Ralph Lauren Corporation (RL Quick QuoteRL - Free Report) delivered better-than-expected fourth-quarter fiscal 2026 results, with strength on both the top and bottom lines. Adjusted earnings came in at $2.80 per share, up 23.3% from $2.27 a year ago and ahead of the Zacks Consensus Estimate of $2.52 by 11.1%.

Net revenues rose 16.6% year over year to $1,978.7 million and topped the consensus mark of $1,845 million. Results reflected broad-based demand across regions and channels, supported by higher direct-to-consumer comparable store sales and continued full-price selling momentum. 

Direct-to-consumer (DTC) performance stood out in the quarter. Global DTC comparable store sales increased 17%, with positive retail comps across regions and channels. Management also pointed to mid-teens growth in average unit retail, reflecting product elevation, mix benefits and sustained full-price selling trends.

Regionally, North America retail comps rose 16%, driven by a 21% increase in digital commerce and a 14% lift in brick-and-mortar stores. Europe retail comps increased 5%, including 2% increase in brick and mortar stores and 14% digital commerce growth, while Asia delivered 25% comps growth, supported by a 31% gain in digital commerce and 25% growth in stores. 

Ralph Lauren’s shares have rallied more than 10% following the earnings release. This Zacks Rank #3 (Hold) company’s stock has gained 18.7% in the past year against the industry’s decline of 21.7%.

RL’s Q4 Revenue Strength Spans Regions

Revenue gains were led by Asia, where sales increased 31% to $564 million, supported by robust demand in China. Europe posted an 18% rise to $620 million, while North America revenues grew 8% to $763 million.

By channel, retail revenues climbed to $1,289.9 million from $1,059.3 million a year ago, reflecting stronger store productivity and digital growth. Wholesale revenues also advanced to $656 million from $602.5 million, while licensing revenues were $32.8 million. The Zacks Consensus Estimate for retail and wholesale channels' revenues stood at $1,193 million and $633 million, respectively.

RL Expands Margins Despite Tariff Pressure

Profitability improved in the quarter as the gross margin expanded on a healthier product mix and pricing. Gross profit was $1.4 billion, and gross margin was 69.7%, up 110 basis points (bps) from the year-ago quarter. The company noted that margin expansion was driven by favorable geographic, channel and product mix, average unit retail growth and reduced cotton costs, more than offsetting higher U.S. tariffs and other product costs.

Adjusted operating income increased to $218 million, translating to an adjusted operating margin of 11%, up 70 bps year over year.

Ralph Lauren’s Financial Details

Ralph Lauren ended fiscal 2026 with $2.065 billion in cash and short-term investments and total debt of $1.239 billion. Inventories were $1.014 billion at year-end, up 7% from the prior year, reflecting a still-controlled inventory position relative to revenue growth.

The company repurchased approximately $500 million of Class A common stock in fiscal 2026, with $1.4 billion remaining on its authorization at year-end. The board also approved a 10% increase in the quarterly dividend to $1.00 per share, with the next payment expected on July 10, 2026, for shareholders of record as of June 26, 2026.

RL's Q1 & Preliminary FY27 View

Management introduced an initial outlook for fiscal 2027 that calls for constant-currency revenue growth in the mid-single digits, centered around 4-5%, alongside operating margin expansion of roughly 40-60 bps in constant currency on modest gross margin expansion and leveraged operating expenses. The company expects foreign currency to be roughly neutral to revenues and margins for the fiscal year. It plans capital expenditures of approximately 4-5% of revenues.

For the first quarter of fiscal 2027, RL expects revenues to increase mid to high-single digits in constant currency, while operating margin is projected to expand 80-120 bps, backed by gross margin gains. Fiscal 2027 will be a 53-week year, with the extra week expected to add about one point to revenue growth and provide a slight benefit to operating margin for the full year.

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