Core Insights - Ralph Lauren reported an 8% revenue growth in Q4 and 7% for the full fiscal year 2025, exceeding guidance due to strong international performance [1][3] - Adjusted operating profits increased by 24%, supported by a significant rise in gross margins [2][3] Revenue Performance - International markets, particularly Europe and Asia, now account for the majority of total revenue, with Europe growing by 16% and Asia by 13%, while China exceeded 20% revenue growth [2][3] - The company achieved record revenues in its international businesses, contributing to overall revenue diversification and reducing reliance on North American markets [3] Profitability and Margins - Adjusted gross margin increased by 260 basis points to 69.2% in Q4, contributing to the 24% rise in adjusted operating profit [2] - The company has reported eight consecutive years of average unit retail growth, driven by proactive pricing strategies and supply chain diversification [4] Supply Chain Strategy - Ralph Lauren has diversified its supply chain to mitigate tariff risks, ensuring no single country accounts for more than 20% of production [4][5] - The company employs pricing power and supply chain optimization to protect gross margins amid macroeconomic challenges [5] Capital Allocation - Free cash flow for fiscal 2025 reached $1 billion, allowing for $625 million in shareholder returns through buybacks and dividends, alongside a new $1.5 billion share repurchase authorization [6][7] - The company is strategically investing in real estate, exemplified by the acquisition of its New York Soho Polo flagship [6] Future Guidance - For fiscal 2026, revenue growth is projected in the low-single-digit percentages, with cautious assumptions for the second half due to tariffs and consumer uncertainty [9] - Operating margin is expected to expand modestly, with gross margin remaining flat as AUR growth and discount reductions offset tariff impacts [9]

Core Insights - Ralph Lauren Corporation (RL) reported strong fourth-quarter fiscal 2025 results, with both top and bottom lines increasing year over year and exceeding the Zacks Consensus Estimate, highlighting the company's brand momentum and strategic execution [1][2] Financial Performance - Adjusted earnings per share for RL were $2.27, surpassing the consensus estimate of $2.00, and reflecting a 32.7% increase from $1.71 in the same quarter last year [2] - Net revenues grew 8% year over year to $1,697 million, exceeding the Zacks Consensus Estimate of $1,635 million, with a 10% increase on a constant-currency basis [2] - Global direct-to-consumer comparable store sales increased by 13%, supported by brand elevation and positive retail comps across all regions and channels [3] Segment Performance - North America: Revenues increased 6% year over year to $705 million, with retail channel comps rising 9% [4] - Europe: Revenues rose 12% year over year to $526 million, with retail channel comps up 18% and digital sales increasing by 25% [5] - Asia: Revenues increased 9% year over year to $432 million, with comps up 15% [6] Margins and Costs - Adjusted gross profit margin expanded by 200 basis points year over year to 68.6%, driven by favorable product mix and lower cotton costs [8] - Adjusted operating expenses rose 9% year over year to $990 million, with operating margin increasing by 160 basis points to 10.3% [9] Financial Position - As of the end of fiscal 2025, RL had cash and short-term investments of $2.1 billion, total debt of $1.1 million, and total shareholders' equity of $2.6 billion [10] - The company repurchased nearly $425 million of Class A Common Stock in fiscal 2025 and announced a new $1.5 billion share repurchase program [11] Shareholder Returns - RL returned approximately $625 million to shareholders through dividends and stock repurchases, with a 10% increase in the quarterly cash dividend to $0.9125 per share [12] Outlook - For fiscal 2026, RL anticipates low-single-digit revenue growth in constant currency, with stronger momentum expected in the first half [14] - Management expects operating margin to expand modestly, with capital expenditures projected to be 4% to 5% of revenues [16]

