Ralph Lauren (RL) Q1 2025 earnings summary

Executive summary

• Fiscal Q1 2025 revenue rose 1% reported and 3% in constant currency to $1.51B, led by international and direct-to-consumer growth, offsetting planned softness in North America wholesale.

• Net income increased to $169M reported ($2.61 EPS), with adjusted EPS at $2.70; operating income rose 25.3% to $208.5M.

• Gross margin expanded to 70.9% (up 210 bps YoY), driven by favorable mix, AUR growth (+6%), and lower cotton costs.

• Brand activations, including Olympics, Wimbledon, and major fashion shows, fueled global consumer engagement and new customer acquisition.

• Strategic focus remains on brand elevation, core product expansion, and winning in key cities through DTC and digital channels.

Financial highlights

• Q1 net revenue: $1.51B, up 1% reported and 3% constant currency; foreign currency negatively impacted growth by 150–170 bps.

• Retail comps increased 5% globally; digital ecosystem sales rose high single digits; digital commerce: North America -4%, Europe +14%, Asia +21%.

• Adjusted operating margin rose to 14.8% (+140 bps YoY); operating expenses up 4% due to higher marketing investments.

• Free cash flow of $245M; net cash provided by operating activities was $277.3M.

• $225M returned to shareholders via dividends and buybacks; dividend per share increased to $0.825.

Outlook and guidance

• Fiscal 2025 constant currency revenue expected to rise 2–3%, with DTC outpacing wholesale; FX to negatively impact by ~150 bps.

• Operating margin projected to expand 100–120 bps to 13.5%–13.7%; gross margin to rise 50–100 bps.

• Q2 revenue growth guided to 3–4% in constant currency; operating margin to expand 80–120 bps.

• Full-year tax rate expected at 22–23%; capex guidance $300–$325M.

• $600M remains under the share repurchase program.