Ralph Lauren Corporation Q1 FY2026 earnings call

• Strong start to fiscal year with first quarter results exceeding expectations across top and bottom line.
• Growing brand desirability, diversified growth drivers, and organizational agility are standouts.
• Performance underscores iconic brand power, lifestyle portfolio breadth, and city ecosystem model.
• First quarter saw double-digit top line growth in Asia and Europe, high single-digit in North America, global comps up 13%.
• Elevate and energize lifestyle brand through marketing activations, new customer acquisition, and social media growth.
• Drive core and expand for more with core products representing over 70% of business, core product sales mid-teens growth, and high-potential categories as accelerators.
• Win key cities with consumer ecosystem, expanding and investing in key city ecosystems, strong DTC comp growth, and new store openings.

North America: First quarter revenue increased 8%. North America retail comps rose 12%, with digital comps up 19%. North America wholesale revenue increased 2%. Europe: First quarter revenue increased 10%. Majority of key markets delivered growth, led by Germany, France, Italy, and Spain. Europe retail comps increased 10%. Asia: First quarter revenue increased 19%. China led with sales up over 30%, Japan up high teens.

• Raised full-year outlook; expects constant currency revenues to increase low to mid-single digits, up from low single digits previously, led by Asia and Europe.
• Q2 constant currency revenues expected high single digits; foreign currency expected to benefit revenues by ~100-150 basis points.
• Expect operating margin to expand ~40-60 basis points in constant currency; second quarter operating margin expected to expand ~120-160 basis points in constant currency.
• Full year fiscal '26 tax rate expected ~19%-20%, second quarter tax rate in range of 15%-17%.

• Potential tariff-related pressures on broader consumer behavior in the second half of the year.
• Macro headwinds including inflationary pressures, supply chain disruptions, and foreign currency fluctuations.

Q: Congrats on another great quarter. With Investor Day in fall, what are largest drivers of upside and sustainability, and what needed to turn more positive on consumer outlook for second half?

A: Patrice said drivers like brand desirability, value proposition, new customer recruitment, lifestyle product portfolio breadth, and expanding key city ecosystems are durable. Cautious on second half due to uncertain inflationary environment but staying on offense. Justin said back half gross margin guide updated due to Q1 outperformance and Q2 view, with tailwinds like AUR growth, promo pullback, but offset by tariff incremental cost inflation.

Q: Justin, updated guidance earlier, walk through assumptions and tariff impacts; Patrice, dig in on handbag business.

A: Justin said updated guide reflects Q1 overdelivery and Q2 view, tariff outlook broadly in line with May guidance. Patrice said handbag business is high potential category with strong initial response to Polo Play launch, strong design and merchandising team, promising future.

Q: Michael Binetti on second quarter guidance, Europe growth rates and why slowdown.

A: Justin said Q2 guide high single digits, DTC leading growth, international momentum continuing. Europe had strong Q1 performance with broad-based growth, but outlook for second half has some pressure due to timing shifts and macro factors.

Q: Dana Telsey on North America full price and outlet trends, AUR at wholesale, China acceleration.

A: Justin said North America full price and outlet stores had strong comps, AUR growth. Patrice said China had over 30% growth due to brand building, product strategy, and handbag response.

Q: Paul Kearney on inventory, tariff impact, and inventory alignment with sales.

A: Justin said inventory up 18% due to strategic receipts, back out tariff impact, inventories expected to moderate to align with sales.

Q: John Kernan on tariff impact on gross margin and North American segment profitability.

A: Justin said tariff is biggest headwind, but gross margin guide slightly up, North America profitability dynamics shifting towards international.

Q: Blake Anderson on SG&A key investment areas and leverage.

A: Justin said SG&A balances reinvestment in growth and profitability, focuses on marketing, key city ecosystems, digital capabilities, with ability to flex expenses in challenging times.

Q: Rick Patel on key city approach runway and new key cities.

A: Patrice said details will be shared at Investor Day in September, focusing on top 30 cities with ongoing opportunities for expansion.