RALPH LAUREN CORP

Ralph Lauren Corporation is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, handbags, footwear & accessories, fragrances, home, and hospitality. The company operates in the premium apparel and luxury goods industry, competing with an extensive range of designers and manufacturers both domestically and internationally, as well as companies selling product categories solely through the Internet. The filing notes that competition is very strong in the segments of the fashion and consumer product industries in which the company operates, and some competitors may be significantly larger and have substantially greater resources.

The company competes primarily on the basis of brand strength, timeless style, quality, value, and service. Primary competitors are not named individually, but the filing states that the company competes with an extensive range of designers and manufacturers of apparel, handbags, footwear, accessories, fragrances, and home products, both domestic and international, as well as companies selling product categories solely through the Internet. The company's competitive advantages include a portfolio of luxury lifestyle products spanning five categories, a well-diversified global multi-channel distribution network, an investment philosophy supported by a strong balance sheet, and an experienced management team. As of March 28, 2026, Mr. Ralph Lauren, or entities controlled by the Lauren family, held approximately 85% of the voting power of the company's outstanding common stock.

The company generates revenue through three primary channels: retail, wholesale, and licensing. The retail channel sells directly to consumers through 594 retail stores and 644 concession-based shop-within-shops, totaling approximately 4.1 million and 0.7 million square feet respectively, as well as through its own digital commerce sites and those of various third-party digital partners. Wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, with products available at approximately 9,500 doors worldwide. The licensing business generates royalty revenues through global licensing alliances, where licensees pay royalties based on sales of designated products. The company's business is diversified by geography (North America, Europe, and Asia) and channel of distribution, which allows it to maintain a dynamic balance as operating results do not depend solely on any single geographic area or channel.

The company's product portfolio spans five categories: Apparel, Handbags, Footwear & Accessories, Fragrances, Home, and Hospitality. Apparel products include extensive collections of men's, women's, and children's clothing sold under brand names including Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Sport, RLX Ralph Lauren, Polo Ralph Lauren Children, and Chaps. Handbags, Footwear & Accessories encompass men's, women's, and children's products including handbags, casual shoes, dress shoes, boots, sneakers, sandals, eyewear, watches, fashion and fine jewelry, scarves, hats, gloves, umbrellas, luggage, small leather goods, and belts. Fragrance offerings include women's products under Romance Collection and Ralph Collection, men's products under Ralph's Club, Purple Label, Polo Blue, Polo Red, Polo Green, Polo Black, Polo 67, Safari, Polo Sport, and Big Pony Men's brands, as well as Polo Earth, a gender-neutral fragrance made of 97% natural-origin ingredients. Home collections include bed and bath lines, furniture, fabric and wall coverings, lighting, dining, floor coverings, and giftware. Hospitality includes restaurants such as The Polo Bar in New York City, RL Restaurant in Chicago, Ralph's in Paris, The Bar at Ralph Lauren in Milan, Ralph's Bar in Chengdu, and Ralph's Coffee concept in various cities.

The company organizes its business into three reportable segments: North America, Europe, and Asia, plus other non-reportable segments. The North America segment represented approximately 41% of Fiscal 2026 net revenues and primarily consists of sales of Ralph Lauren branded products through retail and wholesale businesses in the U.S. and Canada. The Europe segment represented approximately 31% of Fiscal 2026 net revenues and primarily consists of sales through retail and wholesale businesses in Europe and emerging markets. The Asia segment represented approximately 26% of Fiscal 2026 net revenues and primarily consists of sales through retail and wholesale businesses in Asia, Australia, and New Zealand. Other non-reportable segments represented approximately 2% of Fiscal 2026 net revenues and primarily consist of Ralph Lauren and Chaps branded royalty revenues earned through global licensing alliances. Approximately 59% of Fiscal 2026 net revenues were earned outside of the U.S.

