Ralph Lauren Q2 2026 Earnings Report

Ralph Lauren EPS Results

• Actual EPS: $3.79
• Consensus EPS: $3.45
• Beat/Miss: Beat by +$0.34
• One Year Ago EPS: $2.54

Ralph Lauren Revenue Results

• Actual Revenue: $2.01 billion
• Expected Revenue: $1.88 billion
• Beat/Miss: Beat by +$128.09 million
• YoY Revenue Growth: +16.50%

Ralph Lauren Announcement Details

• Quarter: Q2 2026
• Date: 11/6/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, November 6, 2025
• Conference Call Time: 9:00AM ET

Ralph Lauren (NYSE:RL) (NYSE: RL) is a global designer, marketer and distributor of premium lifestyle products under the Ralph Lauren name and a portfolio of related brands. The company, founded by Ralph Lauren in 1967 and headquartered in New York City, has grown from a single line of men's neckties into a global lifestyle business that spans apparel, accessories and home goods.

Ralph Lauren's product assortment includes menswear, womenswear and childrenswear along with footwear, leather goods, eyewear, fragrances and home furnishings. The company sells through a mix of distribution channels, including directly operated retail stores, outlet locations, a global e-commerce platform, wholesale customers such as department stores and specialty retailers, and licensing partners for select product categories and regions.

The business is organized across multiple brand tiers — from Polo Ralph Lauren and Double RL (RRL) to Ralph Lauren Collection and other diffusion lines — allowing the company to address different consumer segments and price points. Ralph Lauren also leverages licensing arrangements for categories like fragrances and eyewear and operates a global supply chain to serve markets across the Americas, Europe, and Asia-Pacific.

Ralph Lauren the founder has been central to the brand’s identity since its inception, and Patrice Louvet has served as President and Chief Executive Officer since 2017. The company’s ongoing strategy emphasizes brand elevation, omnichannel retailing, and international growth while balancing full-price retail with outlet and wholesale distribution to reach a broad global customer base.

Ralph Lauren Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Raised FY26 guidance — management now expects constant-currency revenue growth of ~5%–7% and raised operating-margin expansion to ~60–80 bps (gross margin +10–30 bps), reflecting stronger-than-expected H1 results.
• Positive Sentiment: Broad-based demand and brand momentum — Q2 comps +13%, AUR +12%, DTC and stores both strong, Asia led with sales +16 and China >30%, and the company added 1.5 million new DTC customers.
• Negative Sentiment: Near-term margin headwinds in Q4 — reciprocal tariffs and the front-loading/timing of receipts are expected to cause a notable Q4 gross-margin decline, and management remains cautious on second-half U.S. consumer trends and planned off-price reductions.
• Positive Sentiment: Healthy balance sheet and shareholder returns — $1.6B cash, $1.2B total debt, retirement of $400M notes, and ~$313M of buybacks YTD (≈$420M returned including dividends) support continued investments and buybacks.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren second quarter fiscal year 2026 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions on how to ask a question will be given at that time. If you should require assistance during the call, please press star then zero. As a reminder, this conference is being recorded. I'd now like to turn over the conference to our host, Ms. Corinna Van Der Ghinst. Please go ahead.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Good morning, and thank you for joining Ralph Lauren's second quarter fiscal 2026 conference call. With me today are Patrice Louvet, the company's President and Chief Executive Officer, and Justin Picicci, Chief Financial Officer. After prepared remarks, we will open up the call for your questions, which we ask that you limit to one per caller. During today's call, our financial performance will be discussed on a constant currency-adjusted basis. Our reported results, including foreign currency, can be found in this morning's press release. We will also be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. Our expectations contain many risks and uncertainties.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results, you should refer to this morning's earnings release and to our SEC filings that can be found on our investor relations website. With that, I will turn the call over to Patrice.

[Patrice Louvet, CEO at Ralph Lauren]

Thank you, Cori. Good morning, everyone, and thank you for joining today's call. More than eight years ago, we embarked on an ambitious journey of elevation across our brand, our products, and our go-to-market strategy around the world. Led by Ralph's vision of inspiring the dream of a better life, we put our consumers at the center, and we put this company on a path of healthier, more consistent, more sustainable long-term growth and value creation. In September, we were proud to introduce the latest iteration of this journey, which we are calling our Next Great Chapter Drive Plan. We outlined the vast opportunities still ahead for Ralph Lauren. We currently play in a total addressable premium and luxury market worth $400 billion. And we are just over $7 billion today, less than a 2% market share. Our strategy to grow our share and deliver long-term sustainable growth.

[Patrice Louvet, CEO at Ralph Lauren]

Over the next three years and well beyond. Continues to be supported by multiple diversified engines. As a reminder, these include, first, elevate and energize our lifestyle brand. Second, drive the core and expand for more. Third, win in key cities with our consumer ecosystem. We are off to a strong start in the execution of this plan, with second quarter performance outpacing our expectations across the top and bottom line. These results underscore our diversity of growth opportunities and the broad-based momentum of our iconic brand, which is resonating across generations, cultures, and geographies. All three regions contributed to growth this quarter, including double-digit increases in retail comps and global wholesale sales. We achieved this while continuing to elevate our brand and drive higher quality of sales. Our strong performance through the first half of this fiscal year.

[Patrice Louvet, CEO at Ralph Lauren]

Also gives us confidence to take up our full-year guidance once again. Even as we remain relatively cautious on the second half of the year due to potential consumer headwinds and general volatility. While we are watching the macro environment closely, we remain well-positioned to capture market share opportunities across categories and geographies. We are firmly on offense with a focus on investing behind our brands, products, and key city ecosystems to deliver growth for the long term. Let me walk you through a few highlights from the quarter where we drove progress across our three long-term strategic pillars. Starting with our efforts to elevate and energize our lifestyle brand. As many of you heard in September, Ralph Lauren has the most loyal customers in our defined premium and luxury market.

