RL · Q1 2026 Earnings

Bullish

Ralph Lauren Corporation

Reported August 7, 2025

30-second summary

Ralph Lauren shattered its own Q1 guide: revenue grew 13.7% YoY to $1.72B against a high-single-digit guide, adjusted operating margin hit 17.0% (+270bps YoY reported) with 180bps of gross margin expansion, and every region beat — Asia +21%, Europe +16%, North America +8%. Management raised FY26 revenue growth to low-to-mid single digits (cc) from low-single digits and lifted operating margin expansion to an explicit 40–60bps from "modest," but kept the H2 caution language verbatim. The setup the Q4 call telegraphed — "growth weighted to the first half" — is playing out exactly as drawn, only with a bigger H1.

Headline numbers

EPS

Q1 FY2026

$3.77

Revenue

Q1 FY2026

$1.72B

+13.7% YoY

Gross margin

Q1 FY2026

72.3%

Operating margin

Q1 FY2026

15.9%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$1.72B	+13.7%	$1.70B	+1.3%
EPS	$3.77	—	$2.27	+66.1%
Gross margin	72.3%	—	68.6%	+370bps
Operating margin	15.9%	—	9.1%	+680bps

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue YoY growth	Q1 FY2026	high-single digits	13.7%	+3.7-4.7pts above guide	Beat
Operating margin expansion	Q1 FY2026	approximately 150 to 200 basis points	Adjusted Operating Margin 17.0%	+230 basis points YoY (expansion exceeded 150-200 bps range)	Beat
Tax rate	Q1 FY2026	approximately 20% to 21%	Not reported	in-line	Met

New guidance

Metric	Period	Guide	YoY
Operating margin expansion (constant currency)	Q2 FY2026	120 to 160 basis points	—
Revenue growth (constant currency)	Q2 FY2026	high-single digits	—
Tax rate	Q2 FY2026	15% to 17%	—
FX benefit to revenue growth	FY2026	150 to 200 basis points	—
Gross margin FX benefit	FY2026	10 basis points	—
Operating margin FX benefit	FY2026	40 basis points	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue YoY growth	FY2026	low-single digits	low- to mid-single digits	Upward revision from low- to low-mid single digits	Raised
Operating margin expansion	FY2026	modest	40 to 60 basis points	Raised from modest (unquantified) to 40-60 bps, now explicit	Raised
Tax rate	FY2026	20% to 22%	19% to 20%	-100 to -200 bps midpoint reduction	Lowered

Reaffirmed unchanged this quarter: Capital expenditures (approximately 4% to 5% of revenue)

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
Retail	$1.201B	+16.4%
Wholesale	$0.484B	+8.5%

Platform metrics

Q1 FY2026

Segment	Q1 FY2026
Comparable Store Sales Growth	13%
Direct-to-Consumer Comps	13%
North America Retail Comps	12%
Digital Commerce Growth - Asia	35%
Average Unit Retail Growth	14%
New Customer Acquisition	1.4 million

Profitability

Q1 FY2026

Segment	Q1 FY2026
Adjusted Operating Margin	17.0%
Gross Margin Expansion	180 bps YoY

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
North America	$0.656B	+7.9%
Europe	$0.555B	+15.7%
Asia	$0.474B	+21.2%

Management tone

Q3 FY25 brand-elevation continuation → Q4 FY25 defensive H2 framing → Q1 FY26 confident on offense, caution preserved as ballast.

The "stay on offense while remaining prudent and agile" language from Q4 is now backed by numbers that justify the offense without retiring the prudence. Management quite deliberately did NOT raise Q2 above high-single digits despite a +11.4% cc Q1 print — Justin's framing in Q&A that performance "pretty clearly beat the expectations we shared in May" is the tell: they're tracking ahead but parking the upside in conservative forward language.

