Ralph Lauren Exceeds Expectations in Q2 FY26, Raises Full-Year Guidance

11/06/2025 – 08:01 AM

• Second Quarter Revenue Increased 17% on a Reported Basis and 14% in Constant Currency, Exceeding Expectations, with Double-Digit Growth in All Geographies
• Global Direct-to-Consumer Comparable Store Sales Grew 13%, Driven by Broad-Based Performance Across Regions and Channels
• Adjusted Gross and Operating Margin Expansion Were Both Ahead of Outlook, Supported by Strong Full-Price Demand and Expense Leverage
• Maintained Healthy Balance Sheet Positioning with $1.6 Billion in Cash and Short-Term Investments and Inventories Well-Positioned to Global Demand
• Returned Approximately $420 Million to Shareholders Through Our Dividend and Repurchase of Class A Common Stock This Fiscal Year-to-Date
• Raised Full Year Fiscal 2026 Constant Currency Revenue and Adjusted Operating Margin Expansion Outlook, Reflecting Stronger than Anticipated First Half Performance and Continued Caution on the Global Operating Environment in the Second Half of the Fiscal Year

NEW YORK – Ralph Lauren Corporation (NYSE:RL), a global leader in the design, marketing, and distribution of luxury lifestyle products, today reported strong second-quarter fiscal 2026 earnings that surpassed expectations. The company reported earnings per diluted share of $3.32, up 44% compared to the prior year. On an adjusted basis, excluding restructuring-related and other net charges, earnings per diluted share were $3.79, marking a significant 49% increase compared to the second quarter of fiscal 2025. This strong performance reflects the company’s continued brand strength and effective execution of its strategic initiatives.

“For more than 58 years, we have inspired authentic, timeless style, reflecting the easy sophistication of a life well-lived,” said Ralph Lauren, Executive Chairman and Chief Creative Officer. “From the streets of Tokyo and Paris to the intimacy of our runway show in our New York City design studio, we are inviting more people than ever to step into their dream of a better life.”

Patrice Louvet, President and Chief Executive Officer, commented, “We are off to a strong start in the execution of our *Next Great Chapter: Drive* strategic plan introduced at our Investor Day in September, with second-quarter performance outpacing our expectations across geographies, channels, and consumer segments.” Louvet highlighted the resonance of the brand and timeless products with global consumers and the company’s commitment to reinforcing its inclusive luxury lifestyle position through disciplined investments.

Louvet further remarked, “As we continue to navigate a highly dynamic global operating environment with agility, we are encouraged by our brand’s continued momentum through the start of the important Fall/Holiday season, enabling us to once again raise our Fiscal 2026 outlook.”

**CNBC Analysis:** Ralph Lauren’s stellar Q2 performance is a testament to its adept navigation of the challenging macroeconomic landscape. The company’s robust growth in all geographies, particularly in Asia and Europe, underscores the global appeal of the brand. The double-digit increase in global direct-to-consumer comparable store sales, driven by both brick-and-mortar and digital commerce growth, highlights the effectiveness of Ralph Lauren’s omnichannel strategy.

**Key Achievements in Second Quarter Fiscal 2026:**

The company delivered the following highlights across its strategic priorities in the second quarter of Fiscal 2026:

* **Elevate and Energize Our Lifestyle Brand**
* Drove continued momentum in new customer acquisition and loyalty with 1.5 million new consumers in our direct-to-consumer businesses, strengthening brand consideration, purchase intent, and luxury perception, and 67 million social media followers, a high-single digit increase to last year
* Drove powerful, authentic consumer engagement through our always-on approach to brand activations in the second quarter, notably: our iconic sponsorships across the world of sports including Wimbledon, the U.S. Open Tennis Championships and Ryder Cup; our Spring 2026 Women’s Collection fashion show in New York; our immersive experience at the Goodwood Revival motorsport event in England; and celebrity style-defining moments, including the engagement of Taylor Swift and Travis Kelce and the wedding of Selena Gomez and Benny Blanco
* **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 strong double-digits to last year and outpaced total Company growth
* Product highlights this quarter included our *Polo Ralph Lauren for Oak Bluffs* limited-edition collection in partnership with Morehouse and Spelman Colleges; our new Ralph’s Club New York fragrance and campaign featuring Usher; and the launch of our innovative new AI-powered styling tool, *Ask Ralph*
* Increased average unit retail (“AUR”) by 12% across our direct-to-consumer network in the second quarter, above expectations, reflecting our continued elevation, strong full-price selling trends and lower than planned promotions
* **Win in Key Cities with Our Consumer Ecosystem**
* By geography, revenues were driven by double-digit growth across every region, led by Asia and Europe, and accelerated 13% growth in North America. China revenue increased more than 30% to last year, similar to first quarter trend
* Continued to expand and scale our key city ecosystems with the opening of 38 new owned and partnered stores in the second quarter and the purchase of our Newbury Street store in Boston. Key store openings during the period included: Munich, Germany; Plano, Texas; Hangzhou, China; and Nagoya, Japan

Our business is supported by our fortress foundation, which we define through our five key enablers, including: our engaged and empowered teams; industry-leading, agile operations; advanced technology, artificial intelligence and analytics; resilient partners, communities and materials; and a powerful balance sheet.

