Ralph Lauren (RL) Q1 2025 earnings summary

Executive summary

• First quarter fiscal 2025 revenue rose 1% reported and 3% in constant currency to $1.512 billion, led by Europe and Asia, with direct-to-consumer comparable store sales up 5% globally.

• Net income increased to $168.6 million, with diluted EPS of $2.61 (up 33% year-over-year); adjusted EPS was $2.70.

• Adjusted gross margin expanded to 70.9%, driven by favorable mix, AUR growth, and lower cotton costs.

• Continued investment in marketing, digital capabilities, and ecosystem expansion in top cities supports long-term growth.

• Brand activations, including major fashion shows and Olympic partnerships, drove strong consumer engagement and new customer acquisition.

Financial highlights

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

• Adjusted gross margin: 70.9% (up 210 bps YoY); adjusted operating margin: 14.8% (up 140 bps YoY).

• Net income: $169 million reported, $175 million adjusted; EPS: $2.61 reported, $2.70 adjusted.

• Free cash flow of $245 million enabled $225 million in dividends and share repurchases.

• Net cash and short-term investments: $1.8 billion; total debt: $1.1 billion.

Outlook and guidance

• Fiscal 2025 constant currency revenue expected to increase low single digits, centering on 2%-3%; FX to negatively impact by ~150 bps.

• Operating margin projected to expand 100-120 basis points to 13.5%-13.7%.

• Gross margin expected to expand 50-100 basis points, with continued AUR growth and favorable mix.

• Q2 revenue expected up 3-4% in constant currency, led by DTC channels.

• Capex guidance for fiscal 2025: $300–$325 million.