Ralph Lauren Corporation
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Special Note Regarding Forward-Looking Statements
Various statements in this Form 10-Q, or incorporated by reference into this Form 10-Q, in future filings by us with the Securities and Exchange Commission (the "SEC"), in our press releases, and in oral statements made from time to time by representatives of the Company, may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our current expectations about the Company's future operating results and financial condition, the implementation and results of our strategic plans and initiatives, store openings and closings, capital expenses, our plans regarding our quarterly cash dividend and Class A common stock repurchase programs, and our ability to meet citizenship and sustainability goals. Forward-looking statements are based on current expectations and are indicated by words or phrases such as "aim," "anticipate," "outlook," "estimate," "ensure," "commit," "expect," "project," "believe," "envision," "goal," "target," "can," "will," and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others:
•the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, including any potential changes resulting from the execution of our long-term growth strategy, and our ability to effectively transfer knowledge and maintain adequate controls and procedures during periods of transition;
•the impact to our business resulting from the potential imposition of additional tariffs, duties, or taxes, changes to existing trade agreements, and other charges or barriers to trade, including those recently announced by the U.S. and any responding retaliatory actions implemented by impacted countries, and any related impact to global stock markets, foreign currency exchange rates, and existing inflationary pressures, as well as our ability to implement mitigating sourcing strategies;
•the potential impact to our business resulting from inflationary pressures, including increases in the costs of raw materials, transportation, wages, healthcare, and other benefit-related costs;
•the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including potential business disruptions related to ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraine and Israel-Hamas wars, the U.S.-Venezuela conflict, militant attacks on cargo vessels in the Red Sea, and other recent hostilities in the Middle East, civil and political unrest, diplomatic tensions between the U.S. and other countries and any resulting anti-American sentiment, high interest rates, and bank failures, among other factors described herein;
•the impact to our business resulting from a recession or changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory;
•the potential impact to our business resulting from supply chain disruptions, including those caused by capacity constraints, closed factories and/or labor shortages (stemming from pandemic diseases, labor disputes, strikes, or otherwise), man-made or natural disasters, scarcity of raw materials, port congestion, and scrutiny or detention of goods produced in certain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which could result in shipment approval delays leading to inventory shortages and lost sales, as well as potential shipping delays, inventory shortages, and/or higher freight costs resulting from port strikes, the recent Red Sea crisis, and/or disruptions to major waterways such as the Suez and Panama canals;
•changes in our tax obligations and effective tax rate due to a variety of factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;
•our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment;
•our exposure to currency exchange rate fluctuations from both a transactional and translational perspective;
•our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms;
•our ability and the ability of our third-party service providers to secure our respective facilities and systems from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, ransomware, or similar Internet or email events;
•our ability to recruit and retain qualified employees to operate our retail stores, distribution centers, and various corporate functions;
•our ability to successfully implement our long-term growth strategy;
•our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories;
•our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence;
•our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers;
•our ability to competitively price our products and create an acceptable value proposition for consumers;
•our ability to continue to maintain our brand image and reputation and protect our trademarks;
•our ability to achieve our goals regarding citizenship and sustainability practices, including those related to climate change, our human capital, and our supply chain, or if our stakeholders disagree with such goals;
•the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible;
•the potential impact to our business resulting from pandemic diseases such as COVID-19, including periods of reduced operating hours and capacity limits and/or temporary closure of our stores, distribution centers, and corporate facilities, as well as those of our customers, suppliers, and vendors, and potential changes to consumer behavior, spending levels, and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations;
•the potential impact on our operations and on our suppliers and customers resulting from man-made or natural disasters, including pandemic diseases, severe weather, geological events, and other catastrophic events, such as terrorist attacks, military conflicts, and other hostilities;
•our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term;
•the impact to our business resulting from potential costs and obligations related to the early or temporary closure of our stores or termination of our long-term, non-cancellable leases;
•our ability to maintain adequate levels of liquidity to provide for our cash needs, including our debt obligations, tax obligations, capital expenditures, and potential payment of dividends and repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs;
•the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors;
•our ability to access capital markets and maintain compliance with covenants associated with our existing debt instruments;
•a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation, exportation, and traceability and transparency of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business;
•the potential impact to the trading prices of our securities if our operating results, Class A common stock share repurchase activity, and/or cash dividend payments differ from investors' expectations;
•our ability to maintain our credit profile and ratings within the financial community;
•our intention to introduce new products or brands, or enter into or renew alliances;
•changes in the business of, and our relationships with, major wholesale customers and licensing partners; and
•our ability to make strategic acquisitions and successfully integrate the acquired businesses into our existing operations.