**Second Quarter Fiscal 2026 Income Statement Review:**

*Net Revenue:* In the second quarter of Fiscal 2026, revenue increased 17% to $2.0 billion on a reported basis and was up 14% in constant currency. Foreign currency favorably impacted revenue growth by approximately 250 basis points in the second quarter.

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

* *North America Revenue.* North America revenue in the second quarter increased 13% to $832 million on a reported basis. In retail, comparable store sales in North America increased 13%, with a 12% increase in brick and mortar stores and a 15% increase in digital commerce. North America wholesale revenue increased 13% to the prior year.
* *Europe Revenue.* Europe revenue in the second quarter increased 22% to $688 million on a reported basis. In constant currency, revenue increased 15%. In retail, comparable store sales in Europe increased 10%, with an 8% increase in brick and mortar stores and a 17% increase in digital commerce. Europe wholesale revenue increased 26% to prior year on a reported basis and increased 18% in constant currency.
* *Asia Revenue.* Asia revenue in the second quarter increased 17% to $446 million on a reported basis. In constant currency, revenue increased 16%. Comparable store sales in Asia increased 16%, with a 14% increase in our brick and mortar stores and a 36% increase in digital commerce.

*Gross Profit:* Gross profit for the second quarter of Fiscal 2026 was $1.4 billion and gross margin was 68.0%, 100 basis points above the prior year. Gross margin expansion was driven by AUR growth, favorable product mix, and lower cotton costs, more than offsetting pressure from tariffs and other product costs.

*Operating Expenses:* Operating expenses in the second quarter of Fiscal 2026 were $1.1 billion, up 15% to last year on a reported basis. On an adjusted basis, operating expenses were also $1.1 billion, up 13% to last year. Adjusted operating expense rate was 53.9%, compared to 55.5% in the prior-year period.

*Operating Income:* Operating income for the second quarter of Fiscal 2026 was $246 million and operating margin was 12.2% on a reported basis. On an adjusted basis, operating income was $283 million and operating margin was 14.1%, 270 basis points above the prior year. Operating income for the Company’s reportable segments in the second quarter compared to the prior year period was as follows:

* *North America Operating Income.* North America operating income in the second quarter was $162 million and operating margin was 19.4%, up 290 basis points to last year.
* *Europe Operating Income.* Europe operating income in the second quarter was $202 million and operating margin was 29.4%, up 360 basis points to last year. Foreign currency benefited operating margin rate by 110 basis points in the second quarter.
* *Asia Operating Income.* Asia operating income in the second quarter was $111 million and operating margin was 25.0%, up 230 basis points to last year. Foreign currency negatively impacted operating margin rate by 10 basis points in the second quarter.

*Net Income and EPS:* Net income in the second quarter of Fiscal 2026 was $207 million, or $3.32 per diluted share on a reported basis. On an adjusted basis, net income was $237 million, or $3.79 per diluted share. This compared to net income of $148 million, or $2.31 per diluted share on a reported basis, and net income of $162 million, or $2.54 per diluted share on an adjusted basis, for the second quarter of Fiscal 2025.

In the second quarter of Fiscal 2026, the Company had an effective tax rate of 15% on a reported basis and 16% on an adjusted basis, in-line with our outlook. This compared to an effective tax rate of approximately 21% 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 second quarter of Fiscal 2026 with $1.6 billion in cash and short-term investments and $1.2 billion in total debt, compared to $1.7 billion and $1.1 billion, respectively, at the end of the second quarter of Fiscal 2025. Inventory at the end of the second quarter of Fiscal 2026 was $1.3 billion, up 12% compared to the prior year period. During the period, the Company retired $400 million of senior notes due September 2025 and completed the purchase of its store location on Newbury Street in Boston.

The Company repurchased approximately $63 million of Class A Common Stock in the second quarter for a total of $313 million this fiscal year-to-date.

**Full Year Fiscal 2026 and Third 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 third 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 5% to 7% on a constant currency basis. Based on current exchange rates, foreign currency is expected to benefit revenue growth by approximately 200 to 250 basis points in Fiscal 2026.

The Company now expects operating margin for Fiscal 2026 to expand approximately 60 to 80 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 30 to 50 basis points.

For the third quarter, the Company expects revenues to grow approximately mid-single digits on a constant currency basis. Foreign currency is expected to benefit revenue growth by approximately 150 to 200 basis points.

Operating margin for the third quarter is expected to expand approximately 60 to 80 basis points in constant currency. 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 now expected to be in the range of approximately 19% to 21%. The third quarter tax rate is expected to be approximately 21% to 23%.

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

**Investor Takeaway:**

* Ralph Lauren is demonstrating strong financial performance, driven by effective strategy and execution.
* The company’s global diversification insulates it from regional economic headwinds.
* Investments in digital commerce and AI-powered tools are enhancing customer engagement and driving sales.
* Disciplined expense management is contributing to margin expansion.
* The raised outlook for fiscal 2026 signals continued confidence in the brand’s momentum.
* Share buybacks and dividends underscores strong shareholder returns commitment.

The brand’s fortress foundation, supported by engaged teams, agile operations, advanced technology, resilient partnerships, and a powerful balance sheet, positions Ralph Lauren for sustained long-term growth and value creation.

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