Ralph Lauren Q3 Earnings Call Highlights

Core Insights - The company reported strong third-quarter fiscal 2026 results, exceeding revenue and profit commitments, with a 10% increase in total revenue and significant margin expansion [4][6][17] - The holiday marketing campaigns generated 2.9 billion global impressions, contributing to broad-based momentum across geographies and product categories [1][4] - The company is implementing a three-year "Next Great Chapter: Drive" plan, focusing on elevating the brand, expanding product categories, and enhancing consumer engagement in key cities [2] Financial Performance - Total revenue increased by 10% in Q3, with adjusted gross margin rising 140 basis points to 69.8% and adjusted operating margin up 200 basis points to 20.7% [6][17] - The company added 2.1 million new consumers to its direct-to-consumer (DTC) businesses, with social media followers increasing to over 68 million [6][10] - North America DTC revenue grew by 7% and wholesale by 11%, while Asia saw a remarkable 22% revenue growth, with China exceeding 30% [14][16][17] Marketing and Brand Strategy - The company emphasized an "always on" marketing approach, with significant events planned, including the Milan men's show and the Winter Olympics [7] - Marketing spending increased to 8% of Q3 sales, with an outlook raised to 7.5% to 8% for the full year [13] - Core products, representing over 70% of the business, grew low double digits, with high-potential categories like women's apparel and handbags rising in the high teens [8][9] Future Outlook - The company raised its fiscal 2026 revenue outlook, now expecting high single to low double-digit growth, particularly in Asia [19] - For Q4, the company anticipates mid-single-digit constant-currency revenue growth but expects declines in gross and operating margins due to higher tariffs [20][21] - Management is cautious about the North American operating environment, anticipating a decline in wholesale revenue due to strategic reductions in off-price sales [14][15]