The company now anticipates full-year revenue growth in the low- to mid-single digits on a constant currency basis, with foreign currency expected to positively impact revenue growth by approximately 150 to 200 basis points.
Full year operating margin is projected to improve by about 40 to 60 basis points in constant currency, surpassing previous estimates.
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This improvement is primarily attributed to operating expense leverage. Foreign currency is anticipated to contribute positively to both gross and operating margins by approximately 10 and 40 basis points, respectively.
Despite these positive indicators, Ralph Lauren’s management has expressed caution regarding the second half of the fiscal year due to potential impacts of tariffs on consumer behaviour.
During the earnings call, president and CEO Patrice Louvet said: “Despite macro headwinds, we remain well positioned and we are on offense based on our continued commitment to invest behind our brands and market share gains, our strong and growing geographical presence, largely concentrated in our key cities in each region and our relentless focus on improving technology, AI and analytics to better serve our consumers and drive greater efficiencies in our business, all underscored by our balance sheet and operating discipline.”
Overall performance in Q1 FY26
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By GlobalDataRalph Lauren’s first-quarter revenue climbed 14% to $1.72bn on a reported basis and saw an 11% increase in constant currency.
Notably, Asia revenue experienced a significant surge with a 21% growth to $474m, driven by all key markets including China, increasing more than 30% from the prior year quarter.
Europe also posted strong results with a 16% increase to $555m.
Gross profit for the quarter reached $1.24bn with a gross margin of 72.3%, marking an improvement of 180 basis points over the prior year. This expansion was fuelled by average unit retail (AUR) growth, favourable channel and geographic mix shifts, as well as lower cotton costs which offset additional tariff pressures.
Operating income stood at $274m with an operating margin of 15.9% on a reported basis.
The company recorded net income of $220.4m in Q1 FY26. This translates to diluted earnings per share of $3.52.
The company concluded the quarter with a strong balance sheet featuring $2.3bn in cash and short-term investments and total debt of $1.6bn. Inventory levels were up by 18% at $1.2bn compared to the prior year period.
“We delivered strong first quarter results across geographies, channels and consumer segments. While we continue to approach the current global operating environment with prudence, we are encouraged by the broad-based strength in our brand and our businesses as we execute on our long-term strategic priorities — including recruiting new and younger consumers, strengthening our core and high-potential categories, and developing our key city ecosystems in each region,” Patrice Louvet added.
