Ralph Lauren Q3 earnings beat but shares slide on tariff-driven margin outlook Proactive uses images sourced from Shutterstock Ralph Lauren Corp (NYSE:RL) shares fell nearly 7% in early trading on Thursday, even after the luxury apparel maker reported fiscal third-quarter results that exceeded Wall Street expectations, as investors focused on its outlook for margin pressure in the fourth quarter. The company raised its full-year fiscal 2026 outlook, now expecting constant-currency revenue growth in the hi ...

Financial Data and Key Metrics Changes - The company reported a total revenue growth of 10% in Q3, exceeding the mid-single-digit outlook, with Asia leading at 22% growth, followed by North America at 8% and Europe at 4% [23][31] - Adjusted gross margin expanded by 140 basis points to 69.8%, driven by AUR growth and a favorable mix shift towards full-price businesses [24][33] - Adjusted operating margin increased by 200 basis points to 20.7%, with operating profit rising by 21% [25] Business Line Data and Key Metrics Changes - Core product sales grew in low double digits, driven by strong demand in categories like cotton cable knits and children's programs [13][24] - High-potential categories, including women's apparel and handbags, increased in high teens, outpacing total company growth [14][15] - Direct-to-consumer (DTC) business in North America increased by 7%, with retail comps up 7% and digital comps also growing by 7% [26] Market Data and Key Metrics Changes - Asia's revenue increased by 22%, with retail comp growth of 20%, driven by strong performance in China, which grew over 30% [29][31] - North America revenue grew by 8%, with strong performance across both DTC and wholesale businesses [26][27] - Europe saw a revenue increase of 4%, with healthy comps in full-price stores offset by softer outlet trends [28][32] Company Strategy and Development Direction - The company is focused on its "Next Great Chapter: Drive" strategic plan, which aims to elevate the brand, drive core products, and expand in key cities [8][20] - The strategy emphasizes a cinematic storytelling approach to marketing, aiming to connect deeply with consumers and enhance brand desirability [5][44] - The company plans to continue leveraging advanced technology, AI, and analytics to improve consumer engagement and operational efficiency [7][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's resilience and ability to navigate an uncertain global environment, focusing on long-term growth and value creation [20][30] - The outlook for fiscal 2026 has been raised, expecting constant currency revenues to increase in the high single to low double digits [31][33] - Management remains cautious about the North American operating environment due to ongoing consolidation in the wholesale channel [32] Other Important Information - The company added 2.1 million new consumers to its DTC businesses in Q3, reflecting strong momentum among younger consumers [11][12] - The launch of "Ask Ralph," an AI-powered digital shopping assistant, is expected to enhance customer engagement and provide valuable first-party data [78] - The company opened 32 new stores globally, expanding its presence in key markets [18] Q&A Session Summary Question: How is the company thinking about sustaining longer-term brand momentum with increased marketing? - Management emphasized the importance of cultural moments and experiences in attracting and retaining consumers, alongside consistent execution across all business aspects [42][44] Question: What are the drivers of the raised outlook for Q4? - Management noted continued global momentum across regions and channels, particularly in North America and Asia, despite expected moderation in growth due to timing of wholesale receipts [46][47] Question: Can you elaborate on the drivers of AUR increase and any price resistance from consumers? - Management highlighted that AUR growth was driven by reduced promotional activity and strong full-price demand, with no observed price resistance from core customers [50][54] Question: What is the outlook for Europe and the impact of outlet performance? - Management confirmed that Europe is expected to grow at the high end of mid-single digits, with a focus on enhancing quality of sales and reducing promotional activity in outlets [59][64] Question: What are the early learnings from the implementation of Ask Ralph? - Management reported encouraging early reviews and insights from consumer interactions, with plans to expand features and integrate further into the digital ecosystem [77][78]