During Fiscal 2026, the company continued to advance key workstreams under the Next Generation Transformation project, a multi-year global project begun in Fiscal 2024, including completion of global design templates that support the core enterprise resource planning platform and related processes, automating certain distribution center operations, and progressing the global roll-out of merchandise allocation and long-range demand planning tools. In connection with the NGT project, the company incurred other charges of $83.9 million ¹ during Fiscal 2026. During the fourth quarter of Fiscal 2026, the company entered into settlement agreements with Visa, Inc., Mastercard Incorporated, and other named parties to resolve credit card interchange fee litigation matters, receiving $24.2 million ² of cash proceeds, net of legal fees, which were recognized as gains and then donated to The Ralph Lauren Corporate Foundation. In June 2025, the company completed a registered public debt offering and issued $500 million ³ aggregate principal amount of unsecured senior notes due June 15, 2032, bearing interest at a fixed rate of 5.000% ⁴. On May 15, 2025, the Board of Directors approved an expansion of the common stock repurchase program allowing repurchases of up to an additional $1.500 billion ⁵ of Class A common stock. On May 15, 2025, the Board of Directors approved an increase to the quarterly cash dividend from $0.825 ⁶ to $0.9125 ⁷ per share. During Fiscal 2026, the company repurchased $500.2 million ⁸ of Class A common stock pursuant to the repurchase program, and an additional $123.6 million ⁹ in shares were surrendered or withheld in satisfaction of withholding taxes. The company also paid dividends of $216.5 million ¹⁰ during Fiscal 2026.

In Fiscal 2026, the company reported net revenues of $8.115 billion ¹¹, net income of $941.1 million ¹², and net income per diluted share of $15.11 ¹³, compared to net revenues of $7.079 billion ¹⁴, net income of $742.9 million ¹⁵, and net income per diluted share of $11.61 ¹⁶ in Fiscal 2025. Net revenues increased 14.6% ¹⁷ on a reported basis and 11.8% ¹⁸ on a constant currency basis. Gross profit as a percentage of net revenues increased by 130 basis points to 69.9% ¹⁹ during Fiscal 2026. SG&A expenses as a percentage of net revenues decreased by 70 basis points to 53.9% ²⁰. Operating income increased by $247.1 million ²¹ to $1.179 billion ²². Net cash provided by operating activities was $1.154 billion ²³ during Fiscal 2026. The company ended Fiscal 2026 in a net cash and short-term investments position of $826.1 million ²⁴, compared to $940.4 million ²⁵ as of the end of Fiscal 2025.

The company's long-term growth strategy includes accelerating growth in high-potential, underdeveloped product categories comprised of women's apparel, outerwear, and handbags. The company is also focused on expanding its multi-channel distribution network, including within international markets such as China. The filing notes that the company's growth strategy includes continuing to scale and expand Online to Offline capabilities to enhance the consumer experience, including Online Appointment Bookings, Digital Clienteling, Endless Aisle, Buy Online-Ship from Store, Buy Online-Pick Up in Store, Same-Day Delivery, and Mobile Point of Sale and contactless payments. The company is also focused on expanding the reach of its global application across key markets worldwide and introduced Ask Ralph, a conversational artificial intelligence shopping experience.

The company's growth strategy also includes expanding its digital ecosystem across owned and partnered channels, both physical and digital. The digital ecosystem is comprised of directly-operated platforms, wholesale partner websites, third-party digital pure players, social commerce, and third-party gaming platforms. The company continues to optimize its customer experience globally and is focused on foundational needs ranging from platform enhancements to technology solutions to operational efficiencies. The company also sells products online through various third-party digital pure-play sites to reach a broader audience of consumers, including younger consumers, and has created digital shop-in-shop environments on many of these sites. Ralph Lauren brands are also represented in several gaming platforms, providing digital apparel offerings and virtual brand experiences that attract younger consumers.

The filing discusses margin trajectory primarily through the lens of recent performance and ongoing pressures. Gross profit as a percentage of net revenues increased by 130 basis points to 69.9% ²⁶ during Fiscal 2026, driven by average unit retail growth, product elevation, and favorable foreign currency effects, more than offsetting pressure from tariffs and non-cotton product costs. SG&A expenses as a percentage of net revenues decreased by 70 basis points to 53.9% ²⁷ during Fiscal 2026, largely attributable to operating leverage on higher net revenues despite higher compensation-related expenses, marketing investments, and variable selling expenses. The company notes that its gross margins could be adversely impacted if it were to apply a promotional strategy over a prolonged period in response to market pressures. The company also states that its profitability will be negatively impacted should tariffs increase significantly across its supply chain.

The company continues to advance the Next Generation Transformation project, a multi-year global project expected to continue over the next several years with implementation expected to occur in phases by region and/or capability. The project involves redesigning certain end-to-end processes and implementing a suite of technology systems on a global scale, expected to result in significant process improvements and the creation of synergies across core areas of operations, as well as financial planning and reporting. During Fiscal 2026, the company continued to advance key workstreams including completion of global design templates that support the core enterprise resource planning platform and related processes, automating certain distribution center operations, and progressing the global roll-out of merchandise allocation and long-range demand planning tools. The company also continues to enhance its solutions for advanced analytics, furthering its use of AI, both predictive and generative, and machine learning for areas such as planning, marketing, and personalization.

