Latest quarter
Ralph Lauren reported Q1 FY2027 revenue of $2.0 billion, up 14.0% from $1.7 billion a year earlier. Revenue, as the consensus counts it, was $2.0 billion versus the $1.9 billion consensus, or 4.42% above the consensus. The company reported adjusted EPS of $4.59, compared with the $4.30 consensus, or 6.74% above the consensus.
The filing shows growth across all reportable segments, with North America revenue up 12.8%, Europe revenue up 7.2% and Asia revenue up 24.3%. Ralph Lauren attributed the revenue increase to retail and wholesale growth, including higher comparable-store sales in its retail businesses. Gross margin rose to 73.7% from 72.3%, which the filing attributed primarily to average-unit-retail growth and favorable channel and geographic mix, partly offsetting tariff and other product-cost pressure. Operating margin increased to 17.5% from 15.9%.
Diluted EPS was $4.28, compared with $3.52 a year earlier. Free cash flow was $285.9 million, compared with −$11.2 million a year earlier; the filing reported operating cash flow of $339.3 million and cited lower inventory levels and higher net income before non-cash charges.
| Q1 FY2027 | Q1 FY2026 | Change | |
|---|---|---|---|
| Revenue | $2.0 billion | $1.7 billion | 14.0% |
| Diluted EPS | $4.28 | $3.52 | 21.6% |
| Gross margin | 73.7% | 72.3% | 1.4 percentage points |
| Operating margin | 17.5% | 15.9% | 1.6 percentage points |
| Free cash flow | $285.9 million | −$11.2 million | — |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $4.59 | $4.30 | Beat by 6.74% |
| Revenue | $2.0 billion | $1.9 billion | Beat by 4.42% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
On the earnings call, Patrice Louvet said the company’s China business grew 40% in Q1 FY2027, citing consumer engagement, global campaigns complemented by local activations, core-product demand and performance in women’s and handbag businesses. He said Ralph Lauren expects China to be around mid-teens for FY2027 as it laps high growth in the prior-year back half. Louvet also said APAC revenue was up 25% in the quarter and described momentum in Korea and Japan.
Justin, the chief financial officer, said Q2 guidance reflects continued brand momentum across channels and key markets. He said Asia is expected to lead with mid-teens growth, North America is expected to grow mid-single digits, and EMEA is expected to post modest growth amid a more pressured consumer environment and strong prior-year comparisons. When asked about recent trading, Justin said the company typically does not comment on quarter-to-date trends.
Analysts also asked how much further average unit retail, or AUR, could advance and whether a tougher pricing environment could affect the company’s strategy. Justin said AUR is an outcome rather than the objective of the company’s approach, and cited higher full-price sell-through, lower promotions, changes in consumer, channel, geographic and product mix, and targeted pricing as drivers. He said Ralph Lauren has flexibility to make market-specific pricing adjustments without changing its brand-elevation strategy or margin objectives.
On margins, Justin said Q1 gross margin exceeded the company’s expectations because of AUR growth and favorable geographic and channel mix, which more than offset incremental tariffs and non-material cost pressure. He said Q2 gross-margin expansion is expected to be 80 to 100 basis points, driven by AUR growth and favorable product, geographic and channel mix. He also said tariff assumptions include a roughly 10% rate through the end of July before reciprocal tariff-rate assumptions apply for the balance of FY2027.
Louvet said Ralph Lauren remains comfortable with an 8% marketing investment for FY2027. He said the company evaluates additional brand activations through the lens of return on investment, while Justin said growth and profit are expected to be more weighted to the first half because of wholesale timing, comparisons and planned reductions in off-price and lower-tier distribution in the back half.
Guidance
Ralph Lauren raised its FY2027 constant-currency revenue-growth outlook to 5.00% to 6.00%, from its prior 4.00% to 5.00% outlook, reflecting better-than-expected first-quarter results. On the call, Justin said the company raised its full-year gross-margin-expansion outlook from modest expansion to 50 to 70 bps of expansion based on Q1 performance.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Tax rate | Q2 FY2027 | 19.0%–20.0% | Q1 FY2027: 22.0%–23.0% | Cut |
| Tax rate | FY2027 | 21.0%–22.0% | 21.0%–22.0% | Held |
| Gross margin, Foreign Currency | Q2 FY2027 | Ralph Lauren expects foreign currency to have a roughly neutral impact on Q2 FY2027 gross margin. | — | — |
| Operating margin, 53rd Week | FY2027 | Ralph Lauren expects the 53rd week to benefit full-year Fiscal 2027 operating margin slightly. | — | — |
| Gross margin, Foreign Currency | FY2027 | Ralph Lauren expects foreign currency to have a roughly neutral impact on Fiscal 2027 gross margin. | — | — |
| Gross margin, non-GAAP | H1 FY2027 | Ralph Lauren expects Fiscal 2027 gross-margin expansion to be stronger in the first half of the fiscal year. | — | — |
| Operating expenses growth, Marketing | three-year strategy period | 3.50%–8.50% | — | New |
| Operating expenses growth, Marketing | FY2027 | 8.00% | 8.00% | Held |
| Capex growth | FY2027 | 4.00%–5.00% | — | New |