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Financial Performance - Ralph Lauren raised its full-year outlook [1] - Company recorded double-digit revenue growth across all geographic segments [1]

Core Insights - Ralph Lauren reported $2.01 billion in revenue for the quarter ended September 2025, marking a year-over-year increase of 16.5% and exceeding the Zacks Consensus Estimate of $1.9 billion by 6.04% [1] - The company's EPS for the same period was $3.79, up from $2.54 a year ago, representing a surprise of 9.86% compared to the consensus estimate of $3.45 [1] Revenue Performance - North America net revenues reached $832.4 million, surpassing the estimated $778.58 million, reflecting a year-over-year increase of 12.6% [4] - Other Licensing revenues were reported at $44.4 million, exceeding the average estimate of $40.27 million, with a year-over-year change of 9.9% [4] - Asia net revenues amounted to $445.6 million, above the estimated $436.3 million, showing a year-over-year increase of 17.2% [4] - Europe net revenues were $688.3 million, compared to the average estimate of $640.76 million, representing a year-over-year change of 21.6% [4] - Retail net revenues totaled $1.26 billion, exceeding the average estimate of $1.22 billion, with a year-over-year increase of 15.3% [4] - Wholesale net revenues were reported at $701.8 million, surpassing the estimated $633.44 million, reflecting a year-over-year increase of 19.1% [4] Stock Performance - Ralph Lauren shares have returned -3.7% over the past month, while the Zacks S&P 500 composite has changed by +1.3% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Revenue Breakdown - Approximately 57% of Fiscal 2025 net revenues were earned outside of the U.S.[168] - North America segment represented approximately 43% of Fiscal 2025 net revenues, primarily from retail and wholesale sales in the U.S. and Canada[170] - Europe segment accounted for approximately 31% of Fiscal 2025 net revenues, with sales through retail and wholesale businesses in Europe and emerging markets[170] - Asia segment represented approximately 24% of Fiscal 2025 net revenues, primarily from retail and wholesale sales in Asia, Australia, and New Zealand[170] Financial Performance - For the three months ended September 27, 2025, the company reported net revenues of $2.011 billion, a 16.5% increase compared to $1.726 billion for the same period in 2024[180] - Net income for the three months ended September 27, 2025, was $207.5 million, up from $147.9 million in the prior year, resulting in net income per diluted share of $3.32, an increase of $1.01[184] - Total net revenues increased by $491.6 million, or 15.2%, to $3.730 billion for the six months ended September 27, 2025, compared to the prior fiscal year period[223] - Net income rose to $427.9 million for the six months ended September 27, 2025, compared to $316.5 million in the prior year, marking an increase of $111.4 million[241] Cost and Profitability - Gross profit as a percentage of net revenues increased by 100 basis points to 68.0% for the three months ended September 27, 2025, driven by average unit retail growth and favorable product mix[182] - Selling, general, and administrative expenses as a percentage of net revenues declined by 160 basis points to 53.9% for the three months ended September 27, 2025, due to operating leverage on higher net revenues[183] - Operating income increased by $66.8 million, or 37.3%, to $245.7 million, with operating income as a percentage of net revenues rising to 12.2%[211] - Gross profit rose by $387.2 million, or 17.4%, to $2.609 billion, with a gross profit margin of 69.9%, up from 68.6%[231] Operational Efficiency - The company is executing a multi-year Next Generation Transformation project aimed at optimizing inventory levels and improving operational efficiency[172] - The company faces risks from inflationary pressures, including increases in raw material and transportation costs[159] - The global economic environment remains challenging, with ongoing inflationary pressures and geopolitical tensions impacting consumer sentiment and spending[175] Cash Flow and Liquidity - The company ended the second quarter of Fiscal 2026 with a net cash and short-term investments position of $407.8 million, down from $940.4 million at the end of Fiscal 2025[187] - Net cash provided by operating activities was $229.3 million during the six months ended September 27, 2025, compared to $374.5 million in the same period of 2024[188] - Cash and cash equivalents decreased by $479.5 million to $1.443 billion as of September 27, 2025, primarily due to stock repurchases and capital expenditures[244] Shareholder Returns - The quarterly cash dividend was increased from $0.825 to $0.9125 per share, reflecting the company's commitment to returning value to