Ralph Lauren's Q2 Earnings Soar on Strong Revenue Growth

TL;DR

**RALPH LAUREN IS BACK, CRUSHING EARNINGS WITH STRONG REVENUE AND PROFIT GROWTH, MAKING IT A SOLID BUY.**

AI Summary

Ralph Lauren Corporation (RL) reported a robust financial performance for the three and six months ended September 27, 2025. For the three months, net revenues increased by 16.5% to $2,010.7 million from $1,726.0 million in the prior year, driven by strong retail sales of $523.8 million in North America. Net income for the quarter rose significantly by 40.3% to $207.5 million, up from $147.9 million in the same period last year. Diluted EPS also saw a substantial increase to $3.32 from $2.31. For the six-month period, net revenues grew by 15.2% to $3,729.8 million, and net income climbed by 35.2% to $427.9 million. Operating income for the six months increased to $519.3 million from $387.4 million, reflecting improved operational efficiency despite higher selling, general, and administrative expenses of $2,032.8 million. The company's cash and cash equivalents decreased to $1,443.0 million from $1,922.5 million at March 29, 2025, primarily due to significant capital expenditures of $281.1 million and share repurchases totaling $435.9 million. Inventories increased to $1,261.3 million from $949.6 million, indicating strategic stocking for future sales. Long-term debt also increased to $1,237.7 million from $742.9 million, partially offset by the repayment of $400.0 million in current portion of long-term debt.

Why It Matters

Ralph Lauren's strong revenue and net income growth signal robust brand health and effective strategic execution, which is crucial for investors seeking stability in the luxury retail sector. The significant increase in capital expenditures to $281.1 million suggests investments in future growth, potentially enhancing competitive positioning against rivals like LVMH and Capri Holdings. For employees, this performance could mean job security and potential for growth, while customers benefit from continued product innovation and brand presence. The broader market may see this as a positive indicator for discretionary consumer spending, especially in the premium segment, potentially influencing other luxury and apparel stocks.

Risk Assessment

Risk Level: medium — While net income and revenue show strong growth, the company's cash and cash equivalents decreased by $479.4 million for the six months ended September 27, 2025, and inventories increased by $311.7 million to $1,261.3 million. This inventory build-up, coupled with increased long-term debt to $1,237.7 million, could pose a risk if consumer demand softens or if inventory becomes obsolete, impacting future cash flow and profitability.

Analyst Insight

Investors should consider Ralph Lauren's strong top-line and bottom-line growth as a positive signal, but monitor inventory levels and debt management closely. The significant share repurchases of $435.9 million indicate management's confidence and commitment to shareholder returns. This could be an opportune time to hold or consider adding to positions, given the positive momentum and strategic investments.

Financial Highlights

debt To Equity

N/A

revenue

$3,729.8M

operating Margin

N/A

total Assets

N/A

total Debt

$1,237.7M

net Income

$427.9M

eps

$3.32

gross Margin

N/A

cash Position

$1,443.0M

revenue Growth

+15.2%

Revenue Breakdown

Key Numbers

• $2.01B — Net Revenues (Increased 16.5% for the three months ended September 27, 2025, from $1.73B in the prior year.)
• $207.5M — Net Income (Increased 40.3% for the three months ended September 27, 2025, from $147.9M in the prior year.)
• $3.32 — Diluted EPS (Increased from $2.31 for the three months ended September 27, 2025.)
• $3.73B — Six-Month Net Revenues (Increased 15.2% for the six months ended September 27, 2025.)
• $427.9M — Six-Month Net Income (Increased 35.2% for the six months ended September 27, 2025.)
• $281.1M — Capital Expenditures (Significant increase for the six months ended September 27, 2025, from $75.1M in the prior year.)
• $435.9M — Common Stock Repurchases (Increased for the six months ended September 27, 2025, from $330.2M in the prior year.)
• $1.26B — Inventories (Increased from $949.6M at March 29, 2025, indicating strategic stocking.)
• $1.24B — Long-Term Debt (Increased from $742.9M at March 29, 2025.)
• $1.44B — Cash and Cash Equivalents (Decreased from $1.92B at March 29, 2025.)

