Ralph Lauren sets cautious revenue growth for first half of FY26

Ralph Lauren (NYSE:RL) released early details of its Strategic Growth Plan ahead of its Investor Day conference on Tuesday, leaving investors disappointed as evidenced by the dip in shares ahead of the opening bell.

The company’s three-year financial outlook assumes annual revenue growth of mid-single digits and operating profit growth exceeding top-line growth by FY28.

For the first half of FY26, the company is more cautious with revenue expected to be up high-single to low-double digits, but up by low to mid-single digits for all of FY26.

Operating margin is expected to expand by ~40-60 basis points compared to the company’s prior guidance of a “modest increase.”

Finally, in FY26, gross margins are expected to be up slightly from the prior year with AUR growth, discount reductions and favorable geographic and channel mix offsetting the negative impacts from tariffs and noncotton material costs.

Additionally, Ralph Lauren (NYSE:RL) plans to continue returning at least $2B in excess free cash flow to shareholders through FY28 through dividends and share repurchases.

These targets do not include any potential impact from trade tariffs. While the company has significantly reduced its reliance on manufacturing in China, Vietnam, India, and Sri Lanka continue to account for a large share of its import volume, all of which remain subject to double-digit tariffs.

To obtain this growth objective, Ralph Lauren (NYSE:RL) intends to continue executing on its strategic growth drivers to elevate and energize the Ralph Lauren brand, continue to drive growth in the company’s stable of “iconic core products” and accelerate growth in high-potential, under-penetrated categories, and to scale its digitally-led strategy across the top 30 cities and begin developing the next 20 top cities to sustain long-term growth, including new target cities of Austin, Zurich, and Vienna.

“Our execution is anchored in the strength of our teams, balance sheet and operational capabilities and underpinned by a culture of excellence and agility. We plan to drive our momentum forward, reinforcing our leadership as an inclusive luxury lifestyle brand to unlock sustainable, long-term growth and value creation,” CEO Patrice Louvet said.

Shares are down 5% in premarket trading