Transcript: Ralph Lauren Q1 2027 Earnings Conference Call

Ralph Lauren (NYSE: RL ) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Ralph Lauren reported a strong start to the fiscal year 2027, with a 13% increase in revenues, driven by double-digit growth in both Asia and North America. The company raised its full-year outlook due to the over-performance in the first quarter, expecting mid-single-digit revenue growth and expansion in gross and operating margins. Key strategic initiatives include brand elevation, expanding high-potential categories like women's apparel and handbags, and growing presence in key cities through direct-to-consumer and wholesale channels. S.

Postal Service, fashion shows, and the Ralph Lauren Polo Cup, which aided in increasing brand desirability and customer acquisition. Asia, particularly China, showed impressive growth with a 25% increase in sales, led by a 40% rise in China, supporting the company's focus on expanding in key growth markets. Management emphasized the continued investment in technology, AI, and analytics to enhance customer engagement and operational efficiency, alongside returning $300 million to shareholders through dividends and repurchases.

Despite macroeconomic pressures, especially in Europe, Ralph Lauren remains confident in its strategic approach, focusing on brand elevation, product offerings, and expanding its consumer base. Full Transcript OPERATOR Ladies and gentlemen, thank you for standing by. Welcome to the Ralph Lauren first quarter fiscal year 2027 earnings call. At this time, all participants are in a listen-only mode.

Later we will conduct a question-and-answer session. Instructions on how to ask a question will be given at that time. If you should require assistance during the call, please press star then zero. As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Ms. Corinna Van Der Ghinst. Please go ahead. Corinna Van Der Ghinst, SVP, Global Head of Strategy and Investor Relations Good morning.

Thank you for joining Ralph Lauren's first quarter fiscal 2027 conference call. Joining me today are Patrice Louvet, the company's President and Chief Executive Officer, and Justin Picicci, Chief Financial Officer. After prepared remarks, we will open up the call for your questions, which we ask that you limit to one per caller. During today's call, our financial performance will be discussed on a constant currency adjusted basis.

Our reported results, including foreign currency, can be found in this morning's press release. We will also be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. Our expectations contain many risks and uncertainties.

Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results, you should refer to this morning's earnings release and to our SEC filings that can be found on our investor relations website. With that, I'll turn the call over to Patrice. Patrice Louvet, President and Chief Executive Officer Thank you, Corinna.

Good morning, everyone, and thank you for joining today's call. We are off to a strong start in the second year of our Next Great Chapter drive plan 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. And we are connecting with and engaging consumers as only Ralph Lauren can, inspiring people to step into their dream of a better life.

This strengthening brand desirability across lifestyle categories, channels and regions is translating into healthy, consistent, sustainable growth and value creation for our business. In the first quarter, our top and bottom line results exceeded our expectations supported by our diversified drivers of growth. Revenues increased 13%, including double-digit growth in both Asia and North America and mid-single-digit growth in Europe. Performance was balanced across global DTC comps and wholesale, up 12% and 13% respectively in constant currency.

And we achieved this all while continuing to improve our quality of sales with increased full-price selling and investing back into our key strategic priorities, notably a rolling thunder of brand activations, new AI capabilities and expanding our key city ecosystems, along with returning cash to shareholders. With first quarter revenues and gross and operating margins ahead of the expectations we outlined in May, we have confidence in raising our full year outlook to reflect our first quarter over-delivery even as we continue to take a measured approach to the macro backdrop in Europe.

In particular, despite dynamic global operating conditions, we remain on offense based on our continued commitment to invest behind our brands, driving high-quality new customer recruitment and retention, our strong and growing geographical presence anchored in our key cities in each region, and our strategic investments in advanced analytics, technology and AI to better serve our consumers and drive greater efficiencies in our business, all underpinned by our strong balance sheet and operating discipline. Let me take you through a few recent highlights across the three strategic pillars of our plan.

As a reminder, these include: first, elevate and energize our lifestyle brand; second, drive the core and expand for more; and third, win in key cities with our consumer ecosystem. Starting with our efforts to elevate and energize our lifestyle brand at the intersection of culture, style and luxury, the Ralph Lauren brand continues to captivate new generations while deepening its connection with existing consumers around the world. Through our fashion shows, key city campaigns, celebrations of important historical moments and heritage sporting events, we are bringing the world of Ralph Lauren to life in distinct and immersive ways.

