Shares of Ralph Lauren (NYSE:RL) rose approximately 3% in early trading on Thursday following the luxury apparel company’s better-than-expected fourth-quarter results for fiscal year 2025.
The company reported earnings per share of $2.27 for Q4, surpassing analyst projections of $2.04. Revenue also beat estimates, coming in at $1.7 billion compared to the consensus of $1.64 billion.
On a constant currency basis, revenue grew by 10%, well above the forecasted 7.3%, while comparable store sales increased 13%, outpacing the anticipated 7.68%.
Profit margins also exceeded expectations, with an adjusted gross margin of 68.6% versus the estimated 67.2%, and an adjusted operating margin of 10.3%, slightly higher than the predicted 9.97%.
“Our strong performance in the third and final year of our Next Great Chapter: Accelerate plan underscores the growing desirability of our brand and our team’s powerful execution as we navigated a dynamic global operating environment,” stated Patrice Louvet, Ralph Lauren’s President and CEO.
Looking forward, Louvet added, “As we enter Fiscal 2026, we remain on offense – with a focus on driving our multiple engines of growth across lifestyle categories, geographies, and channels. At the same time, we will stay agile and prudent – leaning into our diversified supply chain, operating discipline, and strong balance sheet as we manage through ongoing macroeconomic uncertainty.”
For fiscal 2026, Ralph Lauren expects revenue growth in the low single digits on a constant currency basis, primarily concentrated in the first half of the year. The company anticipates modest operating margin expansion due to expense leverage, while gross margin is forecasted to remain steady. Factors supporting the outlook include growth in average unit retail (AUR), lower cotton prices, and favorable product mix, offset somewhat by higher tariffs and increased costs for non-cotton materials.
In the first quarter of fiscal 2026, revenue is projected to increase by high single digits year-over-year in constant currency. Operating margin is expected to improve by 150 to 200 basis points, supported by gross margin improvements and cost efficiencies.
Tax rates are forecasted to be between 20% and 22% for the full fiscal year and 20% to 21% in the first quarter.
Ralph Lauren noted that its guidance “is based on its best assessment of the current geopolitical and macroeconomic environment, including tariffs, inflationary pressures, and other consumer spending-related headwinds, global supply chain disruptions, and foreign currency volatility, among other factors.”
The company also clarified that “the full year Fiscal 2026 and first quarter guidance excludes any potential restructuring-related and other net charges that may be incurred in future periods.”
Given the uncertain environment, the company emphasized that its outlook is preliminary and may be revised as market conditions change.
Additionally, Ralph Lauren announced an increase of $1.5 billion to its share repurchase authorization. This follows $425 million in buybacks during fiscal 2025, leaving $352 million available under the previous plan as of year-end.