Ralph Lauren recorded broad-based growth across its operating regions, exceeding expectations and leaving the company “confident in the strength of [its] brand”.
The company reported particularly strong performance in Asia, where revenue rose 28% to $571m in Q2. Comparable store sales in the region improved by 24%, aided by a 23% increase in brick-and-mortar sales and a 31% rise in digital commerce.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
North America generated $885m in revenue for Q2, an increase of 6%. Retail comparable sales in the region also grew by 6%, and wholesale revenue increased by 8%, which the company attributed in part to the earlier timing of shipments.
In Europe, revenue on a reported basis increased 1% year-on-year to $696m. Within the region, digital commerce posted a 9% rise, while brick-and-mortar retail sales fell by 4%.
Tariff refunds, lower costs boost profit
Ralph Lauren’s gross profit reached $1.6bn in Q2, translating to a gross margin of 74.2%, which was 620 basis points higher than the same period last year. This was primarily driven by tariff refunds in the quarter. On an adjusted basis, gross margin was 70.5%, up 250 basis points, reflecting growth in average unit retail, a favourable geographic mix, and lower product costs.
Operating expenses on a reported basis increased by 13% to $1.3bn. On an adjusted basis, operating expenses were $1.2bn, up 11%.
“As we enter the Holiday season, I’m reminded of what has always inspired me — the beauty of the world around us, the warmth of family and the optimism and sense of possibility that have guided us for nearly 60 years,” commented Ralph Lauren, executive chairman and chief creative officer at the company.
“These values are deeply personal to me and remain at the heart of our company and everything we create.”
Outlook for Q3 and FY2027
Reflecting the stronger-than-anticipated second quarter, Ralph Lauren now anticipates full-year fiscal 2027 constant currency revenue growth of 6% to 7%, up from its previous range of 5% to 6%.
The operating margin is also expected to improve by 80 to 100 basis points in constant currency, compared to the earlier outlook.
The company projects a neutral impact of foreign currency on operating margin for the year, with gross margin set to benefit by up to 30 basis points.
For the third quarter, the company is guiding for constant currency revenue growth of around 3% to 4%, factoring in the impact of wholesale timing and strategic off-price reductions.
The operating margin is expected to expand by 50 to 70 basis points in constant currency for the quarter.
Ralph Lauren chief executive officer Patrice Louvet said the strong quarterly results supported the company’s decision to lift its financial outlook and that key strategic priorities would continue to receive investment.
Louvet stated: “We delivered strong second quarter performance, enabling us to raise our Fiscal 2027 outlook once again.
“Through a dynamic global operating environment, we continue to invest in the strategic priorities that are bringing our Next Great Chapter: Drive plan to life — strengthening our brand desirability and delighting multi-generational customers in every geography around the world to drive sustainable long-term growth and value creation. We remain confident in the strength of our brand, our teams and our diversified engines of growth through this fiscal year and beyond.”
Ralph Lauren stressed that its business continues to be supported by what it calls its “fortress foundation” – five key enablers: people and culture, digital technology and analytics, superior operational capabilities, a “powerful balance sheet” and leadership in citizenship and sustianability.
This latest report follows shortly after a proxy filing showed that Ralph Lauren has replaced its citizenship and sustainability targets with a focus on AI in a “sign of the times” for fashion firms.