We are leveraging our unique lifestyle authority to create bold, innovative experiences that engage, inspire and strengthen brand desirability. S. Postal Service, making Ralph the first designer ever invited to have this honor. The curated collection aligns with our brand's enduring creative vision, which is deeply rooted in the tapestry of American heritage, landscapes, cultures and artistry.

We also invited consumers to step into our vision of timeless style through our Spring 26 global campaign, A Sporting Life: A Tribute to Sophistication and Sport, with events in the Hamptons, Pebble Beach and beyond. Our Men's Purple Label and Polo fashion show at our palazzo in Milan, capturing the spirit of adventurous travel through reimagined icons, where we welcomed guests including Lewis Hamilton, Maluma, Henry Golding, Tom Hiddleston and more.

Our home presentation during Salone del Mobile, also in Milan, transformed Palazzo Ralph Lauren into an immersive celebration of design and craftsmanship, and the launch of our newest book, Ralph Lauren Catwalk, which chronicles more than 50 years of our iconic womenswear shows and marks the first time an American designer has been featured in this prestigious series. In Asia, we kicked off our year-long celebration of 50 years in Japan with the launch of our Very Ralph documentary at the landmark Akasaka Palace, and we hosted activations around the 20th anniversary of our Omotesando flagship in Tokyo.

And finally, reinforcing our leadership in the world of sports, we hosted our first-ever Ralph Lauren Polo Cup in Beijing and Sydney, an elegant live polo match seamlessly blending equestrian heritage with high fashion and the world of celebrity. And beyond the quarter, we were proud to once again serve as the official sponsor of Wimbledon, marrying the traditions of this storied tournament with sophisticated spectator style. These activations are driving strong, sustainable growth and new customer acquisition and retention. 5 million new customers to our DTC businesses, led by Ralph Lauren stores and our digital commerce sites.

We continue to drive progress across brand equity metrics, including increased NPS and luxury perception scores, as well as our ongoing recruitment of key consumer cohorts including women, luxury and younger customers. And we increased our social media followers by high single digits to more than 70 million, led by Instagram, Line, Douyin and TikTok. We look forward to sharing more of our rolling thunder of activations ahead as we continue to build brand desirability across generations around the world. Moving to our second key initiative, drive the core and expand for more.

Our design teams continue to honor the heritage and enduring codes of our brand while thoughtfully evolving them for the way consumers live today. Starting with our core, which represents more than 70% of our business, core product sales grew mid-teens in the first quarter. Recent highlights include a broad range of foundational sweaters, our linen Oxford and seersucker shirts, and our iconic chino caps. We also introduced our By the Lake children's collection, featuring versatile pieces that provide an easy transition into back to school, led by mini cable sweaters, windbreakers and full-zip hoodies.

Our high-potential categories, including women's apparel, outerwear and handbags, continue to be accelerators for our business. Together, these categories increased more than 20% for the quarter, outpacing total company growth. In women's, we drove strong performance across cable-knit and jersey sweaters, linen shirts, shirt dresses and cotton chino pants. Our lightweight outerwear, led by our city jacket and oversized windbreaker, along with our fleece programs and bold Polo graphics, are driving seasonal newness and consumer engagement.

And our spring handbag campaigns continue to focus on our foundational Polo Play and Polo ID collections and a colorful array of pebbled leathers, decorations, denim beading and seasonal raffia, all ahead of our next foundational launch, the Polo Blaze for Fall 26. Special releases this quarter included our Wimbledon Collection, honoring our heritage of sport, sophistication and timelessness; our latest home collections, Sterling Square and Saddlebrook, inspired by Ralph's homes in New York City and Bedford; and the launch of our partnership with Pebble Beach Resorts, marking the destination's first and only branded retail concept.

As we transition into fall, we will continue to lean into the breadth of our lifestyle product offering, both connecting with consumers around the world while driving resilience in our business. Turning to our third key initiative, winning key cities with our consumer ecosystem. Our teams continue to set the standard for innovative consumer lifestyle experiences, bringing Ralph Lauren to life in our top 30 cities around the world while also laying the groundwork for long-term growth in our next 20 cities. Within DTC, which comprises the majority of our business, we delivered another quarter of healthy comp growth across regions.

Global comps increased 12%, led by our Ralph Lauren stores and digital commerce. By region, Asia again led our growth with sales up 25%, driven by all key markets. China sales remained strong, increasing more than 40% as we continue to build our brand. Our China performance was supported by local activations such as our Polo Cup, along with further expansion across our top six city clusters and on digital.

