Ralph Lauren (RL) Q3 2026 earnings summary

Executive summary

• Q3 revenue rose between 10% and 12.2% year-over-year, surpassing expectations, with strong performance across all geographies, channels, and product categories, driven by robust holiday sales and strong consumer engagement.

• Net income increased up to 21.6% to $361.6 million, with diluted EPS rising as high as 24.9% to $5.82, supported by higher operating income and lower share count.

• The company advanced its strategic plan, focusing on brand elevation, core product growth, and expansion in key cities, supported by technology, AI, and analytics.

• Added up to 2.1 million new direct-to-consumer customers in Q3, with strong acquisition among younger, female, and high-value customers.

• Raised full-year revenue and operating margin outlook based on robust year-to-date performance.

Financial highlights

• Q3 revenue grew up to 12.2% year-over-year to $2.406 billion, with Asia up to 22.4%, North America up to 8.1%, and Europe up to 16%.

• Gross margin improved up to 150 bps to 69.9%, driven by AUR growth, favorable mix, and lower cotton costs.

• Adjusted operating margin expanded up to 230 bps to 20.7%; operating profit increased up to 21%.

• Free cash flow reached up to $1.1 billion for the nine months, with $500 million returned to shareholders fiscal year-to-date.

• Ended Q3 with up to $2.3 billion in cash and $1.2 billion in total debt; inventory changes ranged from up 10% to down 5% year-over-year.

Outlook and guidance

• Fiscal 2026 constant currency revenue growth outlook raised to high single to low double digits; fiscal 2025 revenue growth expected at 6–7% with negative FX impact.

• Full-year operating margin expected to expand 100–160 bps; gross margin to expand 40–80 bps.

• Q4 revenue expected to grow mid-single digits; Q4 operating margin to contract 80–120 bps due to tariffs and timing shifts.

• CapEx to remain at 4%–5% of sales, focused on digital, AI, infrastructure, and store investments.

• Full-year tax rate expected at 19%–23%.