These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is included in our Annual Report on Form 10-K for the fiscal year ended March 29, 2025 (the "Fiscal 2025 10-K"). There are no material changes to such risk factors, nor have we identified any previously undisclosed risks that could materially adversely affect our business, operating results, and/or financial condition, as set forth in Part II, Item 1A — "Risk Factors" of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
In this Form 10-Q, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 2026 will end on March 28, 2026 and will be a 52-week period ("Fiscal 2026"). Fiscal year 2025 ended on March 29, 2025 and was also a 52-week period ("Fiscal 2025"). The third quarter of Fiscal 2026 ended on December 27, 2025 and was a 13-week period. The third quarter of Fiscal 2025 ended on December 28, 2024 and was also a 13-week period.
INTRODUCTION
Management's discussion and analysis of financial condition and results of operations ("MD&A") is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of our results of operations, financial condition, and liquidity. MD&A is organized as follows:
•Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month and nine-month periods ended December 27, 2025. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.
•Results of operations. This section provides an analysis of our results of operations for the three-month and nine-month periods ended December 27, 2025 as compared to the three-month and nine-month periods ended December 28, 2024.
•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of December 27, 2025, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the nine months ended December 27, 2025 as compared to the nine months ended December 28, 2024; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, our supplier finance program, outstanding debt and covenant compliance, common stock repurchases, and payments of dividends; and (iv) a description of any material changes in our material cash requirements since March 29, 2025.
•Market risk management. This section discusses any significant changes in our risk exposures related to foreign currency exchange rates, interest rates, and our investments since March 29, 2025.
•Critical accounting policies. This section discusses any significant changes in our critical accounting policies since March 29, 2025. Critical accounting policies typically require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 of the Fiscal 2025 10-K.
•Recently issued accounting standards. This section discusses the potential impact on our reported results of operations and financial condition of certain accounting standards that have been recently issued.
OVERVIEW
Our Business
Our Company is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, footwear & accessories, home, fragrances, and hospitality. Our long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others.
We diversify our business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area or channel of distribution. We sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operations around the world. Our wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to third parties for specified periods and geographies the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel categories, eyewear, fragrances, and home furnishings.
We organize our business into the following three reportable segments:
•North America — Our North America segment, representing approximately 43% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses primarily in the U.S. and Canada. In North America, our retail business is primarily comprised of our Ralph Lauren stores, our outlet stores, and our digital commerce sites, www.RalphLauren.com and www.RalphLauren.ca. Our wholesale business in North America is comprised primarily of sales to department stores and, to a lesser extent, specialty stores.
•Europe — Our Europe segment, representing approximately 31% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Europe and emerging markets. In Europe, our retail business is primarily comprised of our Ralph Lauren stores, our outlet stores, our concession-based shop-within-shops, and our various digital commerce sites. Our wholesale business in Europe is comprised primarily of a varying mix of sales to both department stores and specialty stores, depending on the country, as well as to various third-party digital and licensee partners.
•Asia — Our Asia segment, representing approximately 24% of our Fiscal 2025 net revenues, primarily consists of sales of our Ralph Lauren branded products made through our retail and wholesale businesses in Asia, Australia, and New Zealand. Our retail business in Asia is primarily comprised of our Ralph Lauren stores, our outlet stores, our concession-based shop-within-shops, and our various digital commerce sites. In addition, we sell our products online through various third-party digital partner commerce sites. Our wholesale business in Asia is comprised primarily of sales to department stores and various third-party digital and licensee partners.
No operating segments were aggregated to form our reportable segments. In addition to these reportable segments, we also have other non-reportable segments, representing approximately 2% of our Fiscal 2025 net revenues, which primarily consist of Ralph Lauren and Chaps branded royalty revenues earned through our global licensing alliances.
Approximately 57% of our Fiscal 2025 net revenues were earned outside of the U.S. See Note 16 to the accompanying consolidated financial statements for further discussion of our segment reporting structure.