Europe delivered mid-single-digit growth this quarter on top of last year's strong compares, and we continue to drive results ahead of expectations in our largest region, North America, with retail and wholesale both contributing to this quarter's 13% growth. As we deepen our presence in our top cities, we opened 22 new owned and partner stores globally this quarter.

New stores included The Grove in Los Angeles; Stanford Shopping Center in Palo Alto, our second store in the Bay Area ecosystem and first in Silicon Valley, including a Ralph's Coffee; Istanbul; new Polo stores in Sydney and Perth; and we renovated our highly elevated Bicester outlet outside of London, which also now includes a Ralph's Coffee. In addition, we expanded our RL mobile app to Korea, our first market to have the app outside of North America, with strong early performance that exceeded our expectations. And finally, touching on our enablers, our business continues to be supported by our five key enablers.

Recent highlights include, first, as part of our focus on advanced technology, AI and analytics, we continue to drive progress in enhancing our creativity, productivity and customer engagement. This quarter we improved user experiences on our digital commerce sites and expanded brand discoverability across key LLMs. We are also participating in select AI tests to understand evolving consumer behavior on these newer platforms. In addition, we were proud to be named one of Time magazine's World's Hundred Most Influential Businesses of 2026, recognizing our company's legacy of style, impactful storytelling and the unique way we transcend generations.

We were also named one of the Wall Street Journal's Best Companies for the Future for 2026, highlighting S&P 500 companies that are best positioned to thrive in a rapidly evolving global landscape. In closing, Ralph and I are encouraged by our brand's continued momentum through the start of fiscal 27. With our diversified drivers of growth, increasingly elevated consumer base, our business model is resilient and delivering consistent performance. We want to thank our teams who are navigating the ever-evolving operating landscape with care and agility and to our customers, thank you for your loyalty and trust.

Looking ahead, we will continue to invest in our key strategic priorities to deliver sustainable growth, including harnessing the power of our iconic brand to drive desirability and lifetime value, creating timeless products with a strong value proposition that consumers love and trust, and investing in brand experiences that inspire our consumers and immerse them in the world of Ralph Lauren. With that, I'll hand it over to Justin and I'll join him at the end to answer your questions. Justin Picicci, Chief Financial Officer Thanks, Patrice, and good morning, everyone.

Our first quarter performance exceeded our expectations on both the top and bottom line, reinforcing the strength of the Ralph Lauren brand and the resilience of our diversified global growth drivers in the midst of a dynamic operating environment. These results underscore our disciplined operating approach and the quality of execution by our teams around the world. Revenues were up double digits ahead of our mid- to high-single-digit outlook for the quarter.

Driven by broad-based performance across regions and channels and supported by healthy consumer demand, we continued on our brand elevation journey with stronger full-price selling and reduced promotional activity, driving gross and operating margins above our expectations. At the same time, we reinvested behind our key strategic priorities to support sustainable growth and long-term value creation. As Patrice mentioned, our strong first quarter results and underlying brand momentum give us confidence to raise our full-year outlook even as we maintain an appropriately prudent view on Europe due to the macroeconomic uncertainty.

But first, let me walk you through our financial highlights from the first quarter, which as a reminder are provided on a constant currency basis. Total company first quarter revenue grew 13%, reflecting better-than-expected performance in both our direct-to-consumer and wholesale channels. By region, Asia led our performance increasing 25%, followed by North America up 13% and Europe up 5%. Total company retail comps were strong, increasing 12% with balanced contributions from our own digital and brick-and-mortar channels.

Total digital ecosystem sales, including our own sites and wholesale digital accounts, grew mid-teens driven by all regions. 6%, underscoring the continued elevation of our business and investments in quality of sales. This resulted in strong AUR growth and favorable mix shift towards our full-price businesses, which more than offset incremental tariff costs and higher labor and non-cotton material costs. In the quarter, AUR increased 15% supported by healthy new customer acquisition and disciplined inventory management enabling strong full-price selling, reduced discounting and selective pricing actions, along with favorable product, channel and geographic mix.

We currently expect mid- to high-single-digit AUR growth in the second quarter of fiscal 27, reflecting our ongoing brand elevation strategy. Additionally, we now anticipate mid- to high-single-digit AUR growth for the full year with contributions from all regions. We expect this continued AUR growth to more than offset modest pressure from higher freight and tariff costs.