[Patrice Louvet, CEO at Ralph Lauren]

Sitting at the heart of culture, we build relationships for life, independent of any single fashion trend or cycle. By leaning into our inclusive luxury lifestyle positioning, we are engaging with consumers across the many facets of their lives, from the runway to the biggest stages in sports, music, gaming, and more. All in a way that is authentic to the core values we have embraced for 58 years: optimism, quality, authenticity, timelessness, and the easy elegance of a life well-lived. Our teams delivered a powerful range of brand activations this quarter as we successfully lapped last year's outstanding Paris Summer Olympics. Key highlights included, first, we continue to reinforce our position as one of the leading luxury apparel brands in the world of sports. We celebrated our 20th year as the official sponsor of both Wimbledon and the US Open tennis championships this summer.

[Patrice Louvet, CEO at Ralph Lauren]

Our Wimbledon storytelling combined the elegance and cherished traditions of British heritage with Ralph Lauren's refined spectator style. Our US Open campaign paid homage to the most electric main stage in tennis through our colorful, retro-inspired collection, delivering record-breaking sales around the event. As sponsor of the US team, we welcomed the Ryder Cup to Bethpage for the first time this fall. Among our many activations, we took over parts of Rockefeller Center Plaza and drove storytelling on social media with Nick Jonas and brand ambassador Billy Horschel. Together, these sports lifestyle campaigns embodied both the proud tradition of sport and the progressive spirit that propels it forward. They drove a combined 67 billion global impressions and more than $350 million in media value. Next, we hosted our Spring 2026 Women's Collection fashion show here in New York City.

[Patrice Louvet, CEO at Ralph Lauren]

Showcasing a balance of strength and sensuality in a modern palette of black, white, and crimson. Beyond the runway, we delivered some of the most iconic celebrity moments of the season. From Taylor Swift and Travis Kelce choosing Ralph Lauren for their viral engagement to the old Hollywood glamor of Selena Gomez's wedding to Benny Blanco. Our activations are also driving strong sustainable growth in new customer acquisition and retention. In the second quarter, we added 1.5 million new consumers to our DTC businesses, a mid-single-digit increase to last year, driven by digital and full-price store customers. The ongoing momentum this quarter was led by luxury buyers with balanced growth across men, women, and younger cohorts. We increased our social media followers by high single digits to 67 million, led by Instagram, TikTok, Douyin, and Line.

[Patrice Louvet, CEO at Ralph Lauren]

This rolling thunder approach to activations, enabled by our strong data and analytics capabilities, gives us confidence to continue our brand momentum as we look ahead. Moving to our second key initiative, drive the core and expand for more. Ralph's vision has always been about more than a tie or a polo shirt or a sweater. The heart of what we do is storytelling through our clothes and experiences, through the cinematic worlds that Ralph has created. Our unique approach to styling enables customers to step into these worlds to build the wardrobes that tell the story of their lives. From that first red polo shirt in a school picture to the striped silk polo dress in an engagement photo. This philosophy is embedded in how we drive our core products as much as it is in our high-potential and complementary lifestyle categories.

[Patrice Louvet, CEO at Ralph Lauren]

Starting with our core, which represents more than 70% of our business. Core product sales grew mid-teens this quarter, driven by strength in cotton cable knit, wool cashmere, and cotton shaker sweaters, linen and seasonal Oxford shirts, our lightweight jackets, and our icon Polo chino caps. An exciting back-to-school season also drove growth and share gains in our core children's programs, led by cable knit sweaters, quilted jackets, and Oxford shirts. Our high-potential categories, including women's apparel, outerwear, and handbags, continue to be accelerators for our business. Together, these categories increased strong double digits, outpacing total company growth in the quarter. Women's apparel continued to be driven by our foundational core, along with a strong response to our seasonal styles. Highlights included our cable knit, jersey, and featherweight cashmere sweaters, linen shirts, our transitional city and utility barn jackets, and dresses.

[Patrice Louvet, CEO at Ralph Lauren]

Momentum in our handbag business continued this quarter, driven by each of our women's labels and led by our foundational Polo ID collection. Polo Play, which launched this past spring and included exciting pop-up shops in Korea this quarter. Our women's collection, Ralph Bags, in seasonal Regent Green Leather and Mocha Suede. An encouraging launch for our Tasha Collection, an elevated new offering in the Lauren family of handbags. Special releases this quarter included our limited edition Polo Ralph Lauren for Oak Bluffs collection in partnership with Morehouse and Spelman Colleges, a powerful celebration honoring the legacy of Oak Bluffs as a cultural haven for Black communities in Martha's Vineyard. Our capsules for Wimbledon, the US Open, and Ryder Cup, with strong double-digit comp growth in each collection led by our Polo Bear and fleece styles. Our newest Ralph's Club New York fragrance launch featuring Usher.

[Patrice Louvet, CEO at Ralph Lauren]

We will continue to leverage the unparalleled breadth of our lifestyle product offering and power of our icons as consumer lifestyles evolve. Turning to our third key initiative, win in key cities with our consumer ecosystem. We continue to thoughtfully expand our consumer ecosystems to deepen Ralph Lauren's presence in our top 30 cities around the world, delivering a cohesive, elevated brand experience across each of our channels. At the same time, we've started investing in our next 20 cities, laying the groundwork for long-term sustainable growth. Within DTC, which comprises the majority of our business, we delivered another strong quarter of comp growth across regions. Global comps increased 13%, above our expectations, with double-digit growth in both our digital sites and physical stores. All three regions outperformed our expectations again in the second quarter, with double-digit growth in every geography, including North America.

[Patrice Louvet, CEO at Ralph Lauren]

Asia once again led our growth, with sales up mid-teens, driven by all key markets. China grew more than 30% in the quarter, ahead of our outlook, with a strong consumer response to our brand-building activities, including our summer of sports campaigns and amplification of our New York fashion show. As we continue to reinforce our presence in our top cities, we opened 38 new owned and partner stores globally, and we recently announced that we are opening our sixth restaurant, bringing our iconic Polo Bar experience to London. The opening is slated for 2028. Yes, we're already getting requests for tables. Finally, touching on our enablers, our business continues to be supported by our five key enablers. Recent highlights include. First. As part of our focus on delivering advanced technology, AI, and analytics.