Core Insights - Ralph Lauren reported revenue of $1.7 billion for the quarter ended March 2025, reflecting an 8.3% increase year-over-year and a surprise of +3.83% over the Zacks Consensus Estimate of $1.63 billion [1] - The company's EPS for the quarter was $2.27, up from $1.71 in the same quarter last year, resulting in an EPS surprise of +13.50% compared to the consensus estimate of $2.00 [1] Revenue Performance - North America net revenues were $704.70 million, exceeding the average estimate of $690.73 million, with a year-over-year change of +5.5% [4] - Other Licensing net revenues were $35.50 million, slightly above the average estimate of $35.47 million, but down -3.3% year-over-year [4] - Asia net revenues reached $431.60 million, surpassing the average estimate of $424.40 million, marking a +9.5% year-over-year increase [4] - Europe net revenues were $525.50 million, exceeding the average estimate of $494.79 million, with a year-over-year change of +12% [4] - Retail net revenues totaled $1.06 billion, above the estimated $1.02 billion, representing an +11.4% change year-over-year [4] - Wholesale net revenues were $602.50 million, exceeding the average estimate of $585.58 million, with a +3.9% year-over-year change [4] Stock Performance - Ralph Lauren shares have returned +28.9% over the past month, outperforming the Zacks S&P 500 composite's +13.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Growth Strategy - The company has a long-term growth strategy for Fiscal 2023 to Fiscal 2025, focusing on brand elevation, core expansion, and winning in key cities[26]. - The company has a focus on returning the North America business to growth as part of its strategic goals[155]. Transformation Initiatives - The Next Generation Transformation Project is a multi-year initiative aimed at transitioning to a global direct-to-consumer model, with significant process improvements expected[36]. - The company has established a large-scale multi-year global project, the Next Generation Transformation project, aimed at transforming operations towards a direct-to-consumer model[121]. Financial Performance - Fiscal 2025 net revenues were approximately 57% generated outside the U.S., with North America contributing 43%, Europe 31%, and Asia 24%[57][61][62]. - The company incurred charges of $25.2 million and $5.1 million related to the NGT project during Fiscal 2025 and Fiscal 2024, respectively[37]. - Approximately 2% of Fiscal 2025 net revenues came from non-reportable segments, primarily from Ralph Lauren and Chaps branded royalty revenues[56]. Sustainability Efforts - The company emphasizes sustainability through initiatives like integrated circularity, sustainable materials, and waste management, aiming for zero waste principles[32]. - The company aims to reduce absolute greenhouse gas emissions and improve water stewardship across its operations and supply chain[32]. - The company is committed to advancing environmental sustainability in the fashion and textile industries through initiatives like the Fashion Pact[154]. Employee Well-being - The company is committed to enhancing employee well-being and fostering a culture of belonging and equity within its workforce[41]. - Starting January 2025, the company will provide free additional coverage for essential cancer screenings above national guidelines for U.S. employees[151]. - All part-time employees with one year of service will be eligible for benefits in calendar 2025, regardless of average hours worked[152]. - The company has a global wellness program, THRIVE, which includes access to physical and mental wellness support[146]. - The company is committed to competitive compensation and benefits, actively monitoring pay equity[149]. - The company aims to exceed an 80% employee survey score on "my manager creates a sense of belonging for the entire team"[141]. Product and Brand Portfolio - The company’s product portfolio includes luxury lifestyle products across five categories: apparel, footwear & accessories, home, fragrances, and hospitality[25]. - The brand portfolio includes well-known names such as Polo Ralph Lauren, Ralph Lauren Collection, and Double RL, reflecting a distinctive American lifestyle[39]. - The company’s products are designed to reflect a timeless and innovative interpretation of American style, contributing to brand strength and reputation[96]. Retail and Distribution - The retail business operates 564 retail stores and 671 concession-based shop-within-shops, totaling approximately 4.1 million and 0.7 million square feet respectively[59][62]. - During Fiscal 2025, 30 new Ralph Lauren stores were opened while 10 were closed, resulting in a total of 252 Ralph Lauren stores[60][62]. - The wholesale business sold products through over 9,400 doors worldwide, with approximately 3,000 in North America, 5,600 in Europe, and 850 in Asia[70][73]. - The company opened 6 new outlet stores and closed 26 during Fiscal 2025, resulting in a total of 312 outlet stores[63][64]. - The company’s distribution network includes multiple global facilities, ensuring efficient shipping and inventory management[115]. Digital Commerce Strategy - The digital commerce strategy includes direct sales through various websites and third-party partners, with a focus on