Ralph Lauren Q1 2027 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2026

Key Takeaways

  • Positive Sentiment: First-quarter results exceeded expectations, with constant-currency revenue up 13%, retail comparable sales up 12%, and adjusted operating margin expanding 150 basis points to 18.5%. Growth was broad-based across DTC and wholesale, with stronger full-price selling and reduced promotions improving sales quality.
  • Positive Sentiment: Ralph Lauren raised its fiscal 2027 outlook, now expecting constant-currency revenue growth of 5%–6% versus 4%–5% previously, and operating-margin expansion of approximately 60–80 basis points. Asia’s full-year revenue outlook was also increased to high-single- to low-double-digit growth.
  • Positive Sentiment: Asia remained the strongest region, growing 25% in the quarter, including more than 40% growth in China and double-digit gains in Japan and Korea. Management cited strong brand engagement, localized activations, and expansion in key city clusters, while expecting China to grow around the mid-teens for the full year.
  • Neutral Sentiment: The company added 1.5 million new DTC customers and reported more than 20% growth in women’s apparel, outerwear, and handbags, supported by ongoing brand activations and an 8% marketing-investment target. Management said marketing could rise further over time if new initiatives generate attractive returns.
  • Negative Sentiment: Management remains cautious on Europe because of pressured traffic, weaker consumer sentiment, elevated energy costs, Middle East-related tourism disruption, and difficult comparisons. North American wholesale growth is also expected to moderate in the second half as Ralph Lauren accelerates exits from off-price and lower-tier distribution, while higher tariffs are expected to pressure costs later in the fiscal year.
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Earnings Conference Call
Ralph Lauren Q1 2027
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren first quarter fiscal year 2027 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 would now like to turn the conference over to our host, Ms. Corinna Van der Ghinst. Please go ahead.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

Good morning. Thank you for joining Ralph Lauren's first quarter fiscal 2027 conference call. Joining 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
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and 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'll turn the call over to Patrice.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Thank you, Corey. Good morning, everyone, and thank you for joining today's call. We are off to a strong start in the second year of our Next Great Chapter: Drive plan. Around the world, the core brand values that Ralph envisioned when he started this company nearly 60 years ago, authenticity, quality, timeless style, are resonating powerfully across generations and geographies. We are connecting with and engaging consumers as only Ralph Lauren can, inspiring people to step into their dream of a better life. This strengthening brand desirability across lifestyle categories, channels, and regions is translating into healthy, consistent, sustainable growth, and value creation for our business. In the first quarter, our top and bottom line results exceeded our expectations, supported by our diversified drivers of growth. Revenues increased 13%, including double-digit growth in both Asia and North America and mid-single-digit growth in Europe.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Performance was balanced across global DTC comps and wholesale, up 12% and 13% respectively in constant currency. We achieved this all while continuing to improve our quality of sales with increased full-price selling and investing back into our key strategic priorities. Notably, a rolling thunder of brand activations, new AI capabilities, and expanding our key city ecosystems, along with returning cash to shareholders. With first quarter revenues and gross and operating margins ahead of the expectations we outlined in May, we have confidence in raising our full-year outlook to reflect our first quarter over-delivery, even as we continue to take a measured approach to the macro backdrop in Europe in particular. Despite dynamic global operating conditions, we remain on offense.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Based on our continued commitment to invest behind our brands, driving high quality and new customer recruitment and retention, our strong and growing geographical presence anchored in our key cities in each region, and our strategic investments in advanced analytics, technology, and AI to better serve our consumers and drive greater efficiencies in our business, all underpinned by our strong balance sheet and operating discipline. Let me take you through a few recent highlights across the three strategic pillars of our plan. As a reminder, these include, first, Elevate and Energize Our Lifestyle Brand, second, Drive the Core and Expand for More, and third, Win in Key Cities with Our Consumer Ecosystem. Starting with our efforts to Elevate and Energize Our Lifestyle Brand. At the intersection of culture, style, and luxury, the Ralph Lauren brand continues to captivate new generations while deepening its connection with existing consumers around the world.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

To our fashion shows, key city campaigns, celebrations of important historical moments, and heritage sporting events, we are bringing the world of Ralph Lauren to life in distinct and immersive ways. We are leveraging our unique lifestyle authority to create bold, innovative experiences that engage, inspire, and strengthen brand desirability. Key highlights from the first quarter included, first, in celebration of America's 250th anniversary, we unveiled our American Icons collection of commemorative stamps with the U.S. Postal Service, making Ralph the first designer ever invited to have this honor. The curated collection aligns with our brand's enduring creative vision, which is deeply rooted in the tapestry of American heritage, landscapes, cultures, and artistry. We also invited consumers to step into our vision of timeless style through our Spring 2026 global campaign, A Sporting Life, a tribute to sophistication and sport with events in the Hamptons, Pebble Beach, and beyond.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Our men's Purple Label and Polo fashion show at our palazzo in Milan, capturing the spirit of adventurous travel through reimagined icons, where we welcome guests including Lewis Hamilton, Maluma, Henry Golding, Tom Hiddleston, and more. Our home presentation during Salone del Mobile, also in Milan, transformed a Palazzo Ralph Lauren into an immersive celebration of design and craftsmanship. The launch of our newest book, "Ralph Lauren Catwalk," which chronicles more than 50 years of our iconic womenswear shows, and marking the first time an American designer has been featured in this prestigious series. In Asia, we kicked off our year-long celebration of 50 years in Japan with the launch of our Very Ralph documentary at the landmark Akasaka Palace, and we hosted activations around the 20th anniversary of our Omotesando flagship in Tokyo.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Reinforcing our leadership in the world of sports, we hosted our first ever Ralph Lauren Polo Cup in Beijing and Sydney, an elegant live polo match seamlessly blending equestrian heritage with high fashion and the world of celebrity. Beyond the quarter, we were proud to once again serve as the official sponsor of Wimbledon, marrying the traditions of this storied tournament with sophisticated spectator style. These activations are driving strong, sustainable growth in new customer acquisition and retention. In the first quarter, we added 1.5 million new customers to our DTC businesses, led by Ralph Lauren stores and our digital commerce sites. We continue to drive progress across brand equity metrics, including increased NPS and luxury perception scores, as well as our ongoing recruitment of key consumer cohorts, including women, luxury, and younger customers.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

