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Investing.com -- Ralph Lauren (NYSE:RL) shares advanced around 3% in premarket trading Thursday after the luxury fashion retailer delivered stronger-than-expected results for the fourth quarter of fiscal 2025.
The company posted Q4 earnings per share (EPS) of $2.27, exceeding analyst estimates of $2.04. Revenue came in at $1.7 billion, also beating the $1.64 billion consensus.
In constant currency, revenue rose 10%, outpacing the 7.3% estimate, while comparable sales increased 13%, topping the expected 7.68%.
Profitability also came in above expectations. The company reported an adjusted gross margin of 68.6%, ahead of the 67.2% estimate, and an adjusted operating margin of 10.3%, slightly above the projected 9.97%.
"Our strong performance in the third and final year of our Next (LON:NXT) Great Chapter: Accelerate plan underscores the growing desirability of our brand and our team’s powerful execution as we navigated a dynamic global operating environment," said Patrice Louvet, President and CEO of Ralph Lauren.
"As we enter Fiscal 2026, we remain on offense — with a focus on driving our multiple engines of growth across lifestyle categories, geographies, and channels. At the same time, we will stay agile and prudent — leaning into our diversified supply chain, operating discipline, and strong balance sheet as we manage through ongoing macroeconomic uncertainty."
Looking ahead, Ralph Lauren guided to low-single-digit revenue growth for fiscal 2026 on a constant currency basis, with the bulk of that growth expected in the first half of the year.
The company sees modest operating margin expansion driven by expense leverage, and expects gross margin to remain flat. Key tailwinds include AUR growth, lower cotton costs, and a favorable mix, while higher tariffs and non-cotton material costs weigh on the outlook.
For the first quarter of fiscal 2026, revenue is expected to grow in the high-single digits year-over-year in constant currency. Operating margin is seen expanding by 150 to 200 basis points, also in constant currency, with gains supported by gross margin improvements and some cost leverage.
Tax rates are expected to range between 20% and 22% for the full year and 20% to 21% in the first quarter.
Ralph Lauren said its outlook "is based on its best assessment of the current geopolitical and macroeconomic environment, including tariffs, inflationary pressures, and other consumer spending-related headwinds, global supply chain disruptions, and foreign currency volatility, among other factors."
"The full year Fiscal 2026 and first quarter guidance excludes any potential restructuring-related and other net charges that may be incurred in future periods," it added.
Given the uncertain backdrop, the company noted the guidance is preliminary and may be adjusted as market conditions evolve.
Ralph Lauren also announced a $1.5 billion increase to its share repurchase authorization. This follows $425 million in repurchases during fiscal 2025, with $352 million remaining on the existing plan at year-end.