expanding accessibility and localizing offerings[67][68]. - The company continues to invest in its digital ecosystem as a key component of its global omni-channel strategy, which includes owned and partnered channels across physical and digital platforms[87]. - Directly-operated digital commerce sites and mobile applications serve as digital flagships, enhancing consumer experience through new payment methods and improved search capabilities[88]. - The company continues to invest in Connected Retail capabilities, including features like Same-Day Delivery and Mobile Point of Sale[59]. Leadership and Management - Ralph Lauren has been the Executive Chairman and Chief Creative Officer since November 2015, and has been with the company since its founding in 1967[154]. - Patrice Louvet has served as President and CEO since July 2017, previously holding senior leadership roles at Procter & Gamble[154]. - Robert Ranftl became Chief Operating Officer in April 2025, previously leading operations in Asia Pacific and North America[155]. - Justin Picicci has been Chief Financial Officer since May 2024, overseeing internal finance functions and previously serving as CFO of North America[155]. - David Lauren, Chief Branding and Innovation Officer since April 2022, has been instrumental in growing the company's global digital commerce business[155]. - Halide Alagöz has been Chief Product Merchandising Officer since March 2025, responsible for the end-to-end product life cycle[155]. Marketing and Consumer Engagement - The company’s marketing strategies increasingly leverage digital and social media platforms to engage younger consumers and enhance brand recognition[100]. - The company collaborates with wholesale customers to deliver tailored content and leverage consumer insights for a holistic view of the consumer[89]. Market and Risk Management - The company continues to face challenges with trademark enforcement in certain parts of Asia[127]. - The company maintains a program of intensive monitoring of import restrictions and opportunities to minimize exposure to import-related risks[132]. - Market risk management strategies are discussed in the Annual Report on Form 10-K[422].

Group 1: Earnings Performance - Ralph Lauren reported quarterly earnings of $2.27 per share, exceeding the Zacks Consensus Estimate of $2 per share, and up from $1.71 per share a year ago, representing an earnings surprise of 13.50% [1] - The company posted revenues of $1.7 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.83%, compared to $1.57 billion in the same quarter last year [2] - Over the last four quarters, Ralph Lauren has consistently surpassed consensus EPS estimates [2] Group 2: Stock Performance and Market Comparison - Ralph Lauren shares have increased by approximately 18.6% since the beginning of the year, while the S&P 500 has declined by 0.6% [3] - The company's current Zacks Rank is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Group 3: Future Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.03 on revenues of $1.57 billion, and for the current fiscal year, it is $13.61 on revenues of $7.3 billion [7] - The trend of estimate revisions for Ralph Lauren is mixed, which could change following the recent earnings report [6] Group 4: Industry Context - The Textile - Apparel industry, to which Ralph Lauren belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Ralph Lauren's stock performance [5]

Financial Data and Key Metrics Changes - The company reported an 8% top line growth for the full year, with adjusted operating profits growing 24% [9] - Fourth quarter revenue growth was 10%, exceeding the 6% to 7% outlook, driven by strong performance in both direct-to-consumer and wholesale channels [26] - Total company adjusted gross margin expanded by 260 basis points to 69.2%, driven by average unit retail (AUR) growth and favorable mix shifts [27] Business Line Data and Key Metrics Changes - Core product sales grew low double digits in the fourth quarter, with notable growth in cable knit sweaters and outerwear [16] - High potential categories, including women's apparel, outerwear, and handbags, increased by high teens [17] - Direct-to-consumer (DTC) sales, which comprise two-thirds of the business, saw a 13% increase in comparable sales [18] Market Data and Key Metrics Changes - By region, Europe led performance with a 16% sales increase, followed by Asia at 13% and North America at 6% [26] - In China, sales grew more than 20%, supported by strong consumer engagement and marketing activations [34][110] - North America maintained healthy trends with mid-single-digit growth, despite exiting 60 department store doors [30] Company Strategy and Development Direction - The company is