We increased our social media followers by high single digits to more than 70 million, led by Instagram, LINE, Douyin, and TikTok. We look forward to sharing more of our rolling thunder of activations ahead as we continue to build brand desirability across generations around the world. Moving to our second key initiative, Drive the Core and Expand for More. Our design teams continue to honor the heritage and enduring codes of our brand while thoughtfully evolving them for the way consumers live today. Starting with our core, which represents more than 70% of our business. Core product sales grew mid-teens in the first quarter. Recent highlights include a broad range of foundational sweaters, our linen Oxford and seersucker shirts, and our iconic chino caps.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

We also introduced our By the Lake children's collection, featuring versatile pieces that provide an easy transition into back to school, led by mini cable sweaters, windbreakers, and full-zip hoodies. Our high-potential categories, including women's apparel, outerwear, and handbags, continue to be accelerators for our business. Together, these categories increased more than 20% for the quarter, outpacing total company growth. In women's, we drove strong performance across cable knit and jersey sweaters, linen shirts, shirt dresses, and cotton chino pants. Our lightweight outerwear, led by our city jacket and oversized windbreaker, along with our fleece programs and bold Polo graphics, are driving seasonal newness and consumer engagement. Our spring handbag campaigns continue to focus on our foundational Polo Play and Polo ID collections in a colorful array of pebbled leathers, denim, beading, and seasonal raffia, all ahead of our next foundational launch, the Polo Blaze, for Fall 2026.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Special releases this quarter included our Wimbledon collection honoring our heritage of sport, sophistication, and timelessness; our latest home collections, Sterling Square and Saddlebrook, inspired by Ralph's homes in New York City and Bedford; the launch of our partnership with Pebble Beach Resorts, marking the destination's first and only branded retail concept. As we transition into fall, we will continue to lean into the breadth of our lifestyle product offering, both connecting with consumers around the world while driving resilience in our business. Turning to our third key initiative, Win in Key Cities with Our Consumer Ecosystem. Our teams continue to set the standard for innovative consumer lifestyle experiences, bringing Ralph Lauren to life in our top 30 cities around the world, while also laying the groundwork for long-term growth in our next 20 cities.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Within DTC, which comprises the majority of our business, we delivered another quarter of healthy comp growth across regions. Global comps increased 12%, led by our Ralph Lauren stores and digital commerce. By region, Asia again led our growth, with sales up 25%, driven by all key markets. China's sales remained strong, increasing more than 40% as we continue to build our brand. Our China performance was supported by local activations such as our Ralph Lauren Polo Cup, along with further expansion across our top six city clusters and on digital. Europe delivered mid-single-digit growth this quarter on top of last year's strong compares, and we continued to drive results ahead of expectations in our largest region, North America, with retail and wholesale both contributing to this quarter's 13% growth. As we deepen our presence in our top cities, we opened 22 new owned and partner stores globally this quarter.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

New stores included The Grove in Los Angeles, Stanford Shopping Center in Palo Alto, our second store in the Bay Area ecosystem and first in Silicon Valley, including a Ralph's Coffee, Istanbul, new Polo stores in Sydney and Perth, and we renovated our highly elevated Bicester outlet outside of London, which also now includes a Ralph's Coffee. In addition, we expanded our RL mobile app to Korea, our first market to have the app outside of North America, with strong early performance that exceeded our expectations. 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 advanced technology, AI and analytics, we continue to drive progress in enhancing our creativity, productivity and customer engagement. This quarter, we improved user experiences on our digital commerce sites and expanded brand discoverability across key LLMs.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

We are also participating in select AI tests to understand evolving consumer behavior on these newer platforms. In addition, we were proud to be named one of TIME magazine's World's 100 Most Influential Businesses of 2026, recognizing our company's legacy of style, impactful storytelling, and the unique way we transcend generations. We were also named one of The Wall Street Journal's Best Companies for the Future for 2026, highlighting S&P 500 companies that are best positioned to thrive in a rapidly evolving global landscape. In closing, Ralph and I are encouraged by our brand's continued momentum through the start of fiscal 2027. With our diversified drivers of growth and increasingly elevated consumer base, our business model is resilient and delivering consistent performance. We want to thank our teams who are navigating the ever-evolving operating landscape with care and agility, and to our customers, thank you for your loyalty and trust.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Looking ahead, we will continue to invest in our key strategic priorities to deliver the sustainable growth, including harnessing the power of our iconic brand to drive desirability and lifetime value, creating timeless products with a strong value proposition that consumers love and trust, investing in brand experiences that inspire our consumers and immerse them in the world of Ralph Lauren. With that, I'll hand it over to Justin, I'll join him at the end to answer your questions.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Thanks, Patrice, good morning, everyone. Our first quarter performance exceeded our expectations on both the top and bottom line, reinforcing the strength of the Ralph Lauren brand and the resilience of our diversified global growth drivers. In the midst of a dynamic operating environment, these results underscore our disciplined operating approach and the quality of execution by our teams around the world. Revenues were up double digits, ahead of our mid to high single-digit outlook for the quarter, driven by broad-based performance across regions and channels, supported by healthy consumer demand. We continued on our brand elevation journey with stronger full-price selling and reduced promotional activity, driving gross and operating margins above our expectations. At the same time, we reinvested behind our key strategic priorities to support sustainable growth and long-term value creation.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

