Ralph Lauren(RL) - 2026 Q2 - Quarterly Report

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]