Ralph Lauren Raised Its Annual Revenue Forecast Following a Strong Quarter in China and the U.S.

Apparel manufacturer Ralph Lauren exceeded Wall Street’s expectations for revenue and profit in the first quarter of 2027, allowing it to raise its revenue forecast for the remainder of the year. The company noted continued strong demand for premium apparel in China and North America.

Ralph Lauren's revenue for the first quarter of fiscal year 2027 rose 14% to $1.96 billion, exceeding the LSEG consensus estimate of $1.87 billion, according to Reuters. Adjusted earnings per share came in at $4.59, compared with market expectations of $4.32.

Stronger-than-expected first-quarter results allowed the company to raise its outlook for the full 2027 fiscal year. Ralph Lauren now expects revenue growth of approximately 5–6% on a constant-currency basis. Previously, the company had forecast growth in the “mid-single-digit” range. The operating margin forecast has also been raised: Ralph Lauren expects it to widen by 60–80 basis points due to an increase in gross margin and improved cost efficiency.

The company noted that its forecast is based on a current assessment of the geopolitical and macroeconomic situation, including the impact of import duties, inflationary pressures, cautious consumer spending, disruptions in global supply chains, and exchange rate volatility. In addition, fiscal year 2027 will consist of 53 weeks instead of the standard 52. Ralph Lauren estimates that the additional week will contribute approximately 1 percentage point to annual revenue growth and provide modest support to the operating margin.

In the first quarter, the company posted its strongest growth in Asia: sales in the region rose 24% on a reported basis. In China, revenue increased by more than 40% compared to the same period last year. In North America, Ralph Lauren’s largest market, sales rose by 13%. In Europe, growth was 7%, though the pace slowed compared to the previous quarter.

Consumers continue to see the “unique value” of the company’s products across all key categories—from handbags to outerwear, Ralph Lauren CEO Patrice Louvet said during a conference call with investors, according to Reuters. However, a more favorable situation in the global luxury goods market would provide an additional growth driver for the company, he noted.

Ralph Lauren maintains a “fairly cautious” outlook on the European market due to ongoing macroeconomic uncertainty, according to Reuters, citing Chief Financial Officer Justin Piccich. Among the factors putting pressure on the market, he cited the war with Iran, a decline in tourist traffic, and the economic situation.

The CFO also stated that in the second half of fiscal year 2027, Ralph Lauren will accelerate the reduction of sales through discount channels and close some of its less profitable full-price stores. The company will continue to strengthen its focus on the premium segment.

Ralph Lauren shares rose 4% at the close of trading on August 6, and have gained 12% year-to-date.

Ralph Lauren continues to outperform many of its competitors thanks to its broader positioning as a lifestyle brand, according to GlobalData Managing Director Neil Saunders, as quoted by Reuters. He noted that the company’s product range spans a wide price spectrum—from polo shirts costing about $118 and leather bags for $498 to handmade Purple Label cashmere jackets priced at $5,295. According to Saunders, this strategy allows the brand to attract different groups of shoppers even as consumers become more cautious about discretionary spending and face rising prices from competitors in the luxury sector.

The analyst also noted that the popularity of Ralph Lauren's nostalgic style and the resurgence of interest in more formal clothing are helping the company attract a younger audience.

The average target price for Ralph Lauren shares is $440.67, which implies upside potential of approximately 11% relative to the closing price of $395.83 on August 6. According to MarketWatch, 18 analysts recommend buying Ralph Lauren stock, two advise holding the stock, and one recommends selling.

This article was AI-translated and verified by a human editor