Our business is typically affected by seasonal trends, with higher levels of retail sales in our second and third fiscal quarters and higher wholesale sales in our second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting our retail business and timing of seasonal wholesale shipments. As a result of changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly operating trends and working capital requirements may not be indicative of our future performance. In addition, fluctuations in sales, operating income (loss), and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes in weather patterns. Accordingly, our operating results and cash flows for the three-month and nine-month periods ended December 27, 2025 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2026.
Recent Developments
Next Generation Transformation Project
During Fiscal 2025, we began a large-scale, multi-year global project that is expected to significantly transform the way in which we operate our business and further enable our long-term strategic pivot towards a global direct-to-consumer-oriented model (the "Next Generation Transformation project" or "NGT project"). The NGT project is being completed in phases and involves the redesign of certain end-to-end processes and the implementation of a suite of technology systems on a global scale. Such efforts are expected to result in significant process improvements and the creation of synergies across core areas of operations, including merchandise buying and planning, procurement, inventory management, retail and wholesale operations, and financial planning and reporting, better enabling us to optimize inventory levels and increase the speed with which we react to changes in consumer demand across markets, among other benefits.
In connection with the current phase of the NGT project, we incurred other charges of $25.0 million and $61.7 million during the three-month and nine-month periods ended December 27, 2025, respectively, and $9.1 million and $17.1 million during the three-month and nine-month periods ended December 28, 2024, respectively, which were recorded within restructuring and other charges, net in the consolidated statements of operations.
Global Economic Conditions and Industry Trends
The global economy and retail industry are impacted by many factors beyond our control. Most recently, the U.S. announced significant changes to its trade policies, including widespread tariff increases on imported goods, with potential for new tariffs and further increases on existing tariffs in the future, as well as revisions or terminations to existing trade agreements. In response, many countries have announced or are otherwise considering retaliatory tariffs on U.S. exports and other trade restrictions. This has led to significant uncertainty regarding the future relationship between the U.S. and other countries, as well as concerns about a global trade war, higher inflation, and a potential global recession, which has already caused significant volatility of global stock markets and foreign currency exchange rates. In addition, the U.S. signed into law tax legislation commonly referred to as the One Big Beautiful Bill Act in July 2025, which extends many of the provisions of the Tax Cuts and Jobs Act of 2017, as well as introduces certain other new provisions.
Other recent economic conditions, including ongoing inflationary pressures, organized labor disputes, high interest rates, significant foreign currency volatility, and military conflicts (as discussed below), continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as to reduce elevated inventory levels, many retailers (particularly in the U.S.) continue to resort to promotional activity in an attempt to offset traffic declines and increase conversion. Furthermore, the department store sector has also experienced consolidations, restructurings, bankruptcies, and other ownership changes in recent times, as well as an increase in store closures.
The global economy has also been negatively impacted by ongoing military conflicts, including the Russia-Ukraine and Israel-Hamas wars, the U.S.-Venezuela conflict, militant attacks on cargo vessels in the Red Sea, and other hostilities in the Middle East. Although our voluntary decision to suspend operations in Russia has not resulted in a material impact to our consolidated financial statements and our ongoing operations in Israel are also not material, our business has been, and may continue to be, affected by the broader macroeconomic implications resulting from these and other military conflicts, including inflationary pressures, unfavorable foreign currency exchange rates, increases in energy prices, food shortages, and financial market volatility, among other factors, which have adversely impacted consumer sentiment and confidence. It is not clear at this time how long these conflicts will endure, or if they will escalate further with additional countries taking part, which could further amplify the impacts of the various macroeconomic factors described above and potentially result in a global recession.
The global supply chain has also been negatively impacted by various factors, including disruptions in the Red Sea as discussed above. Although our business has not been significantly impacted by such disruptions, we have experienced some shipping delays impacting the timing of inventory receipts, and if such disruptions were to continue over a prolonged period, it could result in further inventory receipt delays and/or higher freight costs in the near-term and beyond.
We have implemented various global strategies to address many of these challenges and continue to build a foundation for long-term profitable growth by strengthening our consumer-facing areas and driving a more efficient operating model. We continue to monitor the current geopolitical landscape, including the potential impact of changes to tariffs. We have taken proactive measures in recent years to diversify our supply chain from a geographic perspective and believe we can further mitigate potential cost pressures associated with new tariffs through a combination of our disciplined inventory management, leveraging our relationships with suppliers to reduce product costs, our ability to change country of origin, and pricing actions. However, our profitability will be negatively impacted should tariffs increase significantly across our supply chain. Regarding mitigating inflationary pressures, our strategy includes numerous levers, including our ability to effectively increase prices, leveraging our diversified supply chain and strong supplier relationships, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts. Despite the competitive environment, we plan to continue driving our broader long-term strategy of brand elevation, which includes multiple levers to continue driving average unit retail growth and brand equity.
