Ralph Lauren’s fourth quarter results topped Wall Street’s expectations, yet the market response was negative. Management credited the quarter’s performance to stronger than anticipated demand for core products, especially in Asia, and continued new customer acquisition driven by digital and retail channels. Full price sales and reduced discounting supported a higher average selling price, which contributed to margin expansion. CEO Patrice Louvet noted the effectiveness of immersive brand activations and “consistent execution across all aspects of our business,” while CFO Justin Picicci emphasized disciplined inventory management and a pullback in promotional activity. However, management acknowledged that input cost pressures and tariffs began to impact profitability, particularly in North America and Europe.
Is now the time to buy RL? Find out in our full research report (it’s free for active Edge members).
Ralph Lauren (RL) Q4 CY2025 Highlights:
- Revenue: $2.41 billion vs analyst estimates of $2.32 billion (12.2% year-on-year growth, 3.7% beat)
- Adjusted EPS: $6.22 vs analyst estimates of $5.81 (7.1% beat)
- Adjusted EBITDA: $562.8 million vs analyst estimates of $523.5 million (23.4% margin, 7.5% beat)
- Operating Margin: 19.6%, up from 18.2% in the same quarter last year
- Locations: 1,263 at quarter end, up from 1,258 in the same quarter last year
- Constant Currency Revenue rose 10% year on year (11% in the same quarter last year)
- Same-Store Sales rose 8.1% year on year, in line with the same quarter last year
- Market Capitalization: $21.76 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Ralph Lauren’s Q4 Earnings Call
- Matthew Boss (JPMorgan) asked how increased marketing will support long-term brand momentum and queried post-holiday demand in North America and Europe. CEO Patrice Louvet emphasized ongoing global activations and shifting the customer base to younger and higher-value segments.
- Jay Sole (UBS) questioned drivers behind the robust average unit retail growth and potential price resistance. CFO Justin Picicci cited reduced discounting and full price demand, reporting no significant pushback from core customers and ongoing value perception improvements.
- Laurent Vasilescu (BNP Paribas) asked about Europe’s performance and whether timing shifts or strategic decisions explain Q4 trends. Picicci confirmed underlying growth remains solid and noted deliberate reduction in promotions to enhance long-term brand value.
- Michael Binetti (Evercore ISI) probed the impact of higher marketing spend on European margins and whether promotion pullbacks will continue. Picicci said increased marketing aims to activate more cities and long-term refinement of discounts will persist.
- Adrienne Yeh (Barclays) inquired about early learnings from the “Ask Ralph” AI assistant and its future expansion. Louvet described strong initial engagement, plans for broader rollout, and integration of new features like voice and image-based interactions.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) how Ralph Lauren navigates tariff and input cost headwinds, particularly in the next two quarters, (2) whether brand activations and marketing investments sustain new customer acquisitions and high full-price sales, and (3) the effectiveness of technology initiatives like AI-driven personalization in driving digital engagement. Progress in expanding women’s and accessory categories, as well as further global store openings, will also be key markers of execution.
Ralph Lauren currently trades at $360.74, up from $354.70 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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