As Patrice mentioned, our strong first quarter results and underlying brand momentum give us confidence to raise our full-year outlook, even as we maintain an appropriately prudent view on Europe due to the macroeconomic uncertainty. First, let me walk you through our financial highlights from the first quarter, which, as a reminder, are provided on a constant currency basis. Total company first quarter revenue grew 13%, reflecting better-than-expected performance in both our direct-to-consumer and wholesale channels. By region, Asia led our performance, increasing 25%, followed by North America, up 13%, and Europe, up 5%. Total company retail comps were strong, increasing 12%, with balanced contributions from our own digital and brick-and-mortar channels. Total digital ecosystem sales, including our own sites and wholesale digital accounts, grew mid-teens, driven by all regions.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Total company adjusted gross margin expanded 130 basis points to 73.6%, underscoring the continued elevation of our business and investments in quality of sales. This resulted in strong AUR growth and favorable mix shift towards our full-price businesses, which more than offset incremental tariff costs and higher labor and non-cotton material costs in the quarter. AUR increased 15%, supported by healthy new customer acquisition and disciplined inventory management, enabling strong full-price selling, reduced discounting, and selective pricing actions, along with favorable product, channel, and geographic mix. We currently expect mid to high single-digit AUR growth in the second quarter of fiscal 2027, reflecting our ongoing brand elevation strategy. Additionally, we now anticipate mid to high single-digit AUR growth for the full year, with contributions from all regions. We expect this continued AUR growth to more than offset modest pressure from higher freight and tariff costs.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Adjusted operating expenses increased 13%, but declined 10 basis points as a percentage of sales to last year, driven by 90 basis points of leverage in non-marketing expenses. Marketing increased to 8.2% of sales, compared to 7.5% last year, supported by our investments in key brand-building activations around the world this quarter, including our spring global campaign and men's fashion show. We continue to view these marketing investments as critical drivers of long-term brand desirability, customer acquisition, and lifetime value. With compelling ROI behind these activities, we still expect marketing as a percentage of sales to step up to approximately 8% in fiscal 2027. First quarter adjusted operating margin expanded 150 basis points to 18.5% ahead of our plan, while operating income grew 23%. Turning to segment performance, starting with North America, first quarter revenue grew 13% above our expectations.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

In North America retail, first quarter comps increased 9%, led by our full-price channels. Digital comps increased 8%, reflecting solid traffic trends and benefiting from merchandising optimization and our investments in full funnel marketing activations. North America wholesale revenue grew 22%, driven by strong spring sell-out trends and replenishment orders, resumed shipments to a luxury wholesale account, and a shift in timing of shipments from the fourth quarter of FY 2026. Together, the timing shifts and resumed shipments contributed approximately 15 points of growth in the quarter, demonstrating healthy underlying growth. With stronger-than-expected trends in our full-price wholesale business, we plan to accelerate our strategic reduction of off-price sales and exit of lower tier full-price stores in the back half of the year.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

As a result, we continue to expect stronger North America wholesale performance in the first half, followed by a more pronounced impact from these strategic reductions in the second half, which we expect to more than offset underlying full-price growth and result in modest growth for full year FY 2027. Turning to Europe. First quarter revenue increased 5%. By market, Germany, Italy, and Spain led our performance in the region. Europe retail comps were up 1% on top of a double-digit compare last year, with stronger growth in our own digital business. While store traffic was impacted by the broader macro environment, we continued to outperform market trends with increased conversion rates and basket sizes through our ongoing brand elevation and targeted consumer engagement initiatives. Europe wholesale increased 8%, also on top of a double-digit compare last year.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Results included a roughly 5-point benefit from earlier timing of shipments from the second quarter. While underlying wholesale sellout trends remain in line with our full-year outlook, we are proactively managing our sell-in to maintain healthy inventories in the channel as we continue to take a prudent view of the broader consumer environment. Moving to Asia. First quarter revenue increased 25%, driven by growth across all key markets. Retail comps grew 23%, with double-digit growth in every channel. Asia digital ecosystem sales also increased double digits, with strong contributions from both our own digital commerce sites as well as pure plays. Our full funnel marketing activations continue to strengthen brand affinity across the region, with consumers increasingly drawn to our core values, notably authenticity, quality, and timeless style.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

By market, China continues to lead our growth, with sales up over 40% in the quarter, driven by healthy comps and high-quality new customer recruitment. Japan and Korea also delivered double-digit growth, supported by localized brand activations and strong consumer engagement. Moving to the balance sheet. Our fortress balance sheet and strong cash flow generation remain important competitive advantages, providing us with the flexibility to make strategic investments, pursue growth opportunities, and continue delivering value to shareholders in a dynamic operating environment. During the first quarter, we returned more than $300 million to shareholders through our dividend and repurchases, ending the period with $1.9 billion in cash and short-term investments and $1.2 billion in total debt.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

