The following management's discussion and analysis of financial condition and results of operations should be read together with our audited consolidated financial statements and footnotes, which are included elsewhere in this Annual Report on Form 10-K for Fiscal 2009 ("Fiscal 2009 10-K"). We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2009 ended on March 28, 2009 and reflected a 52-week period ("Fiscal 2009"); fiscal year 2008 ended on March 29, 2008 and reflected a 52-week period ("Fiscal 2008"); and fiscal year 2007 ended on March 31, 2007 and also reflected a 52-week period ("Fiscal 2007").

INTRODUCTION

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

• Overview. This section provides a general description of our business, including our objectives and risks, and a summary of financial performance for Fiscal 2009. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.

• Results of operations. This section provides an analysis of our results of operations for Fiscal 2009, Fiscal 2008 and Fiscal 2007.

• Financial condition and liquidity. This section provides an analysis of our cash flows for Fiscal 2009, Fiscal 2008 and Fiscal 2007, as well as a discussion of our financial condition and liquidity as of March 28, 2009. The discussion of our financial condition and liquidity includes (i) our available financial capacity under our credit facility, (ii) a summary of our key debt compliance measures and (iii) a summary of our outstanding debt and commitments as of March 28, 2009.

• Market risk management. This section discusses how we manage our risk exposures related to interest rates, foreign currency exchange rates and our investments, as well as the underlying market conditions as of March 28, 2009.

• Critical accounting policies. This section discusses accounting policies considered to be important to our financial condition and results of operations, which require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Notes 3 and 4 to our accompanying audited consolidated financial statements.

• Recently issued accounting standards. This section discusses the potential impact to our reported financial condition and results of operations of accounting standards that have been issued, but which we have not yet adopted.

OVERVIEW

Our Business

Our Company is a global leader in the design, marketing and distribution of premium lifestyle products including men's, women's and children's apparel, accessories, fragrances and home furnishings. Our long-standing reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. Our brand names include Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black Label, Blue Label, Lauren by Ralph Lauren, RRL, RLX, Rugby, Ralph Lauren Childrenswear, American Living, Chaps and Club Monaco, among others.

We classify our businesses into three segments: Wholesale, Retail and Licensing. Our wholesale business (representing approximately 57% of Fiscal 2009 net revenues) consists of wholesale-channel sales made principally to major department stores, specialty stores and golf and pro shops located throughout the U.S., Europe and Asia. Our retail business (representing approximately 39% of Fiscal 2009 net revenues) consists of retail-channel sales directly to consumers through full-price and factory retail stores located throughout the U.S., Canada, Europe, South America and Asia, and through our retail internet sites located at www.RalphLauren.com and www.Rugby.com. In addition, our licensing business (representing approximately 4% of Fiscal 2009 net revenues) consists of royalty-based arrangements under which we license the right to third parties to use our various trademarks in connection with the manufacture and sale of designated products, such as apparel, eyewear and fragrances, in specified geographical areas for specified periods. Approximately 28% of our Fiscal 2009 net revenues was earned in international regions outside of the U.S. and Canada. See Note 21 to the accompanying audited consolidated financial statements for a summary of net revenues by geographic location.

Our business is typically affected by seasonal trends, with higher levels of wholesale sales in our second and fourth quarters and higher retail sales in our second and third quarters. These trends result primarily from the timing of seasonal wholesale shipments and key vacation travel, back-to-school and holiday shopping periods in the Retail segment.

Our Objectives and Risks

Our core strengths include a portfolio of global luxury lifestyle brands, a strong and experienced management team, a proven ability to develop and extend our brands distributed through multiple retail channels in global markets, a disciplined investment philosophy and a solid balance sheet. Despite the various risks associated with the deterioration in the global economic environment as further discussed below, we believe our core strengths will allow us to continue to execute our strategy for long-term sustainable growth in revenue, net income and operating cash flow.

Our financial performance has been driven by the Company's focus on six key objectives:

• Creating unique businesses primarily centered around one core and heritage-driven brand;

• Diversifying and expanding our products and prices, distribution channels and geographic regions;

• Improving brand control and positioning;

• Focusing on selective strategic partnerships;

• Implementing infrastructure improvements that support a worldwide business; and

• Funding our expansion through strong operating cash flow.