Financial Data and Key Metrics Changes - The company reported a total revenue growth of 10% for the third quarter, exceeding the mid-single-digit outlook, with Asia leading at 22% growth, followed by North America at 8% and Europe at 4% [23][32] - Adjusted gross margin expanded by 140 basis points to 69.8%, driven by average unit retail (AUR) growth and a favorable mix shift towards full-price businesses [24][34] - AUR grew by 18% in the third quarter, significantly above the initial guidance of high single digits, supported by strong full-price selling trends and reduced discounting [24][55] Business Line Data and Key Metrics Changes - Core product sales grew in low double digits, driven by strong demand in categories such as cotton cable knits and children's programs [13][24] - High-potential categories, including women's apparel and handbags, increased in high teens, outpacing total company growth [13][15] - The direct-to-consumer (DTC) business in North America increased by 7%, with significant quality of sales gains across channels [26] Market Data and Key Metrics Changes - Asia's revenue increased by 22%, with retail comp growth of 20%, driven by strong performance in China, which grew over 30% [30][32] - North America saw a revenue increase of 8%, with retail comps up 7%, while Europe experienced a 4% revenue increase, maintaining strong brand momentum [25][27] - The digital ecosystem sales grew in mid-teens, reflecting growth across all regions, particularly led by Asia [23][30] Company Strategy and Development Direction - The company is focused on its three-year strategic plan, "Next Great Chapter: Drive," which aims to elevate the lifestyle brand, drive core products, and expand in key cities [8][20] - The strategy emphasizes a shift towards full-price DTC sales and reducing reliance on off-price channels, with a commitment to operational agility and leveraging advanced technology [7][20] - The company plans to continue expanding its consumer ecosystems in top cities globally, enhancing customer engagement through immersive experiences [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's resilience and relevance across generations, despite navigating an uncertain global environment [20][39] - The outlook for fiscal 2026 has been raised, expecting constant currency revenues to increase high single to low double digits, reflecting strong execution and improved market conditions [32][34] - Management remains cautious about the North American operating environment due to ongoing consolidation in the wholesale channel [32][33] Other Important Information - The company added 2.1 million new consumers to its DTC businesses in the third quarter, building on last year's record results [11] - The launch of "Ask Ralph," an AI-powered digital shopping assistant, is expected to enhance customer engagement and provide valuable first-party data [18][80] - The company opened 32 new stores globally, including key locations in China and Europe, as part of its expansion strategy [18] Q&A Session Summary Question: How to sustain longer-term brand momentum with increased marketing budget? - Management emphasized the importance of cultural moments and experiences in attracting consumers, alongside consistent execution across marketing and product offerings [43][45] Question: What are the drivers of the raised outlook for the fourth quarter? - Management noted continued global momentum across regions and channels, with solid underlying demand despite expected moderation in growth due to timing of wholesale receipts [47][48] Question: What drove the 18% AUR growth and is there price resistance? - Management attributed AUR growth to reduced promotional activity and strong full-price demand, with no observed price resistance from core customers [51][55] Question: Can you quantify the performance spread between full-price stores and outlets in Europe? - Management confirmed that full-price stores led growth, allowing for a strategic pullback on outlet promotions, which is part of a long-term brand elevation strategy [59][62] Question: What is the impact of increased marketing investment on Europe margins? - Management indicated that increased marketing investments in Europe pressured margins but were necessary for long-term growth, with strong returns expected [70][73]