First quarter net inventory decreased 3% in constant currency, driven by disciplined inventory management, the timing shift of receipts in Europe, and lapping higher inventory levels in the prior year as we mitigated the impact of tariffs in North America. Inventory remains healthy across regions and channels and well-positioned relative to demand. Looking ahead, our outlook for fiscal 2027 remains based on our best assessment of the current operating environment, including the geopolitical backdrop, foreign currency dynamics, and broader macroeconomic trends. For fiscal 2027, we expect constant currency revenue to increase mid-single digits to last year on a 52-week comparable basis, now centered around 5%-6%, up from 4%-5% previously, reflecting our better-than-expected first quarter results and continued brand momentum despite a volatile global operating environment.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Foreign currency is now expected to negatively impact revenue growth by approximately 50 basis points-100 basis points this year based on current exchange rates. As a reminder, fiscal 2027 includes a 53rd week, which is expected to add approximately 1 point to revenue growth and slightly benefit operating margin. While our core consumer base has remained resilient through the start of the year, our outlook maintains a prudent view of consumer demand in EMEA, as well as modest cost headwinds from energy pricing volatility and U.S. tariffs. By region for fiscal 2027, we still expect North America revenue to grow approximately low single digits. We are encouraged by our strong first quarter performance with continued momentum in our direct-to-consumer channel and healthy wholesale sell-out.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We still expect this solid growth to be partly offset by accelerated strategic investments in quality of sales and lower tier door exits, notably in the back half of the year, as we further elevate our long-term position in the marketplace. We continue to expect Europe revenue to increase approximately low to mid-single digits, with underlying growth tempered by ongoing uncertainty in the consumer environment from elevated energy costs and disruption to Middle East partner sales and tourism, as well as lapping strong fiscal 2026 compares. We now expect Asia revenue to increase approximately high single to low double digits, up from our prior outlook of high single-digit growth, driven by our stronger-than-expected Q1 results and ongoing brand momentum and expansion opportunities across key markets in the region.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We now expect full-year operating margin to expand approximately 60 basis points-80 basis points in constant currency, up from our prior guidance of 40 basis points-60 basis points, driven by our better-than-expected Q1 results. Despite the recent U.S. announcements on Section 301 tariffs, we are maintaining our assumption of approximately 10% tariff rates through the first half of this year, followed by a return to reciprocal rates in the high teens during the second half in anticipation of additional tariffs. At the same time, we are raising our full-year gross margin outlook to roughly 50 basis points-70 basis points of expansion, up from our prior expectation of modest expansion, reflecting our stronger-than-expected Q1 performance.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We continue to expect both gross and operating margin expansion to be weighted toward the first half of the fiscal year, supported by the timing of key marketing activations relative to the prior year, as well as our current tariff assumptions, which remain subject to change. Foreign currency is still expected to have a roughly neutral impact on gross and operating margins in fiscal 2027. Our guidance continues to exclude the impact of tariff refunds, which we are not planning to include in our adjusted non-GAAP results. Consistent with our long-term capital allocation approach, we expect to reinvest any related proceeds back into our business, as well as in initiatives that advance our values and purpose. For the second quarter, we expect constant currency revenue to increase approximately mid-single digits, centered around 5%-6%. Foreign currency is expected to negatively impact revenues by approximately 100 basis points-150 basis points.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We expect operating margin to expand approximately 80 basis points-100 basis points in constant currency, led by gross margin expansion. Gross margin is expected to benefit from AUR growth as well as favorable product, geographic, and channel mix, all reflecting the output of our long-term brand elevation strategy. Foreign currency is expected to have a roughly neutral impact on gross and operating margins in the quarter. We expect our second quarter tax rate to be in the range of 19%-20%, while the full-year tax rate is still expected to be approximately 21%-22%. In closing, our teams continue to execute with focus and discipline across both our near and long-term strategic priorities. The enduring strength of our brand, rooted in Ralph's timeless vision, continues to resonate with consumers around the world, deepening engagement across geographies and cultures.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

As we navigate a highly dynamic macro environment, we remain focused on managing industry-wide pressures through our operating discipline, strong balance sheet, and organizational agility. At the same time, we are staying on offense and remain committed to investing in our brand, our products, our experiences, and our capabilities to better serve and create lasting connections with our customers while driving durable growth and long-term value creation. 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 then one on your touch-tone phone. You will hear a tone indicating you have been placed in queue. You may remove yourself from queue at any time by pressing star two. If you are 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 one at this time. One moment please for the first question. The first question comes from Matt Boss with JPMorgan. Your line is open.

Matt Boss
Matt Boss
Analyst at JPMorgan

Thanks, and congratulations on another nice quarter.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Thanks, Matt.

Matt Boss
Matt Boss
Analyst at JPMorgan

Patrice, what's your confidence in sustaining brand momentum through the fiscal year and beyond, despite lapping some big moments, including Olympics and Ralph Lauren Christmas? With more [inaudible] luxury this year, does improvement in the broader luxury market, does that help or hurt your business? Do you need to keep expanding your marketing budget in order to compete? Just to switch gears, Justin, could you help break down the drivers of more than 100 basis points of gross margin expansion in the first quarter, and just any structural change in the drivers of your gross margin build as we think about the second quarter or the back half of the year?

