Ralph Lauren Reports First Quarter Fiscal 2026 Results Exceeding Expectations and Raises Full Year Outlook

NEW YORK--(BUSINESS WIRE)--Ralph Lauren Corporation (NYSE:RL), a global leader in the design, marketing, and distribution of luxury lifestyle products, today reported earnings per diluted share of $3.52, up 35% to prior year on a reported basis and $3.77, up 40% on an adjusted basis, excluding restructuring-related and other net charges, for the first quarter of Fiscal 2026. This compared to earnings per diluted share of $2.61 on a reported basis and $2.70 on an adjusted basis, excluding restructuring-related and other net charges for the first quarter of Fiscal 2025.

"What we stand for -- aspiration, optimism, individuality and authenticity -- inspires people in every corner of the world," said Ralph Lauren, Executive Chairman and Chief Creative Officer. "And we are bringing these values to life and inviting people to step into their dreams in new and powerful ways -- from our first-ever fashion presentation in Shanghai this April to our MLB World Tour™ Tokyo Series activations and our Women's Polo presentation in Paris."

"We delivered strong first quarter results across geographies, channels and consumer segments," said Patrice Louvet, President and Chief Executive Officer. "While we continue to approach the current global operating environment with prudence, we are encouraged by the broad-based strength in our brand and our businesses as we execute on our long-term strategic priorities — including recruiting new and younger consumers, strengthening our core and high-potential categories, and developing our key city ecosystems in each region."

Key Achievements in First Quarter Fiscal 2026

We delivered the following highlights across our strategic priorities in the first quarter of Fiscal 2026:

• Elevate and Energize Our Lifestyle Brand
  • Drove continued momentum in new customer acquisition and loyalty with 1.4 million new consumers in our direct-to-consumer businesses, increases in brand consideration, net promoter score and purchase intent, and nearly 66 million social media followers, a high-single digit increase to last year
  • Engaged consumers through powerful, authentic connections, notably: our Hamptons Re-See event in Shanghai, our first-ever fashion show in China paired with a live shopping event on Douyin; our Fall '25 Modern Romantics Collection show in New York City; our Spring '26 Purple Label runway show in Milan; and iconic celebrity dressing moments including Usher and Tyson Beckford at the Met Gala
• Drive the Core and Expand for More
  • Drove continued momentum in our Core business, up mid-teens, along with our high-potential categories (Women's Apparel, Outerwear, and Handbags), which increased more than 20% to last year in constant currency and outpaced total Company growth
  • Product highlights this quarter included our Spring '25 Hamptons collection, inspired by the natural beauty and free-spirited elegance of coastal living; our Wimbledon collection, celebrating the storied tennis championships; and strong consumer response to our Polo Play foundational handbag collection launched this spring. We also introduced our latest Home collection, Canyon Road, for Fall '25 at Milan's Salone del Mobile, celebrating the raw, natural beauty of the American West
  • Increased average unit retail ("AUR") by 14% across our direct-to-consumer network in the first quarter, above expectations, reflecting our continued elevation and strong full-price selling trends, with lower than planned promotions
• Win in Key Cities with Our Consumer Ecosystem
  • By geography, revenues were led by double-digit growth in Asia and Europe, followed by 8% growth in North America. Asia accelerated to 21% growth on a reported basis, driven by all key markets including China, up more than 30% to last year
  • Continued to expand and scale our key city ecosystems with the opening of 24 new owned and partnered stores in the first quarter. Key store openings during the period included: Vancouver's Alberni Street, representing our second store in Canada; our latest Candy Store concept in Marbella; and our first luxury concept in Korea at Shinsegae Centum City

Our business is supported by our fortress foundation, which we define through our five key enablers, including: our people and culture, best-in-class digital technology and analytics, superior operational capabilities, a powerful balance sheet, and leadership in citizenship and sustainability.

First Quarter Fiscal 2026 Income Statement Review

Net Revenue. In the first quarter of Fiscal 2026, revenue increased 14% to $1.7 billion on a reported basis and was up 11% in constant currency. Foreign currency favorably impacted revenue growth by approximately 230 basis points in the first quarter.