shareholders[267] - The remaining availability under the Class A common stock repurchase program was approximately $1.539 billion as of September 27, 2025, following an expansion allowing for an additional $1.500 billion in repurchases[265] Tax and Equity - The effective tax rate decreased to 14.6% from 21.4%, reflecting a 680 basis point improvement[197] - The company’s equity decreased to $2.582 billion as of September 27, 2025, from $2.589 billion as of March 29, 2025, due to share repurchase activity and dividends declared[189] Investment and Financing - As of September 27, 2025, the company had $750 million available under its Global Credit Facility, with the ability to expand this to $1.500 billion[262] - The company has no financial covenants under its Global Credit Facility and Pan-Asia Borrowing Facilities, providing flexibility in its financing[263] - The company recorded $243.7 million in payment obligations under its supplier finance program as of September 27, 2025, up from $181.0 million in March 2025[259] Foreign Exchange and Risk Management - The company uses forward foreign currency exchange contracts to hedge against exchange rate fluctuations, primarily related to the Euro and Japanese Yen[275] - The company has established policies for managing foreign exchange risk, including transaction limits and credit quality controls[277] - The investment objectives include diversification to minimize liquidity and credit risk while achieving maximum returns[281]

Financial Data and Key Metrics Changes - The company's second quarter revenue growth was 14%, exceeding the high single-digit outlook, with total adjusted gross margin expanding 70 basis points to 67.7% [21][22] - Adjusted operating margin increased 210 basis points to 13.5%, with adjusted operating income rising by 34% [22][23] - The company ended the period with $1.6 billion in cash and short-term investments and $1.2 billion in total debt [28] Business Line Data and Key Metrics Changes - Core product sales grew mid-teens, driven by strong performance in cotton cable knit and seasonal styles [12][13] - Women's apparel and high-potential categories like handbags saw strong double-digit growth, outpacing total company growth [12][14] - Digital ecosystem sales grew double digits, reflecting balanced growth across regions [21] Market Data and Key Metrics Changes - Asia led growth with sales up mid-teens, particularly in China, which grew more than 30% [16][25] - North America revenue increased 13%, with retail comps also up 13% [23] - Europe revenue increased 15%, driven by strong performance across retail and wholesale channels [24][25] Company Strategy and Development Direction - The company introduced the "Next Great Chapter Drive Plan," aiming to capture a larger share of the $400 billion premium and luxury market [4][5] - Strategic pillars include elevating the lifestyle brand, driving core products, and expanding in key cities [5][15] - The company is focused on investing in brand-building activations and enhancing consumer engagement through technology [17][41] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the second half of the year due to potential consumer headwinds and macroeconomic volatility [7][21] - Despite this caution, the company raised its full-year guidance based on strong first-half performance [7][29] - The company expects to mitigate tariff impacts and maintain gross margin expansion in the long term [30][31] Other Important Information - The company opened 38 new owned and partner stores globally and plans to open a sixth restaurant in London by 2028 [16] - The company has repurchased $313 million in shares this fiscal year to date, returning approximately $420 million to shareholders [27] Q&A Session Summary Question: Updated outlook for consumer health and brand awareness - Management noted strong momentum and resilience in consumer behavior, with no significant changes observed [40] - Global brand awareness remains a focus, particularly in markets like Germany and China, where opportunities for growth exist [42][44] Question: Pricing strategy and tariff mitigation - The company continues to leverage pricing as a growth driver, with AUR growth expected to remain strong [48] - Management anticipates Q4 to be the most impacted by tariffs but expects to mitigate these pressures over time [49][51] Question: Engagement with North American value-oriented consumers - The company plans to provide a compelling price-value proposition while maintaining brand integrity [56][59] - Marketing efforts are focused on better segmentation to appeal to various consumer groups [61] Question: North America wholesale trajectory - Management expressed confidence in the underlying quality growth of the wholesale business, despite planned reductions in off-price sales [76][78]