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Good morning, Matt. Thanks for your question. As you know, we've been on the clear brand elevation journey for nearly a decade now, and our brand equity is stronger than ever across markets and across generations. Sustaining that momentum goes well beyond marketing. It's a multi-pronged effort across our three Drive pillars. If you step back, and I know you care deeply about total addressable markets, as an $8 billion business in a more than $400 billion market, we still see significant opportunity to invest behind our brand and for long-term growth. Our three pillars remain central to that strategy to seize this opportunity. Right, first is building brand desirability through our distinctive cinematic storytelling. We continue to amplify evergreen platforms like Wimbledon.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

You may have seen the grass court that we built in Central Park recently. We continue to launch immersive campaigns that engage women, luxury, and next-gen consumers. We continue to see strong ROI from this rolling thunder of activations. We remain comfortable with the 8% marketing investment guided for this year, knowing that as we've talked, as we continue to expand margin in the future, we do expect to continue to further invest in marketing. Second is the unique breadth of our product portfolio. We're leveraging our lifestyle offering across core iconic products, which importantly are resonating across generations, including with the younger generations. We're continuing to lean into our high-potential categories like women's apparel, outerwear, and handbags. We're just at the beginning of this journey across these three businesses, right?

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

If you look at the market shares that we've achieved across all three, it's just the start of an exciting journey. There we're delivering timeless value that transcends fashion cycles. Third is our immersive channel experiences. We continue to build key city ecosystems with innovative shopping experiences that deepen consumer connection. We see that both in consumer recruiting and retention scores, and support strong performance across the broad range of regions that we operate in. All this requires disciplined execution and agility. While the macro environment remains dynamic, we've shown that we can advance this strategy, our three pillars, across many different operating environments successfully.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Regarding your point on the luxury market, we've built strong luxury credentials across geographies. I think that's reflected both in our consumer base and our performance and the type of consumers that we're bringing into the Ralph Lauren family. We also occupy a very distinct space within luxury, what we call inclusive luxury, spanning categories and price points across our lifestyle portfolio. Consumers continue to tell us that they see unique value in our offerings, from handbags to outerwear and beyond. I will add that a healthier luxury market would be a tailwind for us, supporting stronger traffic, consideration, and alignment with our elevated positioning. Looking ahead, our brand is strong. We have multiple growth drivers. We continue to invest as we perform, and we remain confident in delivering growth and value creation this year and beyond.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

I turn it over to Justin to cover your other questions.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Thanks, Patrice. Matt, on the drivers of the gross margin. Q1 gross margin was ahead of expectations, driven by better-than-expected AUR growth and some favorable geo and channel mix, and that more than offset incremental tariffs and some non-cotton material cost pressure. Our gross margin expansion is really underpinned by structural durable drivers, and that really gives us confidence in the continued progression from here. From a quarterly cadence perspective, we still are expecting gross margin expansion will be stronger in the first half, and that's largely due both to our Q1 outperformance and to that tariff assumption that we're making, which is the lower prevailing tariff rate of about 10% through that relief period, end of July, and then back to the reciprocal rate assumptions for the balance of the year. For Q2 specifically, we guided gross margin of 80 basis points-100 basis points of expansion.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

That's really driven by AUR growth as well as favorable product geo and channel mix. On the full year, we did take up our gross margin expansion guide up from expectation of modest expansion to 50 basis points-70 basis points of expansion, and that's really based on that strong Q1 performance. Feel really good about the trajectory that we're on and the durability behind the drivers.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

Thank you. Next question, please.

Operator

Thank you. The next question comes from Jay Sole with UBS. Your line is open.

Jay Sole
Jay Sole
Analyst at UBS

Great. Thank you so much. Justin, AUR continues to exceed your expectations. How much farther do you think the Ralph Lauren brand has to go on the elevation journey from here, especially if the pricing environment becomes more challenging? Can you give us any color around recent performance or quarter-to-date trends given mixed industry reads over the past few months? Patrice, also wanted to just ask you if you can expand on China. You talked a lot about brand momentum, 40% growth in China is really impressive. How should we think about the possibility of that kind of demand and that kind of growth continuing as we go through the rest of the year and into next year?

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Thanks for the question, Jay. I'll kick us off. For us, brand elevation is not a destination. It's an ongoing journey, and we're still in the early innings of unlocking the full potential of our lifestyle brand. An important context to remember here with AUR is that AUR is an outcome of our strategy. It's not an objective in and of itself, right? We're elevating across product, storytelling, the consumer experience to deliver more value to customers, and their response, together with our consistently strong brand metrics, really reinforces the strength and success of that approach we're taking. That includes more than nine years of AUR growth. A few points are worth reinforcing here. First, we continue to demonstrate that growth and elevation, they can go hand in hand, right? It's not an either/or proposition.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We saw this in the first quarter where we again delivered strong growth in revenue, including both AUR and unit growth, while at the same time improving our quality of sales. Second, we have multiple durable drivers of AUR growth, right? These include higher full-price sell-through and lower promotions, structural favorability from consumer channel geo and product category mix, and targeted pricing, always with a clear focus on value perception. Now, on the potentially more challenging pricing environment, we're certainly mindful of the backdrop. At the same time, we built flexibility into our pricing architecture so we can make targeted market-specific adjustments when and where appropriate without compromising our brand elevation strategy or our margin objectives. To the question on recent performance, we typically don't comment on quarter-to-date trends.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

What I would say is that our second quarter guidance reflects the continued brand momentum we're seeing across channels and key markets with positive contributions from all three regions in the quarter. For Q2, Asia is going to lead growing mid-teens, followed by North America, where we're expecting another solid quarter of mid-single-digit growth and with modest growth coming from EMEA, despite a more pressured consumer environment and the strong compares in the prior year. Now, as we reflected in our initial outlook back in May, we do continue to expect revenue and profit growth to be more weighted to the first half of the year, and that reflects wholesale shipment timing, the compares we're lapping, and our decision to accelerate strategic reductions in off-price sales and lower-tier distribution in the back half of the year.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Just taking a step back, we remain focused on executing our strategy, investing in our brand, strengthening our quality of sales, expanding in our top city ecosystems, deepening our connections with customers around the world. At the same time, you'll see us remain agile. We'll remain disciplined as we navigate this external environment, just as we have over time throughout the elevation journey. Over to Patrice.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