Revenue performance for the Company's reportable segments in the first quarter compared to the prior year period was as follows:

• North America Revenue. North America revenue in the first quarter increased 8% to $656 million on a reported basis. In retail, comparable store sales in North America increased 12%, with a 10% increase in brick and mortar stores and a 19% increase in digital commerce. North America wholesale revenue increased 2% to the prior year.
• Europe Revenue. Europe revenue in the first quarter increased 16% to $555 million on a reported basis. In constant currency, revenue increased 10%. In retail, comparable store sales in Europe increased 10%, with a 10% increase in brick and mortar stores and an 11% increase in digital commerce. Europe wholesale revenue increased 15% to prior year on a reported basis and increased 10% in constant currency.
• Asia Revenue. Asia revenue in the first quarter increased 21% to $474 million on a reported basis. In constant currency, revenue increased 19%. Comparable store sales in Asia increased 18%, with a 16% increase in our brick and mortar stores and a 35% increase in digital commerce.

Gross Profit. Gross profit for the first quarter of Fiscal 2026 was $1.2 billion and gross margin was 72.3%, 180 basis points above the prior year. Gross margin expansion was driven by AUR growth, favorable channel and geographic mix shifts, and lower cotton costs, more than offsetting incremental pressure from tariffs and other product costs.

Operating Expenses. Operating expenses in the first quarter of Fiscal 2026 were $969 million, up 13% to last year on a reported basis. On an adjusted basis, operating expenses were $949 million, up 12% to last year. Adjusted operating expense rate was 55.2%, compared to 56.2% in the prior year period.

Operating Income. Operating income for the first quarter of Fiscal 2026 was $274 million and operating margin was 15.9% on a reported basis. On an adjusted basis, operating income was $293 million and operating margin was 17.0%, 270 basis points above the prior year. Operating income for the Company's reportable segments in the first quarter compared to the prior year period was as follows:

• North America Operating Income. North America operating income in the first quarter was $136 million and operating margin was 20.7%, up 100 basis points to last year.
• Europe Operating Income. Europe operating income in the first quarter was $146 million and operating margin was 26.4%, up 120 basis points to last year. Foreign currency benefited operating margin rate by 140 basis points in the first quarter.
• Asia Operating Income. Asia operating income in the first quarter was $145 million and operating margin was 30.7%, up 330 basis points to last year. Foreign currency negatively impacted operating margin rate by 80 basis points in the first quarter.

Net Income and EPS. Net income in the first quarter of Fiscal 2026 was $220 million, or $3.52 per diluted share on a reported basis. On an adjusted basis, net income was $236 million, or $3.77 per diluted share. This compared to net income of $169 million, or $2.61 per diluted share on a reported basis, and net income of $175 million, or $2.70 per diluted share on an adjusted basis, for the first quarter of Fiscal 2025.

In the first quarter of Fiscal 2026, the Company had an effective tax rate of approximately 21% on both a reported and adjusted basis, in-line with our outlook. This compared to an effective tax rate of approximately 22% on both a reported basis and adjusted basis in the prior year period. The decline was driven primarily by favorable tax benefits compared to the prior year period.

Balance Sheet and Cash Flow Review

The Company ended the first quarter of Fiscal 2026 with $2.3 billion in cash and short-term investments and $1.6 billion in total debt, compared to $1.8 billion and $1.1 billion, respectively, at the end of the first quarter of Fiscal 2025. Inventory at the end of the first quarter of Fiscal 2026 was $1.2 billion, up 18% compared to the prior year period. During the period, the Company completed the purchase of its store location on Prince Street in New York City.

The Company repurchased approximately $250 million of Class A Common Stock in the first quarter.

Full Year Fiscal 2026 and Second Quarter Outlook

The Company's outlook is based on its best assessment of the current geopolitical and macroeconomic environment, including inflationary pressures, tariffs and other consumer spending-related headwinds, global supply chain disruptions and foreign currency volatility, among other factors. The full year Fiscal 2026 and second quarter guidance excludes any potential restructuring-related and other net charges that may be incurred in future periods, as described in the "Non-U.S. GAAP Financial Measures" section of this press release.

For Fiscal 2026, the Company now expects revenues to increase low- to mid-single digits on a constant currency basis. Based on current exchange rates, foreign currency is expected to benefit revenue growth by approximately 150 to 200 basis points in Fiscal 2026.

