By Sabrina Escobar

Ralph Lauren posted a beat-and-raise fiscal third quarter, but positive news sometimes isn't positive enough. The stock tumbled Thursday morning, reflecting investors' disappointment that management didn't increase its forecast of revenue even more.

Adjusted earnings came in at $6.22 a share, compared with the FactSet consensus forecast of $5.82. Revenue was $2.4 billion, while Wall Street had expected $2.3 billion.

Yet the stock was down 8.9% in early trading.

Part of the problem appears to be that as the company -- and its stock -- have consistently outperformed other retailers in the past few years, investors have grown accustomed to management's forecasts coming in well ahead of what Wall Street has penciled in. This time, the updated guidance was merely in line with expectations.

The company now expects revenue for the full fiscal year to increase by a percentage in the high single digits or low double digits. Ralph Lauren's prior outlook called for revenue to increase between 5% and 7% on an annual basis in constant-currency terms. While the new forecast is roughly in line with the 10% increase analysts projected, the lower end of the updated range is below the consensus estimate.

The fourth-quarter revenue guidance may also have been a bit softer than many investors had hoped. Ralph Lauren sees revenue rising by mid-single digits on an annual basis, while analysts had penciled in a roughly 4% increase.

Still, that steady pace of expansion is exactly what the company's management is aiming for.

"If you think about our brand and what it stands for, which, that's kind of at the heart of our brand -- it's not about being super hot, it's not about being super cold. It's about timelessness. It's about quality," said Justin Picicci, Ralph Lauren's chief financial officer, on a call with Barron's.

He notes that third-quarter growth was strong across the company's business segments, geographic markets, consumer cohorts, and sales channels. Sales in China, for instance, grew over 30% year over year during the quarter, while North American sales increased 8%.

Picicci acknowledged that it may be too early to "declare stability" on the macroeconomic front, especially in the U.S., but noted that demand remains healthy into the fourth quarter and beyond.

Ralph Lauren's customers continue to buy products at full price, highlighting the strength of the brand's core shopper. That has helped expand Ralph Lauren's profit margins.

Management raised its forecast of growth in operating margins for the year. Operating margin will increase by between 1 and 1.4 percentage points, Ralph Lauren projects, compared with a previous forecast for an increase of 0.6 to 0.8 percentage point.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 05, 2026 09:37 ET (14:37 GMT)

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