We're always excited to talk about China, and indeed, up 40% this last quarter. A few things I would call out. First of all, our teams are doing an outstanding job across the market, engaging consumers, both new consumers and existing consumers. Across our three Drive strategies, first on the marketing and storytelling front, we're leveraging our global campaigns very effectively, and they're resonating in the market, and then we're complementing that with local activations. You heard us talk about the first ever polo match organized in Beijing that we did recently. 74 million people live streamed that polo match, just to give you a sense of the scale that's possible when our teams really hit a nerve with consumers. We're seeing our brand equity ratings go from strength to strength.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Very excited about the momentum that the teams are building there from a brand standpoint. From a product standpoint, our strategy is also playing out very well there. Our core is strong, and we're seeing disproportionate performance from our women's business, our handbag business, and continuing to lean into that. As I mentioned earlier, there's so much potential globally on these categories, and that applies also to the Chinese market. Then finally, as you know, we have a very focused, disciplined key city approach for China, focused on the six key cities that we activate, and we have a disciplined rollout plan for retail. Those strategies are evergreen for that market. As we look ahead for this fiscal year, we expect China to be around mid-teens, right? Remember, in the back half, we're going to be anniversarying some pretty high levels of performance.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

I don't know that we can count on 40% every quarter. I think mid-teens is a still very exciting number for us for this fiscal year. Then in the context of our Drive strategy for the three-year period, we guided China to be low double digits and have confidence in our ability to deliver against that.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

Thanks. Next question please, Julie.

Operator

Thank you. The next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Brooke Roach
Brooke Roach
Analyst at Goldman Sachs

Good morning. Thank you for taking our question. Patrice, can you provide a bit more detail on the engagement that you're seeing with the brand in Europe and dimensionalize the impacts of the macro pressures you're seeing? How have trends progressed throughout the summer months? What actions do you have in place to drive resilient growth amidst the uncertainty? Perhaps for Justin, a similar question. Is there any cadencing regarding revenues or margin delivery that we should be mindful of in this region for the rest of the year, given the comparisons and the macro? Thank you.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Good morning, Brooke. Similar to what we're seeing around the world, we continue to see strengthening of our brand equity in the European market across the key drivers of consideration, awareness, Net Promoter Score, luxury perception. We feel good as a group that the campaigns that we're putting in the market, the activations we're doing locally across Europe, are resonating with the consumer. We do know that this consumer is more pressured because of what's happening in the Middle East, because of consumer sentiment generally being depressed, and because of inflationary pressures. In that context, our brand is continuing to resonate very nicely across the key markets. The markets I would call out in terms of disproportionate strength are Germany, which is actually our number one market in Europe, and Southern Europe, Italy, and Spain.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

As you know, Brooke, we don't comment on the current quarter. I can't give you any perspective yet on what's happening during the summer. You've heard Justin talk earlier about the trends and the momentum that we expect continuing there. We are continuing to invest. We are gaining market share in Europe. We see that very broadly, and excited to see how the brand is just continuing to perform in line with what we expected and how we see strong returns from the different investments we have, whether that is marketing activations, Wimbledon being the latest highlight of that, or our men's fashion show in Milan, or our Salone del Mobile activation, also in Milan. We're opening stores. We just recently opened a beautiful store in Saint-Tropez, which is a great brand statement that will continue to drive brand elevation in that market and brand energy.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Continuing to run the play, but obviously keeping an eye on and being prudent on the general consumer context.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

On the cadence point, as Patrice mentioned, underlying business continues to show positive high-quality growth. We continue to expect to deliver that high-quality, low to mid-single-digit growth for the full year, and that includes the mid-single growth we delivered in Q1 and expected growth in Q2. Again, there is a bit of a first half, second half dynamic there, but we know we're up against some really strong comps in the first half of this year. We do expect improvement there as we move through the second half. On an operating margin perspective, we expect expansion from all three of our regions for the full fiscal 2027, driven by higher growth margin and quality of sales in EMEA.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

I think the important thing to call out there is for Q1, you did see operating margin pressured, and that was really due to the timing and the increase behind market, where we continue to, Patrice's point, to invest behind our brand and our business. We had some one-time activations that were not there in the prior year, like our men's show in Milan.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

Next question, please.

Operator

Thank you. The next question comes from Laurent Vasilescu with BNP Paribas. Your line is open.

Laurent Vasilescu
Laurent Vasilescu
Analyst at BNP Paribas

Good morning. Thank you very much for taking my question. If I heard correctly, Patrice, I think you're still expecting China to grow mid-teens for the year. I'm curious to understand a little bit more what you're seeing in terms of Q2 trends, or I know you don't talk about quarter to date, but how do we think about the evolution of China overall, as the year progresses? I know there's a lot of focus on China, but it looks like overall, Asia is doing really well. I'd love to get your perspective on what you're seeing in the key markets, Japan and Korea. Thank you so much.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Sure. Good morning, Laurent. As I mentioned earlier, our strategies in China, I think, are not just for this year, but they're pretty evergreen. Clearly, our teams are doing an excellent job executing across both marketing, product offering, and go-to-market. It's a big market. Similar to our high-potential categories, I think we're only at the very beginning of this journey. China, before COVID, was 3%. Greater China was 3% of the company. Today, it's 10% of the company. Really nice, consistent progress. If you look at the prior year of performance, we've been on a strong performance run for many, many years now in China. This isn't just a one-quarter story or a two-quarter story. Again, I think only at the beginning of it. Many of our luxury competitors have much greater China penetration than our current 10%.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