The Company now expects operating margin for Fiscal 2026 to expand approximately 40 to 60 basis points in constant currency, up from its prior outlook, driven primarily by operating expense leverage. Foreign currency is now expected to benefit gross and operating margins by approximately 10 and 40 basis points, respectively.

For the second quarter, the Company expects revenues to grow approximately high-single digits on a constant currency basis. Foreign currency is expected to benefit revenue growth by approximately 100 to 150 basis points.

Operating margin for the second quarter is expected to expand approximately 120 to 160 basis points in constant currency, driven primarily by operating expense leverage. Foreign currency is expected to benefit gross and operating margins by approximately 10 and 20 basis points, respectively.

The Company's full year Fiscal 2026 tax rate is expected to be in the range of approximately 19% to 20%. The second quarter tax rate is expected to be approximately 15% to 17%.

The Company continues to expect capital expenditures for Fiscal 2026 of approximately 4% to 5% of revenue.

Conference Call

As previously announced, the Company will host a conference call and live online webcast today, Thursday, August 7, 2025, at 9:00 A.M. Eastern. Listeners may access a live broadcast of the conference call on the Company investor relations website at http://investor.ralphlauren.com or by dialing 517-623-4963 or 800-857-5209. To access the conference call, listeners should dial in by 8:45 A.M. Eastern and request to be connected to the Ralph Lauren First Quarter 2026 conference call.

An online archive of the broadcast will be available by accessing the Company's investor relations website at http://investor.ralphlauren.com. A telephone replay of the call will be available from 12:00 P.M. Eastern, Thursday, August 7, 2025 through 6:00 P.M. Eastern, Thursday, August 14, 2025 by dialing 203-369-3268 or 800-391-9851 and entering passcode 5518.

ABOUT RALPH LAUREN

Ralph Lauren Corporation (NYSE:RL) is a global leader in the design, marketing and distribution of luxury lifestyle products in five categories: apparel, footwear & accessories, home, fragrances, and hospitality. For nearly 60 years, Ralph Lauren has sought to inspire the dream of a better life through authenticity and timeless style. Its reputation and distinctive image have been developed across a wide range of products, brands, distribution channels and international markets. The Company's brand names — which include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children and Chaps, among others — constitute one of the world's most widely recognized families of consumer brands. For more information, visit https://investor.ralphlauren.com.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release, and oral statements made from time to time by representatives of the Company, may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our current expectations about the Company's future operating results and financial condition, the implementation and results of our strategic plans and initiatives, store openings and closings, capital expenses, our plans regarding our quarterly cash dividend and Class A common stock repurchase programs, and our ability to meet citizenship and sustainability goals. Forward-looking statements are based on current expectations and are indicated by words or phrases such as "aim," "anticipate," "outlook," "estimate," "ensure," "commit," "expect," "project," "believe," "envision," "goal," "target," "can," "will," and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements. The factors that could cause actual results to materially differ include, among others: the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, including any potential changes resulting from the execution of our long-term growth strategy, and our ability to effectively transfer knowledge and maintain adequate controls and procedures during periods of transition; the impact to our business resulting from the potential imposition of additional tariffs, duties, or taxes, changes to existing trade agreements, and other charges or barriers to trade, including those recently announced by the U.S. and any responding retaliatory actions implemented by impacted countries, and any related impact to global stock markets, foreign currency exchange rates, and existing inflationary pressures, as well as our ability to implement mitigating sourcing strategies; the potential impact to our business resulting from inflationary pressures, including increases in the costs of raw materials, transportation, wages, healthcare, and other benefit-related costs; the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including potential business disruptions related to ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraine and Israel-Hamas wars, other recent hostilities in the Middle East, including between Israel and Iran, and militant attacks on cargo vessels in the Red Sea, civil and political unrest, diplomatic tensions between the U.S. and other countries and any resulting anti-American sentiment, high interest rates, and bank failures, among other factors described herein; the impact to our business resulting from a recession or changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory; the potential impact to our business resulting from supply chain disruptions, including those caused by capacity constraints, closed factories and/or labor shortages (stemming from pandemic diseases, labor disputes, strikes, or otherwise), man-made or natural disasters, scarcity of raw materials, port congestion, and scrutiny or detention of goods produced in certain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which could result in shipment approval delays leading to inventory shortages and lost sales, as well as potential shipping delays, inventory shortages, and/or higher freight costs resulting from port strikes, the recent Red Sea crisis, and/or disruptions to major waterways such as the Suez and Panama canals; changes in our tax obligations and effective tax rate due to a variety of factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated; our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms; our ability and the ability of our third-party service providers to secure our respective facilities and systems from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, ransomware, or similar Internet or email events; our ability to recruit and retain qualified employees to operate our retail stores, distribution centers, and various corporate functions; our ability to successfully implement our long-term growth strategy; our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories; our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence; our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers; our ability to competitively price our products and create an acceptable value proposition for consumers; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to achieve our goals regarding citizenship and sustainability practices, including those related to climate change, our human capital, and our supply chain, or if our stakeholders disagree with such goals; the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible; the potential impact to our business resulting from pandemic diseases such as COVID-19, including periods of reduced operating hours and capacity limits and/or temporary closure of our stores, distribution centers, and corporate facilities, as well as those of our customers, suppliers, and vendors, and potential changes to consumer behavior, spending levels, and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations; the potential impact on our operations and on our suppliers and customers resulting from man-made or natural disasters, including pandemic diseases, severe weather, geological events, and other catastrophic events, such as terrorist attacks, military conflicts, and other hostilities; our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; the impact to our business resulting from potential costs and obligations related to the early or temporary closure of our stores or termination of our long-term, non-cancellable leases; our ability to maintain adequate levels of liquidity to provide for our cash needs, including our debt obligations, tax obligations, capital expenditures, and potential payment of dividends and repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; our ability to access capital markets and maintain compliance with covenants associated with our existing debt instruments; a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation, exportation, and traceability and transparency of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business; the potential impact to the trading prices of our securities if our operating results, Class A common stock share repurchase activity, and/or cash dividend payments differ from investors' expectations; our ability to maintain our credit profile and ratings within the financial community; our intention to introduce new products or brands, or enter into or renew alliances; changes in the business of, and our relationships with, major wholesale customers and licensing partners; our ability to make strategic acquisitions and successfully integrate the acquired businesses into our existing operations; and other risk factors identified in the Company's Annual Report on Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NON-U.S. GAAP FINANCIAL MEASURES