Financial Data and Key Metrics Changes - The company's second quarter revenue growth was 14%, exceeding the high single-digit outlook, with total adjusted gross margin expanding 70 basis points to 67.7% [21][22] - Adjusted operating margin increased 210 basis points to 13.5%, with adjusted operating income rising 34% [22][23] - The company ended the period with $1.6 billion in cash and short-term investments and $1.2 billion in total debt [28] Business Line Data and Key Metrics Changes - Core product sales grew mid-teens, driven by strong performance in cotton cable knit and seasonal Oxford shirts [12] - Women's apparel and high-potential categories like handbags saw strong double-digit growth, outpacing total company growth [12][14] - Digital ecosystem sales grew double digits, reflecting balanced growth across regions [21] Market Data and Key Metrics Changes - Asia and Europe led performance with sales increasing 16% and 15% respectively, while North America sales grew 13% [21] - China sales increased more than 30%, driven by strong consumer response to brand-building activities [16][25] - North America retail comps were up 13%, with digital comps growing 15% [23] Company Strategy and Development Direction - The company introduced the Next Great Chapter Drive Plan, aiming to capture a larger share of the $400 billion premium and luxury market [4][5] - The strategy focuses on elevating the lifestyle brand, driving core products, and expanding in key cities [5][15] - The company plans to continue investing in brand activations and technology to enhance consumer engagement [17][18] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the second half of the year due to potential consumer headwinds and general volatility [7] - Despite macroeconomic uncertainties, the company is confident in capturing market share opportunities [7][29] - The full-year revenue growth outlook was raised to approximately 5%-7%, reflecting better-than-expected performance in the first half [28][29] Other Important Information - The company added 1.5 million new consumers to its DTC businesses, driven by digital and full-price store customers [10] - The company plans to exit 90-100 wholesale doors in fiscal 2026, with approximately half related to Hudson's Bay [24] - The company launched an AI styling tool, Ask Ralph, developed with Microsoft, to enhance consumer shopping experience [17] Q&A Session Summary Question: Updated outlook for consumer health and brand awareness - Management noted strong momentum in business and no significant changes in consumer behavior, with a focus on attracting full-price customers [40][42] Question: Pricing strategy and tariff mitigation - Management discussed the sustained AUR growth driven by brand investment and pricing actions, with expectations for continued gross margin expansion despite tariff pressures [48][50] Question: Engagement strategies for North America value-oriented consumers - The company emphasized flexibility in pricing and a compelling value proposition to appeal to value-sensitive customers during the holiday season [56][58] Question: North America wholesale trajectory - Management indicated healthy growth in North America wholesale, with expectations for some pressure in the second half due to planned reductions in off-price sales [76][78] Question: Performance in outlet versus full-price channels - Consistent growth was observed across full-price and outlet stores, with a focus on expanding full-price locations while consolidating outlet presence [80]

Financial Data and Key Metrics Changes - The company's second quarter revenue growth was 14%, exceeding the high single-digit outlook, with total adjusted gross margin expanding 70 basis points to 67.7% [18][19] - Adjusted operating margin increased 210 basis points to 13.5%, with adjusted operating income rising by 34% [19][20] - The company ended the period with $1.6 billion in cash and short-term investments and $1.2 billion in total debt, with net inventory increasing 12% year-over-year, aligning with revenue growth [23][24] Business Line Data and Key Metrics Changes - Core product sales, representing over 70% of the business, grew mid-teens, driven by strong performance in various categories including sweaters and jackets [11][12] - High-potential categories such as women's apparel, outerwear, and handbags saw strong double-digit growth, outpacing total company growth [11][12] - The direct-to-consumer (DTC) segment delivered strong comp growth across regions, with global comps increasing 13% [13][14] Market Data and Key Metrics Changes - Asia led growth with sales up mid-teens, particularly in China, which grew more than 30% [14][22] - North America revenue increased 13%, with retail comps also up 13%, driven by strong performance in both direct-to-consumer and wholesale businesses [20][21] - Europe revenue increased 15%, with retail comps up 10%, reflecting ongoing brand strength [21][22] Company Strategy and Development Direction - The company introduced the "Next Great Chapter Drive Plan," aiming to capture a larger share of the $400 billion premium and luxury market, currently holding less than 2% market share [4][5] - Strategic initiatives include elevating the lifestyle brand, driving core products, and expanding in key cities [5][13] - The company is focused on investing in brand-building activations and enhancing consumer engagement through innovative tools like the AI styling assistant [15][33] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the second half of the year due to potential consumer headwinds and macroeconomic volatility, but is confident in capturing market share opportunities [6][18] - The company raised its full-year revenue guidance to a range of 5%-7%, reflecting better-than-expected performance in the first half [24][25] - Management emphasized the resilience of the core consumer and the ongoing demand for the brand, despite macroeconomic pressures [32][34] Other Important Information - The company plans to exit 90-100 wholesale doors in fiscal 2026, with a focus on elevating brand presence and reducing off-price sales [21][22] - Recent marketing investments normalized at 7.8% of sales, down from 8.7% the previous year, with expectations to maintain around 7.5% for fiscal 2026 [19][20] - The company is committed to leveraging its strong balance sheet for strategic growth investments and shareholder returns, having repurchased $313 million in shares this fiscal year to date [23][24] Q&A Session Summary Question: Updated outlook for consumer health and macro assumptions - Management noted strong momentum in business and no significant changes in consumer behavior, maintaining a focus on full-price customer recruitment [31][32] Question: Pricing strategy and ability to mitigate tariffs - The company continues to leverage pricing as a growth driver and expects to mitigate tariff impacts through strategic actions [37][40] Question: Engagement strategies for North America value-oriented consumers - Management highlighted flexibility in pricing architecture and targeted marketing to appeal to value-sensitive consumers during the holiday season [42][45] Question: AUR growth and unit sales - The company has seen consistent AUR growth and is focusing on unit growth in targeted areas, while navigating macro pressures [48][50] Question: North America wholesale trajectory - Management expressed confidence in the underlying quality growth of the wholesale business, despite planned reductions in off-price sales [52][56] Question: Performance in outlet versus full-price stores - Consistent growth was observed across full-price and outlet stores, with a focus on expanding full-price locations while consolidating outlet presence [58][59]

Core Insights - Ralph Lauren Corp. has experienced significant growth, with revenues increasing by 17 percent to $2 billion in the fiscal second quarter, and a 14 percent rise in constant currencies [1] - The company reported a nearly 40 percent increase in net profits, reaching $207.5 million, and adjusted earnings per share of $3.79, surpassing analyst expectations [3] Revenue Performance - North American net revenues rose by 13 percent, Europe saw a 22 percent increase, and Asia grew by 17 percent [1] - A 12 percent increase in average unit retail prices in the direct-to-consumer network contributed to revenue growth [2] Profitability Metrics - Adjusted operating income reached $283 million, with a margin of 14.1 percent, an improvement of 270 basis points year-over-year [3] Future Outlook - The company has raised its fiscal 2026 sales growth forecast to 5 to 7 percent in constant currencies, up from previous low to mid-digit expectations [5] - Operating margins are expected to expand by 60 to 80 basis points, an increase from the earlier forecast of 40 to 60 basis points [5] Management Commentary - The CEO expressed confidence in the company's broad-based momentum and its ability to raise guidance for both revenue and margins [4] - Despite the positive outlook, there is a note of caution regarding potential macroeconomic impacts, particularly from tariffs affecting consumer behavior in the U.S. [7]

Core Insights - Ralph Lauren raised its full-year outlook due to strong performance, recording double-digit revenue growth across all geographic segments [1] Company Performance - The company experienced double-digit revenue growth in all geographic segments, indicating robust demand and effective market strategies [1]