We have a game plan that we're running that is working across the different vectors of our strategy. You are right that APAC as a whole is doing quite well for us, up 25% this last quarter. You heard, I'm sure, from Justin's remark that we actually took our guidance up on APAC specifically for the year, based on the strong momentum that we're seeing across the board. Korea has seen significant acceleration of our performance. Again, the same strategy is at play here. Elevation of our brand driving our core products in the high-potential categories and also selective expansion of our footprint. For those of you who are tracking, BTS, who had a concert last week, I'm sure many of you were at their concert last week at MetLife, actually asked to be dressed in Polo. The whole group was dressed in Polo.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

We were excited about that opportunity to partner with them as they reached out to us. That's Korea. Japan, performing quite strongly. We're seeing good sustained momentum in Japan. We're seeing particularly strength in full-price sales and then better-than-expected inbound tourist spending from China and other markets. We've got some exciting activations going on in Japan this year because we're celebrating our 50th anniversary in this market. This fiscal year, we're celebrating the 20th anniversary of our Omotesando flagship store. Good continued momentum there. In general, we look at the energy that the brand has across China, because I didn't quote Southeast Asia, I didn't quote Australia, but the same dynamic is true across the board and have strong confidence in the future.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

Thank you. Next question, please.

Operator

Thank you. The next question comes from Michael Binetti with Evercore. Your line is open.

Michael Binetti
Michael Binetti
Analyst at Evercore

Hey, guys. Congrats on the great quarter.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Thanks, Michael.

Michael Binetti
Michael Binetti
Analyst at Evercore

A couple from me real quick. On the near term, maybe just on the second quarter North America revenue guide composition, I think, Justin, you said mid-singles. Can you just talk about how we get there a little? It sounded like maybe there's still a wholesale benefit in 2Q, and then we get into some quality of sales in the back half. It seems like you're baking in a fairly conservative DTC comp in North America. Maybe just a comment on the composition there. A bit of a longer-term question, as we think back to the Analyst Day with the updated guidance today, you're now tracking probably to the high end of your fiscal 2028 revenue guidance this year, a year ahead of time. Congrats on that, first of all.

Michael Binetti
Michael Binetti
Analyst at Evercore

I wonder with some of those wins under your belt and a lot of leverage coming through this quarter on the operating expense line, the non-marketing line. Is it smart to think maybe marketing towards the mid to high points of the 2028 guide? Do you think it makes sense to start targeting the high end of that range to continue this level of revenue performance? Any thought would be helpful.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Thanks, Michael. On North America, listen, we're really encouraged by our growth in North America. It's our largest region. It's on a really solid, high-quality growth trajectory. We saw strong Q1 results across channels, and we saw that broad-based brand momentum carry forward into Q2, where again, we're expecting another solid, another high-quality, balanced mid-single-digit growth quarter, and we continue to have confidence in delivering that full year sort of growth expectation of low single digits with potential opportunity against this expectation as we continue to lean into strategic elevation investments and the brand continues to perform well really across the entire North America ecosystem. We're seeing strong results in DTC, strong demand across channels, digital and in the stores.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We're seeing strong results in wholesale, really solid sell-out trends, enabling us, to your point, to be able to lean in and accelerate on some of our elevation initiatives. As you've seen us do in the past, we're going to continue to leverage our ability and our agility to take advantage of incremental demand opportunities when and if they arise, right? We know we have the ability to chase into incremental demand. Q2, I would say, is more of a continuation story, a really balanced, high-quality growth story for North America. On the sort of longer-term outlook and the marketing, you've seen us steadily increase our marketing as we've moved through the course of our brand elevation journey. I think we started, it was 3.5%, right? Roughly 8% up to this year.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We feel really good about the impact that our marketing investments have been having, as we scale them and as we diversify them. That's been part of the ROI, and the impact has been the driving force behind us continuing to take this spend up. Now, you can see that as we deliver on our commitments and in the case of recent quarters, over-deliver our sort of one key area to put the over-delivery that we don't flow through is really behind our brand and building our brand and strengthening our brand. That's what you see happening in marketing expense. I think we feel good about the 7.5%-8.5% three-year guide that we laid out back in September. As Patrice always talks about, it's not a ceiling.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We know that as we continue to see the traction and impact behind our spend, this is an area that we're going to continue to focus on moving forward.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Our marketing teams are really doing a fantastic job around the world building brand desirability, recruiting new customers. You saw the number this quarter, again, 1.5 million new customers. We're strengthening value per customer. We're getting really good returns on the increased marketing investments that we've been doing over the years. I think, Justin, as you mentioned, we're comfortable with the 8% guide for this year. The range we had provided for the three year was 3.5%-8.5%. Michael, I don't think there's a ceiling, right? As we come up with new smart ideas to activate the brand to engage with consumers, we'll look at it through the lens of ROI. If there's a smart opportunity to lean in, then we will do that in parallel with continued expansion of our operating margins.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

Next question, please.

Operator

Thank you. The next question comes from Dana Telsey with Telsey Group. Your line is open.

Dana Telsey
Analyst at Telsey Group

Hi, good morning, everyone, congratulations. Two things. As you think about, I think, [Justin], you mentioned you had 90 basis points of leverage in non-marketing expense. How should we think about that going forward? Is there more opportunity? The other question on the strength in wholesale with North America resuming some shipments.