[Patrice Louvet, CEO at Ralph Lauren]

In September, we launched our new AI styling tool, Ask Ralph, that we developed with Microsoft. Bringing Ralph's iconic styling right to your pocket, Ask Ralph builds on our history of innovating the consumer shopping experience and immersing our consumers in the world of Ralph Lauren with cutting-edge technology. While still early, customer engagement and feedback have been encouraging. This is an exciting step forward in our journey to test and learn new tools to better serve our consumers, drive conversion, and ultimately build lifetime value. Second, our teams and our culture drive our performance. We were proud to be named one of America's best employers for company culture by Forbes. Finally, Ralph Lauren was honored in Fast Company's 2025 Innovation by Design Awards for our unforgettable brand presence at the 2024 Summer Olympics in Paris.

[Patrice Louvet, CEO at Ralph Lauren]

We look forward to building on this legacy, bringing our heritage of sport and style to life at the Milan Cortina Winter Olympics in February. In closing, Ralph and I are incredibly proud and grateful for the hard work, care, and dedication that our teams are delivering around the world. Together, we are building on Ralph's legacy and vision with this next great chapter of growth. We remain focused on creating value through a distinct brand position that is clear, consistent, relevant, and emotionally resonant. A legacy of leadership in fashion, in culture, and in innovation, and a proven ability to execute with creativity, agility, and operating discipline. All underpinned by our fortress balance sheet and ongoing commitment to embrace new technology and support our teams, partners, and communities. With that, I'll hand it over to Justin, and I'll join him at the end to answer your questions.

[Justin Picicci, CFO at Ralph Lauren]

Thanks, Patrice, and good morning, everyone. Our second quarter results demonstrate strong progress as we embark on our Next Great Chapter Drive plan, showcasing our team's agility and unwavering focus on execution. Top-line performance exceeded our expectations, reaching our highest Q2 revenues since we began our elevation journey more than eight years ago. Results were driven by broad-based performance across every region and channel, highlighting our brand strength and authentic connection with consumers around the world. Gross and operating margins once again outperformed our outlook as we continue to elevate across all markets. Each of our three regions contributed to operating margin expansion despite the volatile global operating environment. We achieved all of this while continuing to invest behind our strategic drivers of long-term growth.

[Justin Picicci, CFO at Ralph Lauren]

As Patrice mentioned, our strong year-to-date results and brand momentum give us confidence to raise our full-year outlook, even as we maintain a relatively cautious stance into the second half, given the macroeconomic uncertainty and exceptionally strong prior-year comparisons. First, let me walk you through our financial highlights from the second quarter, which, as a reminder, are provided on a constant currency basis. Total Company's second quarter revenue growth of 14% was above our high single-digit outlook. By region, Asia and Europe led our performance, with sales increasing 16% and 15% respectively, followed closely by North America, up 13%. Total Company retail comps increased 13%, with ongoing momentum in both our own digital business and stores. Total digital ecosystem sales, including our own sites and wholesale digital accounts, grew double digits, reflecting balanced growth across regions. Total Company adjusted gross margin expanded 70 basis points to 67.7%.

[Justin Picicci, CFO at Ralph Lauren]

The increase was driven by AUR growth, favorable mix shift toward our full-price businesses, and lower cotton costs, which more than offset tariffs, labor, and non-cotton material costs. AUR increased 12% in the second quarter, supported by strong full-price selling trends, reduced discounting, modest targeted pricing growth, and favorable product mix. We currently expect high single-digit AUR growth for the second half of fiscal 2026, based on similar drivers. Adjusted operating expenses increased 11%, reflecting a 130 basis point decline as a percentage of sales to last year. We delivered leverage across key expense categories, including rent, marketing, and selling, on better-than-expected sales. Second quarter marketing investments grew 2% to last year. As a percentage of sales, marketing normalized at 7.8% compared to last year's 8.7%, which included our Paris Olympic activations.

[Justin Picicci, CFO at Ralph Lauren]

We now expect marketing, as a percentage of sales, to be approximately 7.5% in fiscal 2026, in line with our long-range plan. Second quarter adjusted operating margin expanded 210 basis points to 13.5%, with adjusted operating income increasing 34%. Moving to segment performance, and starting with North America. Second quarter revenue increased 13%, above our expectations, with balanced growth across our direct-to-consumer and wholesale businesses. In North America retail, second quarter comps were up 13%, led once again by our Ralph Lauren stores. Digital comps grew 15%, supported by our strategy of full funnel activations, which drove higher quality of sales. In North America wholesale, revenue also increased 13%, driven by strong performance in digital wholesale and our top premium and luxury doors, as well as stronger-than-expected replenishment.

[Justin Picicci, CFO at Ralph Lauren]

We are encouraged by our recent sellout trends, but maintain a more measured outlook for the second half of fiscal 2026, based on further strategic reductions in off-price sales in the fourth quarter and potential near-term macro pressures across the broader channel. We still plan to exit 90-100 wholesale doors in fiscal 2026, with approximately half of these related to Hudson's Bay. Moving to Europe. Second quarter revenue increased 15%, exceeding our expectations. Growth was driven by continued momentum across both our retail and wholesale channels. All key markets delivered growth in the quarter, reflecting our ongoing brand strength and elevation. Europe retail comps increased 10% to last year, with strong performance across stores and digital channels. Our Europe digital ecosystem increased double digits, driven by both our wholesale and own digital businesses.

