Ralph Lauren lifts FY27 guidance, China grows more than 40 percent

Ralph Lauren Corporation raised its full-year outlook on Thursday after its first-quarter revenue in fiscal year 2027 climbed 14 percent, with double-digit growth across Asia and North America and a 15 percent increase in average unit retail across its direct-to-consumer network.

Revenue for the first quarter of fiscal 2027 reached 2 billion dollars, up 13 percent in constant currency and ahead of the company’s own expectations. Earnings per diluted share came in at 4.28 dollars on a reported basis and 4.59 dollars adjusted, both up 22 percent year on year. Net income was 262 million dollars, compared with 220 million dollars a year earlier.

Asia was the standout

According to the company, revenue in Asia rose 24 percent on a reported basis to 589 million dollars, with comparable store sales up 23 percent. China led the growth, expanding more than 40 percent against the prior year. North America revenue increased 13 percent to 740 million dollars, helped by a 22 percent rise in wholesale, roughly 15 points of which came from resumed shipments to a luxury wholesale account and a shipment timing shift out of the fourth quarter. Europe grew 7 percent on a reported basis to 594 million dollars, or 5 percent in constant currency, with comparable store sales up just 1 percent.

Margins expanded on both lines

Gross margin reached 73.7 percent, 140 basis points above last year, which the company attributed to AUR growth and favourable channel and geographic mix — enough to more than offset tariff pressure and other product cost increases. Adjusted operating margin was 18.7 percent, up 170 basis points, despite higher marketing spend.

The AUR figure is the number likely to draw attention from the wider industry.

Chief executive Patrice Louvet described the quarter as a strong start to the second year of the company’s “Next Great Chapter: Drive” plan.

"Our iconic brand is resonating around the world, and we continue to invest behind the long-term strategic priorities that will drive further sustainable growth and value creation into the future – from recruiting new and younger consumers to strengthening our core and high-potential categories and developing our key city ecosystems in every region,” Louver said.

The group added 1.5 million new direct-to-consumer customers in the quarter and opened 22 owned and partnered stores, including locations at The Grove in Los Angeles, Stanford Shopping Center in Palo Alto, Istanbul, and new Polo stores in Sydney and Perth.

FY27 guidance updated

For the full year, the company now expects constant currency revenue growth of approximately 5 to 6 percent, with operating margin expanding 60 to 80 basis points in constant currency, both above its previous guidance. Fiscal 2027 is a 53-week year, with the extra week adding around a point to revenue growth.

Management cautioned that margin expansion will be weighted to the first half, partly because of marketing timing and partly because the prevailing tariff rate is lower through the first six months of the year. Second-quarter revenue is guided to 5 to 6 percent constant currency growth, with operating margin up 80 to 100 basis points.

"As we celebrate America's 250th anniversary and look ahead to important milestones for our Company over the coming year, I'm reminded of what has inspired us for nearly 60 years — optimism and aspiration, authenticity and the belief that we all can step into our dreams," said Ralph Lauren, executive chairman and chief creative officer, said in a statement. "These are the values that our teams around the world embrace every day, that will endure as we continue to grow and evolve."