Ralph Lauren — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Second quarter net revenue increased 9% to $2.2 billion on a reported basis and 10% in constant currency.
• Earnings per diluted share were $4.87 on a reported basis (up 47% year-over-year) and $4.64 on an adjusted basis (up 22% year-over-year).
• Adjusted net income was $283 million, compared to $237 million in the prior year period.
• Gross margin was 74.2% on a reported basis, an increase of 620 basis points year-over-year, driven by tariff refunds.
• On an adjusted basis, gross margin was 70.5%, an increase of 250 basis points year-over-year, driven by Average Unit Retail (AUR) growth, favorable geographic mix, and lower product costs.
• Operating margin was 16.6% on a reported basis and 15.7% on an adjusted basis, an increase of 160 basis points year-over-year.
• Inventory decreased 9% to $1.2 billion compared to the prior year period.
• The company ended the quarter with $1.8 billion in cash and short-term investments and $1.2 billion in total debt.
• Capital expenditures for the six-month period were $114.2 million.

Guidance and Future Outlook:

• Raised full-year Fiscal 2027 constant currency revenue growth outlook to mid- to high-single digits, now centered around 6% to 7% (previously 5% to 6%).
• Raised full-year Fiscal 2027 adjusted operating margin expansion outlook to approximately 80 to 100 basis points in constant currency (previously lower).
• Fiscal 2027 is a 53-week year, with the 53rd week expected to contribute an additional 1 point to revenue growth.
• Third quarter revenue is expected to grow approximately low- to mid-single digits on a constant currency basis, centered around 3% to 4%.
• Third quarter operating margin is expected to expand approximately 50 to 70 basis points in constant currency.
• Full-year Fiscal 2027 tax rate is expected to be in the range of 21% to 22%; third quarter tax rate is expected to be 23% to 24%.
• Capital expenditures for Fiscal 2027 are expected to be approximately 4% to 5% of revenue.

Business Segments and Product Lines:

• Asia revenue led growth with a 28% increase to $571 million on a reported basis; China revenue increased more than 35%.
• North America revenue increased 6% to $885 million; comparable store sales in North America increased 6%.
• Europe revenue increased 1% to $696 million; comparable store sales in Europe decreased 1%.
• Global Direct-to-Consumer comparable store sales increased 10% with balanced growth across digital and brick-and-mortar channels.
• Average Unit Retail (AUR) increased 9% across the direct-to-consumer network.
• Core business grew 10%, while high-potential categories (Women's Apparel, Outerwear, and Handbags) increased in the low double-digits.
• New product highlights included the Ralph Lauren x Gee's Bend collection, the second Polo Ralph Lauren x TÓPA capsule, the U.S. Open Collection, and the launch of the Polo Blaze handbag collection.
• Opened 22 new owned and partnered stores in the second quarter, including locations in Boston, London, St. Tropez, and Beijing.
• Launched the Ralph Lauren mobile app in Japan.
• Acquired 1.7 million new consumers in direct-to-consumer businesses.

Market and Competitive Landscape:

• Revenue growth was driven by strong full-price demand and brand desirability.
• The company maintains a diversified growth engine across geographies and channels.
• Foreign currency negatively impacted revenue growth by approximately 50 basis points in the second quarter.

Risks and Challenges:

• Outlook is based on the current geopolitical and macroeconomic environment, including tariffs, inflationary pressures, consumer spending headwinds, global supply chain disruptions, and foreign currency volatility.
• Risks include potential impacts from military conflicts, civil unrest, diplomatic tensions, and anti-American sentiment.
• Potential impacts from inflationary pressures on raw materials, energy, transportation, and wages.
• Risks related to the scope, duration, and legal status of tariffs and potential retaliatory measures.
• Risks associated with supply chain disruptions, port congestion, labor shortages, and trade restrictions.
• Risks related to inventory management, promotional environments, and currency exchange rate fluctuations.
• Risks regarding cybersecurity, data privacy, and the regulation of artificial intelligence.
• Risks related to the ability to recruit and retain qualified employees and successfully implement long-term growth strategies.

Management Commentary and Tone:

• Patrice Louvet, President and CEO, stated the company delivered strong second-quarter performance, enabling the raising of the Fiscal 2027 outlook.
• Management expressed confidence in the strength of the brand, teams, and diversified engines of growth.
• The company is executing its "Next Great Chapter: Drive" plan to strengthen brand desirability and delight multi-generational customers.
• Ralph Lauren, Executive Chairman and Chief Creative Officer, emphasized the company's values of optimism and the beauty of the world as guiding principles.

Other Key Points:

• Returned more than $600 million to shareholders through dividends and share repurchases year-to-date.
• Repurchased approximately $250 million of Class A Common Stock in the second quarter, completing the Fiscal 2027 share repurchase plan.
• Total repurchases for the fiscal year-to-date were $500 million.
• The company completed the sale of its former Club Monaco business to Regent, L.P. in a prior fiscal year, with consideration recognized in the current period.
• Received tariff refunds under the International Emergency Economic Powers Act (IEEPA) which contributed to gross margin expansion.
• Made charitable donations using a portion of the IEEPA tariff refund proceeds.
• Conference call and webcast scheduled for November 5, 2026, at 9:00 A.M. Eastern.