Financial Performance - Earnings per diluted share for Q2 Fiscal 2026 were $3.32, up 44% year-over-year on a reported basis, and $3.79, up 49% on an adjusted basis[2] - Revenue for Q2 Fiscal 2026 increased 17% to $2.0 billion on a reported basis, with a 14% increase in constant currency[7] - Net revenues for the three months ended September 27, 2025, were $2,010.7 million, a 16.5% increase from $1,726.0 million for the same period in 2024[31] - Net income for the three months ended September 27, 2025, was $207.5 million, up 40.3% from $147.9 million in the same period of 2024[31] - Basic net income per share for the three months ended September 27, 2025, was $3.39, compared to $2.36 for the same period in 2024, representing a 43.6% increase[31] - Total net revenues for the six months ended September 27, 2025, reached $3,729.8 million, a 15.2% increase compared to $3,238.2 million in the prior year[38] - Operating income for the six months ended September 27, 2025, was $519.3 million, up from $387.4 million in the same period of 2024, reflecting a 34.0% increase[35] - Operating income for the three months ended September 27, 2025, was $245.7 million, reflecting an increase from $178.9 million in the same period last year[45] Revenue Growth by Region - North America revenue increased 13% to $832 million, with comparable store sales also up 13%[12] - Europe revenue rose 22% to $688 million, with a 10% increase in comparable store sales[12] - Asia revenue increased 17% to $446 million, with comparable store sales up 16%[12] - North America segment net revenues increased by 10.5% to $1,488.6 million for the six months ended September 27, 2025, compared to $1,347.7 million in 2024[38] - Digital commerce sales in Asia grew by 36% for the three months ended September 27, 2025, indicating strong online performance[37] Shareholder Returns and Investments - The company returned approximately $420 million to shareholders through dividends and stock repurchases year-to-date[4] - The company repurchased $435.9 million of common stock during the six months ended September 27, 2025, compared to $330.2 million in the same period of 2024[33] - Capital expenditures for the six months ended September 27, 2025, were $281.1 million, significantly higher than $75.1 million in the prior year[33] - The company is investing $100 million in new product development, focusing on sustainable materials and innovative designs[54] Financial Position - The company ended Q2 Fiscal 2026 with $1.6 billion in cash and short-term investments, and $1.2 billion in total debt[15] - Total assets as of September 27, 2025, were $7,347.7 million, an increase from $6,800.0 million as of September 28, 2024[29] - Total liabilities as of September 27, 2025, were $4,765.5 million, compared to $4,357.7 million as of September 28, 2024[29] - Cash and cash equivalents as of September 27, 2025, were $1,443.0 million, a decrease from $1,922.5 million as of March 29, 2025[29] - The company reported a total current liability of $1,840.0 million as of September 27, 2025, down from $2,092.4 million as of September 28, 2024[29] Strategic Initiatives - The company plans to continue expanding its direct-to-consumer presence and enhance its digital capabilities[27] - The company is focused on managing inventory levels effectively to mitigate margin pressures in a highly promotional retail environment[27] - The company is undergoing a Next Generation Transformation project aimed at significantly transforming its operations towards a direct-to-consumer model[51] - Ralph Lauren plans to expand its presence in Asia, targeting a 20% increase in market share over the next three years[54] - The company announced a strategic partnership with a leading technology firm to enhance customer experience through AI[54] - Ralph Lauren is exploring potential acquisitions to bolster its portfolio and expand into new markets[54] Future Guidance - Full year Fiscal 2026 revenue is now expected to increase 5% to 7% on a constant currency basis[18] - Operating margin for Fiscal 2026 is expected to expand approximately 60 to 80 basis points in constant currency[19] - Future guidance for Fiscal 2026 excludes potential restructuring-related charges, with uncertainty regarding the timing and amount of such charges[53] - Future guidance indicates expected revenue growth of 8-10% for the upcoming fiscal year[54] Profitability Metrics - Gross profit for the six months ended September 27, 2025, was $2,608.7 million, compared to $2,221.5 million for the same period in 2024, reflecting a 17.4% increase[31] - Gross margin improved to 60%, up from 58% in the previous year, reflecting better pricing strategies and cost management[54] - The effective tax rate for the three months ended September 27, 2025, was 14.6%, compared to 21.4% in the previous year[46] - The company incurred total other operating expenses of $1,120.7 million for the three months ended September 27, 2025, compared to $976.8 million in the prior year[45]