As our business has grown, our portfolio mix and brand control has evolved from primarily that of a mono-brand U.S. centric menswear wholesaler with a broad array of product and geographic licenses to that of a portfolio of lifestyle brands with a "direct control" model over most of our brands, products and international territories. We believe that this broader and better-diversified portfolio mix positions us for ongoing growth, offering our customers a range of products, price points and channels of distribution, and our size and global operations favorably position us to take advantage of synergies in design, sourcing and distribution.

While balancing our long-term key strategic objectives with our near-term priorities to manage through the many risks associated with the weakened global economic environment, including a significant contraction in consumer spending, we intend to continue to pursue select opportunities for growth during the course of Fiscal 2010 and beyond. These opportunities and continued investment initiatives include:

• International Growth Opportunities

Ø The transition of our wholesale and retail businesses in Southeast Asia from a licensed to a wholly owned operation effective January 1, 2010, and the development of a supporting organizational infrastructure; and

Ø Ongoing development and integration of our recently acquired Japanese businesses, including the continued execution of our plans to build a supporting organizational infrastructure and retail business.

• Brand Extension and Product Diversification Growth Opportunities

Ø Further development of a wide array of luxury accessories product offerings, including handbags, footwear, small leathergoods and watches/jewelry; and

Ø The continued expansion of our Lauren product line in Europe and other international markets.

• Direct-to-Consumer Growth Opportunities

Ø Global expansion of our direct-to-consumer presence in various formats and key markets, including Paris, France.

• Cost Savings Opportunities

Ø The ongoing evaluation of strategies to better align our cost base with lower sales trends associated with the recent contraction in consumer spending.

Global Economic Developments

Our opportunities for long-term growth are accompanied by significant challenges and risks, particularly in the near term. Over the course of the past year, the global economic environment has deteriorated significantly and has evolved into what is commonly called a "global economic crisis." Negative developments have included declining values in real estate, restricted criteria for obtaining credit and capital, liquidity concerns for most borrowers, the failure of certain major financial institutions, rising unemployment, and significant declines and volatility in global financial markets. In response to these unprecedented economic conditions, the United States and many other countries have taken a number of significant measures designed to stabilize the state of their financial systems. Notwithstanding these measures, consumer confidence in the U.S., as measured by the Conference Board, has been at all-time low levels.

The global economic crisis has negatively impacted to a significant degree the level of consumer spending for discretionary items over the course of the past year and through April 2009. This has negatively affected our business as it is highly dependent on consumer demand for our products. Despite the more challenging economic environment that affected both the Company's wholesale customers and retail channels, we continued to experience reported revenue growth during Fiscal 2009.

However, beginning in October 2008, our Retail segment began to experience sharp declines in comparative store sales, as did many of our traditional wholesale customers. In particular, our comparable store sales for the second half of Fiscal 2009 declined approximately 23% for full-price Ralph Lauren sales, approximately 19% for full-price Club Monaco sales and approximately 6% for factory store sales. To realign our cost base with lower sales trends, the Company initiated a restructuring plan during the fourth quarter of Fiscal 2009. This plan included a reduction in workforce and the closure of certain underperforming retail stores. Cost reduction actions related to the restructuring plan are anticipated to result in annualized pretax cash savings of approximately $25 million beginning in Fiscal 2010. We also have mitigated the impact of the contraction in consumer spending by taking proactive measures to scale back our inventory levels across all channels, with inventory down approximately 2% at the end of Fiscal 2009 compared to the prior year excluding the effects of acquisitions.

The global economic environment and the related contraction in the anticipated level of consumer spending will likely continue to have a negative effect on our sales and operating margins across all segments for the foreseeable future. As of March 28, 2009, largely in response to the global macroeconomic environment, our traditional retail partners have reduced their initial wholesale orders for Fall 2009 apparel products by approximately 10%.