Key Players & Entities

• RALPH LAUREN CORP (company) — registrant
• SEC (regulator) — Securities and Exchange Commission
• $2,010.7 million (dollar_amount) — net revenues for three months ended September 27, 2025
• $1,726.0 million (dollar_amount) — net revenues for three months ended September 28, 2024
• $207.5 million (dollar_amount) — net income for three months ended September 27, 2025
• $147.9 million (dollar_amount) — net income for three months ended September 28, 2024
• $3.32 (dollar_amount) — diluted EPS for three months ended September 27, 2025
• $2.31 (dollar_amount) — diluted EPS for three months ended September 28, 2024
• $435.9 million (dollar_amount) — repurchases of common stock for six months ended September 27, 2025
• $1,261.3 million (dollar_amount) — inventories as of September 27, 2025

FAQ

Risk Factors

• Global Economic Conditions [high — market]: The Company's operations and financial performance are subject to global economic conditions, including inflation, interest rates, and consumer spending patterns. A significant downturn in the global economy could adversely affect demand for the Company's products, leading to reduced net revenues and profitability.
• Supply Chain Disruptions [medium — operational]: The Company relies on a global supply chain for its products. Disruptions due to geopolitical events, natural disasters, or other unforeseen circumstances can impact production, inventory levels, and timely delivery, potentially affecting sales and increasing costs.
• International Trade and Tariffs [medium — regulatory]: As a global company, Ralph Lauren is subject to various international trade regulations and tariffs. Changes in trade policies or the imposition of new tariffs could increase the cost of goods sold and impact the Company's profitability and competitive pricing.
• Foreign Currency Exchange Rate Fluctuations [medium — financial]: The Company operates in numerous countries and its financial results are reported in U.S. dollars. Fluctuations in foreign currency exchange rates can impact the reported value of international revenues and expenses, potentially affecting net income.
• Brand Reputation and Consumer Preferences [high — operational]: The Company's success depends on maintaining its brand image and adapting to evolving consumer preferences in the luxury lifestyle market. Failure to do so, or negative publicity, could damage brand loyalty and reduce demand for its products.
• Inventory Management [medium — financial]: Effective inventory management is crucial. An increase in inventory levels, as seen in the current period ($1,261.3M from $949.6M), if not managed properly, could lead to increased holding costs, markdowns, and potential obsolescence, impacting profitability.
• Intellectual Property Protection [low — legal]: Protecting the Company's intellectual property, including its trademarks and brands, is essential. Infringement by third parties or failure to adequately protect its IP could dilute brand value and harm its competitive position.

Industry Context

Ralph Lauren operates in the highly competitive global luxury lifestyle market, facing competition from established luxury brands and emerging designers. The industry is characterized by evolving consumer preferences, a focus on sustainability, and the increasing importance of digital channels. Brands that can effectively blend heritage with modern appeal and maintain strong brand equity tend to perform well.

Regulatory Implications

The company must navigate complex international trade regulations, including tariffs and import/export laws, which can impact costs and supply chain efficiency. Compliance with consumer protection laws and advertising standards across different jurisdictions is also critical to maintaining brand integrity and avoiding penalties.

What Investors Should Do

1. Monitor inventory levels and turnover ratios.
2. Analyze the drivers of SG&A expense growth.
3. Evaluate the impact of capital expenditures on future growth.
4. Assess the company's debt management strategy.

Key Dates

• 2025-09-27: End of Second Quarter Fiscal 2026 — Reported strong net revenue growth of 16.5% and net income increase of 40.3% for the quarter, indicating robust consumer demand and effective operational execution.
• 2025-03-29: End of Fiscal Year 2025 — Represents the prior period's balance sheet date, showing higher cash and cash equivalents ($1,922.5M) and lower long-term debt ($742.9M) compared to the current period.
• 2024-09-28: End of Second Quarter Fiscal 2025 — Prior year comparable period for Q2 results, showing lower net revenues ($1,726.0M) and net income ($147.9M), highlighting the significant year-over-year improvement.

Glossary

SG&A

Selling, General, and Administrative expenses. These are the costs associated with running a business, excluding the cost of goods sold. (The filing notes an increase in SG&A expenses ($2,032.8M for six months), which is important to monitor in relation to revenue growth to assess operating efficiency.)

Diluted EPS

Diluted Earnings Per Share. This metric reflects the earnings per share after accounting for all potential dilutive securities, such as stock options and convertible bonds. (The significant increase in Diluted EPS to $3.32 from $2.31 demonstrates improved profitability on a per-share basis for shareholders.)

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, and equipment. (A substantial increase in capital expenditures ($281.1M for six months) suggests investment in future growth or operational improvements, impacting cash flow.)

Inventories

The goods and materials that a business holds for the ultimate purpose of resale. (The increase in inventories to $1,261.3M from $949.6M indicates strategic stocking for anticipated sales, but also carries risks of holding costs and potential markdowns.)

Deferred Income

Revenue that has been received by the company but not yet earned. This typically includes unredeemed gift cards or advance royalty payments. (Deferred income of $21.9M as of September 27, 2025, represents future revenue to be recognized, primarily within the next twelve months.)

Treasury Stock Method

An accounting method used to calculate diluted earnings per share when a company has outstanding stock options or warrants. It assumes these options are exercised and the proceeds are used to repurchase shares. (This method is used to calculate diluted EPS, ensuring that the per-share earnings reflect the potential dilution from outstanding equity awards.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, Ralph Lauren has demonstrated strong top-line growth with net revenues increasing by 15.2% to $3,729.8 million, and net income has also seen a substantial rise of 35.2%. This performance is underpinned by robust retail sales, particularly in North America. However, the company has significantly increased its long-term debt and capital expenditures, while its cash position has decreased, reflecting strategic investments and share repurchases. Inventories have also risen, indicating a proactive approach to stocking for future demand.

