American luxury fashion house Ralph Lauren Corporation has reported a strong third quarter (Q3) of fiscal 2026 (FY26) ended December 27, 2025, beating expectations on both revenue and profitability. Reported revenue rose 12.2 per cent year on year (YoY) to $2.406 billion, while constant-currency revenue increased 10 per cent, supported by a foreign exchange (FX) tailwind of around 220 basis points (bps).
Diluted earnings per share (EPS) came in at $5.82, up 25 per cent YoY, while adjusted EPS rose 29 per cent to $6.22, excluding restructuring-related and other net charges. Net income increased to $361.6 million from $297.4 million a year earlier, while adjusted net income rose to $386.8 million from $307.9 million.
Profitability improved, with gross profit reaching $1.682 billion and gross margin expanding 150 bps to 69.9 per cent. The company attributed the margin gain to high-teens average unit retail growth, favourable product mix and lower cotton costs, which more than offset increased US tariffs and other product costs. Operating income rose to $471.3 million, with operating margin improving to 19.6 per cent. On an adjusted basis, operating income was $503.1 million and adjusted operating margin expanded 220 bps to 20.9 per cent, Ralph Lauren said in a press release.
Direct-to-consumer (DTC) momentum remained strong. Global DTC comparable store sales increased 9 per cent in constant currency in the quarter, led by Asia, while wholesale sales expanded at a double-digit pace. The company also reported an 18 per cent increase in average unit retail across its DTC network, reflecting reduced promotions and stronger full-price selling trends.
By region, North America revenue increased 8.1 per cent to $1.078 billion, with North America retail comparable sales up 7 per cent, including 6 per cent growth in bricks-and-mortar and 7 per cent in digital commerce. North America wholesale revenue rose 11 per cent YoY.
Europe revenue increased 11.9 per cent to $676.5 million on a reported basis and was up 4.2 per cent in constant currency. Europe retail comparable sales were broadly flat, with a 5 per cent increase in digital commerce partially offset by a 1 per cent decline in bricks-and-mortar. Europe wholesale revenue increased 16 per cent on a reported basis and 8 per cent in constant currency.
Asia delivered the strongest growth, with revenue up 22.4 per cent to $620.3 million on both a reported and constant currency basis. Asia comparable store sales increased 20 per cent, with bricks-and-mortar up 18 per cent and digital commerce up 35 per cent.
The operating performance by segment showed continued strength in North America and Asia. North America operating income rose to $292.7 million, with operating margin at 27.1 per cent. Europe operating income increased to $178.6 million, though operating margin eased to 26.4 per cent. Asia operating income climbed to $197.3 million, with operating margin rising to 31.8 per cent.
During the quarter, the company said it expanded and scaled its key city ecosystems with 32 new owned and partnered stores, including openings in Chengdu, Sydney, Bangkok, two new stores in London, and New Delhi.
Ralph Lauren ended the quarter with $2.3 billion in cash and short-term investments and $1.2 billion in total debt. Inventory was $1.149 billion, up 15 per cent YoY. The company repurchased $37 million of Class A common stock in the quarter.
“Our Holiday collection was inspired by the rugged landscapes of the American West, which have long-been both a place of refuge and inspiration for me,” said Ralph Lauren, executive chairman and chief creative officer of the group. “They reflect connections to the land, to family, and to each other—and as we start a new year with renewed optimism, they are a fitting reminder to dream big and find the space to become who you are.”
“This holiday season, our teams delivered strong, high-quality growth across geographies and consumer segments, enabling accelerated investment in our long-term strategic priorities and brand elevation,” said Patrice Louvet, president and CEO at Ralph Lauren. “In a dynamic operating environment, our Next Great Chapter: Drive strategy—supported by multiple growth drivers, the enduring and emotional power of our brand, and strong operational discipline—positions us well to continue to deliver sustainable growth and long-term value creation.”
For the first nine months (9M) of FY26, net revenues increased 14 per cent to $6.136 billion on a reported basis and rose 11.7 per cent in constant currency. Retail remained the larger channel, with nine-month retail revenues of $4.243 billion, while wholesale revenues were $1.783 billion and licensing revenues were $109.7 million.
Operating income for the 9M period increased to $990.6 million from $777.1 million a year earlier. Net income rose to $789.5 million from $613.9 million, and diluted EPS increased to $12.66 from $9.57. On an adjusted basis, nine-month net income was $859.4 million and adjusted diluted EPS was $13.78.
DTC comparable sales for the nine months rose 11 per cent in constant currency. North America was up 10 per cent, Europe up 6 per cent and Asia up 18 per cent, supported by strong digital growth, particularly in Asia, where digital commerce increased 35 per cent for the nine-month period.
Net cash provided by operating activities was $1.009 billion in the nine months, compared with $1.113 billion in the prior-year period. The company invested $356.7 million in capital expenditures over the period and returned cash to shareholders through dividends and repurchases. The company reported total repurchases of $350 million fiscal year to date, and said it returned approximately $500 million to shareholders through dividends and repurchases fiscal year to date.
For full FY26, the company expects revenues to increase high-single to low-double digits on a constant currency basis, up from its prior outlook of 5 per cent to 7 per cent. Based on current exchange rates, foreign currency is still expected to benefit revenue growth by around 200 to 250 bps for fiscal 2026. It further expects operating margin to expand by around 100 to 140 bps in constant currency, compared with 60 to 80 bps previously, driven by gross margin expansion and operating expense leverage. Foreign currency is expected to benefit gross and operating margins by around 20 and 50 basis points, respectively. Capital expenditure is expected to be around 4-5 per cent of revenue.
For the fourth quarter (Q4), Ralph Lauren expects revenue to increase by approximately mid-single digits in constant currency, with foreign currency expected to add around 200 to 300 bps. Operating margin is expected to contract by around 80 to 120 bps in constant currency, reflecting higher US tariffs and increased marketing spend over a seasonally smaller revenue base.
Fibre2Fashion News Desk (SG)
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