During Fiscal 2026, the company spent $408.1 million ²⁸ on capital expenditures, compared to $216.2 million ²⁹ during Fiscal 2025. Capital expenditures primarily related to the strategic purchase of real estate, as well as store openings and renovations, corporate office renovations, and enhancements to information technology systems. As of March 28, 2026, the remaining availability under the common stock repurchase program was approximately $1.352 billion ³⁰. On May 14, 2026, the Board of Directors approved an additional increase to the quarterly cash dividend from $0.9125 ³¹ to $1.00 ³² per share. The company paid dividends of $216.5 million ³³ during Fiscal 2026. The company also has a $750 million ³⁴ senior unsecured revolving credit facility through June 30, 2028, with remaining availability of approximately $740 million ³⁵ as of March 28, 2026, excluding outstanding letters of credit of $10 million ³⁶.

The filing identifies several structural headwinds and execution risks. The company notes that the global economy and retail industry are affected by numerous factors beyond its control, including changes in diplomatic and trade relationships, the imposition of new tariffs or other changes to international trade policies, inflationary pressures, high interest rates, significant foreign currency volatility, and military conflicts. In April 2025, the U.S. announced significant changes to its trade policies under the authority of the International Emergency Economic Powers Act, including widespread tariff increases on imported goods, and in February 2026, the U.S. Supreme Court invalidated the IEEPA tariffs previously applied to imports, after which a new round of tariffs was announced under an alternative U.S. Trade Act authority. The company states that as approximately 96% of its products are currently produced outside of the U.S., any material change in tariffs or other trade restrictions could result in a significant increase to product costs. The company also notes that many retailers continue to resort to promotional activity in an attempt to offset traffic declines and increase conversion, and that the department store sector has experienced consolidations, restructurings, bankruptcies, and other ownership changes.

The company also identifies risks related to its international operations and supply chain. The company states that the vast majority of its products (by dollar value) were produced outside of the U.S., primarily in Asia, Europe, and Latin America, with approximately 21% ³⁷ of products sourced from Vietnam, 16% ³⁸ from Cambodia, and 11% ³⁹ from India. The company notes that the entire apparel industry has faced supply chain challenges including reduced freight availability, port congestion, labor shortages, and rising wages, oil prices and other energy costs. The company also notes that ongoing military conflicts, including the conflicts involving Iran and other hostilities in the Middle East, have adversely impacted consumer sentiment and confidence, and it is not clear how long these conflicts will endure or if they will escalate further.

The company faces material risks from changes to U.S. trade policies, as approximately 96% of its products are produced outside the U.S., and any material change in tariffs could result in a significant increase to product costs. The company's three largest wholesale customers accounted for approximately 11% ⁴⁰ of total net revenues in Fiscal 2026 and approximately 29% ⁴¹ of total gross trade accounts receivable as of March 28, 2026, creating concentration risk from consolidations, bankruptcies, or financial instability in the department store sector. The company's substantial indebtedness of approximately $1.2 billion ⁴² as of March 28, 2026, comprised of outstanding unsecured senior notes, could restrict its ability to engage in additional capital-related transactions. The company is exposed to foreign currency fluctuations from both transactional and translational perspectives, primarily involving the Euro, Japanese Yen, Chinese Renminbi, South Korean Won, Australian Dollar, British Pound Sterling, Swiss Franc, and Canadian Dollar. The company also faces risks related to its reliance on independent third-party manufacturers, with approximately 300 ⁴³ different suppliers worldwide and no one supplier providing more than 5% of total products by dollar value during Fiscal 2026.

Management's message emphasizes the company's long-term growth strategy for Fiscal 2026 to Fiscal 2028, introduced during the September 2025 Investor Day, with the objective of delivering sustainable, profitable growth and long-term value creation for shareholders. The filing states that management believes the company's core strengths, including a portfolio of luxury lifestyle products, a well-diversified global multi-channel distribution network, an investment philosophy supported by a strong balance sheet, and an experienced management team, will allow it to effectively execute its long-term growth strategy despite various risks and uncertainties associated with the current global economic environment. The strategic priorities emphasized include accelerating growth in high-potential product categories (women's apparel, outerwear, and handbags), expanding the multi-channel distribution network including in international markets such as China, and continuing to enhance the digital ecosystem and omni-channel capabilities.