[Justin Picicci, CFO at Ralph Lauren]

Europe wholesale increased 18%, driven by higher-than-expected reorders and a planned shift in shipments into the first half of the fiscal year, as we previously discussed. The timing shift represented approximately 11 points of the wholesale increase in Q2, with the channel still reflecting healthy underlying growth. Turning to Asia. Second quarter revenue and retail comps each grew 16%, with every key market contributing to growth. China once again led our performance, with sales increasing more than 30% to last year, driven by robust comps and new customer recruitment, enabling our continued outperformance versus peers in the market. Sales in Japan increased high single digits, driven by strong full-price selling and reduced discounting. Building out our digital presence remains a significant long-term opportunity across Asia. We are encouraged by our early progress, including double-digit revenue growth this quarter.

[Justin Picicci, CFO at Ralph Lauren]

We drove meaningful acceleration on our Japan digital site, supported by the recent transition to our global e-commerce operating system. In China, we continue to expand our presence on Douyin since launching our women's shop earlier in 2025, including our first Wimbledon livestream digital event this quarter. Moving to the balance sheet. Our strong balance sheet and cash flow generation continue to be powerful enablers of our long-term strategy, supporting both our strategic growth investments and our commitment to shareholder returns. In the second quarter, we finalized the purchase of our Newberry Street store in Boston and also retired our $400 million in senior notes, which matured in September. In addition to our regular dividend, we have repurchased $313 million in shares this fiscal year to date, returning a combined total of approximately $420 million to shareholders.

[Justin Picicci, CFO at Ralph Lauren]

We ended the period with $1.6 billion in cash and short-term investments and $1.2 billion in total debt. Net inventory moderated from Q1 levels as planned, increasing 12% to last year, roughly in line with revenue growth. Our inventories are well-positioned to meet consumer demand in each of our regions for the holiday season. Looking ahead, our outlook remains based on our best assessment of the current operating environment, geopolitical backdrop, and macroeconomic trends. This includes tariffs and other inflationary pressures, supply chain disruptions, and foreign currency fluctuations, among other considerations. For fiscal 2026, we now expect constant currency revenues to increase in a range of approximately 5%-7%, up from low to mid-single digits previously. This is slightly ahead of the three-year guidance we provided in September for year one of our long-range plan.

[Justin Picicci, CFO at Ralph Lauren]

Foreign currency is now expected to benefit revenue growth by about 200-250 basis points this year. The increased outlook reflects our better-than-expected performance in the first two quarters of the year, as well as our continued brand momentum into fall holiday, despite the challenging comparisons. With our strong first-half results, we now expect North America revenues to be up slightly for the full year versus our prior outlook of a low single-digit decline. We continue to expect Q4 to be the weakest quarter of the year for North America, based on our caution around cost inflation-related pressures on U.S. consumers, in addition to our planned strategic reductions in off-price wholesale. We expect Europe to grow at the high end of mid-single digits, unchanged from our previous guide, with the first half benefiting from planned wholesale timing shifts, followed by a sequential deceleration due to challenging second-half comparisons.

[Justin Picicci, CFO at Ralph Lauren]

Despite the timing shifts, we still expect healthy underlying growth in Europe, in line with our long-term plan. We now expect Asia to be up high single to low double digits for both the second half and the full year, up from high single digits previously. Operating margin is now expected to expand approximately 60-80 basis points in constant currency, up from our prior guidance of 40-60 basis points, primarily driven by expense leverage. We now anticipate constant currency gross margin to expand about 10-30 basis points for the full year, with further growth in AUR, favorable cotton costs, and geographic mix more than offsetting pressure from tariffs. Foreign currency is expected to benefit gross and operating margins by about 30-50 basis points in fiscal 2026.

[Justin Picicci, CFO at Ralph Lauren]

Following our strategic pull forward of receipts, we continue to expect tariff headwinds to ramp up in our fiscal Q3 and become more pronounced into Q4. As a result, we still expect a notable year-over-year gross margin decline in Q4 due to the combination of reciprocal tariffs, unusually strong prior-year comparisons, and previously discussed timing shifts, all negatively impacting our smallest revenue quarter of the year. We remain confident in our long-term gross margin outlook of 50-100 basis points of expansion over the three years of our drive plan, with expansion expected in each year. While we anticipate gross margin pressure over the next few quarters, Q4 of this fiscal year is still expected to be the most negatively impacted quarter, driven by the additional timing-related headwinds.

[Justin Picicci, CFO at Ralph Lauren]

As we move through next fiscal year, we expect to mitigate these pressures more meaningfully as we begin to lap the tariffs and our sourcing shifts and other mitigating actions take effect more broadly. For the third quarter, we expect constant currency revenues to increase approximately mid-single digits, reflecting a slightly improved outlook for the back half of the year versus our expectations in August and coming into the year. Foreign currency is expected to benefit revenues by approximately 150-200 basis points. We expect third-quarter operating margin to expand approximately 60-80 basis points in constant currency. This is driven by 50-70 basis points of gross margin expansion, as well as slight operating expense leverage, more than offsetting tariffs and higher marketing investments to support our global holiday activations and Polo Women's Fashion presentation in Paris.

[Justin Picicci, CFO at Ralph Lauren]

Foreign currency is expected to benefit gross and operating margins by about 10 and 20 basis points, respectively, in the third quarter. We expect our third-quarter tax rate to be in the range of 21%-23% and a full-year tax rate of approximately 19%-21%. In closing, we are proud of our team's strong execution and early progress on our next great chapter drive plan across the world through the first half of this fiscal year. Even in an operating environment that remains dynamic, our agility, fortress balance sheet, culture of operating discipline, and multiple engines of growth give us confidence in our ability to continue delivering sustainable long-term value.

[Justin Picicci, CFO at Ralph Lauren]

As we shape the future of inclusive luxury lifestyle, we remain focused on investing in the key strategic priorities that will enable us to connect with consumers more broadly and deeply than ever before and to continue inspiring them to dream. With that, let's open up the call for your questions.

