Ralph Lauren grew Q1 FY2027 revenue 14% to $1.96B and diluted EPS 22% to $4.28 as 15% higher average selling prices and 25% constant-currency growth in Asia lifted gross margin to 73.7% despite tariffs, and it raised full-year guidance.
Revenue
$2.0B
+14.0% YoY
Net income
$262M
+19.0% YoY
Diluted EPS
$4.28
+21.6% YoY
Operating margin
17.5%
Ralph Lauren grows sales 14% as full-price selling and Asia carry the quarter
Ralph Lauren's first quarter of fiscal 2027 (the three months ended June 27, 2026; the company's fiscal year ends in late March/early April, so this is April–June 2026) beat both the prior year and its own plan. Net revenues rose 14.0% to $1.96 billion, operating income rose 25.2% to $342.4 million, and diluted earnings per share rose 21.6% to $4.28. Management raised its full-year outlook on the back of it.
Two things did most of the work: shoppers paid more per item, and they came from Asia in much larger numbers. The 10-Q attributes the gross-margin gain "primarily" to "mid-teens AUR growth as well as favorable channel and geographic mix shifts, more than offsetting pressure from tariffs and other product costs." AUR — average unit retail, the average price a customer actually pays per item after discounts — rose 15% across the company's own stores and websites, which the earnings release links to "strong full-price selling trends, with lower than planned promotions."
Key figures
Metric
Q1 FY2027
Q1 FY2026
YoY Change
Net revenues
$1,959.8M
$1,719.1M
+14.0% (+13.4% constant currency)
Gross margin
73.7%
72.3%
+140 bps
SG&A (operating expenses) as % of revenue
55.0%
55.2%
−20 bps
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Constant currency strips out exchange-rate movements by translating both years at the same rates. Comparable store sales measure sales at stores and websites open at least 13 full months, so new openings don't inflate the figure; Ralph Lauren always reports them in constant currency. Adjusted figures exclude restructuring and other one-off charges (see below).
Region by region
Segment
Revenue
Reported growth
Constant-currency growth
Retail comp sales
Operating margin (change)
North America
$740.3M
+12.8%
+12.8%
+9%
23.1% (+240 bps)
Europe
$594.4M
+7.2%
+4.6%
+1%
26.4% (flat)
Asia
$589.3M
+24.3%
+25.3%
+23%
33.5% (+280 bps)
Asia was the standout. Revenue rose $115.3 million, almost entirely from the company's own retail business (+$121.8 million in constant currency, of which $88.3 million came from comparable stores and $33.5 million from new stores). Comparable sales rose 23% — 22% in physical stores and 32% online — reflecting "mid-teens AUR growth and higher traffic." The earnings release says China was up more than 40%. Asia now contributes $197.7 million of segment operating income, more than North America, on a 33.5% margin. The freestanding store count in Asia rose from 238 to 269 over the year, while concession shops (branded counters inside department stores) fell from 635 to 603 — a shift toward stores the company runs itself.
North America grew 12.8%, split almost evenly between retail (+$42.2 million) and wholesale (+$41.9 million). The retail gain came from a 9% comp increase driven by "high-teens AUR growth and higher traffic." Wholesale — sales to department stores and other retailers — rose 22%, but the release says about 15 of those 22 points came from resumed shipments to a luxury wholesale account and orders shifted in from the prior quarter. Stripping those out, underlying North American wholesale growth was roughly 7%.
Europe was the weak spot. Constant-currency growth was only 4.6%, and favourable currency movements added $14.7 million to the reported figure. Retail comps rose just 1% (physical stores flat, online +6%), with only "low-single digit AUR growth." Wholesale rose 8% in constant currency, but roughly 5 points of that was shipments pulled forward from the second quarter. The segment's margin held flat at 26.4% only because a 160 bp gross-margin gain offset higher marketing spend — and 40 bps of that margin came from currency.