Dana Telsey
Analyst at Telsey Group

How do you think about that going forward? Given the more pronounced strategic reduction, where should wholesale be as a percentage of the business? How do you see the growth of DTC relative to wholesale, especially given the opportunity categories have so much room? Thank you.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

I'll kick it off. Patrice and I will tag-team on the wholesale sort of strategy. On expenses, our long-term philosophy remains unchanged, right? That's to balance reinvestment in growth for the longer term with delivering on or exceeding, as we did in Q1, our operating margin commitment. You saw us deliver a little bit of leverage in Q1. You also saw us invest in marketing up pretty meaningfully year-over-year. We're going to continue that balance, and we built out that muscle of operating expense leverage with our cost optimization discipline that we've created as a culture here at Ralph Lauren. Just on the trending on the wholesale before the strategy, I'll just say that for North America wholesale, we feel really good about the health of the business.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

We're driving high-quality growth while at the same time continuing to elevate our positioning in the channel. Right? Underlying demand remains healthy, sell-through remains strong, and we continue to gain share across our family of brands and key accounts. For us, driving growth while elevating in this channel is really the play here.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

From a general strategy standpoint for go-to-market, Dana, as you know, we've got this key city approach that we're leveraging around the world. Top 30 cities, the next tranche of 20 cities that we're starting to activate. Wholesale has an important role to play, and I would qualify that by saying quality wholesale has an important role to play in that strategy, because we're finding that quality wholesale is a wonderful way for brand discovery and new consumer recruiting. We rely on it in large part for that in the context of our key city ecosystems. Today, the split is 70/30. If you look at just sheer geographical composition and mix, right, APAC is mostly DTC. As APAC disproportionately grows, obviously that percentage is going to continue to increase towards DTC. We're not obsessed with the split.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Frankly, each part of that business has a role to play. What we're obsessed with is, are we engaging the consumer in the right place? Are we engaging with them in an elevated way, in a way that we are proud and that is financially attractive? I have to say, having had a recent lunch with one of our key wholesale partners, it's so exciting to see the strategic alignment we now have with our key department store partners, both here in the U.S., and in Europe. It's exciting to see the breadth of our performance as we look at market share gains, men's, women's, kids, core, high-potential categories. To Justin's point, we feel we have very strong momentum there. Most of the reset is complete, although we will continue to clear the bottom, because there's always a bottom.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

Feel good about where we are from a wholesale standpoint, both in North America and Europe now. I think back to the percentage question, probably a little more than 70% DTC moving forward.

Corinna Van der Ghinst
Corinna Van der Ghinst
Senior VP and Global Head of Strategy and Investor Relations at Ralph Lauren

We'll go with one more question, please, Julie.

Operator

Thank you. Our final question will come from Blake Anderson with Jefferies. Your line is open.

Blake Anderson
Blake Anderson
Analyst at Jefferies

Hi, guys. Thanks for taking my question. I wanted to ask you about Europe. I know you've discussed it on the call already. I was wondering if you could unpack a little bit more what you're seeing in terms of local demand versus tourism and anything on units or AUR in that market or traffic to your stores. Bigger picture, I wanted to ask, has your perspective or strategy changed at all for this market in terms of your outlook, given the recent environment? I know that you've had some quality of sales initiatives you implemented more on the last few quarters to maintain that high AUR. How are you thinking about the strategy there and outlook going forward, bigger picture as well?

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

Thanks. Thanks for the question. I'll start us off. Traffic, as you know, has been broadly pressured across EMEA, right? That's really driven by the challenging macro backdrop trends varying by markets, and that includes that slowdown in tourism from the Middle East. On the plus side, our brand positioning and our brand strength remains very strong. We've been able to offset the soft traffic with higher conversion rates, increased basket sizes, as we continue to appeal to our core consumer. Our core consumer in the region remains resilient, and that's really what's driving our growth in the region. At the same time, we've put together our established action plan to engage and convert those consumers that are more pressured by the macro.

Justin Picicci
Justin Picicci
CFO at Ralph Lauren

That, for us, is a smaller subset of our consumer base, but this is with targeted, personalized marketing, with very specific, tactical product value propositions, clienteling, reach out, et cetera. We've seen that circumstance before, that environment before, and we've ran that play before, and we know that we can successfully talk to and engage these consumers during this time. We've reflected the macro challenges in our outlook for the year. At the same time, we continue to deliver growth, we continue to invest, and we continue to see the high-quality, full-price growth come through in our quality of sales and in our gross margin. When we think about the outlook for the region, we're really confident in that low to mid-single-digit growth outlook that we guided, because our underlying European business continues to show that positive, high-quality growth.

Patrice Louvet
Patrice Louvet
President and CEO at Ralph Lauren

For the longer-term strategy, Blake, Europe is around 30% of the company. We've had a really nice run in Europe now for several years, with strong growth across all the markets and the reset of our wholesale business there. Strong foundations. Our ambition and expectations from Europe are unchanged. We still expect to deliver mid-single digit, for the full three-year period, to Justin's point. This year, we're being a little more prudent given the consumer context, but our longer-term ambition relative to that market and our longer-term excitement about the opportunities that we have across EMEA are unchanged. Thank you all for joining us today. We look forward to reconnecting with all of you in early November to share our second quarter 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.

Executives
    • Corinna Van der Ghinst
      Corinna Van der Ghinst
      Senior VP and Global Head of Strategy and Investor Relations
    • Patrice Louvet
      Patrice Louvet
      President and CEO
    • Justin Picicci
      Justin Picicci
      CFO
Analysts
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