Ralph Lauren Corporation (NYSE:RL) delivered a stronger-than-expected quarter on Thursday as demand held up across regions and momentum stayed solid in its global business.

The company raised its full-year revenue growth outlook, supported by expanding margins and favorable pricing and product mix.

The company increased average unit retail (AUR) by 18% across its direct-to-consumer network in the third quarter, exceeding expectations and reflecting continued brand elevation, strong full-price selling, and fewer promotions than planned.

Quarterly Metrics

The company reported third-quarter adjusted earnings per share of $6.22, beating the analyst consensus estimate of $5.81. Quarterly sales of $2.406 billion outpaced the Street view of $2.313 billion.

Third-quarter revenue rose 12% on a reported basis and 10% in constant currency, amid demand across geographies.

North America revenue in the third quarter increased 8% to $1.1 billion on a reported basis. Europe revenue increased 12% to $676 million on a reported basis. Asia revenue in the third quarter increased 22% to $620 million.

Gross profit for the third quarter was $1.7 billion, and gross margin was 69.9%, 150 basis points above the prior year. Gross margin expansion was driven by high-teens AUR growth, favorable product mix, and lower cotton costs.

Adjusted operating income was $503 million, and operating margin was 20.9%, 220 basis points above the prior year period.

The company ended the third quarter with $2.3 billion in cash and short-term investments and $1.2 billion in total debt.

Outlook

For fiscal 2026, the company now expects revenue growth in the high single to low double digits on a constant currency basis, up from its prior outlook of a 5% to 7% increase.

Based on current exchange rates, foreign currency is still expected to add approximately 200 to 250 basis points to revenue growth in fiscal 2026.

The company now expects the operating margin for fiscal 2026 to expand approximately 100 to 140 basis points in constant currency, up from 60 to 80 basis points previously.

For the fourth quarter, the company expects revenues to increase approximately mid-single digits on a constant currency basis.

Operating margin for the fourth quarter is expected to contract approximately 80 to 120 basis points in constant currency, reflecting an increase in U.S. tariffs and higher marketing spend to support key global activations over a seasonally smaller revenue base. 

RL Price Action: Ralph Lauren shares were down 4.70% at $338.02 at the time of publication on Thursday, according to Benzinga Pro data.

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