We will continue to monitor these conditions and trends and adjust our operating strategies to help mitigate the related impacts on our results of operations, while remaining focused on the long-term growth of our business and protecting and elevating the value of our brand.
For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A — "Risk Factors" in our Fiscal 2025 10-K.
Summary of Financial Performance
Operating Results
During the three months ended December 27, 2025, we reported net revenues of $2.406 billion, net income of $361.6 million, and net income per diluted share of $5.82, as compared to net revenues of $2.143 billion, net income of $297.4 million, and net income per diluted share of $4.66 during the three months ended December 28, 2024. During the nine months ended December 27, 2025, we reported net revenues of $6.136 billion, net income of $789.5 million, and net income per diluted share of $12.66, as compared to net revenues of $5.382 billion, net income of $613.9 million, and net income per diluted share of $9.57 during the nine months ended December 28, 2024. The comparability of our operating results has been affected by net restructuring-related charges and certain other charges, as well as foreign currency volatility. Our operating results are also susceptible to changes in macroeconomic conditions.
Our operating performance for the three-month and nine-month periods ended December 27, 2025 as compared to the prior fiscal year periods reflected revenue growth of 12.2% and 14.0%, respectively, on a reported basis and 10.0% and 11.7%, respectively, on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. Net revenues reflected growth across all of our reportable segments.
Our gross profit as a percentage of net revenues increased by 150 basis points to 69.9% during the three months ended December 27, 2025 and by 140 basis points to 69.9% during the nine months ended December 27, 2025, as compared to the prior fiscal year periods, primarily driven by average unit retail ("AUR") growth, favorable product mix, favorable foreign currency effects, and lower cotton costs, more than offsetting pressure from tariffs and non-cotton product costs.
Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues declined by 70 basis points to 49.0% during the three months ended December 27, 2025 and by 110 basis points to 52.3% during the nine months ended December 27, 2025, as compared to the prior fiscal year periods, largely attributable to operating leverage on higher net revenues despite higher compensation-related expenses, marketing investments, and variable selling expenses.
Net income increased by $64.2 million to $361.6 million during the three months ended December 27, 2025 as compared to the three months ended December 28, 2024, primarily due to an $81.6 million increase in our operating income, partially offset by a $15.9 million increase in our income tax provision. Net income per diluted share increased by $1.16 to $5.82 per share during the three months ended December 27, 2025 as compared to the three months ended December 28, 2024, primarily driven by the higher level of net income and lower weighted-average diluted shares outstanding. Net income increased by $175.6 million to $789.5 million during the nine months ended December 27, 2025 as compared to the nine months ended
December 28, 2024, primarily due to a $213.5 million increase in our operating income, partially offset by a $20.6 million increase in our income tax provision and a $17.3 million increase in non-operating expense, net. Net income per diluted share increased by $3.09 to $12.66 per share during the nine months ended December 27, 2025 as compared to the nine months ended December 28, 2024, driven by the higher level of net income and lower weighted-average diluted shares outstanding.
Our operating results during each of the three-month periods ended December 27, 2025 and December 28, 2024, were negatively impacted by net restructuring-related charges and certain other charges totaling $31.8 million and $12.2 million, respectively, which had an after-tax effect of reducing net income by $25.2 million, or $0.40 per diluted share, and $10.5 million, or $0.16 per diluted share, respectively. During the nine-month periods ended December 27, 2025 and December 28, 2024, our operating results were negatively impacted by net restructuring-related charges and certain other charges totaling $88.4 million and $38.0 million, respectively, which had an after-tax effect of reducing net income by $69.9 million, or $1.12 per diluted share, and $30.7 million, or $0.48 per diluted share, respectively.