The H2 caution is unchanged in substance but more specific in mechanism. Justin in Q&A: "the first half is strong, second half a bit lower due to really the tariffs and the cost inflation pressure." He flagged the unknown as "the price sensitivity and how the consumer reacts to the broader pricing environment." Gross margin guide moved from "approximately flat" at Q4 to "slightly up YoY" now — a small upgrade, but management explicitly tied it to tariff ramp in H2 rather than structural margin expansion. The Q4 line that pricing was incomplete and more would be assessed for Fall 25/Spring 26 has now materialized: Q2 AUR guide of high-single digits reflects "selective pricing actions in North America and Asia for fall 25."

Pricing posture has shifted from defensive to deliberate: Q1 AUR growth was driven mainly by product elevation and discount reduction, while Q2 layers in targeted fall pricing. The order matters — they earned the right to price by demonstrating brand strength first, then layered pricing on top. This is the playbook working as designed.

Q&A highlights

Matt Boss · JPMorgan

What are the largest drivers of upside in recent strength? How much is sustainable? What's needed to turn more positive on consumer outlook for H2? What are the drivers of back-half gross margin relative to front-half expansion levers?

Patrice highlighted three durable drivers: brand strength with elevated full-price consumer base, breadth of lifestyle portfolio with core and high-potential categories, and expanding key city ecosystems. Emphasized staying on offense with focus on controllable factors. Justin explained back-half gross margin will be lower due to tariffs and cost inflation, with tailwinds from AUR growth, promo pullback, and favorable mix offset by tariff costs. Key unknown is consumer price sensitivity.

1.4 million new customers added in Q1 (mid-single digit increase YoY)Q1 retail comps up 13%First half revenues expected up roughly high single to low double digitsGross margin guidance updated from flat to slightly up YoY

Jay Sol · UBS

Why was guidance updated earlier than usual in fiscal year? What changed and what are tariff assumptions? Deep dive on handbag business performance over last 90 days and conviction on sustained growth?

Justin explained Q1 and Q2 performance beat May expectations across all regions, with tariff assumptions broadly in line with May guidance. Patrice detailed handbags as early-stage high-potential category with three-brand portfolio (Polo, Lauren, Collection). Polo Play launch showing strong incremental response. Category benefits from lifestyle complement, strong value proposition, and early-stage capability building.

Q1 beat expectations across all regionsTariff outlook broadly in line with May guidanceGreater China now 9% of total company (vs 3-4% few years ago)Polo Play handbag launch showing strong initial response

Michael Benetti · Evercore ISI

Where is the better momentum by geos and categories versus 90 days ago? Why is Europe guidance weighted heavily to H1 and what are go-forward growth rate expectations given recent strong contribution?

Justin noted DTC leading charge with digital and wholesale growth broad-based. Q2 expects DTC to continue leading with international momentum continuing. North America facing broader pricing environment pressures in Q2. Europe showing balanced strength across retail and wholesale in Q1 but expects deceleration in H2 due to planned wholesale timing shifts and lapping of prior-year Red Sea disruption timing.

Q2 revenue guide high single digitsEurope Q1 constant currency revenue up 10%Europe retail comps up 10% with balanced digital and brick-and-mortar growthEurope wholesale up 10%

Dana Telsy · Telsy Advisory Group

What were full-price vs outlet channel trends in North America? What is AUR at wholesale? What drove China acceleration? How to think about pricing actions and supply chain diversification in H2?

Justin detailed strong comps across both full-price and outlet in North America, with full-price leading. Saw strong quality of sales, AUR growth, meaningful discount decline, and digital acceleration. Patrice explained China's +30% driven by brand building (Shanghai fashion show, 618 activation, Douyin live shopping), strong product resonance especially core items and handbags, and deliberate six-city-cluster focus with store expansion. On pricing, Q1 AUR growth mainly from product elevation and discount reduction; Q2 high single digit AUR includes start of targeted fall pricing.

North America full-price and outlet both showed strong compsQ1 AUR growth 14%, Q2 guidance high single digitsChina sales up over 30% in Q1Greater China now represents 9% of total company

John Kernan · TD Cowan

Can you quantify the tariff impact on gross margin net of pricing? How should we think about North American segment profitability in back-half?