[Operator]

Ladies and gentlemen, if you wish to ask a question, please press Star and then 1 on your touch-tone phone. You will hear a tone indicating you have been placed into queue. You may remove yourself from the queue at any time by pressing Star two. If you're using a speakerphone, please pick up the handset before pressing the numbers. We ask that you limit yourself to one question per caller. Once again, if you have a question, please press Star and then one at this time. One moment, please, for the first question. The first question comes from Matt Boss with JPMorgan.

[Matt Boss, Equity Research Analyst at JPMorgan]

Thanks, and congrats on a great quarter.

[Justin Picicci, CFO at Ralph Lauren]

Thank you, Matt.

[Patrice Louvet, CEO at Ralph Lauren]

Thanks, Matt.

[Matt Boss, Equity Research Analyst at JPMorgan]

Patrice, so the company continues to outperform expectations despite the caution that you've been calling out. What does your updated outlook for this year assume for health of the consumer, particularly macro assumptions that you embedded for the back half? Have you seen any change in consumer behavior in any key markets today? And then just larger picture, Patrice, if we extend the lens, could you walk through global brand awareness for Ralph Lauren relative to only 2% market share for the brand today and just how that supports your revenue targets longer term?

[Patrice Louvet, CEO at Ralph Lauren]

Sure. Thank you for your question, Matt. On the first parts of your question, we continue to see strong, broad-based momentum in our business, right? Our new Next Great Chapter Drive strategy is working, and our brand is resonating with consumers around the world. To date, we have not seen any meaningful changes in consumer behavior across our key consumer segments or markets. Demand remains healthy, and our core consumer is resilient, especially as we continue, as you know this, to shift our recruiting towards more full price, less price sensitive, higher basket size new customers. Now, from a macro perspective. As price increases take root across different sectors, we are watching closely to see how consumers will respond. Our teams are staying as agile as ever in this context. Listen, we continue to focus on our key strategic pillars and invest in spaces that we expect to successfully fuel our momentum and grow share for the long term.

[Patrice Louvet, CEO at Ralph Lauren]

First, we've implemented a rolling thunder of brand-building activations to drive brand desirability and retention and more consistent engagement with consumers. I'll come back to that when we talk about your awareness question, whether that's through our impactful fashion shows—we had two this last quarter—our inspiring sport activations, or our more innovative interactions like our AI-powered Ask Ralph styling assistant. This will remain a key area of investment as we look ahead. Second, we continue to drive a healthy balance of authentic core products that perform across macro cycles along with our high-potential categories—think women's apparel, outerwear, and handbags—and both are performing well, as you heard us talk about earlier. Third, just a reminder that we still have a lot of distribution opportunities globally, whether that's deepening our presence in the existing top 30 key cities in China or Western Europe.

[Patrice Louvet, CEO at Ralph Lauren]

To what we've just started doing, which is opening new stores in the Bay Area, for example, as we build the San Francisco ecosystem, or in the Pacific Northwest here in the U.S. All in, our consumer continues to show up for our brand. Even as we navigate the macros, our business model is resilient with our multiple drivers of growth, and we will continue to stay on offense to deliver on our long-term drive plan. As far as global awareness is concerned, let's go around the world together, Matt. Obviously, our awareness is highest here in North America. Europe is very closely behind that across all the markets. I think the opportunity is still in markets like Germany, which historically has not been the focus area, as you know, for this company.

[Patrice Louvet, CEO at Ralph Lauren]

Certainly, we are, as the current leadership team, very focused on taking advantage of the Germany opportunity, and we're seeing strong continued momentum across that region. In Asia, it's really a mixed picture. We've been in Japan for—it'll be 50 years next year—we have strong brand awareness there. We have opportunities for growth of brand awareness in Korea. Probably our greatest awareness opportunity remains in China, where I think, based on our latest numbers, slightly more than half of the population is aware of the Ralph Lauren brand. Depending on the markets, awareness is or is not a key opportunity. Obviously, as we look to recruit new, younger consumers, we know there's work to do on brand awareness and brand engagement. It's really about making sure that we're telling stories that resonate with these different consumer groups.

[Patrice Louvet, CEO at Ralph Lauren]

It's really about making sure that we have a product offering that takes advantage of our core icons and also leverages our high-potential categories in a way that resonates with those consumer groups we want to go after. It's making sure that we can offer a compelling shopping experience, whether that's online or in-store, in the key cities that matter for these consumer groups. Certainly, you touched on it. We're very energized by the opportunity ahead of us when you look at market shares, right? Less than a 2% market share in a large and growing market, total addressable market of around $400 billion. Building awareness is a vector of growth that will help us expand our market share. Obviously, conversion, basket size, all the different dimensions of revenue growth areas that our marketing teams are focused on.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Thank you. Next question, please.

[Operator]

Thank you. The next question comes from Jay Sole with UBS.

[Jay Sole, Managing Director at UBS]

Super. Thank you so much. Justin, the company has successfully driven eight straight years of AUR growth. Patrice kind of touched on this a little bit, but how are you thinking about using pricing as a lever over the next few quarters before you start to lap tariffs? And how should we think about your ability to mitigate tariffs over time? And how much of your guidance of a second-half acceleration is due to your general caution on a consumer slowdown versus true structural or timing shifts this year?

[Patrice Louvet, CEO at Ralph Lauren]

Thanks, Jay. Thanks for the question. Those are a few really important questions. Let me try to take them one by one, see if I can provide some helpful context here. First, on pricing. We have a proven multi-year elevation strategy that's driven those sustained AUR gains you referenced of more than eight years and counting. Our AUR growth has been, and continues to be, driven by multiple levers, right? Investing in our brand, attracting more full-price customers, elevating our product mix, capable geo channel mix, and pulling back on discounts in addition to strategic pricing actions. As we talked at our September Investor Day, these drivers are durable into the future. Really importantly, we continue to see consumers recognize and respond to the value we're delivering. It's critical. Now, for this fiscal year, we took normal course of business pricing actions for fall as we continue to elevate our brand around the world. With the higher tariffs that were announced, we did layer in some additional modest adjustments both for fall and for spring 2026.