Filing Documents

• rl-20250927.htm (10-Q) — 1934KB
• rl-20250927x10qex311.htm (EX-31.1) — 10KB
• rl-20250927x10qex312.htm (EX-31.2) — 10KB
• rl-20250927x10qex321.htm (EX-32.1) — 5KB
• rl-20250927x10qex322.htm (EX-32.2) — 5KB
• 0001628280-25-049927.txt ( ) — 10285KB
• rl-20250927.xsd (EX-101.SCH) — 58KB
• rl-20250927_cal.xml (EX-101.CAL) — 86KB
• rl-20250927_def.xml (EX-101.DEF) — 322KB
• rl-20250927_lab.xml (EX-101.LAB) — 751KB
• rl-20250927_pre.xml (EX-101.PRE) — 553KB
• rl-20250927_htm.xml (XML) — 1906KB

FINANCIAL INFORMATION (Unaudited)

PART I. FINANCIAL INFORMATION (Unaudited)

Financial Statements

Item 1. Financial Statements: Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income 4 Consolidated Statements of Cash Flows 5 Consolidated Statements of Equity 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 61

Controls and Procedures

Item 4. Controls and Procedures 61

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 62

Risk Factors

Item 1A. Risk Factors 62

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 62

Other Information

Item 5. Other Information 62

Exhibits

Item 6. Exhibits 63

Signatures

Signatures 64 1 RALPH LAUREN CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) September 27, 2025 March 29, 2025 (millions) ASSETS Current assets: Cash and cash equivalents $ 1,443.0 $ 1,922.5 Short-term investments 202.5 160.5 Accounts receivable, net of allowances of $ 220.6 million and $ 186.3 million 524.6 459.5 Inventories 1,261.3 949.6 Income tax receivable 53.8 55.4 Prepaid expenses and other current assets 267.8 242.4 Total current assets 3,753.0 3,789.9 Property and equipment, net 1,055.4 846.4 Operating lease right-of-use assets 1,134.2 1,013.1 Deferred tax assets 325.8 335.4 Goodwill 911.3 888.5 Intangible assets, net 57.1 62.8 Other non-current assets 110.9 111.2 Total assets $ 7,347.7 $ 7,047.3 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $ — $ 399.7 Accounts payable 532.7 436.0 Current income tax payable 42.2 146.5 Current operating lease liabilities 237.7 225.4 Accrued expenses and other current liabilities 1,027.4 926.1 Total current liabilities 1,840.0 2,133.7 Long-term debt 1,237.7 742.9 Long-term finance lease liabilities 224.4 234.8 Long-term operating lease liabilities 1,151.1 1,044.7 Non-current liability for unrecognized tax benefits 164.9 193.3 Other non-current liabilities 147.4 109.4 Commitments and contingencies (Note 12) Total liabilities 4,765.5 4,458.8 Equity: Class A common stock, par value $ .01 per share; 113.5 million and 112.5 million shares issued; 38.8 million and 39.6 million shares outstanding 1.1 1.1 Class B common stock, par value $ .01 per share; 21.9 million shares issued and outstanding 0.2 0.2 Additional paid-in-capital 3,093.5 3,031.7 Retained earnings 7,907.4 7,590.1 Treasury stock, Class A, at cost; 74.7 million and 72.9 million shares ( 8,172.2 ) ( 7,734.7 ) Accumulated other comprehensive loss ( 247.8 ) ( 299.9 ) Total equity 2,582.2 2,588.5 Total liabilities and equity $ 7,347.7 $ 7,047.3 See accompanying notes. 2 R

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share data and where otherwise indicated) (Unaudited) 1. Description of Business Ralph Lauren Corporation ("RLC") is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, fragrances, and hospitality. RLC's long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. RLC's brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others. RLC and its subsidiaries are collectively referred to herein as the "Company," "we," "us," "our," and "ourselves," unless the context indicates otherwise. The Company diversifies its business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows the Company to maintain a dynamic balance as its operating results do not depend solely on the performance of any single geographic area or channel of distribution. The Company sells directly to consumers through its integrated retail channel, which includes its retail stores, concession-based shop-within-shops, and digital commerce operations around the world. The Company's wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which the Company has licensed the right to operate in defined geographic territories using its trademarks. In addition, the Company licenses to third parties for specified periods the right to access its various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel categories, eyewear, fragrances, and home furnishings.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) also a 52-week period ("Fiscal 2025"). The second quarter of Fiscal 2026 ended on September 27, 2025 and was a 13-week period. The second quarter of Fiscal 2025 ended on September 28, 2024 and was also a 13-week period. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Actual results could differ materially from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include reserves for customer bad debt, customer returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances; the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived tangible and intangible assets; fair value measurements; accounting for income taxes and related uncertain tax positions; valuation of stock-based compensation awards and related forfeiture rates; and reserves for restructuring activity, among others. Reclassifications Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation . Seasonality of Business The Company's business is typically affected by seasonal trends, with higher levels of retail sales in its second and third fiscal quarters and higher wholesale sales in its second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting its retail business and the timing of seasonal wholesale shipments. As a result of changes in its business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly o