Financial Data and Key Metrics Changes - The company reported a total revenue growth of 10% for the third quarter, exceeding the mid-single-digit outlook, with Asia leading at 22% growth, North America at 8%, and Europe at 4% [20][24][26] - Adjusted gross margin expanded by 140 basis points to 69.8%, driven by average unit retail (AUR) growth and a favorable mix shift towards full-price businesses [21][31] - Free cash flow reached approximately $650 million, with $500 million returned to shareholders year-to-date [19] Business Line Data and Key Metrics Changes - Core product sales grew in low double digits, with significant contributions from cotton cable knits, wool cashmere, and children's programs [11][19] - High-potential categories, including women's apparel and handbags, increased in high teens, outpacing total company growth [11][12] - Direct-to-consumer (DTC) business in North America increased by 7%, with retail comps up 7% and digital comps also growing by 7% [23] Market Data and Key Metrics Changes - Asia's revenue increased by 22%, with China growing over 30%, driven by strong full-price demand and successful marketing campaigns [14][26] - Europe saw a 4% revenue increase, with strong performance in Germany, the UK, Italy, and Spain, despite a highly promotional competitive environment [24][25] - North America wholesale revenue increased by 11%, driven by stronger-than-expected reorders and digital wholesale performance [23] Company Strategy and Development Direction - The company is focused on its "Next Great Chapter: Drive" strategic plan, which aims to elevate the brand, drive core products, and expand in key cities [6][17] - The strategy includes leveraging advanced technology, AI, and analytics to enhance consumer engagement and operational efficiency [5][15] - The company plans to continue expanding its presence in top cities globally, with 32 new stores opened this quarter [15][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's resilience and ability to navigate an uncertain global environment, emphasizing a focus on long-term sustainable growth [17][34] - The outlook for fiscal 2026 has been raised, expecting constant currency revenues to increase high single to low double digits, up from a previous estimate of 5%-7% [29][31] - Management remains cautious about the North American operating environment due to ongoing consolidation in the wholesale channel [30] Other Important Information - The company launched the AI-powered digital shopping assistant "Ask Ralph," which is expected to enhance customer engagement and provide valuable first-party data [15][74] - The company was recognized as one of America's Best Companies by Forbes, and Ralph Lauren received the CFDA's 2025 American Womenswear Designer of the Year award [16] Q&A Session Summary Question: How to sustain long-term brand momentum with increased marketing budget? - Management emphasized the importance of cultural moments and experiences in attracting consumers, alongside consistent execution across all business aspects [39][41] Question: Drivers of raised outlook for Q4 and trends in North America and Europe? - Management noted continued global momentum and solid growth in North America, despite some moderation expected in Q4 due to timing of wholesale receipts and strategic reductions in off-price sales [43][44] Question: Drivers of AUR increase and any signs of price resistance? - Management highlighted that AUR growth was driven by reduced promotional activity and strong full-price demand, with no signs of price resistance from core customers [49][51] Question: Performance of full-price stores versus outlets in Europe? - Management confirmed that full-price stores led growth, while strategic pullbacks in outlet promotions were made to enhance long-term brand health [57][61] Question: Margin outlook for Q4 and impact of tariffs? - Management indicated that operating margin contraction in Q4 is primarily due to tariffs and timing of marketing campaigns, with expectations for continued AUR growth [81][33]

While reporting its financial results for the third quarter on Thursday, luxury fashion house Ralph Lauren Corp. (RL) said it expects revenue growth for the fourth quarter in about mid-single digits from last year on a constant currency basis.Looking ahead to fiscal 2026, the company now projects revenues to increase in the high-single to low-double digits on a constant currency basis, up from the prior forecast for a growth of 5 to 6 percent.On average, analysts polled expect net sales growth of 3.92 perc ...

格隆汇2月5日｜奢侈品零售商拉夫劳伦第三财季营收同比增长12%至24.1亿美元，市场预期为23.1亿美 元。 ...

Financial Performance - Earnings per diluted share for Q3 Fiscal 2026 were $5.82, up 25% year-over-year on a reported basis, and $6.22, up 29% on an adjusted basis [2]. - Revenue for Q3 Fiscal 2026 increased 12% to $2.4 billion on a reported basis, with a 10% increase in constant currency [5][10]. - Net income for the three months ended December 27, 2025, was $361.6 million, representing a 21.6% increase from $297.4 million in the same period last year [36]. - Basic net income per share for the three months ended December 27, 2025, was $5.91, compared to $4.76 for the same period in 2024, reflecting a 24.1% increase [36]. - Total net revenues for the three months ended December 27, 2025, were $2,358.1 million, a decrease of $47.9 million compared to the same period in 2024 [49]. - Operating income for the three months ended December 27, 2025, was reported at $471.3 million, compared to $389.7 million for the same period in 2024, reflecting an operating margin of 19.6% [50]. - Total operating income for the nine months ended December 27, 2025, was $990.6 million, compared to $777.1 million in the same period of 2024, reflecting a growth of 27.4% [40]. Revenue Growth - Global direct-to-consumer comparable store sales grew high-single-digits, with North America revenue increasing 8% to $1.1 billion [10][17]. - The company expects full-year Fiscal 2026 revenues to increase high-single to low-double digits on a constant currency basis, up from a prior outlook of 5% to 7% [22]. - North America segment net revenues increased by 9.4% to $2,566.9 million for the nine months ended December 27, 2025, compared to $2,345.4 million in 2024 [43]. - Asia segment net revenues grew by 20.5% to $1,539.9 million for the nine months ended December 27, 2025, compared to $1,277.8 million in the previous year [43]. - Digital commerce sales in North America increased by 12% for the nine months ended December 27, 2025, while brick-and-mortar sales rose by 9% [42]. Margins and Profitability - Adjusted gross margin for Q3 Fiscal 2026 was 69.9%, up 150 basis points from the prior year, driven by high-teens AUR growth [13]. - Gross profit for the three months ended December 27, 2025, was $1,681.7 million, up from $1,466.1 million in the same period last year, resulting in a gross profit margin of 69.9% [49]. - Adjusted operating income for the three months ended December 27, 2025, was $503.1 million, reflecting an adjusted operating margin of 20.9% [50]. Cash and Investments - The company ended Q3 Fiscal 2026 with $2.3 billion in cash and short-term investments, compared to $2.1 billion at the end of Q3 Fiscal 2025 [19]. - Cash and cash equivalents increased to $2,031.9 million as of December 27, 2025, from $1,922.5 million as of March 29, 2025, reflecting a growth of 5.7% [34]. - Approximately $500 million was returned to shareholders through dividends and stock repurchases in Fiscal Year-to-Date [5]. Store Expansion - The company opened 32 new stores in key cities during Q3, including locations in Chengdu, Sydney, and New Delhi [11]. - The total number of directly operated stores increased to 600 globally as of December 27, 2025, compared to 579 in the previous year [47]. Shareholder Returns - The company declared dividends of $0.9125 per share for the three months ended December 27, 2025, compared to $0.825 per share for the same period in 2024, an increase of 10.6% [36]. - The company repurchased common stock totaling $473.4 million during the nine months ended December 27, 2025, compared to $404.6 million in the same period of 2024 [38]. Restructuring and Charges - The company reported a restructuring charge of $31.8 million for the three months ended December 27, 2025, compared to $12.2 million in the same period last year [36]. - The adjustments during the fiscal periods include charges related to the Company's restructuring activities and other non-recurring events, with income tax benefits adjusted accordingly [57]. - The Fiscal 2026 full year and fourth quarter guidance excludes potential restructuring-related and other charges that may occur in future periods [58]. - A full reconciliation of non-U.S. GAAP financial measures to U.S. GAAP cannot be provided due to the uncertain nature of potential future charges [58].