focused on elevating its lifestyle brand, driving core product growth, and expanding in key cities through a consumer ecosystem [10][18] - Investments will continue in brand desirability, market share, and technology to enhance consumer engagement [10] - The company plans to remain agile and prudent in resource allocation while pursuing long-term growth opportunities [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging global operating environment, including uncertainties around tariffs and consumer behavior [9][22] - Despite macro pressures, the company is well-positioned due to a transformed business model and strong balance sheet [9][10] - The outlook for fiscal 2026 anticipates low single-digit revenue growth, with a cautious view on the second half of the year due to macroeconomic indicators [37][38] Other Important Information - The company generated $1 billion in free cash flow, returning $625 million to shareholders through dividends and repurchases [25] - Marketing investments increased to 7.3% of sales, with plans to maintain this level in the upcoming fiscal year [28][76] - The company acquired its global Polo flagship location in SoHo, Manhattan, as part of its real estate strategy [36][80] Q&A Session Summary Question: How is the company thinking about the health of consumers across regions in today's uncertain backdrop? - Management noted strong brand momentum and resilience in their business model, with no change in the underlying trajectory across regions [49][52] Question: How should the company approach pricing strategy for fiscal 2026? - The company plans to assess pricing actions to offset tariff impacts while maintaining AUR growth [58][62] Question: Can you provide more detail on revenue expectations by geography for the first quarter? - The company expects high single-digit growth in Asia, mid-single-digit growth in Europe, and a cautious outlook for North America [71] Question: What are the plans for marketing spend and high-potential categories? - Marketing spend is expected to remain at 7.3% of revenue, with continued focus on women's apparel, outerwear, and handbags [76][78] Question: What is the outlook for the U.S. wholesale channel? - The company is encouraged by stabilization in the wholesale channel and plans to continue refining its distribution strategy [86][89] Question: How is the company performing in Europe and what is the outlook for operating margins? - Europe delivered strong growth with a focus on key city strategies, and management is optimistic about continued momentum [96][99]

Financial Data and Key Metrics Changes - The company reported a 10% revenue growth in Q4, exceeding the 6% to 7% outlook, driven by strong performance in both direct-to-consumer and wholesale channels [24][22] - For the full year, total revenue growth was 8%, with adjusted operating profits increasing by 24% [8][22] - Adjusted gross margin expanded by 260 basis points to 69.2%, supported by average unit retail (AUR) growth and favorable product mix [26][22] - Free cash flow for the year was $1 billion, with $625 million returned to shareholders through dividends and repurchases [23][22] Business Line Data and Key Metrics Changes - Core product sales grew low double digits in Q4, with notable growth in cable knit sweaters and outerwear [15][16] - High potential categories, including women's apparel, outerwear, and handbags, increased by high teens [16][15] - Digital ecosystem sales grew in the high teens, led by Europe [25][24] Market Data and Key Metrics Changes - North America revenue increased by 6%, with retail comps up 9% [28][30] - Europe saw a 16% revenue increase, with retail comps up 18% [30][31] - Asia's revenue grew by 13%, with China leading at over 20% growth [32][33] Company Strategy and Development Direction - The company is focused on elevating its lifestyle brand, driving core product sales, and expanding in key cities [10][11] - Investments in technology, data, AI, and analytics are prioritized to enhance consumer engagement and operational efficiency [10][21] - The company aims to maintain a strong balance sheet while navigating macroeconomic challenges [21][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging global operating environment but expressed confidence in the brand's resilience and growth potential [8][21] - The outlook for fiscal 2026 anticipates low single-digit revenue growth, with a cautious view on the second half of the year due to macroeconomic pressures [35][36] - The company plans to assess additional pricing actions to mitigate tariff impacts [37][38] Other Important Information - The company opened 83 new stores globally, focusing on key cities, particularly in Asia [18][30] - Marketing investments