Ralph Lauren Tops Profit Estimates but Warns on Margin
By Reuters | 05 Feb, 2026

The cost of shifting supply chains away from high-tariff countries like China, India and Vietnam will lower margins for the US luxury retailer.

Ralph Lauren posted third-quarter results above Wall Street estimates on Thursday, but the luxury retailer's warning of margin pressure tied to U.S. tariffs sent its shares down nearly 8% in premarket trading.

The company expects fourth-quarter margins, its smallest revenue period, to shrink about 80 to 120 basis points due to higher tariff pressure and marketing spend.

Ralph Lauren, which sources its products from regions such as China, India and Vietnam, has relied on raising prices and reallocating production to regions with lower duty exposure to offset U.S. tariff pressures. 

"Ralph Lauren has been able to raise prices for some time now. There is some limit on how long it can continue to do this. I think (the company's) gross margins are near peak levels," Morningstar analyst David Swartz said. 

The company, which sells $148 striped linen shirts and $498 leather handbags, has reduced discounting, lifted full-price sales and refreshed core styles, boosting its appeal among wealthier and younger customers, including Gen Z.

Higher-income households are still splurging on luxury items, travel and restaurant meals, while lower- and middle-income consumers are strained by higher costs for rents and food as well as a softer job market.

The luxury retailer said revenue in the quarter ended December 27 rose 12% to $2.41 billion, above analysts' estimates of a 7.9% rise to $2.31 billion, according to data compiled by LSEG.

It earned $6.22 per share, excluding items, compared to expectations of $5.81, aided by a 220 basis points increase in margins and an 18% rise in average unit retail across its direct-to-consumer channel.

Ralph Lauren now expects fiscal 2026 revenue to rise in the high single to low double digits on a constant currency basis, up from its prior forecast of 5% to 7% growth.

The company raised its operating margin target to a range of 100 to 140 basis points in currency-adjusted terms, up from 60 to 80 basis points it forecast previously.

(Reporting by Savyata Mishra in Bengaluru; Editing by Tasim Zahid)