[Patrice Louvet, CEO at Ralph Lauren]

That is reflected in that high single-digit AUR growth guide we provided for the back half of the year. Your second question on gross margins, we still expect Q4 to be the most impacted quarter of this fiscal year, consistent with our planned cadence. It is a combination of the reciprocal tariffs and the timing shifts we made to accelerate receipts earlier in the year. This is all happening in Q4 as our smallest revenue quarter of the year. It is a transitional quarter, right, between fall holiday and spring. Even with the year-one tariff pressure, we are now expecting 10-30 basis points of gross margin expansion this fiscal year, better than our initial outlook. Talking beyond this year, we still expect to mitigate the cost inflation.

[Patrice Louvet, CEO at Ralph Lauren]

You'll start to see our broader mitigating actions take shape, country of origin shifts and optimization, merchandising mix actions, and potentially some further targeted pricing. Lastly, on the second-half guide, we made some strategic intentional choices to front-load our performance this fiscal year, given the higher level of macro uncertainty as you move through the year and specifically in the back half. That all said, we've been able to raise our outlooks for Q3 and Q4 modestly as we move through the first half of the year. We do realize there are a number of moving parts here. When you adjust for the timing shifts, when you adjust for the strong holiday compares, the general caution we've called out on the U.S. consumer, our underlying trajectory remains in line with our longer-term outlook of that mid-single-digit growth. I've said a lot.

[Patrice Louvet, CEO at Ralph Lauren]

Just to summarize, targeted pricing, one of our many durable levers of AUR growth that we're applying to this fall and beyond with a focus on value. We continue to feel good about our ability to expand gross margin and mitigate tariffs both this fiscal year and beyond. While there's a combination of structural and timing shifts impacting the second half of this fiscal year, our underlying growth continues to track to our long-range outlook of mid-single digits as we share that investor guide.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Next question, please.

[Operator]

Thank you. The next question comes from Brooke Roach with Goldman Sachs.

[Brooke Roach, VP, Equity Research at Goldman Sachs]

Good morning, and thank you for taking our question. Justin, Patrice, I was hoping you could dive a little bit deeper into the strategic actions that you're taking to engage the North America value-oriented consumer this holiday season. You continue to take a little bit of a conservative approach there, but it looks like you've been outperforming your expectations to date. Wondering what the plan is for this holiday and what you're looking to do if the consumer does look to get a little bit weaker.

[Justin Picicci, CFO at Ralph Lauren]

Sure. Thanks for the question. Just taking a step back, as we entered this fall holiday season, we saw some pretty broad-based momentum behind our brand across markets and channels, including in North America. We've been, past eight-plus years, we've been through a number of different iterations of a tough environment before, right? Of cost inflation, price inflation, cotton, freight, pressures on the consumer. We've navigated that pretty successfully using that diversified toolkit of levers that we talked. The brand is positioned now better than it ever was before during any of those periods.

[Justin Picicci, CFO at Ralph Lauren]

We have confidence that we can navigate through the macro pressures. We've got real pricing power, and we also have seen our value perception grow progressively along with AUR throughout the elevation journey. When we think about fall holiday, a couple of words come to mind. One is flexibility, right? We've got the flexibility in our price architecture to be able to, in a very targeted, selective way, still talk and convert those more value-oriented customers. Subsegments that exist in channels like wholesale and the outlets when the macro pressures sort of tighten. We can do that without walking back our broader brand guardrails. The other word that I think about is value. We're going to stay laser-focused on making sure we're providing a compelling price value proposition to our customers.

[Justin Picicci, CFO at Ralph Lauren]

As we kind of sharpen our marketing, as we sharpen our analytics, as we get to know the customer better and we get our segmentation more precise, we're only getting better at being able to understand what's that sweet spot in terms of price value to appeal to the consumer.

[Patrice Louvet, CEO at Ralph Lauren]

Brooke, I might add to Justin's perspective, two points. First on branding and the second on product offering. Our storytelling, and you saw the range of activations this past quarter, which was very special and obviously has given us momentum going into this holiday season, our storytelling is really designed to appeal broadly, including to the more value-sensitive consumers. What we have certainly found the past few quarters is the broad range of marketing activations from sports to fashion presentations to these serendipitous celebrity moments. I've talked to the different consumer segments that we appeal to.

[Patrice Louvet, CEO at Ralph Lauren]

Our teams here in North America are putting a disproportionate emphasis now on better segmentation to make sure we're getting the right message to the right group at the right time. I think we're gaining momentum there. There's more to come on this front. That's on the marketing branding side. On the product side, what's very interesting is across consumer segments, the strategy of both driving our core icons and our three high-potential categories is resonating. We're seeing that play out at the upper end of the echelon from a revenue standpoint of our customer base. We're also seeing that play out within our more value-sensitive consumers, which obviously makes it a lot easier to execute and gives us confidence in our ability to win during this upcoming holiday season.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Great. Next question, please.

[Operator]

Thank you. The next question comes from Michael Binetti with Evercore.

[Michael Binetti, Senior Managing Director at Evercore ISI]

Hey, guys. Thanks for taking our question. Congrats on a nice quarter.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Thanks, Michael.

[Michael Binetti, Senior Managing Director at Evercore ISI]

Yeah. I want to ask just you. On the AUR, look at a few metrics here. The global AUR growth rate has been very, very close to the DTC same-store sales growth rate for a while here, implying flattish units in the first half, something near that. You consistently tell us there is really attractive new customer growth. Customers are growing, units are not. Is there an opportunity for the units to help you start to outpace the AUR growth as you look at the rest of the year? Patrice, the investor day plan was for EBIT margins 15-15.5% range by fiscal 2028. There is a scenario where you get to that range this year. I guess there is a jump ball between Patrice and Justin. In the first half of, in the first year of the plan, I know you clarified that '16 is in the cap. Maybe you can help us frame the long-term opportunity with a nod to the update for second quarter upside here.