What drove profit
Gross margin +140 bps to 73.7%. About 10 bps was currency; the other 130 bps came from higher prices realised and a mix shift toward the company's own higher-margin stores and toward Asia, which more than covered higher tariff costs.
Operating expenses grew slower than sales. SG&A rose 13.4% ($127.6 million), led by compensation (+$48.1 million), marketing (+$33.0 million) and rent (+$24.3 million). Because revenue grew faster, the expense ratio fell 20 bps. Corporate costs rose $25.2 million to $190.0 million, mostly compensation.
Tax took a bigger bite. The effective tax rate rose from 20.7% to 23.4%; the release attributes this to the absence of favourable one-time tax benefits from the prior-year quarter. That is why net income (+19.0%) grew more slowly than operating income (+25.2%).
Buybacks lifted EPS. Diluted EPS grew faster than net income (+21.6% vs +19.0%) because the share count fell. The company spent $325.1 million on share repurchases in the quarter, including $75.1 million withheld for employee tax on vesting stock awards, and paid $54.8 million in dividends.
GAAP vs. adjusted: Reported results include $23.5 million of pre-tax restructuring and other net charges ($19.3 million a year ago), mostly $20.8 million of costs tied to the "Next Generation Transformation" project — a multi-year overhaul of the company's planning, inventory and technology systems. After tax these cut EPS by $0.31 (vs $0.25 last year). The gap is similar in both years, so GAAP and adjusted growth rates tell the same story (+21.6% vs +22%).
Cash and inventory
Operating cash flow nearly doubled to $339.3 million from $176.1 million, which the 10-Q attributes mainly to lower inventory levels versus a year ago plus higher earnings. Inventory ended at $1.2 billion, down 5% year over year even as sales rose 14% — leaner stock is what allows fewer markdowns. Net cash (cash and short-term investments minus debt) fell to $702.2 million from $826.1 million at fiscal year-end because buybacks, dividends and $53.4 million of capital spending exceeded operating cash flow.
Takeaway: Ralph Lauren's growth is coming from charging more rather than discounting more — direct-to-consumer AUR rose 15% while traffic also rose in North America and Asia, and inventory fell 5% — which is why gross margin expanded despite higher tariffs. The caveat is geographic: Asia (+25% in constant currency) is carrying the quarter, while Europe's underlying growth was about 5% and its store comps only 1%, and some of North America's and Europe's wholesale gain was shipment timing that will not repeat.
Outlook
Management raised its guidance after the quarter:
Fiscal 2027 (full year): constant-currency revenue growth of mid-single digits, now "centered around 5% to 6%," with currency expected to cut reported growth by 50–100 bps. Operating margin is expected to expand 60–80 bps in constant currency (raised from the prior outlook). Fiscal 2027 is a 53-week year; the extra week adds about 1 point of revenue growth.
Second quarter (July–September 2026): constant-currency revenue growth centered around 5% to 6%, with a 100–150 bp currency headwind, and operating-margin expansion of 80–100 bps.
Margin gains are expected to be stronger in the first half, partly because of "a lower prevailing tariff rate through the first half of the fiscal year" and the timing of marketing campaigns.
Our read: The guidance implies a sharp slowdown from 13.4% constant-currency growth in Q1 to roughly 5–6% for the year, meaning the remaining three quarters average low-to-mid single digits. Some of that is prudence, but some is mechanical — the Q1 wholesale timing benefits in North America and Europe reverse later, and the company itself expects tariff costs to weigh more in the second half. The metrics to watch next quarter are whether Asia's growth (especially China) holds above 20% and whether North American comps stay near 9% without extra promotions. A further tail item: the 10-Q notes the company has filed claims for refunds of IEEPA tariffs struck down by the Supreme Court, but says the amount and timing "remain uncertain," so none of it is in guidance.
Source: Ralph Lauren Form 10-Q for the quarter ended June 27, 2026 (filed August 6, 2026); guidance, adjusted figures, China growth, DTC AUR and wholesale timing detail from the company's August 6, 2026 earnings release (Form 8-K Exhibit 99.1).