Ralph Lauren Reports Strong Q2 FY27 Beat and Raises Full-Year Outlook

Ralph Lauren Corporation (NYSE: RL) Q2 Fiscal 2027 Earnings Summary

Key Financial Highlights

• Revenue: Increased 9% on a reported basis (10% constant currency) to $2.2 billion, exceeding guidance.
• Diluted EPS:
  • Reported: $4.87 (+47% vs. $3.32 in Q2 FY26)
  • Adjusted: $4.64 (+22% vs. $3.79 in Q2 FY26)
• Gross Margin: Reported gross margin expanded 620 bps to 74.2% (aided by tariff refunds); adjusted gross margin expanded 250 bps to 70.5%, driven by 9% AUR growth and lower product costs.
• Operating Income: Reported operating income was $364 million (16.6% margin); adjusted operating income was $345 million (15.7% margin, +160 bps YoY).

Segment Revenue Breakdown

• Asia: Revenue jumped 28% reported and constant currency to $571 million; China grew over 35%.
• North America: Revenue rose 6% reported to $885 million, with retail comps up 6% and wholesale up 8%.
• Europe: Revenue increased 1% reported (3% constant currency) to $696 million.

Capital Return and Balance Sheet

• Ended the quarter with $1.8 billion in cash and short-term investments, and $1.2 billion in total debt.
• Inventories stood at $1.2 billion, down 9% compared to the prior-year period.
• Repurchased ~$250 million of Class A Common Stock in Q2 ($500 million fiscal year-to-date), fulfilling full-year repurchase targets.

Raised Fiscal 2027 Guidance

• Full-Year Constant Currency Revenue: Raised to ~6% to 7% growth (previously 5% to 6%), plus ~1 point contribution from the 53rd week.
• Full-Year Operating Margin: Expected to expand 80 to 100 bps in constant currency (raised from prior guidance).
• Q3 FY27 Revenue: Expected to increase 3% to 4% in constant currency, with operating margin expanding 50 to 70 bps.