Financial Condition and Liquidity
We ended the third quarter of Fiscal 2026 in a net cash and short-term investments position (calculated as cash and cash equivalents, plus short-term investments, less total debt) of $1.013 billion, as compared to $940.4 million as of the end of Fiscal 2025. The increase in our net cash and short-term investments position was primarily due to our operating cash flows of $1.009 billion and the favorable effect of exchange rate changes of $61.9 million, primarily related to our cash and cash equivalents, partially offset by our use of cash to support Class A common stock repurchases of $473.4 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to invest in our business through $356.7 million in capital expenditures, and to make dividend payments of $161.3 million.
Net cash provided by operating activities was $1.009 billion during the nine months ended December 27, 2025, as compared to $1.113 billion during the nine months ended December 28, 2024. The net decrease in cash provided by operating activities was due to a net unfavorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year period, partially offset by an increase in net income before non-cash charges.
Our equity increased to $2.888 billion as of December 27, 2025 compared to $2.589 billion as of March 29, 2025 due to our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our share repurchase activity and dividends declared during the nine months ended December 27, 2025.
Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition
The comparability of our operating results for the three-month and nine-month periods ended December 27, 2025 has been affected by certain transactions, including net restructuring-related charges and certain other charges totaling $31.8 million and $88.4 million, respectively, and $12.2 million and $38.0 million during the three-month and nine-month periods ended December 28, 2024, respectively. See Note 7 to the accompanying consolidated financial statements.
Because we are a global company, the comparability of our operating results reported in U.S. Dollars is also affected by foreign currency exchange rate fluctuations because the underlying currencies in which we transact change in value over time compared to the U.S. Dollar. Such fluctuations can have a significant effect on our reported results. As such, in addition to financial measures prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), our discussions often contain references to constant currency measures, which are calculated by translating current-year and prior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency. We present constant currency financial information, which is a non-U.S. GAAP financial measure, as a supplement to our reported operating results. We use constant currency information to provide a framework for assessing how our businesses performed excluding the effects of foreign currency exchange rate fluctuations. We believe this information is useful to investors for facilitating comparisons of operating results and better identifying trends in our businesses. The constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with U.S. GAAP. Reconciliations between this non-U.S. GAAP financial measure and the most directly comparable U.S. GAAP measure are included in the "Results of Operations" section where applicable.
Our discussion also includes reference to comparable store sales. Comparable store sales refer to the change in sales of our stores that have been open for at least 13 full fiscal months. Sales from our digital commerce sites are also included within comparable sales for those geographies that have been serviced by the related site for at least 13 full fiscal months. Sales for stores or digital commerce sites that are closed or shut down during the year are excluded from the calculation of comparable store sales. Sales for stores that are either relocated, enlarged (as defined by gross square footage expansion of 25% or greater), or generally closed for 30 or more consecutive days for renovation are also excluded from the calculation of comparable store sales until such stores have been operating in their new location or in their newly renovated state for at least 13 full fiscal months. All comparable store sales metrics are calculated on a constant currency basis.
Our "Results of Operations" discussion that follows includes the significant changes in operating results arising from these items affecting comparability. However, unusual items or transactions may occur in any period. Accordingly, investors and other financial statement users should consider the types of events and transactions that have affected operating trends.
RESULTS OF OPERATIONS
Three Months Ended December 27, 2025 Compared to Three Months Ended December 28, 2024
The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the below table and the discussion that follows have been calculated using unrounded numbers.