Because Ralph Lauren Corporation is a global company, the comparability of its operating results reported in U.S. Dollars is affected by foreign currency exchange rate fluctuations because the underlying currencies in which it transacts change in value over time compared to the U.S. Dollar. Such fluctuations can have a significant effect on the Company's reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), the Company's discussions often contain references to constant currency measures, which are calculated by translating current-year and prior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency. The Company presents constant currency financial information, which is a non-U.S. GAAP financial measure, as a supplement to its reported operating results. The Company uses constant currency information to provide a framework for assessing how its businesses performed excluding the effects of foreign currency exchange rate fluctuations. Management believes this information is useful to investors for facilitating comparisons of operating results and better identifying trends in the Company's businesses. The constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, the Company's operating performance measures calculated in accordance with U.S. GAAP.

This earnings release also includes certain other non-U.S. GAAP financial measures relating to the impact of charges and other items as described herein. The Company uses non-U.S. GAAP financial measures, among other things, to evaluate its operating performance and to better represent the manner in which it conducts and views its business. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers non-U.S. GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP, and may be different from non-U.S. GAAP measures reported by other companies.

Adjustments made during the fiscal periods presented include charges recorded in connection with the Company's restructuring activities, as well as certain other charges (benefits) associated with other non-recurring events, as described in the footnotes to the non-U.S. GAAP financial measures above. The income tax benefit (provision) has been adjusted for the tax-related effects of these charges, which were calculated using the respective statutory tax rates for each applicable jurisdiction. Included in this earnings release are reconciliations between the non-U.S. GAAP financial measures and the most directly comparable U.S. GAAP measures before and after these adjustments.

Additionally, the Company's full year Fiscal 2026 and second quarter guidance excludes any potential restructuring-related and other charges that may be incurred in future periods. The Company is not able to provide a full reconciliation of these non-U.S. GAAP financial measures to U.S. GAAP as it is not known at this time if and when any such charges may be incurred in the future. Accordingly, a reconciliation of the Company's non-U.S. GAAP based financial measure guidance to the most directly comparable U.S. GAAP measures cannot be provided at this time given the uncertain nature of any such potential charges that may be incurred in future periods.