Key Takeaways:
Ralph Lauren reported Q1 fiscal 2027 revenue of $1.96 billion, up 13% in constant currency, beating its mid-to-high single-digit outlook.
"We are off to a strong start in the second year of our Next Great Chapter Drive plan," Patrice Louvet, president and chief executive officer, said. "Around the world, the core brand values that Ralph envisioned when he started this company nearly 60 years ago — authenticity, quality, timeless style — are resonating powerfully across generations and geographies."
Adjusted gross margin expanded 130 basis points to 73.6%, while adjusted operating margin rose 150 basis points to 18.5%, driving operating income up 23%. Average unit retail climbed 15%, and the company added 1.5 million new direct-to-consumer customers during the quarter. Adjusted diluted EPS came in at $4.59.
Asia led regional growth with a 25% constant-currency gain, driven by China where sales surged more than 40%. North America grew 13%, including a 22% jump in wholesale that benefited from shipment timing and resumed shipments to a luxury account. Europe grew 5% despite a pressured consumer environment, with Germany, Italy, and Spain leading.
High-potential categories — women's apparel, outerwear, and handbags — grew more than 20%, outpacing total company growth. Net inventory declined 3% in constant currency. Marketing investment rose to 8.2% of sales from 7.5% a year ago, supporting activations including the U.S. Postal Service stamp collection, the Milan fashion show, and Wimbledon sponsorship.
Raised guidance
Management raised its full-year fiscal 2027 outlook, now expecting constant-currency revenue growth of 5% to 6%, up from 4% to 5%, with operating margin expansion of 60 to 80 basis points and gross margin expansion of 50 to 70 basis points. For Q2, the company guided to mid-single-digit revenue growth and 80 to 100 basis points of operating margin expansion.
The guidance embeds a cautious view of European demand and assumes U.S. tariff rates rising to high teens in the second half. China is expected to grow mid-teens for the year, while Europe is expected to grow low to mid-single digits. The company returned more than $300 million to shareholders through dividends and buybacks, ending the quarter with $1.9 billion in cash and $1.2 billion in debt.
Shares closed at $395.53, up 0.09%. The guidance raise signals management expects brand momentum to persist through the year. Investors will watch Q2 results for continued AUR growth and the trajectory of China's expansion as the company laps a 40%-plus quarter.
This article is for informational purposes only and does not constitute investment advice.