| Three Months Ended | ||||||||||||||||||||||||
| December 27, 2025 | December 28, 2024 | $ Change | % / bps Change | |||||||||||||||||||||
| (millions, except per share data) | ||||||||||||||||||||||||
Net revenues | $ | 2,406.0 | $ | 2,143.5 | $ | 262.5 | 12.2 | % | ||||||||||||||||
| Cost of goods sold | (724.3) | (677.4) | (46.9) | 6.9 | % | |||||||||||||||||||
Gross profit | 1,681.7 | 1,466.1 | 215.6 | 14.7 | % | |||||||||||||||||||
| Gross profit as % of net revenues | 69.9 | % | 68.4 | % | 150 bps | |||||||||||||||||||
| Selling, general, and administrative expenses | (1,178.6) | (1,064.2) | (114.4) | 10.7 | % | |||||||||||||||||||
| SG&A expenses as % of net revenues | 49.0 | % | 49.7 | % | (70 bps) | |||||||||||||||||||
| Restructuring and other charges, net | (31.8) | (12.2) | (19.6) | 160.7 | % | |||||||||||||||||||
Operating income | 471.3 | 389.7 | 81.6 | 21.0 | % | |||||||||||||||||||
| Operating income as % of net revenues | 19.6 | % | 18.2 | % | 140 bps | |||||||||||||||||||
| Interest expense | (13.3) | (11.6) | (1.7) | 15.0 | % | |||||||||||||||||||
| Interest income | 11.9 | 17.8 | (5.9) | (32.6 | %) | |||||||||||||||||||
| Other expense, net | (6.1) | (12.2) | 6.1 | (48.8 | %) | |||||||||||||||||||
Income before income taxes | 463.8 | 383.7 | 80.1 | 20.9 | % | |||||||||||||||||||
| Income tax provision | (102.2) | (86.3) | (15.9) | 18.4 | % | |||||||||||||||||||
Effective tax rate(a) | 22.0 | % | 22.5 | % | (50 bps) | |||||||||||||||||||
Net income | $ | 361.6 | $ | 297.4 | $ | 64.2 | 21.6 | % | ||||||||||||||||
| Net income per common share: | ||||||||||||||||||||||||
Basic | $ | 5.91 | $ | 4.76 | $ | 1.15 | 24.2 | % | ||||||||||||||||
Diluted | $ | 5.82 | $ | 4.66 | $ | 1.16 | 24.9 | % | ||||||||||||||||
(a)Effective tax rate is calculated by dividing the income tax provision by income before income taxes.
Net Revenues. Net revenues increased by $262.5 million, or 12.2%, to $2.406 billion during the three months ended December 27, 2025 as compared to the three months ended December 28, 2024, reflecting growth across all of our reportable segments, including favorable foreign currency effects of $47.9 million. On a constant currency basis, net revenues increased by $214.6 million, or 10.0%.
The following table summarizes the percentage changes in our consolidated comparable store sales for the three months ended December 27, 2025 as compared to the prior fiscal year period:
| % Change | |||||||
| Digital commerce | 10 | % | |||||
| Brick and mortar | 8 | % | |||||
| Total comparable store sales | 9 | % | |||||
Our global average store count increased by 1 store and concession shop during the three months ended December 27, 2025 compared with the three months ended December 28, 2024, primarily due to new full price store openings in Asia, largely offset by concession shop closures in Asia. The following table details our retail store presence by segment as of the periods presented:
| December 27, 2025 | December 28, 2024 | |||||||||||
| Freestanding Stores: | ||||||||||||
| North America | 225 | 228 | ||||||||||
| Europe | 112 | 103 | ||||||||||
| Asia | 263 | 248 | ||||||||||
| Total freestanding stores | 600 | 579 | ||||||||||
| Concession Shops: | ||||||||||||
| North America | — | 1 | ||||||||||
| Europe | 29 | 29 | ||||||||||
| Asia | 634 | 649 | ||||||||||
| Total concession shops | 663 | 679 | ||||||||||
| Total stores | 1,263 | 1,258 | ||||||||||
In addition to our stores, we sell products online in North America, Europe, and Asia through our various digital commerce sites, as well as through our Polo mobile apps in the U.S. We also sell products online through various third-party digital partner commerce sites, primarily in Asia.
Net revenues for our segments, as well as a discussion of the changes in each reportable segment's net revenues from the comparable prior fiscal year period, are provided below:
| Three Months Ended | $ Change | Foreign Exchange Impact | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||
| December 27, 2025 | December 28, 2024 | As Reported | Constant Currency | As Reported | Constant Currency | |||||||||||||||||||||||||||||||||||||
| (millions) | ||||||||||||||||||||||||||||||||||||||||||
| Net Revenues: | ||||||||||||||||||||||||||||||||||||||||||
| North America | $ | 1,078.3 | $ | 997.7 | $ | 80.6 | $ | 0.4 | $ | 80.2 | 8.1 | % | 8.0 | % | ||||||||||||||||||||||||||||
| Europe | 676.5 | 604.4 | 72.1 | 46.8 | 25.3 | 11.9 | % | 4.2 | % | |||||||||||||||||||||||||||||||||
| Asia | 620.3 | 506.7 | 113.6 | 0.7 | 112.9 | 22.4 | % | 22.3 | % | |||||||||||||||||||||||||||||||||
| Other non-reportable segments | 30.9 | 34.7 | (3.8) | — | (3.8) | (11.0 | %) | (11.1 | %) | |||||||||||||||||||||||||||||||||
| Total net revenues | $ | 2,406.0 | $ | 2,143.5 | $ | 262.5 | $ | 47.9 | $ | 214.6 | 12.2 | % | 10.0 | % | ||||||||||||||||||||||||||||
North America net revenues — Net revenues increased by $80.6 million, or 8.1%, during the three months ended December 27, 2025 as compared to the three months ended December 28, 2024. On a constant currency basis, net revenues increased by $80.2 million, or 8.0%.