increased to 7.3% of sales, with plans to maintain this level in the upcoming fiscal year [27][72] - The acquisition of the global Polo flagship location in SoHo is part of a strategy to enhance key city ecosystems [34][76] Q&A Session Summary Question: How is the company thinking about the health of consumers across regions in today's uncertain backdrop? - Management noted strong brand momentum and resilience among elevated consumers, despite general consumer pressure from the geopolitical and economic environment [48][49] Question: How should the company approach pricing strategy for fiscal 2026? - The company plans to assess pricing actions and leverage its diversified supply chain to manage cost headwinds effectively [56][58] Question: What is the outlook for the U.S. wholesale channel? - The company is encouraged by stabilization in the wholesale channel and plans to continue refining its distribution strategy [82][84] Question: Can you discuss the strong performance in China? - China delivered a strong quarter with over 20% growth, supported by effective marketing activations and expanding store footprint [100][104] Question: What are the expectations for gross margin in fiscal 2026? - The company expects gross margins to be flat for the year, with a stronger first half due to durable tailwinds from AUR growth and discount reductions [106][106]

Financial Performance - Fourth quarter revenue increased 8% to $1.7 billion on a reported basis and 10% in constant currency, while full year revenue rose 7% to $7.1 billion[4][15]. - Net revenues for the three months ended March 29, 2025, increased to $1,697.3 million, a rise of 8.3% compared to $1,567.9 million for the same period in 2024[46]. - Gross profit for the twelve months ended March 29, 2025, reached $4,852.9 million, up from $4,431.8 million in 2024, reflecting a strong performance[46]. - Operating income for the three months ended March 29, 2025, was $155.0 million, compared to $107.8 million in the prior year, marking a significant increase[46]. - Net income for the twelve months ended March 29, 2025, was $742.9 million, an increase of 14.9% from $646.3 million in 2024[44]. - Total segment operating income for the twelve months ended March 29, 2025, was $1,745.3 million, up from $1,478.3 million in 2024, indicating robust growth across segments[46]. - Retail sales for the twelve months ended March 29, 2025, reached $4,770.1 million, up from $4,351.0 million in the previous year, reflecting a growth of 9.6%[57]. - For the three months ended March 29, 2025, net income was reported at $129.0 million, compared to $90.7 million for the same period in 2024, representing an increase of 42.2%[60]. - The adjusted net income for the twelve months ended March 29, 2025, was $788.9 million, up from $685.8 million in the previous year, reflecting a growth of 15.1%[60]. Revenue Growth by Region - North America revenue in the fourth quarter increased 6% to $705 million, with comparable store sales up 9%[11][18]. - Europe revenue in the fourth quarter increased 12% to $526 million on a reported basis, with comparable store sales up 18%[11][18]. - Asia revenue in the fourth quarter increased 9% to $432 million on a reported basis, with comparable store sales up 15%[11][18]. Shareholder Returns - The company returned a total of $625 million to shareholders through dividends and stock repurchases in Fiscal 2025, with a 10% dividend increase approved[4][24][25]. - The company declared dividends of $0.825 per share for the three months ended March 29, 2025, compared to $0.75 per share in the same period last year[46]. Future Outlook - For Fiscal 2026, the company expects revenue growth of low-single digits on a constant currency basis, reflecting caution on the global operating environment[4][27]. - Operating margin for Fiscal 2026 is expected to expand modestly, with gross margin projected to be approximately flat in constant currency[4][28]. - The full year Fiscal 2026 tax rate is expected to be in the range of 20% to 22%[30]. - Capital expenditures for Fiscal 2026 are planned to be approximately 4% to 5% of revenue[30]. Customer Acquisition and Digital Strategy - The company recruited 5.9 million new customers in direct-to-consumer channels during Fiscal 2025, supported by growth in social media followers[4][8]. - The company is focused on enhancing its digital footprint and capabilities to expand its direct-to-consumer presence[36]. - The company is undergoing a Next Generation Transformation project aimed at significantly transforming its operations towards a global direct-to-consumer model[62]. Financial Position - Total assets increased to $7,047.3 million in March 2025 from $6,602.6 million in March 2024, representing