[Patrice Louvet, CEO at Ralph Lauren]

On margin, there is no jump ball. It is always Justin. Thanks so much.

[Justin Picicci, CFO at Ralph Lauren]

In case it was unclear. On the AUR question, we have been, pretty to your point, consistently growing AUR. You see the AUR gains with the comp gains, which really shows you the quality of the revenue they are putting up and the share gains that we are getting behind them. To your point on units, we have been growing units along the course of this journey. I think earlier in the elevation journey, when we had the step changes in elevation, they were slower. Now, as we move through, where we've been seeing unit growth is those areas that we've really been targeting, right? Our full-price businesses, right? Our digital businesses, markets like China where we know we have outsized growth opportunities, our accelerator categories like women's, like handbags, like outerwear. We've been seeing unit growth there. I think when you think about the environment from a macro perspective that we're going to go that we expect to go into in this sort of second half and maybe carrying into the first half of next year, and we talked this a little at investor day, we are going to lean more into AUR versus unit growth overall as we navigate those cost inflation pressures. That all said, to your point on opportunity, there is certainly a unit growth opportunity specifically in those areas that we've been focused on, right?

[Justin Picicci, CFO at Ralph Lauren]

Those areas that are further along on the elevation journey. You will continue to see us opportunistically focus on and grow units there. As the other areas of our business progress on that elevation journey, you will see the inflection point in those facets as well. On the OI margin question in terms of opportunity, 16% plus when you think about longer term, I mean, and we have talked this before, we are committed to balancing, delivering on, or often exceeding our near-term commitments with reinvesting back behind our brand and our business for that longer-term sustainable growth. You see us do things like this year, this guide, we took up both the top and bottom line. We also took up our marketing expectation, right, as we continue to reinvest behind that sustainable long-term growth. I think in terms of that philosophy, it is not going to change.

[Justin Picicci, CFO at Ralph Lauren]

You'll see us continue to follow that as we move forward. As we have potential upside, you're going to see us balance the flow through between operating margin expansion and between reinvestment back into the business with marketing probably being the 1A area. You're also seeing this year, as we move through the year based upon our guide, and you kind of saw it start last year, you see us work this sort of SG&A leverage muscle, right? This cost optimization muscle. That's going to be another lever we have at our disposal, both to mitigate and manage the macros, and because we know gross profit does have some choppiness associated with it, but also to balance between flowing through near-term profitability gains with reinvestment back into our business.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Next question, please.

[Operator]

Thank you. The next question comes from Ike Boruchow with Wells Fargo.

[Ike Boruchow, Managing Director, Senior Analyst Retailing and E-commerce at Wells Fargo]

Hey, everyone.I think this is for Justin. Wanted to kind of dig more into North America wholesale. You've inflected to positive, I think, three quarters in a row now, but you kind of went low double digits this quarter, but there's an 11-point shift. And then, Justin, some of your comments on the fourth quarter kind of suggest you're going to pull back from some unproductive sales. Kind of just peeling the onion back, just how should we think about the trajectory of North America wholesale? I assume that shift is hurting us in the third quarter, but would love some clarity there. Kind of just looking for the trend line and how you plan that channel at this point.

[Justin Picicci, CFO at Ralph Lauren]

Sure. Listen, when you think about the underlying quality growth that we're seeing in our wholesale business, and it's, I would say, North America and in the media, but let's focus on North America, as well as the strategic ongoing elevation work in these channels that is quite purposefully meant to balance momentum at times, notably in North America, I mean, we're very encouraged. Our brand momentum has been strong, and we've been able to deliver more outsized performance than we were expecting. I think it's fair to say through the first half of this year. The great thing about this growth is that it's healthy, high-quality growth on an underlying basis, right? It's reflective of the diversity of our growth drivers. It's working in retail, it's carrying over and cutting through in wholesale. Women's is a great example.

[Justin Picicci, CFO at Ralph Lauren]

Women's working really well, both from an AUR perspective and a comp perspective in North America wholesale, specifically at that top-tier channel. It's great to see the execution of the strategy, and it's great to see the healthy underlying growth. To your point on sort of a normalized growth expectation as we think about first half versus second half and beyond, we've always talked about sort of a stable-to-up type of algo for that North America wholesale business. That's really balancing between growing in areas like top-tier doors, growing in areas like digital, growing in areas like key cities with our wholesale partners, balancing that out with continuing to cull off-price, continuing to cull the lower-tier distribution.

[Justin Picicci, CFO at Ralph Lauren]

When we think about the second half specifically versus the first half, we've got some off-price reduction pressure that we know is coming that is planned for Q4 that's going to impact that business by 2-3 points. We've also got the caution embedded in our outlook around the U.S. consumer, right? Because we know as the pricing environment begins to take shape, those sort of strong reorder rates that we've been seeing in that business, there's some elasticity pressure that we're layering on top of that as we head into the second half. Then we've got the third step, which is really continued brand elevation reinvestments, which is going to partly offset some of our gross bookings.

[Justin Picicci, CFO at Ralph Lauren]

When you think about the shape of things, there will be some expected pressure in the second half, but I think we feel good about the core of that business. If you strip out some of the one-offs, we feel good about that sort of stable-to-up normalized growth organic trajectory.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Next question, please.

[Operator]

Thank you. The next question comes from Dana Telsey with Telsey Advisory Group.

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

Hi. Good morning, everyone. So nice to see the progress. As you think about your retail distribution, both full-price and outlet, anything different you're seeing in outlet from full-price with the AUR increases? How is trajectory in outlet space globally of higher-priced product there? Just lastly, anything on the supply chain to make note of as a benefit for margin going forward? Thank you.