The $80.6 million increase in North America net revenues was driven by:
•a $52.6 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $52.1 million, reflecting increases of $49.9 million in comparable store sales and $2.2 million in non-comparable store sales. The increase in our comparable store sales reflected strong double-digit AUR growth, as well as higher traffic, during the three months ended December 27, 2025 as compared to the prior fiscal year period. The following table summarizes the percentage changes in comparable store sales related to our North America retail business:
| % Change | |||||||
| Digital commerce | 7 | % | |||||
| Brick and mortar | 6 | % | |||||
| Total comparable store sales | 7 | % | |||||
•a $28.0 million increase related to our North America wholesale business largely driven by improved selling trends and strong replenishment orders.
Europe net revenues — Net revenues increased by $72.1 million, or 11.9%, during the three months ended December 27, 2025 as compared to the three months ended December 28, 2024. On a constant currency basis, net revenues increased by $25.3 million, or 4.2%.
The $72.1 million increase in Europe net revenues was driven by:
•a $40.8 million increase related to our Europe wholesale business largely driven by stronger re-order trends and favorable foreign currency effects of $20.8 million, which more than offset a timing shift of inventory shipments into the first half of Fiscal 2026 and planned reductions within the off-price wholesale channel; and
•a $31.3 million increase related to our Europe retail business, inclusive of favorable foreign currency effects of $26.0 million. On a constant currency basis, net revenues increased by $5.3 million, reflecting increases of $4.2 million in non-comparable store sales and $1.1 million in comparable store sales. The increase in our comparable store sales reflected mid-single digit AUR growth, as well as higher traffic, during the three months ended December 27, 2025 as compared to the prior fiscal year period. The following table summarizes the percentage changes in comparable store sales related to our Europe retail business:
| % Change | |||||||
| Digital commerce | 5 | % | |||||
| Brick and mortar | (1 | %) | |||||
| Total comparable store sales | — | % | |||||
Asia net revenues — Net revenues increased by $113.6 million, or 22.4%, during the three months ended December 27, 2025 as compared to the three months ended December 28, 2024. On a constant currency basis, net revenues increased by $112.9 million, or 22.3%.
The $113.6 million increase in Asia net revenues was primarily driven by:
•a $111.3 million increase related to our Asia retail business, inclusive of favorable foreign currency effects of $0.7 million. On a constant currency basis, net revenues increased by $110.6 million, reflecting increases of $79.9 million in comparable store sales and $30.7 million in non-comparable store sales. The increase in our comparable store sales reflected mid-teens AUR growth, as well as higher traffic, during the three months ended December 27, 2025 as compared to the prior fiscal year period. The following table summarizes the percentage changes in comparable store sales related to our Asia retail business:
| % Change | |||||||
| Digital commerce | 35 | % | |||||
| Brick and mortar | 18 | % | |||||
| Total comparable store sales | 20 | % | |||||
Gross Profit. Gross profit increased by $215.6 million, or 14.7%, to $1.682 billion for the three months ended December 27, 2025, including favorable foreign currency effects of $34.6 million. Gross profit as a percentage of net revenues increased to 69.9% for the three months ended December 27, 2025 from 68.4% for the three months ended December 28, 2024. The 150 basis point increase reflected favorable foreign currency effects of 10 basis points. The remaining 140 basis point improvement was primarily due to high-teens AUR growth, favorable product mix, and lower cotton costs, more than offsetting pressure from tariffs and non-cotton product costs.
Gross profit is the difference between total net revenues and cost of goods sold. Cost of goods sold includes the amounts incurred to acquire and produce inventory for sale to our customers, including product costs, freight-in, and import costs, as well as changes in reserves for shrinkage and inventory realizability. Gains and losses associated with forward foreign currency exchange contracts that are designated and qualifying as cash flow hedges of inventory transactions are also recognized within cost of goods sold when the hedged inventory is sold. The costs of selling merchandise, including those associated with preparing merchandise for sale, such as picking, packing, warehousing, and order charges, are included in SG&A expenses in the consolidated statements of operations. As a result, our gross profit may not be comparable to that of other entities.