We continue to evaluate strategies to control costs by focusing on operational efficiencies on a Company-wide basis, by conservatively managing our inventory levels, and by controlling capital spending. The implementation of these strategies may necessitate additional cost-savings actions going forward.

For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A - "Risk Factors" included elsewhere in this Fiscal 2009 10-K.

Summary of Financial Performance

Operating Results

During Fiscal 2009, we reported revenues of $5.019 billion, net income of $406.0 million and net income per diluted share of $4.01. This compares to revenues of $4.880 billion, net income of $419.8 million and net income per diluted share of $3.99 during Fiscal 2008. As discussed further below, the comparability of our operating results has been affected by recent acquisitions and $79.0 million of pretax charges recognized in Fiscal 2009 related to asset impairments and restructurings.

Our operating performance for Fiscal 2009 included revenue growth of 2.8%, principally due to the inclusion of a full year of revenues from the newly launched American Living product line, increased revenues from our European and Japanese Wholesale businesses, continued growth in RalphLauren.com and Rugby.com sales (collectively, "RalphLauren.com"), and net favorable foreign currency effects. These increases were partially offset by a net decline in comparable global Retail store sales and lower Wholesale sales to our traditional department and specialty store customers in the U.S. associated with the current weakened global economic environment. We also experienced an increase in gross profit percentage of 30 basis points to 54.4%, primarily due to the growth of our European and Japanese Wholesale operations, as well as the net decrease of unfavorable purchase accounting effects in our Wholesale and Retail segments. These increases were partially offset by increased markdown activity and higher reductions in the carrying cost of our retail inventory, largely relating to the current economic downturn. Selling, general and administrative ("SG&A") expenses increased during Fiscal 2009 attributable largely to our new business initiatives.

Net income declined during Fiscal 2009 as compared to Fiscal 2008, principally due to a $57.9 million decrease in operating income, offset in part by a $40.8 million decrease in the provision for income taxes. The decrease in the provision for income taxes was driven by a 370 basis point decline in our effective tax rate and the overall decrease in pretax income. Net income per diluted share slightly increased compared to the prior fiscal year, as the effect of lower weighted-average diluted shares outstanding was mostly offset by the decrease in net income in Fiscal 2009. These results were negatively impacted by $79.0 million of pretax charges recognized in Fiscal 2009 related to asset impairments and restructurings, which had an aggregate effect of reducing net income in Fiscal 2009 by $49.7 million ($0.49 per diluted share).

Financial Condition and Liquidity

Our financial position reflects the overall relative strength of our business results. We ended Fiscal 2009 in a net cash and short-term investments position
(total cash and cash equivalents, plus short-term investments less total debt)
of $413.5 million, compared to a net debt position (total debt less total cash and cash equivalents and short-term investments) of $53.4 million as of the end of Fiscal 2008.

The improvement in our financial position was primarily due to growth in operating cash flows, partially offset by our treasury stock repurchases, capital expenditures and the funding of our recent Japanese Childrenswear and Golf Acquisition (as defined under "Recent Developments"). Our stockholders' equity increased to $2.735 billion as of March 28, 2009, compared to $2.390 billion as of March 29, 2008. This increase was primarily due to our net income during Fiscal 2009, offset in part by our share repurchase activity.

We generated $774.2 million of cash from operations during Fiscal 2009, compared to $695.4 million during Fiscal 2008. We used our cash availability to support our common stock repurchase program, to reinvest in our business through capital spending, to fund our Japanese Childrenswear and Golf Acquisition for approximately $26.0 million, and to repay $196.8 million of debt that matured in May 2008 relating to our Japanese Business Acquisitions (as defined under "Recent Developments"). In particular, we used $169.8 million to repurchase 2.5 million shares of Class A common stock. We also spent $185.0 million for capital expenditures primarily associated with global retail store expansion, construction and renovation of department store shop-within-shops and investments in our facilities and technological infrastructure.

