aligning on strategies to drive growth moving forward. So I anticipate a strong growth trajectory for AUR and expansion within the wholesale segment. For other gross margin guidance, we maintain our outlook. We are committed to establishing mid-teens operating margins and we’re confident in our capabilities to achieve that level. As Jane mentioned, we still expect mid-60s for gross margin expectations in the near term, and once we are ready, we can evaluate the next phase together. In summary, we maintain consistent expectations while firmly focusing on achieving mid-teens operating margins for the company.

In terms of Q4 implied operating margin, it is our smallest quarter traditionally. We are making substantial investments focused largely on new consumer acquisitions, digital investments, and marketing initiatives, all of which are expected to yield significant long-term results. While any upside could come if revenues exceed expectations, or if supply chain challenges resolve quicker than forecasted, you could see a stronger performance. However, as we indicated, we anticipate some pressure from product costs, especially in the back half of the year, with freight costs rising significantly, impacting margins.

Thank you. Next question, please.

Thank you. The next question comes from Matthew Boss with JP Morgan.

Great, thanks. Patrice, maybe on the product side, could you help walk through key changes, maybe by category or collection, that you've made to increase relevance with younger consumers as we exit the pandemic. Curious about what you're most excited about as we approach the holiday season. Additionally, how do you see the brand positioned in a world potentially facing greater overall casualization?

Matthew, let me broaden your point because the way we appeal to younger consumers encompasses how we present some of our core products. For example, we focus on making our classic white polo shirt relevant for a younger demographic. The shifts in our marketing strategy, engaging on platforms favored by this demographic, including TikTok and Snapchat, and participating in activities like gaming and the Metaverse, including our recent efforts with Zepeto, have significantly broadened our appeal to younger consumers. The data reflects this; we are bringing in younger, higher-value, and more profitable customers, which is quite encouraging. In product terms, we've reinvigorated Polo sports, elevated athleisure, and fleece lines, and are seeing strong performance in core products like sweaters, chinos, denim, and elevated outerwear. Consequently, as I look at the broad categories that have performed exceptionally in the past quarter and anticipate for the future, I feel we are solidly positioned to connect with younger consumers, focusing on products such as denim, sneakers, and more elevated casual attire that are appealing to both men's and women's segments. I am optimistic that the progression we've made toward attracting younger, high-value customers is not just a one-quarter trend but a reflection of our strategic interventions across product marketing and distribution.

The next question, please.

Thank you. The next question comes from Brooke Roach with Goldman Sachs.

Thank you. Good morning, and thanks for taking our question. Patrice and Jane, in your remarks, you called out marketing and other multi-year strategic investments to support long-term growth as drivers of SG&A investments into the second half. I was wondering if you could talk a little more about the most important spending initiatives within SG&A this year. As you transition into the back half, what are the components rising that are within your control and considered accretive to long-term brand health? Are there any other components of SG&A that are rising, such as labor or inflation? Where do you see overall opportunities headed into calendar '22? Thank you.

I will team up with Jane on this one. Our focus on investments moving forward is segmented into key areas expected to drive long-term growth: first, nurturing and acquiring a new customer base, focusing on the younger, higher-value segments. We're increasingly using our consumer intelligence capabilities to target and tailor messaging, yielding high ROI on our investments; we’ve seen success in this area. Second, fueling our digital momentum, which involves enhancing functionality on our sites, integrating connected retail strategies, and expanding localized propositions on ralphlauren.com. Lastly, we are investing in building our store footprint in key city ecosystems. We recently leveraged positive openings in Shanghai and Beijing, with more to come. These investments are expected to generate long-lasting benefits, focusing on customer lifetime value and retention, and we are pleased with the profiles of new customers we’re attracting.

Yes, indeed. As we consider SG&A components, marketing budgets will be at least 6% of revenues, as we navigate shifts like the $25 million that was redirected from the first half to the second half. In the second half, you’ll see heavier marketing expenditures correlating to events such as the Australian Open and Fashion Week that we will activate. Outside of marketing, we are beginning to normalize as our stores have resumed operations, while we also see some wage inflation pressure, particularly within our distribution centers and retail stores. Fortunately, our staffing is adequate. However, wage inflation has impacted costs. We are committed to opening new doors this year to enhance our direct-to-consumer strategy, which naturally incurs additional investment and expenses.

And the last question, please, Angela.

Thank you. Our final question comes from John Kernan with Cowen.

Excellent. Thanks for squeezing me in.

Good morning, John.

Good morning. Thank you. Going back to North America, the $700 million in revenue that was taken out of the business globally. I think a lot of that is from North America. Just curious, how should we think about wholesale and retail within North America? What might a sustainable growth rate in North America look like as we exit the pandemic?

Let me first address the $700 million pressure, which is primarily from North America. This revenue pressure predominantly stems from the Chaps transition to a licensed model. This transition posed more than a 10-point headwind to our wholesale business in the second half. However, we believe it is strategically valid because it enables us to focus on higher levels of profitability outside our Chaps business. In retail, as the COVID situation normalizes, we anticipate better traffic returning to stores alongside strong conversion rates, which will impact our sales positively. We're planning store openings in North America to further drive comp growth. While we haven't provided long-term guidance for this region, we expect that North America, given the current foundation, is poised for growth.

If you step back to evaluate the drivers for North America moving forward, my confidence in our ability to thrive in North America remains as sturdy as when we first spoke about it last quarter. The key vectors driving this growth are digital capabilities, which have improved significantly after a necessary reset post-COVID. Our RalphLauren.com site is engaging consumers effectively with better product offerings and connected retail capabilities delivering profitability. The second critical aspect is our retail footprint; we need to improve productivity in our outlet and expand our full-price store presence, targeting key cities. Finally, our wholesale approach has fundamentally shifted; where there was once a drag, we are now experiencing robust growth after substantial resets. As noted, our wholesale AUR increase is indicative of the evolving market dynamics, and there are more prospects for growth ahead. I'm pleased to share that recent market feedback indicates we are gaining share across various categories such as men's apparel, kids, home, and women's ready-to-wear. Overall, the momentum, healthy base, and our proactive investment strategies offer a favorable outlook for growth ahead.

With that, we are going to close it here. Thank you for joining us today. We look forward to sharing our third quarter fiscal '22 results with you in February. In the meantime, we hope to welcome you at the Polo Bar. Little advertising never hurts, which just reopened here in New York City a couple of weeks ago, where you can experience the magic of the Ralph Lauren lifestyle. Thank you for joining and have a great day.

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