Ralph Lauren beats earnings and revenue expectations in strong Q3

Ralph Lauren Corp. posted stronger-than-expected results for its third quarter, supported by solid holiday demand and continued spending from higher-income consumers. Even so, the company’s shares fell about 8% before markets opened Thursday after it warned of margin pressure in the current quarter tied to higher U.S. tariffs.

For the quarter, Ralph Lauren reported earnings per share of $5.82, edging past Wall Street forecasts of $5.78. Revenue climbed 12% year over year to $2.41 billion, ahead of expectations of $2.3 billion.

On an adjusted basis, earnings per share reached $6.22, up 29% from the prior year. Reported earnings rose 25% from $4.66 in the same quarter last year. Revenue increased 10% in constant currency terms, with foreign exchange contributing roughly 220 basis points to growth.

Sales continued to benefit from demand for core products such as Polo shirts and leather handbags. Higher-income shoppers remained active in the luxury market, even as lower- and middle-income households faced pressure from rising housing and food costs and a softer job market.

Looking ahead to the fourth quarter, Ralph Lauren expects operating margin to contract by about 80 to 120 basis points as higher tariffs raise costs in the U.S. The company also forecasts revenue growth at a mid-single digit rate in constant currency for the quarter.

Despite the near-term margin pressure, Ralph Lauren raised its outlook for fiscal 2026. The company now expects revenue to grow at a high-single to low-double digit rate in constant currency, compared with its earlier forecast of 5% to 7%. Operating margin is projected to expand by 100 to 140 basis points for the year, up from a previous estimate of 60 to 80 basis points, supported by stronger gross margins and disciplined expense management.

For fiscal 2026, Ralph Lauren expects its effective tax rate to fall between 19% and 21%, with capital spending totaling about 4% to 5% of revenue.