Core Viewpoint - Ralph Lauren reported third-quarter sales exceeding Wall Street expectations, driven by a strong holiday season and robust demand for its Polo shirts and leather handbags among affluent shoppers [1] Group 1: Sales Performance - The company's third-quarter sales surpassed analyst forecasts, indicating strong market performance [1] - The holiday season contributed significantly to the sales growth, reflecting consumer confidence and spending [1] Group 2: Product Demand - There was resilient demand for Polo shirts and leather handbags, highlighting the brand's appeal among affluent consumers [1]

NEW YORK--(BUSINESS WIRE)--Ralph Lauren Reports Strong Third Quarter Fiscal 2026 Holiday Results, Ahead of Expectations, and Raises Full Year Outlook. ...

Core Insights - Ralph Lauren Corporation (RL) is expected to report third-quarter fiscal 2026 results on February 5, with revenue estimates at $2.3 billion, indicating a 7.9% year-over-year growth, and earnings estimates at $5.78 per share, suggesting a 19.9% increase from the previous year [1][9]. Group 1: Financial Performance - The company's bottom line exceeded the Zacks Consensus Estimate by 9.9% in the last reported quarter, with an average trailing four-quarter earnings surprise of 9.8% [2]. - Management anticipates mid-single-digit revenue growth on a constant-currency basis for the fiscal third quarter, with foreign currency expected to contribute an additional 150-200 basis points [6]. Group 2: Growth Drivers - Ralph Lauren's performance is likely bolstered by a strong brand presence, a diverse product portfolio, and expanding e-commerce capabilities, enhancing its market position [3]. - The company has been investing in digital transformation, including mobile and omnichannel strategies, which have improved consumer engagement and contributed positively to fiscal third-quarter performance [4]. Group 3: Market Trends - Retail and wholesale operations are key pillars for Ralph Lauren, with flagship stores and partnerships expected to enhance comparable sales across North America, Europe, and Asia [5]. - The company has been optimistic about brand momentum and outperformance across all regions and channels in the first half of the year [5]. Group 4: Margin and Cost Challenges - Ralph Lauren is facing rising selling costs due to supply-chain disruptions, inflation, tariffs, and market volatility, which may limit growth flexibility [7]. - Elevated operating expenses from investments in brand activations and technology are compressing margins, potentially impacting profitability despite steady revenue growth [8]. Group 5: Stock Valuation - Ralph Lauren's stock is currently trading at a premium valuation of 21X on a forward 12-month basis, higher than its five-year median of 15.04X and the industry average of 15.82X [12]. - The stock has seen a 12.2% increase over the past three months, outperforming the industry growth of 6.9% [13].