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Revenue from the Company's wholesale business is generally recognized upon shipment of products, at which point title passes and risk of loss is transferred to the customer. In certain arrangements where the Company retains the risk of loss during shipment, revenue is recognized upon receipt of products by the customer. Wholesale revenue is recorded net of estimates of returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances. Returns and allowances require pre-approval from management and discounts are based on trade terms. Estimates for end-of-season markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Estimates for operational chargebacks are based on actual customer notifications of order fulfillment discrepancies and historical trends. The Company reviews and refines these estimates on at least a quarterly basis. The Company's historical estimates of these amounts have not differed materially from actual results. Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks (i.e., symbolic intellectual property) and benefit from such access through their own sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for most arrangements, may be subject to a contractually-guaranteed minimum royalty amount. Payments are generally due quarterly and, depending on time of receipt, may be recorded as a liability until recognized as revenue. The Company recognizes revenue for sales-based royalty arrangements (including those for which the royalty exceeds any contractually-guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-b

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Six Months Ended September 27, 2025 September 28, 2024 North America Europe Asia Other Total North America Europe Asia Other Total (millions) Sales Channel (a) : Retail $ 984.8 $ 605.8 $ 875.1 $ — $ 2,465.7 $ 884.0 $ 518.0 $ 727.0 $ — $ 2,129.0 Wholesale 503.8 637.0 44.5 — 1,185.3 463.7 527.0 44.1 — 1,034.8 Licensing — — — 78.8 78.8 — — — 74.4 74.4 Total $ 1,488.6 $ 1,242.8 $ 919.6 $ 78.8 $ 3,729.8 $ 1,347.7 $ 1,045.0 $ 771.1 $ 74.4 $ 3,238.2 (a) Net revenues from the Company's retail and wholesale businesses are recognized at a point in time. Net revenues from the Company's licensing business are recognized over time. Deferred Income Deferred income represents cash payments received in advance of the Company's transfer of control of products or services to its customers and generally consists of unredeemed gift cards (net of breakage) and advance royalty payments from its licensees. The Company's deferred income balances were $ 21.9 million and $ 16.7 million as of September 27, 2025 and March 29, 2025, respectively, and were primarily recorded within accrued expenses and other current liabilities within the consolidated balance sheets. The majority of the deferred income balance as of September 27, 2025 is expected to be recognized as revenue within the next twelve months. Shipping and Handling Costs Costs associated with shipping goods to customers are accounted for as fulfillment activities and reflected as selling, general, and administrative ("SG&A") expenses in the consolidated statements of operations. Costs of preparing merchandise for sale, such as picking, packing, warehousing, and order charges ("handling costs"), are also included in SG&A expenses. Shipping and handling costs billed to customers are included in revenue. A summary of shipping and handling costs for the fiscal periods presented is as follows: Three Months Ended Six Months Ended September 27, 2025 September 28, 202

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The weighted-average number of common shares outstanding used to calculate basic net income per common share is reconciled to shares used to calculate diluted net income per common share as follows: Three Months Ended Six Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 (millions) Basic shares 61.1 62.6 61.0 62.9 Dilutive effect of RSUs 1.3 1.3 1.5 1.4 Diluted shares 62.4 63.9 62.5 64.3 All earnings per share amounts have been calculated using unrounded numbers. The Company has outstanding performance-based RSUs, which are included in the computation of diluted shares only to the extent that the underlying performance conditions (i) have been satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive. As of September 27, 2025 and September 28, 2024, there were 0.1 million and 0.3 million, respectively, of additional shares issuable contingent upon vesting of performance-based RSUs that were excluded from the diluted shares calculations. Accounts Receivable In the normal course of business, the Company extends credit to wholesale customers that satisfy certain defined credit criteria. Payment is generally due within 30 to 120 days and does not involve a significant financing component. Accounts receivable are recorded at amortized cost, which approximates fair value, and are presented in the consolidated balance sheets net of certain reserves and allowances. These reserves and allowances consist of (i) reserves for returns, discounts, end-of-season markdowns, operational chargebacks, and certain cooperative advertising allowances (see the " Revenue Recognition " section above for further discussion of related accounting policies) and (ii)

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