Ralph Lauren Beats Q2 Earnings & Revenue Estimates, Raises FY26 View

Ralph Lauren Corporation RL posted impressive second-quarter fiscal 2026 results, wherein both the top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. The second-quarter results put an emphasis on the company’s strong brand momentum, operational discipline and strategic execution.

RL reported adjusted earnings per share of $3.79, which surpassed the consensus estimate of $3.45. Also, the bottom line increased 49% from $2.54 per share in the year-earlier quarter.

Ralph Lauren Corporation Price, Consensus and EPS Surprise

Ralph Lauren Corporation price-consensus-eps-surprise-chart | Ralph Lauren Corporation Quote

Net revenues grew 17% year over year to $2,010 million and beat the Zacks Consensus Estimate of $1,896 million. On a constant-currency (cc) basis, revenues were up 14% from the year-ago quarter. The top line witnessed growth across all regions, driven by brand strength, pricing efforts and continued strategic investments.

Global direct-to-consumer comparable store sales (comps) jumped 13%, backed by positive retail comps in all regions and channels. The top line was favorably impacted by 250 basis points (bps) from foreign currency rates.

Shares of this Zacks Rank #3 (Hold) company have gained 31.8% in the past six months against the industry’s decline of 13.3%.

Ralph Lauren’s Q2 Segmental Details

North America: The segment’s revenues were up 13% year over year to $832 million. Comps for North America’s retail channel rose 13% year over year, while those for brick-and-mortar stores and digital commerce moved up 12% and 15%, respectively. Revenues from the North America wholesale business rose 13% year over year.

Europe: The segment’s revenues rose 22% year over year to $688 million. The metric was up 15% on a currency-neutral basis. Comps for the retail channel in Europe were up 10%, while brick-and-mortar stores grew 8% year over year. Digital sales witnessed a 17% rise. Revenues for the segment’s wholesale business increased 26% on a reported basis and rose 18% on a cc basis.

Asia: The segment’s revenues increased 17% year over year to $446 million on a reported basis and 16% on a currency-neutral basis. Comps in Asia were up 16%, backed by 14% growth in brick-and-mortar stores and a 36% increase in the digital business.

A Look at RL’s Q2 Margins & Costs

Ralph Lauren's adjusted gross profit margin expanded 100 bps year over year to 68%. This was mainly driven by favorable product mix, and lower cotton costs, along with AUR growth and lower cotton costs, which helped offset increased pressure from tariffs and other product-related expenses.

Adjusted operating expenses rose 13% from the year-ago period to $1083.4 million. Adjusted operating expenses, as a percentage of sales, contracted 160 bps to 53.9%.

The company’s adjusted operating income was $283 million for the reported quarter. The adjusted operating margin increased 130 bps year over year to 14.1%.

Ralph Lauren’s Financials

Ralph Lauren ended second-quarter fiscal 2026 with cash and short-term investments of $1.6 billion, total debt of $1.2 million and total shareholders’ equity of $2.5 billion. Inventory gained 12% year over year to $1.3 billion at the end of the quarter under review.
    
The company reported $281.1 million in capital expenditures for the first six months of 2026, up from $75.1 million in the prior year.

RL repurchased nearly $63 million of Class A Common Stock in the fiscal second quarter of 2026. It returned about $420 million to its shareholders via dividends and repurchases of Class A common stock.

Ralph Lauren’s Store Update

As of Sept. 27, 2025, Ralph Lauren had 582 directly operated stores and 667 concession shops globally. The directly operated stores included 272 Ralph Lauren and 310 Outlet stores. The company operated 127 licensed partner stores globally as of the same date.

RL’s Outlook for Q3 & FY26

Following its strong second-quarter results, Ralph Lauren raised its full-year fiscal 2026 guidance, reflecting continued brand momentum and outperformance across all regions and channels in the first half of the year. The company’s outlook reflects its best assessment of the current geopolitical and macroeconomic environment, including inflationary pressures, tariffs, consumer spending-related headwinds, global supply chain disruptions and foreign currency volatility.

For fiscal 2026, management expects revenues to increase in the range of 5%-7% on a constant currency basis compared with low to mid-single digits expected earlier. Based on current exchange rates, foreign currency is expected to benefit revenue growth by approximately 200 to 250 basis points compared with 150 to 200 bps expected earlier. Operating margin is now expected to expand by approximately 60 to 80 basis points in constant currency, an improvement over the prior outlook, primarily driven by operating expense leverage.

Foreign currency is anticipated to contribute approximately 30 basis points to gross margin and 50 basis points to operating margin. The full-year effective tax rate is projected to be between 19% and 21%, while capital expenditures are expected to remain in the range of 4% to 5% of revenues. These projections exclude any potential restructuring-related and other net charges that may arise in future periods.

For the fiscal third quarter, RL expects revenues to grow in mid-single digits on a constant currency basis, with foreign currency expected to contribute an additional 150 to 200 basis points. Operating margin for the quarter is forecasted to expand by approximately 60 to 80 basis points in constant currency, primarily driven by operating expense leverage. Foreign currency is also expected to benefit gross and operating margins by approximately 10 and 20 basis points, respectively. The company anticipates an effective tax rate of approximately 21% to 23% for the third quarter.

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