Transactions Affecting Comparability of Results of Operations and Financial Condition

The comparability of the Company's operating results for the three fiscal years presented herein has been affected by certain transactions, including:

• Acquisitions that occurred in Fiscal 2009, Fiscal 2008 and Fiscal 2007. In particular, the Company completed the Japanese Childrenswear and Golf Acquisition on August 1, 2008, the Japanese Business Acquisitions on May 29, 2007, the Small Leathergoods Business Acquisition on April 13, 2007 and the RL Media Minority Interest Acquisition on March 28, 2007 (each as defined in Note 5 to the accompanying audited consolidated financial statements);

• Certain pretax charges related to asset impairments and restructurings during the fiscal years presented; and

• The adoption of the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of Statement of Financial Accounting Standards ("FAS") No. 109" ("FIN 48") as of the beginning of Fiscal 2008. The incremental impact of the adoption of FIN 48 decreased the effective tax rate by 97 basis points in Fiscal 2008. See Note 13 to the accompanying audited consolidated financial statements for further discussion of the Company's adoption of FIN 48.

A summary of the effect of certain of these items on pretax income for each applicable fiscal year presented is noted below (references to "Notes" are to the notes to the accompanying audited consolidated financial statements):

                                                        Fiscal Years Ended
                                              March 28,      March 29,     March 31,
                                                 2009          2008          2007
                                                            (millions)

       Impairments of assets (see Note 11)    $   (55.4 )    $   (5.0 )    $      -
       Restructuring charges (see Note 12)        (23.6 )           -          (4.6 )

                                              $   (79.0 )    $   (5.0 )    $   (4.6 )

The following discussion of results of operations highlights, as necessary, the significant changes in operating results arising from these items and transactions. However, unusual items or transactions may occur in any period. Accordingly, investors and other financial statement users individually should consider the types of events and transactions that have affected operating trends.

Recent Developments

Agreement to Acquire Southeast Asia Licensed Operations

In February 2009, the Company entered into an agreement with Dickson Concepts International Limited ("Dickson") to assume direct control of its Polo-branded licensed apparel businesses in Southeast Asia effective January 1, 2010 in exchange for a payment of $20 million and certain other consideration. Dickson is currently the Company's licensee for Polo-branded apparel in the Southeast Asia region, which is comprised of China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Taiwan and Thailand. In connection with this agreement, the Company entered into a one-year extension of its underlying sub-license agreement with Dickson, which was originally scheduled to expire on December 31, 2008. The transaction is subject to certain customary closing conditions. The Company expects to account for this transaction as an asset purchase during the fourth quarter of Fiscal 2010.

Japanese Childrenswear and Golf Acquisition

On August 1, 2008, in connection with the transition of the Polo-branded childrenswear and golf apparel businesses in Japan from a licensed to a wholly owned operation, the Company acquired certain net assets (including inventory) from Naigai Co. Ltd. ("Naigai") in exchange for a payment of approximately ¥2.8 billion (approximately $26 million as of the acquisition date) and certain other consideration (the "Japanese Childrenswear and Golf Acquisition"). The Company funded the Japanese Childrenswear and Golf Acquisition with available cash on-hand. Naigai was the Company's licensee for childrenswear, golf apparel and hosiery under the Polo by Ralph Lauren and Ralph Lauren brands in Japan. In conjunction with the Japanese Childrenswear and Golf Acquisition,

the Company also entered into an additional 5-year licensing and design-related agreement with Naigai for Polo and Chaps-branded hosiery in Japan and a transition services agreement for the provision of a variety of operational, human resources and information systems-related services over a period of up to eighteen months from the date of the closing of the transaction.

The results of operations for the Polo-branded childrenswear and golf apparel businesses in Japan have been consolidated in the Company's results of operations commencing August 2, 2008.

