Ralph Lauren Corp. charged past first-quarter expectations and raised its outlook for the full fiscal year, even with some trepidation over how consumers will react to the impact of higher tariffs.
Net income rose 30.7 percent in the quarter to $220.4 million from $168.6 million a year ago. Adjusted income increased a slightly faster 34.9 percent to $236 million, or $3.77 a diluted share — 22 cents ahead of the $3.50 EPS analysts forecast, according to Yahoo Finance.
Investors approved and shares of Ralph Lauren, which have already grown 90 percent over the past year, rose 2.3 percent in premarket trading on Wall Street to $310.
There are a lot of elements to that stock price expansion — the company has been steadily increasing its average prices by pumping more into the brand and solidifying its image while also navigating all the operational complexities of tariffs and a global supply chain.
But a lot of it seems to be that, even after nearly 60 years in the business, Ralph is still Ralph.
“What we stand for — aspiration, optimism, individuality and authenticity — inspires people in every corner of the world,” said Ralph Lauren, executive chairman and chief creative officer, in a statement. “And we are bringing these values to life and inviting people to step into their dreams in new and powerful ways — from our first-ever fashion presentation in Shanghai this April to our MLB World Tour Tokyo Series activations and our Women’s Polo presentation in Paris.”
Revenues for the three months ended June 28 increased 14 percent to $1.7 billion, an 11 percent bump up in constant currency. By region:
- North American revenues rose 8 percent to $656 million, with comparable sales up 12 percent.
- The European top line advanced 16 percent to $555 million, or 10 percent in constant currency, with comp sales also up 10 percent.
- Revenues in Asia grew 21 percent to $474 million, a 19 percent increase in constant currencies, with an 18 percent comp sales rise.
Ralph Lauren’s average unit retail prices increased 14 percent through its own stores and web site.
Accordingly, the company has grown more bullish on the year and is now projecting revenues will increase in the low- to mid-single digits on a constant currency basis, up from the low-single digit forecast made in May. The operating margin for fiscal 2026 is now expected to expand by 40 to 60 basis points in constant currency. Before, the firm said that it would grow operating margin only “modestly.”
The strong outlook comes against a market that’s expected to be getting tougher.
Patrice Louvet, president and chief executive officer, told WWD Thursday morning: “We’re cautious in the back half disproportionately in North America because we don’t know how consumers are going to respond to what will likely be a more inflationary environment. We have heard many companies across industries talk about how they will increase pricing to deal with tariffs among different interventions. And we don’t really know how the consumer’s going to respond to all these expected increases across industries.”