Ralph Lauren Soars As Q2 Results Outpace Expectations—CEO Eyes Holiday Season With Raised Revenue Goals

Ralph Lauren Corporation RL shares surged after the company reported better-than-expected second-quarter results.

Quarterly adjusted earnings per share of $2.54, topped the consensus of $2.41. Quarterly revenues of $1.726 billion beat the street view of $1.677 billion.

Revenue grew 6% YoY on a reported basis and rose 6% in constant currency. Foreign currency contributed 10 basis points to revenue growth in the quarter.

North America’s revenue grew 3% YoY to $739 million, with strong brick-and-mortar sales offsetting digital declines. Europe’s revenue rose 7% YoY to $566 million, led by 15% retail growth, surpassing its expectations.

Asia revenue increased 9% YoY to $380 million, driven by 11% YoY growth in comparable store sales, especially in digital commerce.

Global direct-to-consumer comparable store sales increased by 10%, fueled by strong retail performance in all regions.

Operating income for the quarter was $179 million, with a 10.4% margin; adjusted income reached $197 million, with an 11.4% margin, up 90 basis points year over year.

Ralph Lauren maintained a strong balance sheet with $1.7 billion in cash and short-term investments and well-prepared inventories for the holiday season despite global supply chain challenges.

The company returned ~$375 million to shareholders through dividends and Class A stock buybacks this fiscal year to date. Inventory was $1.1 billion, down 6% YoY due to strategic cuts in North America.

Patrice Louvet, President and Chief Executive Officer, commented, “Our strong business performance across every geography this quarter underscores the resilience of our diversified growth drivers and our elevated consumer base, giving us confidence to take up our financial outlook for the full fiscal year ahead of the all-important holiday season.”

Q3 Outlook: Ralph Lauren expects constant currency revenues to grow approximately 3% to 4%, with foreign currency to benefit revenue growth by approximately 10 to 50 basis points.

It expects the operating margin to expand by 100 to 140 basis points in constant currency, driven by gross margin gains, with a neutral foreign currency impact on margins.

2025 Outlook: The company now expects constant currency revenue to increase by 3% to 4% (prior view: centering around 2% to 3%), with a foreign currency impact reducing growth by approximately 40 to 60 basis points.

Operating margin is now expected to grow by 110 to 130 basis points in constant currency, with gross margin improving by 80 to 120 basis points, though foreign currency may slightly reduce margins by 20 basis points.

Price Action: RL shares are trading higher by 5.36% to $219.19 at last check Thursday.

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