[Patrice Louvet, CEO at Ralph Lauren]

Good morning, Dana. As far as the performance is concerned, across all our DTC channels, I might even expand that to RalphLauren.com, if you do not mind. We're actually seeing really nice, consistent growth, both our full-price stores, our outlet stores, and actually disproportionate growth on digital, which we're very excited about. As I mentioned earlier to Brooke's question, what we're seeing is our marketing activations and our product offering is resonating pretty consistently across these three different channels. As we get more precise on consumer understanding and consumer segmentation, we're able to better target through particularly our social media platforms to get the full potential performance across all three. The short answer to your question is broadly consistent performance across the three areas. Of course, moving forward, our expectation is to continue to expand our full-price stores, right?

[Patrice Louvet, CEO at Ralph Lauren]

You saw this quarter we opened 38 around the world. That will continue. We do not expect to expand our outlet doors. If anything, what our teams are doing around the world now is combining outlet presence. We might have a center where we have three different locations. We are folding that into one. We expect to have some closures of outlets moving forward as we look to continue to elevate our presence. Of course, we are leaning in aggressively in RalphLauren.com and our digital operations because we are seeing very strong response there. On the supply chain piece, our global sourcing supply chain is well-positioned, strong, long-standing partnerships. It has really been, as you know, a key differentiator for us over the past eight-plus years, significantly diversified.

[Patrice Louvet, CEO at Ralph Lauren]

We have been taking advantage of that diversification in terms of being nimble and agile as we navigate the ongoing cost inflation landscape. We do also maintain alternate sourcing capabilities for all of our key products in more than one country of origin, right? We have been certainly leaning into that as well as working with our supply partners to drive efficiencies in our cost of goods and broader sort of end-to-end relationships. That supply chain is also very innovative. They also continue to focus on developing and scaling new opportunities in each of our regions to mitigate what we know is a very dynamic global macroeconomic environment. You will see some of those mitigating actions start to ramp up as we move through this year into early next year and into next year more fulsomely. That is obviously a key lever in our mitigation toolkit when we think about cost inflation.

[Corinna Van der Ghinst, Head of Investor Relations at Ralph Lauren]

Next question, please, Angela.

[Operator]

Thank you. The next question comes from Laurent Vasilescu with BNP Paribas.

[Laurent Vasilescu, Managing Director at BNP Paribas]

Good morning. Thank you very much for taking my question. Patrice, I have to ask about China. I think China grew over 30% this quarter. I think that is in line with the prior quarter. Can you talk about what you are seeing there? Is there a rebound in the luxury space, or is it idiosyncratic to Ralph? I would think that is the case to some degree. I know you do not guide explicitly for China, but I think you mentioned in a prior call that your expectations were for China to grow low double digits this year. How should we think about growth this year for China? Thank you very much.

[Justin Picicci, CFO at Ralph Lauren]

Good morning, Laurent. We always love to talk about China. Thank you for your question. Very pleased with the performance, again, this quarter at 30%. If you look at our run rates in China, we have been performing strongly for many years now. Why is that? It is our strategy at play that the teams on the ground are doing a brilliant job executing, building the brand in a way that resonates with the Chinese consumer, leveraging our core items, and also leaning into our high-potential categories, particularly our women's apparel and handbag businesses, disproportionately performing in China, and then expanding our footprint in a very selective way across the six key cities, building these unique ecosystems. The performance you saw this quarter is really the result of these actions over many years. While we are like you reading the headlines on the economic environment in China.

[Justin Picicci, CFO at Ralph Lauren]

I think, to use your terminology, a lot of our performance is driven by idiosyncratic elements from the Ralph Lauren mix. Now, keep in mind, Laurent, the market is significant, right? And we still have relatively small shares. So there's a lot of business to be had, even if the overall category were not growing. As we did guide, I think, low double digits for China even longer term, right? So not just for this year, but over the three-year period of our next big tractor drive. We do not typically do that for individual markets, but we thought it was helpful for all of you just to get a sense of how we think about that market in particular. We stand by that. Listen, we gave that guidance six weeks ago, so it's unlikely to have changed in the span of six weeks.

[Justin Picicci, CFO at Ralph Lauren]

We feel very good about the balance of growth drivers and the diversity of growth drivers across that market. Healthy comp growth quarter on quarter with new store expansion in a very selective, disciplined way, really leaning into digital and digital significant growth potential, including with, and we touched on this in prior calls, social commerce, which is really gaining momentum in China in particular. We talked about our activations on Douyin. We have a women's polo activation that's performing very well, actually ahead of our expectations. We'll be expanding that across our portfolio. The combination of new consumer recruiting, which drives strong comp growth, select store expansion, and acceleration of our digital platform and footprint, along with clientele. This is probably one of the markets where we have the best understanding of the customer and the best connected understanding of the customer across the ecosystem.

[Justin Picicci, CFO at Ralph Lauren]

It gives us confidence that we can continue to build. Strong, steady performance in China. We are in China for the next few decades, right? We are also being very disciplined in terms of how we grow quarter on quarter to make sure it is done in a quality way, a sustainable way. We are encouraged by the momentum we have.

[Patrice Louvet, CEO at Ralph Lauren]

All right. Laurent, you had the last question. Thank you, everyone, for joining us today. We look forward to reconnecting in February. We will have just—we will be in the middle of the Cortina Olympic Games, where we sponsor the US team. We will be looking forward to sharing our third-quarter fiscal 2026 results. Until then, take care and have a great day.

[Operator]

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.

Participants

Executives

• Corinna Van der Ghinst, Head of Investor Relations
• Patrice Louvet, CEO
• Justin Picicci, CFO

Analysts

• Laurent Vasilescu, Managing Director at BNP Paribas
• Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group
• Jay Sole, Managing Director at UBS
• Brooke Roach, VP, Equity Research at Goldman Sachs
• Matt Boss, Equity Research Analyst at JPMorgan
• Michael Binetti, Senior Managing Director at Evercore ISI
• Ike Boruchow, Managing Director, Senior Analyst Retailing and E-commerce at Wells Fargo