a growth of approximately 6.7%[39]. - Current liabilities rose to $2,133.7 million in March 2025 from $1,467.2 million in March 2024, an increase of approximately 45.4%[39]. - Retained earnings increased to $7,590.1 million in March 2025 from $7,051.6 million in March 2024, reflecting a growth of approximately 7.6%[39]. - The company reported cash and cash equivalents of $1,922.5 million as of March 2025, up from $1,662.2 million in March 2024, a rise of approximately 15.6%[39]. - The company’s total liabilities increased to $4,458.8 million in March 2025 from $4,152.3 million in March 2024, an increase of approximately 7.4%[39]. - The company’s net cash and short-term investments amounted to $940.4 million in March 2025, compared to $642.7 million in March 2024, a growth of approximately 46.4%[39]. - The company’s total equity increased to $2,588.5 million in March 2025 from $2,450.3 million in March 2024, reflecting a growth of approximately 5.6%[39]. Operating Metrics - Fourth quarter adjusted gross margin was 68.6%, 200 basis points above the prior year, driven by favorable geographic, channel, and product mix[9][16]. - Digital commerce sales in North America increased by 8% for the three months ended March 29, 2025, while brick-and-mortar sales rose by 9%[48]. - In Europe, digital commerce sales surged by 25% for the three months ended March 29, 2025, with brick-and-mortar sales increasing by 16%[48]. - The gross profit margin for the three months ended March 29, 2025, was 68.6%, compared to 66.6% for the same period in 2024[57]. - The adjusted operating margin for the twelve months ended March 29, 2025, was 14.0%, compared to 12.5% for the same period in 2024[59]. Tax and Earnings Per Share - The effective tax rate for the three months ended March 29, 2025, was 20.5%, compared to 18.7% for the same period in 2024[60]. - The diluted earnings per share (EPS) for the three months ended March 29, 2025, was $2.03, an increase from $1.38 in the same period of 2024, marking a growth of 47.0%[60]. - The adjusted effective tax rate for the twelve months ended March 29, 2025, was 21.8%, compared to 19.1% for the same period in 2024[60]. Store Operations - The total number of directly operated stores globally remained stable at 564 as of March 29, 2025, compared to the same number in 2024[54]. - The company opened 20 new Ralph Lauren stores in Asia, increasing the total to 154 stores as of March 29, 2025, compared to 138 stores in 2024[54]. - Licensing revenues for the twelve months ended March 29, 2025, totaled $144.6 million, consistent with $146.3 million in the previous year[57]. Impairment Charges - The company recorded impairment charges related to the write-down of long-lived assets in connection with certain North America wholesale shops[62].

Note: Ralph Lauren's FY'25 concluded in March 2025. Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images SOPA Images/LightRocket via Getty Images Ralph Lauren (NYSE: RL) is set to disclose its fiscal fourth-quarter earnings on Thursday, May 22, 2025, with analysts estimating earnings of $2.40 per share on $1.65 billion in revenue. This would indicate a 45% year- over-year increase in earnings and a 5% rise in sales compared to last year's figures of $1.41 per share and $1.57 billion ...

Core Viewpoint - Analysts project Ralph Lauren (RL) will report quarterly earnings of $1.96 per share, a 14.6% increase year over year, with revenues expected to reach $1.63 billion, reflecting a 4.1% increase from the same quarter last year [1] Earnings Estimates - The consensus EPS estimate has been revised 0.2% lower over the last 30 days, indicating a collective reevaluation by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Projections - Analysts estimate 'Net revenues- Retail' at $1.01 billion, suggesting a year-over-year increase of 6.7% [5] - 'Net revenues- Wholesale' are projected to reach $585.58 million, indicating a 0.9% increase from the previous year [5] - 'Geographic Net revenues- Other- Licensing' is expected to be $35.47 million, reflecting a decrease of 3.4% year over year [5] Geographic Revenue Estimates - 'Geographic Net revenues- North America' are anticipated to be $685.16 million, a 2.6% increase from the year-ago quarter [6] - 'Geographic Net revenues- Europe' are projected at $493.24 million, suggesting a 5.1% year-over-year increase [6] - 'Geographic Net revenues- Asia' are expected to reach $420.67 million, indicating a 6.7% increase year over year [6] Stock Performance - Ralph Lauren shares have returned 32.9% over the past month, outperforming the Zacks S&P 500 composite's 13.1% change [7] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to mirror overall market performance in the near future [7]