Justin explained tariffs are the biggest gross margin headwind but confidence in offsetting with tailwinds (AUR growth, promo pullback, product elevation, favorable channel/geo mix, cotton cost reduction). Gross margin updated from flat to slightly up YoY despite tariffs ramping in H2. Noted cost inflation pressure disproportionately impacts North America, so regional profitability contribution will shift toward international given 40-60 bps operating margin expansion guidance.

Tariffs identified as biggest gross margin pressureGross margin guidance updated from flat to slightly up YoYOperating margin expansion guidance 40-60 bps in constant currencyTariff pressure ramps up in H2

Answers to last quarter's watch list

Q1 FY26 actuals vs guided HSD revenue growth and 150–200bps op margin expansion. Both crushed. Revenue +11.4% cc (+13.7% reported) vs HSD guide; adjusted operating margin +230bps YoY cc (+30–80bps above the high end of the range). The Q4 FY25 guide is now demonstrably conservative on the front half.

Resolved positively

North America DTC comp trajectory through Q1 and back-to-school. NA retail comps +12% in Q1, with full-price stores leading. NA revenue +7.9% YoY. Against a cautious FY26 NA framing, the Q1 print is a clear overperformance.

Resolved positively

Incremental pricing announcements for Fall 25 and Spring 26. Confirmed: Q2 AUR guide of HSD reflects "selective pricing actions in North America and Asia for fall 25," per Justin's prepared remarks. Management is executing the multi-round pricing telegraphed in Q4.

Resolved positively

Gross margin trajectory in 1H FY26 against the "approximately flat" full-year cc guide. Q1 gross margin expanded 180bps YoY to 72.3%, and FY26 GM guide nudged from "approximately flat" to "slightly up." But Justin explicitly said H2 GM will be lower than H1 due to tariff ramp — so the H1 strength is partially being absorbed by H2 pressure, not reinvested. Status: Resolved positively for Q1, continue monitoring H2.

Wholesale sell-out trends in North America after the ~90-door exit. Wholesale revenue +8.5% YoY in Q1; NA wholesale +2%, with full-price sellout ahead of sell-in and digital wholesale sellout up double digits. The pruning thesis is holding, and management plans to exit another 90–100 wholesale doors in FY26.

Resolved positively

What to watch into next quarter

Whether Q2 revenue actuals exceed the HSD cc guide by a similar magnitude to Q1. A clean Q2 beat reconfirms the FY raise is sandbagged; an in-line print suggests Q1 borrowed from Q2 demand.

NA retail comps in Q2 against the +12% Q1 baseline. Sustaining double-digit NA comps while FY guide remains cautious means another FY raise is plausible on the November call. A drop to mid-single digits validates the H2 caution.

Gross margin in Q2 — specifically whether it expands YoY or contracts. Q2 op margin guide of +120–160bps cc is the cleanest read; if GM contracts in Q2, the tariff pressure is arriving faster than modeled.

Magnitude and reception of "selective pricing actions" in North America and Asia. Justin confirmed pricing layered into Q2 AUR; watch whether AUR growth holds at HSD without comp deceleration — that's the elasticity test management has been staging for two quarters, and Justin flagged consumer price sensitivity as the key H2 unknown.

Whether Greater China sustains 20%+ growth and crosses 10% of company revenue. China is now 9% of total, up from 3–4% a few years ago, and grew +30% in Q1. This is becoming a material driver and a single-point geopolitical risk simultaneously.

Any quantification of tariff dollar impact in Q2 or H2. Management has not sized tariff impact in dollar terms. A specific figure on the November call would change the H2 modeling.

Sources

Ralph Lauren Q1 FY2026 press release, SEC filing, August 7, 2025 — https://www.sec.gov/Archives/edgar/data/1037038/000103703825000016/rl-20250628ex991xpressrele.htm
Q1 FY2026 earnings call Q&A — analyst exchanges with Boss (J.P. Morgan), Sol (UBS), Benetti (Evercore ISI), and Telsey (Telsey Advisory Group)

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