Ralph Lauren's Q1 2026: Navigating Contradictions on Tariffs, Growth Strategy, and Consumer Sentiment

Tariff impact on gross margin, inventory management and growth strategy, consumer outlook and growth momentum, pricing power and promotional activity, and again tariff impact on gross margin are the key contradictions discussed in Ralph Lauren Corporation's latest 2026Q1 earnings call.



Strong First Quarter Performance:
- Ralph Lauren Corp delivered a strong start to fiscal 2026 with first-quarter results exceeding expectations, achieving double-digit top-line growth in Asia and Europe, and high single-digit growth in North America, leading to a global comps increase of 13%.
- The growth was driven by the company's growing brand desirability, diversified drivers of growth, and organizational agility.

Brand Engagement and E-commerce Growth:
- The company added 1.4 million new customers to its DTC businesses, a mid-single-digit increase from last year, driven by digital and full-price store customers.
- This was supported by strong brand activations, such as the Shanghai Re-See event, and increased social media followers by high single digits.

Product and Geographic Performance:
- Core product sales grew mid-teens, driven by strength in seasonal sweater polos, cotton cable-knit, and merino sweaters, with high-potential categories like women's apparel, outerwear, and handbags also performing strongly.
- Asia, specifically China, grew more than 30%, outpacing the competitive set, due to successful brand-building initiatives and strong consumer response.

Operational and Financial Efficiency:
- The first quarter saw an increase in adjusted gross margin by 160 basis points to 72.1%, driven by AUR growth and reduced discounting, despite higher labor and non-cotton material costs.
- The company's balance sheet and cash flow generation allowed for strategic investments, supporting long-term growth drivers and maintaining shareholder commitments.