Ralph Lauren Corporation (NYSE:RL) reported second-quarter fiscal 2026 revenue of $2.011 billion, up 17% year over year and 14% in constant currency, beating estimates of $1.889 billion.
Adjusted EPS was $3.79, up 49% from a year ago and above the $3.44 estimate, while GAAP EPS rose 44% to $3.32. Adjusted gross and operating margins expanded ahead of the outlook, driven by strong full-price demand and expense leverage.
Regional Performance
North America revenue increased 13% to $832 million, driven by 13% comparable store growth, comprising 12% growth in stores and 15% growth in digital commerce.
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Europe revenue increased 22% to $688 million (up 15% in constant currency) on 10% comparable sales growth and a 26% wholesale gain.
Asia revenue advanced 17% to $446 million, up 16% in constant currency, with 16% comparable growth and 36% digital commerce growth.
Segment margins improved to 19.4% in North America, 29.4% in Europe, and 25.0% in Asia.
Margin & Profitability Highlights
Gross profit reached $1.4 billion, with a 68% margin, up 100 basis points year-over-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 income was $246 million reported and $283 million adjusted, yielding a 14.1% adjusted margin, up 270 basis points.
Ralph Lauren ended the quarter with $1.6 billion in cash and short-term investments and $1.2 billion in total debt. Inventory rose 12% to $1.3 billion, in line with demand.
The company repurchased $63 million in Class A stock during the quarter and $313 million year-to-date, returning about $420 million to shareholders through dividends and buybacks.
Management Commentary
“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,” said Patrice Louvet, President and CEO.
“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,” he added.
Outlook
Ralph Lauren raised its fiscal 2026 outlook, now expecting constant-currency revenue growth of 5% to 7% and operating margin expansion of 60 to 80 basis points, with foreign currency expected to add 200 to 250 basis points to growth.
The company projects a full-year tax rate of 19% to 21% and mid-single-digit revenue growth in the third quarter.
On the earnings call, Louvet said Ralph Lauren is tapping into a ~$400 billion premium and luxury market, where it holds under 2% share with a little over $7 billion in revenue.
Management said demand remains healthy and core consumers remain resilient, supported by a continued shift in customer acquisition toward full-price, less price-sensitive shoppers with higher average spend.
The company expects tariff-related pressures to increase in the fiscal third quarter and intensify in the fourth quarter, resulting in a notable year-over-year gross margin decline in the fourth quarter, its smallest revenue quarter.
The decline is driven by reciprocal tariffs, tough comparisons, and timing shifts. Despite near-term margin headwinds, management remains confident in achieving 50–100 bps of gross margin expansion over three years, with progress expected each year.
Price Action: RL shares were trading lower by 1.74% to $311.38 at last check Thursday.
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