Luxury lifestyle company Ralph Lauren (RL -2.33%) reported second-quarter earnings for fiscal year 2025 on Thursday, Nov. 7, which showed 6% revenue growth, reaching $1.7 billion and exceeding expectations. This was driven by international successes, particularly in Europe and Asia, although there were challenges in North America. The adjusted earnings per share stood at $2.54, marking a 21% increase from the prior year.
Overall, the quarter reflected solid profitability with strategic advancement despite some domestic hurdles.
| Metric | Q2 FY2025 | Analysts Estimate | Q2 FY2024 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $1.73 billion | $1.68 billion | $1.63 billion | 6% |
| Adjusted EPS | $2.54 | $2.42 | $2.19 | 21% |
| Gross margin | 67% | N/A | 65.4% | 160 bps |
Source: Ralph Lauren. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
About Ralph Lauren
Ralph Lauren is a globally acclaimed brand, specializing in luxury lifestyle products, including apparel, accessories, and home furnishings. Its brand is synonymous with authenticity, timeless style, and American culture, driving consumer loyalty worldwide. The company organizes its global operations into three major segments: North America, Europe, and Asia, and distributes through diversified channels like retail, digital commerce, and wholesale.
Recently, the company has concentrated on expanding its brand recognition and equity. Key strategies include leveraging important global events for marketing and focusing on a diverse range of luxury products. Another area of focus is digital transformation, aiming to adapt to evolving consumer preferences, alongside sustainability initiatives.
Quarterly Highlights
Ralph Lauren noted significant growth in its international markets with Asia reporting a 10% sales increase, powered by strong performance in China. European sales increased 6%, driven by retail momentum. Conversely, North American revenue grew 3%, with strengths in direct-to-consumer channels offset by a 3% decline in wholesale operations due to strategic reductions.
Furthermore, Ralph Lauren's gross margin increased by 160 basis points to 67%, fueled by a favorable shift toward premium-priced products and efficient cost management. The average unit price rose by 10%, reflecting strategic efforts toward full-price sales and elevated brand perception. Despite the encouraging figures, the digital channels in North America experienced a 2% decline, reflecting a larger consumer shift.
On the financial side, Ralph Lauren maintained a robust balance sheet, with $1.7 billion in cash and investments, preparing for future opportunities and challenges. Moreover, its efforts to trim inventories by 6% will provide operational flexibility throughout the holiday season. Significant marketing investments were centered around global events like the Paris Olympics, strengthening Ralph Lauren's luxury positioning.
In terms of dividends, no material changes were reported to the $0.825 per share payout, indicating consistent shareholder returns aligned with strategic financial goals.
Future Outlook
Looking ahead, Ralph Lauren raised its full-year revenue growth target, now expecting a 3% to 4% increase (on a constant currency basis). With anticipated operating margin expansion by 110 to 130 basis points, the company remains optimistic about its strategic initiatives, particularly international growth and direct-to-consumer channels.
Management also highlighted potential currency impacts, estimating a 40 to 60 basis point negative influence on annual revenue growth. Investors should watch for the company’s ability to adapt in North America and manage digital sales growth. Ralph Lauren's "Next Generation Transformation Project" continues to emphasize direct consumer interactions and efficiencies across its value chain.