Japanese Business Acquisitions

On May 29, 2007, the Company acquired control of certain of its Japanese businesses that were formerly conducted under licensed arrangements, consistent with the Company's long-term strategy of international expansion. In particular, the Company acquired approximately 77% of the outstanding shares of Impact 21 Co., Ltd. ("Impact 21") that it did not previously own in a cash tender offer (the "Impact 21 Acquisition"), thereby increasing its ownership in Impact 21 from approximately 20% to approximately 97%. Impact 21 previously conducted the Company's men's, women's and jeans apparel and accessories business in Japan under a pre-existing, sub-license arrangement. In addition, the Company acquired the remaining 50% interest in Polo Ralph Lauren Japan Corporation ("PRL Japan"), which holds the master license to conduct Polo's business in Japan, from Onward Kashiyama and Seibu (the "PRL Japan Minority Interest Acquisition"). Collectively, the Impact 21 Acquisition and the PRL Japan Minority Interest Acquisition are herein referred to as the "Japanese Business Acquisitions."

The purchase price initially paid in connection with the Japanese Business Acquisitions was approximately $360 million, including transaction costs of approximately $12 million. In February 2008, the Company acquired approximately 1% of the remaining Impact 21 shares outstanding at an aggregate cost of $5 million. During the first quarter of Fiscal 2009, the Company acquired the remaining 2% of Impact 21 shares outstanding at an aggregate cost of approximately $9 million and completed the process of acquiring the remaining outstanding shares not exchanged as of the close of the tender offer period (the "minority squeeze-out"). As a result of these transactions, Impact 21 is a 100%-owned subsidiary of the Company.

The Company funded the Japanese Business Acquisitions with available cash on-hand and ¥20.5 billion of borrowings under a one-year term loan agreement pursuant to an amendment and restatement to the Company's existing credit facility. The Company repaid the borrowing by its maturity date on May 22, 2008 using $196.8 million of Impact 21's cash on-hand acquired as part of the acquisition.

The results of operations for Impact 21, which were previously accounted for using the equity method of accounting, have been consolidated in the Company's results of operations commencing April 1, 2007. Accordingly, the Company recorded within minority interest expense the amount of Impact 21's net income allocable to the holders of the approximate 80% of the Impact 21 shares not owned by the Company prior to the closing date of the tender offer. The results of operations for PRL Japan had already been consolidated by the Company in all prior periods.

See Note 5 to the accompanying audited consolidated financial statements for further discussion of the Company's acquisitions during the fiscal years presented.

American Living

In Fiscal 2008, the Company launched American Living, a new lifestyle brand created exclusively in the U.S. for distribution by J.C. Penney Company, Inc. ("JCPenney") through the Company's Global Brand Concepts group. The Company began shipping related product to JCPenney in December 2007. See "Overview - Global Economic Developments."

RESULTS OF OPERATIONS

Fiscal 2009 Compared to Fiscal 2008

The following table summarizes our results of operations and expresses the
percentage relationship to net revenues of certain financial statement captions:


                                                          Fiscal Years Ended
                                                      March 28,         March 29,
                                                         2009              2008         $ Change       % Change
                                                          (millions, except per share data)

Net revenues                                         $    5,018.9       $  4,880.1      $   138.8            2.8   %
Cost of goods sold(a)                                    (2,288.2 )       (2,242.0 )        (46.2 )          2.1   %

Gross profit                                              2,730.7          2,638.1           92.6            3.5   %
Gross profit as % of net revenues                            54.4 %           54.1 %
Selling, general and administrative expenses(a)          (2,036.0 )       (1,932.5 )       (103.5 )          5.4   %
SG&A as % of net revenues                                    40.6 %           39.6 %
Amortization of intangible assets                           (20.2 )          (47.2 )         27.0          (57.2 ) %
Impairments of assets                                       (55.4 )           (5.0 )        (50.4 )      1,008.0   %
Restructuring charges                                       (23.6 )              -          (23.6 )           NM

Operating income                                            595.5            653.4          (57.9 )         (8.9 ) %
Operating income as % of net revenues                        11.9 %           13.4 %
Foreign currency gains (losses)                               1.6             (6.4 )          8.0         (125.0 ) %
Interest expense                                            (26.6 )          (25.7 )         (0.9 )          3.5   %
Interest and other income, net                               22.0             24.7           (2.7 )        (10.9 ) %
Equity in income (loss) of equity-method investees           (5.0 )           (1.8 )         (3.2 )        177.8   %
Minority interest expense                                       -             (2.1 )          2.1         (100.0 ) %
. . .