01—Abstract
Summary
Summary of the 10-Q filed November 6, 2025. Cited figures are marked; the original filing is the authoritative source.
Ralph Lauren Corporation's Form 10-Q for the second quarter of Fiscal 2026 (three and six months ended September 27, 2025) shows net revenues of $2.011 billiona for the quarter, up 16.5% on a reported basis and 14.0% on a constant currency basis, versus $1.726 billion a year earlier.
Net income rose to $207.5 millionb from $147.9 million, and diluted EPS increased to $3.32 from $2.31. Operating income was $245.7 million, or 12.2% of net revenues, compared with $178.9 million, or 10.4%, a year earlier. Gross profit as a percentage of net revenues rose to 68.0% from 67.0%, and SG&A as a percentage of net revenues fell to 53.9% from 55.5%.
Restructuring and other charges, net, totaled $37.3 millionc, including $25.7 million tied to the Next Generation Transformation project. The effective tax rate was 14.6% versus 21.4% a year earlier. Balance sheet and cash flow shifted toward lower liquidity.
Net cash and short-term investments fell to $407.8 milliond from $940.4 million at fiscal year-end, as the company repurchased $435.9 million of stock (including tax withholding), spent $281.1 million on capital expenditures, and paid $106.0 million in dividends. Operating cash flow was $229.3 million for the six months, down from $374.5 million, driven by unfavorable working capital changes including higher inventories of $1.261 billion, up from $949.6 million at March 29, 2025. The company issued $500 million of 5.000% Senior Notes due 2032 in June 2025 and repaid $400 million of 3.750% Senior Notes in September 2025, leaving total debt of $1.238 billion.
Equity was $2.582 billion, and the Board's remaining share repurchase authorization was approximately $1.539 billion. The filing states there are no material changes to risk factors disclosed in the Fiscal 2025 10-K. The company's quarterly dividend was increased to $0.9125 per share from $0.825.
02—Key points
Key Highlights
- Net revenues rose 16.5% to $2.011 billion (14.0% in constant currency), with growth in all three reportable segments: North America, Europe, and Asia.
- Operating income increased 37.3% to $245.7 million, and operating margin expanded 180 basis points to 12.2%.
- Diluted EPS was $3.32 versus $2.31, supported by higher net income and lower weighted-average diluted shares of 62.4 million versus 63.9 million.
- Restructuring and other charges, net, totaled $37.3 million, including $25.7 million for the Next Generation Transformation project; after-tax, these charges reduced net income by $29.3 million, or $0.47 per diluted share.
- Net cash and short-term investments declined to $407.8 million from $940.4 million at fiscal year-end, as share repurchases of $435.9 million, capital expenditures of $281.1 million, and dividends of $106.0 million exceeded operating cash flow of $229.3 million.
- Inventories increased to $1.261 billion from $949.6 million at March 29, 2025, and operating cash flow fell to $229.3 million from $374.5 million for the six-month period.
- The quarterly dividend was raised to $0.9125 per share from $0.825, and about $1.539 billion remained under the Class A share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Ralph Lauren kept $0.10.
- Revenue$2.01B100.0%
- Cost of revenue−$644.3M32.0%
- Gross profit$1.37B68.0%
- Operating costs−$1.12B55.7%
- Operating income$245.7M12.2%
- Interest, other & tax−$38.2M1.9%
- Net income$207.5M10.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed November 6, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $2.01B$1.73B | +16.5% |
| Cost of Revenue | $644.30M$570.30M | +13.0% |
| Gross Profit | $1.37B$1.16B | +18.2% |
| SG&A Expenses | $1.08B$958.40M | +13.0% |
| Operating Expenses | $1.12B$976.80M | +14.7% |
| Operating Income | $245.70M$178.90M | +37.3% |
| Interest Expense | $15.90M$11.40M | +39.5% |
| Net Income | $207.50M$147.90M | +40.3% |
| EPS (Basic) | $3.39$2.36 | +43.6% |
| EPS (Diluted) | $3.32$2.31 | +43.7% |
| Shares Outstanding (Basic) | 61.10M62.60M | −2.4% |
| Shares Outstanding (Diluted) | 62.40M63.90M | −2.3% |
05—Questions
Frequently Asked Questions
Why did operating cash flow decline so sharply in the first half of Fiscal 2026?
Net cash provided by operating activities was $229.3 million for the six months ended September 27, 2025, down from $374.5 million a year earlier. The filing attributes the $145.2 million decrease to an unfavorable change in operating assets and liabilities, including an inventory increase driven by higher in-transit inventory and higher product and freight costs, timing of accounts payable payments, accrued payroll tied to a higher bonus payout, and higher income tax payments.
How did the company's liquidity position change during the first half?
Net cash and short-term investments fell to $407.8 million from $940.4 million at March 29, 2025. The company held $1.645 billion in cash, cash equivalents, and short-term investments, of which $1.123 billion was held by subsidiaries outside the U.S. Available credit includes a $750 million Global Credit Facility with no borrowings outstanding, and the company was contingently liable for $10.4 million of letters of credit.
What drove the improvement in operating margin?
Operating income as a percentage of net revenues rose to 12.2% from 10.4%. Gross profit as a percentage of net revenues increased to 68.0% from 67.0%, reflecting average unit retail growth, favorable product mix, favorable foreign currency effects, and lower cotton costs, partly offset by tariffs and non-cotton product costs. SG&A as a percentage of net revenues declined to 53.9% from 55.5%, largely due to operating leverage on higher revenues.
What is the company's debt position after the June 2025 notes offering?
Total long-term debt was $1.238 billion as of September 27, 2025, consisting of $750 million of 2.950% Senior Notes due 2030 and $500 million of 5.000% Senior Notes due 2032. The company repaid $400 million of 3.750% Senior Notes at maturity on September 15, 2025. The Senior Notes indenture contains covenants restricting certain liens, sale and leaseback transactions, and mergers, but no financial covenants.
What did the filing say about the Next Generation Transformation project?
The company is in the early stages of a large-scale, multi-year global project intended to transform how it operates and support its strategic pivot toward a global direct-to-consumer model. The project involves redesigning end-to-end processes and implementing technology systems globally. The company recorded other charges of $25.7 million in the quarter and $36.7 million for the six months ended September 27, 2025, and expects capital expenditures in Fiscal 2026 of approximately 4% to 5% of net revenues, partly related to this project.
06—Continue