Ralph Lauren's Fiscal Q4 Revenue Jumps 8%

Ralph Lauren (NYSE:RL) reported its fiscal fourth-quarter and full-year 2025 results on May 22, with quarterly revenue growth of 8%, or 10% on a constant currency basis (exceeding the guidance range of 6% to 7%) and fiscal year revenue growth of 7% (8% in constant currency), due in part to record international performance. Adjusted operating profits grew by 24%. Management highlighted a new $1.5 billion share repurchase authorization and its recent 10% increase in the dividend, and outlined cautious but confident guidance for a fiscal 2026 that will be shaped by tariff risks and macroeconomic uncertainty.

Record International Growth and Profit Expansion

For the first time, international markets (Europe and Asia) provided the majority of Ralph Lauren's total revenue, fueling a company-wide margin expansion. Adjusted operating profit rose 24%, supported by a 260-basis-point adjusted gross margin increase to 69.2% in Q4. Europe led regional sales with 16% growth, followed by Asia (13%), while China posted greater than 20% revenue growth, maintaining a strong pace after prior quarters of double-digit percentage growth.

"For the full year, we delivered 8% top-line growth, including record revenues for our international businesses in Europe and Asia, which together now comprise the majority of total company revenues. And adjusted operating profits grew 24%."
-- Patrice Louvet, President and Chief Executive Officer

International scale and premium brand positioning are driving structural improvements in revenue diversification and operational leverage, directly reducing dependence on more volatile North American markets and enhancing long-term earnings resilience.

Pricing Power and Supply Chain Diversification Counter External Headwinds

The company has now reported eight consecutive years of average unit retail (AUR) growth, underpinned by proactive price actions, channel and product mix elevation, and significant discount reductions. Management noted supply chain dispersion as a critical tactical hedge against evolving tariff regimes: No single country accounts for more than 20% of its production.

"With the recent tariff announcements, what we're doing is we're assessing and reactivating our various proven levers to offset related impact. And these levers include first as you know, we've already significantly diversified our global supply chain over the past eight, nine years. And as the cost equation shifts, continue to reallocate production to markets with lower overall landed costs. At the same time maintaining our high levels of quality. You know, today, as a result of our diversification, no single country is over 20% of our production exposure."
-- Justin Padicci, Chief Financial Officer

Defensive agility -- via pricing, supply chain optimization, and AI-enabled inventory management -- protects gross margins and supports sustained, profitable growth, even as macro and trade-related risks rise sector-wide.

Strategic Capital Allocation: Shareholder Returns and Selective Real Estate Investment

In fiscal 2025 free cash flow reached $1 billion, enabling $625 million in shareholder returns via buybacks and dividends, a 10% dividend increase, and an additional $1.5 billion in share repurchases was recently authorized. The company also executed a high-impact acquisition of its New York Soho Polo flagship, using real estate investment as a lever to lock in rent savings and anchor key city ecosystems.

"We generated $1 billion of free cash flow this year, enabling us to return $625 million to shareholders through dividends and repurchases. And our Board of Directors recently authorized a 10% increase in our annual dividend and an additional $1.5 billion in share repurchases to support future returns. "
-- Justin Padicci, Chief Financial Officer

Highly disciplined balance sheet management enhances shareholder value while empowering strategic investments in long-term brand elevation and direct-to-consumer growth, sustaining both near-term financial flexibility and long-term competitive advantage.

Looking Ahead

For fiscal 2026, management guided for revenue growth in the low-single-digit percentages on a constant-currency basis, with performance weighted to the first half, when it anticipates mid-single-digit percentage gains. For the second half, the company is making more cautious assumptions due to tariffs, U.S. consumer uncertainty, and general macroeconomic volatility. Operating margin is projected to expand modestly on a constant-currency basis, with gross margin expected to remain flat as AUR growth, discount pullbacks, and favorable mix offset anticipated tariff headwinds beginning in the second half. Fiscal first-quarter revenue is forecast to increase by a high-single-digit percentage, with operating margin expansion of 150 to 200 basis points in constant currency; capital expenditures are expected to remain in the range of 4% to 5% of sales, focused on key cities, technology, and store upgrades.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 962%* — a market-crushing outperformance compared to 169% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of May 19, 2025

This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.