Luxury Fashion Company Ralph Lauren Q3 Revenue Surges 11% On Robust Holiday Sales; Stock Jumps

Ralph Lauren Corp RL shares are surging Thursday after the third-quarter FY25 earnings result.

The luxury fashion company reported third-quarter sales growth of 11% year-on-year to $2.14 billion, beating the analyst consensus estimate of $2.01 billion.

Revenue growth was driven by better-than-expected holiday performance in all geographies. Global direct-to-consumer comparable store sales increased 12%.

Revenue in North America increased by 7% to $998 million, Europe jumped by 16% to $604 million, and Asia climbed by 14% to $507 million.

Gross profit was $1.5 billion, with a gross margin of 68.4%. Adjusted gross margin was also 68.4%, 200 basis points above the prior year.

Operating margin was 18.2%, and operating income for the quarter jumped 22.6% to $389.7 million. Adjusted operating margin was 18.7%, 230 basis points above the prior year.

Adjusted EPS of $4.82 beat the consensus estimate of $4.49.

The company held $2.14 billion in cash and equivalents as of December 28, 2024. Operating cash flow for nine months totaled $1.1 billion.

The company repurchased approximately $74 million of Class A Common Stock in the third quarter.

“Our teams around the world executed very well across geographies, channels, and categories this holiday to deliver on our long-term, Next Great Chapter: Accelerate strategy,” said Patrice Louvet, President and Chief Executive Officer. 

Outlook: Ralph Lauren now expects FY25 revenues to increase 6% – 7% (prior view 3% to 4%) on a constant currency basis.

The company expects FY25 operating margin to expand 120 – 160 basis points (prior view  110 – 130 basis points) in constant currency, driven by gross margin expansion 130 to 170 basis points (previous view 80 to 120 basis points)

For the fourth quarter, the company expects revenues to be up 6% – 7% on a constant currency basis. The company sees an operating margin expansion of 120 – 140 basis points in constant currency.

Ralph Lauren sees FY25 capital expenditures of $200 million to $250 million.

Price Action: RL shares are trading higher by 15.1% at $286.59 at the last check Thursday.

Photo via Shutterstock.