Ralph Lauren (RL) has raised its fiscal 2027 revenue and margin forecasts after reporting a strong second quarter, with sales growing 10%. The company's Chief Financial Officer, Justin Picicci, highlighted that Asia led the growth with a 28% increase, driven by a 35% surge in China. North America and Europe saw more modest gains of 6% and 3%, respectively.
The company now expects full-year constant-currency revenue growth of 6% to 7%, up from its previous forecast of 5% to 6%. While growth is expected to slow in the second half due to tougher comparisons and planned reductions in lower-priced sales, the outlook remains positive. Asia's forecast has been increased to low-teens growth, while Europe's outlook has been adjusted downward to low-single-digit growth due to consumer traffic pressure and macroeconomic volatility.
Adjusted gross margin expanded by 220 basis points to 70.2%, supported by higher average unit retail prices, favorable geographic mix, and lower product costs. Operating margin increased by 140 basis points to 15.5%, even as marketing spending rose. The company added 1.7 million new customers to its direct-to-consumer businesses during the quarter.
For the holiday season, Ralph Lauren expects constant-currency revenue growth centered around 3% to 4% and operating margin expansion of 50 to 70 basis points. The company has completed its fiscal 2027 buyback plans, repurchasing $500 million of shares, and ended the quarter with $1.8 billion in cash and short-term investments.