On August 7, Ralph Lauren Corporation (NYSE: RL) announced its financial results for the first quarter of Fiscal 2025, reporting revenue that exceeded expectations. The company posted a 1% increase in net income, reaching $1.51 billion, with a 3% increase on a constant currency basis. The strong demand for premium denim and polo shirts in Europe and Asia significantly contributed to the overall positive performance.
Key Highlights from Q1 FY2025:
- Global Direct-to-Consumer Growth: Comparable store sales in the direct-to-consumer segment grew by 5%, with robust retail performance across all regions.
- Expansion of Adjusted Gross and Operating Margins: The gross margin reached 70.5%, up by 170 basis points from the previous year. This improvement was driven by favorable product and geographic mix, lower cotton costs, and growth in average unit retail (AUR) across all regions.
- Maintaining a Healthy Balance Sheet: Ralph Lauren ended the quarter with $1.8 billion in cash and short-term investments, while inventory levels decreased by 13% compared to the previous year. The company returned $225 million to shareholders during the quarter.
- Regional Performance:
- Europe: Revenue increased by 6% on a reported basis and 7% on a constant currency basis. Brick-and-mortar sales grew by 7%, while digital commerce surged by 14%.
- Asia: Revenue rose by 4% on a reported basis and 9% on a constant currency basis, with particularly strong growth in the Chinese market.
- North America: Revenue declined by 4%, but strong direct-to-consumer performance partially offset planned reductions in wholesale.
- Reaffirmation of FY2025 Outlook: Ralph Lauren reaffirmed its forecast of low single-digit revenue growth and adjusted operating margin expansion of 100 to 120 basis points on a constant currency basis.
Ralph Lauren started the fiscal year strong, reaffirming confidence in its long-term growth strategy. The company’s brand strength, diverse growth drivers, and disciplined operations have positioned it for sustained growth despite a dynamic market environment.
For the second quarter of FY2025, the company expects revenue growth of 3% to 4% on a constant currency basis, with continued contributions from Europe and Asia. Additionally, operating margin expansion is anticipated, driven by gains exceeding planned marketing investments.
Ralph Lauren remains committed to maintaining a strong balance sheet and delivering shareholder returns while continuing to pursue long-term growth.