Selling, General, and Administrative Expenses. SG&A expenses include costs relating to compensation and benefits, marketing and advertising, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased by $114.4 million, or 10.7%, to $1.179 billion for the three months ended December 27, 2025, including unfavorable foreign currency effects of $18.9 million. SG&A expenses as a percentage of net revenues declined to 49.0% for the three months ended December 27, 2025 from 49.7% for the three months ended December 28, 2024. The 70 basis point improvement was largely attributable to operating leverage on higher net revenues despite higher marketing investments, compensation-related expenses, and variable selling expenses.
The $114.4 million increase in SG&A expenses was driven by:
| Three Months Ended December 27, 2025 Compared to Three Months Ended December 28, 2024 | |||||||
| (millions) | |||||||
| SG&A expense category: | |||||||
| Marketing and advertising expenses | $ | 37.9 | |||||
| Compensation-related expenses | 20.6 | ||||||
| Rent and occupancy expenses | 19.5 | ||||||
| Staff-related expenses | 8.2 | ||||||
| Selling-related expenses | 7.4 | ||||||
| Depreciation and amortization expense | 5.2 | ||||||
| Shipping and handling costs | 4.7 | ||||||
| Other | 10.9 | ||||||
| Total increase in SG&A expenses | $ | 114.4 | |||||
Restructuring and Other Charges, Net. During the three-month periods ended December 27, 2025 and December 28, 2024, we recorded restructuring charges of $6.5 million and $1.6 million, respectively, primarily consisting of severance and benefits costs, as well as other charges of $0.8 million and $2.2 million, respectively, related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. In addition, during the three-month periods ended December 27, 2025 and December 28, 2024, we recorded other charges of $25.0 million and $9.1 million, respectively, in connection with our Next Generation Transformation project (refer to "Recent Developments" for additional discussion) and other income of $0.5 million and $0.7 million during the three-month periods ended December 27, 2025 and December 28, 2024, respectively, related to consideration received from Regent, L.P. in connection with our previously sold Club Monaco business. See Note 7 to the accompanying consolidated financial statements.
Operating Income. Operating income increased by $81.6 million, or 21.0%, to $471.3 million for the three months ended December 27, 2025, reflecting favorable foreign currency effects of $15.7 million. Our operating results during the three-month periods ended December 27, 2025 and December 28, 2024 were negatively impacted by net restructuring-related charges and certain other charges totaling $31.8 million and $12.2 million, respectively. Operating income as a percentage of net revenues was 19.6% for the three months ended December 27, 2025, reflecting a 140 basis point increase from the prior fiscal year period. The increase in operating income as a percentage of net revenues was primarily driven by the increase in our gross margin, as well as the decrease in SG&A expenses as a percentage of net revenues, partially offset by the higher net restructuring-related charges and certain other charges recorded during the three months ended December 27, 2025 as compared to the prior fiscal year period, all as previously discussed.
Operating income and margin for our segments, as well as a discussion of the changes in each reportable segment's operating margin from the comparable prior fiscal year period, are provided below:
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-03-04 | Alagoz Halide | Chief Product & Merch. Officer | Sell | -1,120 | $362.00 | -$405,440 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-05-22 10-K expected by 2026-05-29 (in 2 days)
- ~2026-08-06 10-Q expected by 2026-08-06 (in 78 days)
- ~2026-11-05 10-Q expected by 2026-11-05 (in 169 days)
- ~2027-02-04 10-Q expected by 2027-02-04 (in 260 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-02-05 10-Q Quarterly Report
- 2026-02-05 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-15 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-11-06 10-Q Quarterly Report
- 2025-11-06 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-07 10-Q Quarterly Report
- 2025-08-07 8-K Earnings Release; Financial Statements and Exhibits
- 2025-06-05 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2025-05-22 10-K Annual Report
- 2025-05-22 8-K Earnings Release; Financial Statements and Exhibits
- 2025-04-01 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-02-06 10-Q Quarterly Report
- 2025-02-06 8-K Earnings Release; Financial Statements and Exhibits
- 2025-01-21 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2024-11-07 10-Q Quarterly Report