Ralph Lauren Corporation (RL Quick QuoteRL - Free Report) posted impressive third-quarter fiscal 2026 results, wherein both the top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. The third-quarter results put an emphasis on strong holiday momentum, with revenues and profits exceeding expectations on broad-based demand across regions and channels. Margin expansion outperformed guidance as full-price selling and operating leverage offset higher costs, supporting a raised full-year outlook and underscoring continued brand strength.

RL reported adjusted earnings per share of $6.22, which surpassed the consensus estimate of $5.80. Also, the bottom line increased 29% from $4.82 per share in the year-earlier quarter.

Ralph Lauren Corporation Price, Consensus and EPS Surprise

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Net revenues grew 12% year over year to $2,406 million and beat the Zacks Consensus Estimate of $2,318 million. On a constant-currency (cc) basis, revenues were up 10% from the year-ago quarter. The top line witnessed growth across all regions, driven by brand strength, pricing efforts and continued strategic investments.

Global direct-to-consumer comparable store sales (comps) rose in high-single digits, backed by balanced growth across both physical stores and digital channels, while global wholesale sales delivered robust double-digit growth. The top line was favorably impacted by 220 basis points (bps) from foreign currency rates.

Shares of this Zacks Rank #3 (Hold) company have gained 8.8% in the past six months against the industry’s decline of 6.2%.

RL Stock's Price Performance

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Ralph Lauren’s Q3 Segmental Details

North America: The segment’s revenues were up 8% year over year to $1.1 billion. Comps for North America’s retail channel rose 7% year over year, while those for brick-and-mortar stores and digital commerce moved up 6% and 7%, respectively. Revenues from the North America wholesale business rose 11% year over year.

Europe: The segment’s revenues rose 12% year over year to $676 million. The metric was up 4% on a currency-neutral basis. Comps for the retail channel in Europe edged higher, as a 5% increase in digital commerce was partially offset by a 1% decline in brick-and-mortar stores. Revenues for the segment’s wholesale business increased 16% on a reported basis and rose 8% on a cc basis.

Asia: The segment’s revenues increased 22% year over year to $620 million on both a reported basis and a currency-neutral basis. Comps in Asia were up 20%, backed by 18% growth in brick-and-mortar stores and a 35% increase in the digital business.

A Look at RL’s Q3 Margins & Costs

Ralph Lauren's adjusted gross profit margin expanded 150 bps year over year to 69.9%. The margin improvement was driven by strong average unit retail growth, a favorable product mix and lower cotton costs, more than offsetting higher U.S. tariffs and other product cost pressures.

Adjusted operating expenses rose 12% from the year-ago period to $1.7 million. Adjusted operating expenses, as a percentage of sales, contracted 70 bps to 49%.

The company’s adjusted operating income was $503 million for the reported quarter. The adjusted operating margin increased 220 bps year over year to 20.9%.

Ralph Lauren’s Financials

Ralph Lauren ended third-quarter fiscal 2026 with cash and short-term investments of $2.3 billion, total debt of $1.3 million and total shareholders’ equity of $2.9 billion. Inventory gained 15% year over year to $1.1 billion at the end of the quarter under review.
    
The company reported $356.7 million in capital expenditures for the first nine months of 2026, up from $136.3 million in the prior year.

RL repurchased nearly $37 million of Class A Common Stock in the fiscal third quarter of 2026. It returned about $500 million to its shareholders via dividends and repurchases of Class A common stock.

Ralph Lauren’s Store Update

As of Sept. 27, 2025, Ralph Lauren had 600 directly operated stores and 663 concession shops globally. The directly operated stores included 287 Ralph Lauren and 313 Outlet stores. The company operated 131 licensed partner stores globally as of the same date.

RL’s Outlook for Q4 & FY26

Following its strong third-quarter results, Ralph Lauren raised its full-year fiscal 2026 guidance, reflecting continued brand momentum and outperformance across all regions and channels. The company’s outlook reflects its best assessment of the current geopolitical and macroeconomic environment, including inflationary pressures, tariffs, consumer spending-related headwinds, global supply chain disruptions and foreign currency volatility.

For fiscal 2026, management expects revenues to increase in the high-single to low-double digits on a constant currency basis compared with 5%-7% expected earlier. Based on current exchange rates, foreign currency is expected to benefit revenue growth by 200-250 bps. Operating margin is now expected to expand by approximately 100-140 bps in constant currency, an improvement over the prior outlook of 60-80 bps, primarily driven by operating expense leverage and gross margin expansion.

Foreign currency is anticipated to aid gross and operating margins by 20-50 bps. The full-year effective tax rate is projected to be 19-21%, while capital expenditures are expected to be 4-5% of revenues. These projections exclude any potential restructuring-related and other net charges that may arise in future periods.

For the fiscal fourth quarter, RL expects revenues to grow in mid-single digits, on a constant currency basis, with foreign currency expected to aid revenues by 200-300 bps compared with 150-200 bps expected earlier. Operating margin for the quarter is forecasted to contract by approximately 80-120 bps in constant currency, primarily due to higher U.S. tariffs and increased marketing investment to support key global activations over a seasonally lower revenue base. Foreign currency is also expected to benefit gross and operating margins by approximately 50 and 100 bps, respectively. The company anticipates an effective tax rate of 19-21% for the fourth quarter.

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