Ralph Lauren Corporation has reported $2.1 billion in revenue for the third quarter of fiscal 2025 (Q3 FY25), ended December 28, 2024, exceeding expectations, driven by strong growth across key markets.
Ralph Lauren reported Q3 fiscal 2025 revenue of $2.1 billion, up 11 per cent, exceeding expectations.
Earnings per share rose 11 per cent to $4.66 on a reported basis and 16 per cent to $4.82 adjusted.
North America, Europe, and Asia saw strong growth.
Gross margin improved to 68.4 per cent.
Net income hit $297 million.
The company raised its full-year outlook and continued global expansion.
The company posted earnings per diluted share of $4.66, an 11 per cent increase from the prior year on a reported basis, and $4.82 on an adjusted basis, marking a 16 per cent rise. Total revenue for the quarter increased 11 per cent, with growth consistent across constant currency metrics.
North America revenue rose 7 per cent to $998 million, supported by an 8 per cent increase in comparable store sales, including a 10 per cent gain in brick-and-mortar stores and a 3 per cent rise in digital commerce. Wholesale revenue in the region also grew by 6 per cent. In Europe, revenue surged 16 per cent to $604 million, with comparable store sales up 17 per cent, reflecting an 18 per cent increase in physical stores and a 14 per cent gain in digital commerce. The region’s wholesale revenue saw a 15 per cent increase, bolstered by strong reorder trends. Asia posted a 14 per cent revenue increase to $507 million, with comparable store sales up 14 per cent, including a 13 per cent rise in brick-and-mortar stores and a notable 29 per cent increase in digital commerce.
Gross profit for the third quarter reached $1.5 billion, with a gross margin of 68.4 per cent, up 200 basis points from the previous year. This was driven by a favourable product, channel, and geographic mix, as well as lower cotton costs and an increase in Average Unit Retail (AUR). Operating expenses grew 11 per cent to $1.1 billion on a reported basis, while the adjusted operating expense rate improved to 49.7 per cent from 50.0 per cent in the prior year. Operating income rose to $390 million, with an adjusted operating margin of 18.7 per cent, an improvement of 230 basis points, the company said in a financial statement.
Breaking down operating income by region, North America reported $264 million in operating income, with a margin of 26.4 per cent, up 460 basis points. Europe recorded $169 million in operating income, with an adjusted margin of 27.9 per cent, reflecting a 420 basis-point increase. Asia’s operating income stood at $136 million, with an adjusted operating margin of 26.9 per cent, up 270 basis points.
Net income for the quarter reached $297 million, equating to $4.66 per diluted share on a reported basis and $308 million, or $4.82 per diluted share, on an adjusted basis. This compares to $277 million, or $4.19 per share, in the prior year. The company’s effective tax rate stood at 23 per cent on a reported basis and 22 per cent on an adjusted basis, reflecting an increase from the previous year due to the absence of favourable discrete tax benefits.
Ralph Lauren ended the quarter with $2.1 billion in cash and short-term investments, alongside $1.1 billion in total debt. Inventory declined by 5 per cent year-over-year to $1.0 billion, while the company repurchased approximately $74 million of Class A common stock.
Geographically, revenue growth was strongest in Europe and Asia, with China posting an increase of over 20 per cent. Ralph Lauren continued its retail expansion with 34 new stores in the quarter, including key openings in Hong Kong, Beijing, Edinburgh, and London’s Harrods.
Looking ahead, Ralph Lauren raised its full-year fiscal 2025 outlook, now expecting constant currency revenue growth of 6 to 7 per cent. However, foreign currency is projected to negatively impact revenues by 100 to 150 basis points. Operating margin is forecasted to expand by 120 to 160 basis points, slightly higher than previous projections, driven by gross margin expansion of 130 to 170 basis points. Foreign currency fluctuations are anticipated to weigh on margins by 30 to 50 basis points.
For the fourth quarter, the company expects revenue growth of 6 to 7 per cent in constant currency, with foreign exchange expected to have a 300-basis-point negative impact. Operating margin expansion is projected at 120 to 140 basis points, with a tax rate of approximately 24 to 25 per cent. Capital expenditures for the fiscal year are estimated at $200 million to $250 million.
“Our teams around the world executed very well across geographies, channels, and categories this holiday to deliver on our long-term, Next Great Chapter: Accelerate strategy. We are encouraged by this quarter’s strong performance, and we continue to be sharply focused on what’s ahead for Ralph Lauren: leveraging the incredible power of our brand and diverse drivers of growth to stay on offense into the next year and beyond,” added Patrice Louvet, president and chief executive officer.
Fibre2Fashion News Desk (HU)
