Q4 2025 Ralph Lauren Corp Earnings Call

Operator: Ladies and gentlemen, thank you for standing by.

Ladies and gentlemen, thank you for standing by and welcome to the Ralph Lauren fourth quarter fiscal year 2025 earnings call. At this time all participants are in a listen only mode. Later, we will conduct a question answer session and instructions on how to ask.

Operator: Welcome to the Ralph Lauren fourth quarter fiscal year 2025 earnings call. At this time, all participants are in a listen only mode.

Operator: Later, we will conduct a question and answer session. Instructions on how to ask a question will be given at that time. If you should require assistance during a call, please press star then zero. As a reminder, this conference is being recorded.

My question will be given at that time.

If you should require assistance starting to call. Please press Star then zero.

As a reminder, this conference is being recorded.

Corinna Vandegans: I would now like to turn over the conference to our host, Ms. Corinna Vandegans. Please go ahead.

I would now like to turn over the conference or a house miscarry enough and again. Please go ahead.

Corinna Vandegans: Good morning, and thank you for joining Ralph Lauren's fourth quarter and year end fiscal 2025 conference call. With me today are Patrice Louvet, the company's President and Chief Executive Officer, and Justin Piccici, Chief Financial Officer.

Ralph Lauren: Good morning, and thank you for joining Ralph Lauren's fourth quarter and year end fiscal 2025 conference call.

Patrice: With me today are Patrice <unk>, the company's President and Chief Executive Officer, and Justin to Chi Chi Chief Financial Officer.

Corinna Vandegans: After prepared remarks, we will open up the call for your questions, which we ask that you limit to one per caller. During today's call, our financial performance will be discussed on a constant currency-adjusted basis. Our reported results, including foreign currency, can be found in this morning's press release.

After prepared remarks, we will open up the call for your questions, which we ask that you limit to one per caller.

During today's call are financial performance will be discussed on a constant currency adjusted basis, our reported results, including foreign currency can be found in this morning's press release, we will also be making some forward looking statements within the meaning of the federal securities laws.

Corinna Vandegans: We will also be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. Our expectations contain many risks and uncertainties. Principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings.

<unk>, our financial outlook forward looking statements are not guarantees and our actual results may differ materially from those expressed or implied in the forward looking statements.

Patrice: Our expectations contain many risks and uncertainties.

Patrice: All risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings.

Corinna Vandegans: To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results, you should refer to this morning's earnings release and to our SEC filings that can be found on our Investor Relations website.

Ralph Lauren: To find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results you should refer to this morning's earnings release and to our SEC filings that can be found on our investor Relations website.

Patrice Louvet: With that, I will turn the call over to Patrice. Thank you, Corey. Good morning, everyone, and thank you for joining today's call. As we close out this third and final year of our Next Great Chapter Accelerate Plan, we are proud to have delivered strongly on both our strategic and financial commitments. Our achievements this fiscal year embodied so much of what Ralph Lauren stands for as one of the most beloved, iconic brands in the world. As Ralph would say, it's never been just about a tie or a polo shirt or a sweater. It's about the values that are so authentic to us.

Patrice: With that I will turn the call over to Patrice.

Patrice: Thank you Corey.

Patrice: Good morning, everyone and thank you for joining today's call.

Patrice: As we close out this third and final year of our next great chapter accelerate plan.

Patrice: We are proud to have delivered strongly on both our strategic and financial commitments.

Patrice: Our achievements this fiscal year and body so much of what Ralph Lauren stands for I was one of the most beloved iconic brands in the world.

Patrice: As Ralph would say, it's never been just about a Thai oil.

Patrice: For polo shirt or sweater.

Patrice: It's about the values that are so authentic to us.

Patrice Louvet: Quality, effortless style, time well spent together with family and friends. stepping into our dreams. This year's performance clearly demonstrates The growing desirability of our brand, which remains our most powerful asset and is resonating with consumers around the world. The breadth and appeal of our lifestyle portfolio of products with an emphasis on elegant, timeless style and authenticity. and our proven key city ecosystem model, enabling consumers to engage and transact with the world of Ralph Lauren like never before. These diverse drivers of growth, spanning geographies, channels, and product categories, have enabled us to successfully execute our plans while navigating global volatility over the past several years.

Patrice: Quality Africa.

Patrice: Effortless style.

Speaker Change: Hi, I'm, well spent together with family and friends steps.

Speaker Change: Stepping into our dreams.

Speaker Change: This year's performance clearly demonstrates the growing desirability of our brand, which remains our most powerful asset and is resonating with consumers around the world.

Speaker Change: The breadth and appeal of our lifestyle portfolio of products with an emphasis on elegant timeless style and authenticity.

Speaker Change: And our proven key city ecosystem model, enabling consumers to engage and transact with the world of Ralph Lauren like never before.

Speaker Change: These diverse drivers of growth spanning geographies channels and product categories have enabled us to successfully execute our plans well navigating global volatility over the past several years.

Patrice Louvet: and they will continue to drive our growth into the future. We reported fourth quarter results that exceeded our expectations on both the top and bottom line. This strong performance was broad-based, driven by every geography and channel. For the full year, we delivered 8% top line growth, including record revenues for our international businesses, Europe and Asia, which together now comprise the majority of total company revenues. and Adjusted Operating Profits grew 24%. This exceeded the expectations we laid out last May. even as we chose to invest in our long-term strategic priorities and returns to our shareholders.

Speaker Change: It will continue to drive our growth into the future.

Speaker Change: We reported fourth quarter results that exceeded our expectations on both the top and bottom line.

Patrice: This strong performance was broad based driven by every geography and channel.

Patrice: For the full year.

Patrice: We delivered 8% topline growth.

Patrice: <unk> record revenues for our international businesses, Europe, and Asia, which together now comprise the majority of total company revenues.

Patrice: And adjusted operating profits grew 24%.

Patrice: This exceeded the expectations, we laid out last night.

Patrice: Even as we chose to invest in our long term strategic priorities and returns to our shareholders.

Patrice Louvet: As we turn to Fiscal 26. The global operating environment has become more challenged with uncertainty around tariffs and broader consumer behavior. Despite macro pressures, we are well positioned, having fundamentally transformed our business and built a more agile organization over the past several years. This strong foundation is built on a timeless brand that consumers know and trust. a portfolio comprised of 70% core products that perform across economic cycles. A Culture of Operating Discipline with an Ability to Flex Expenses a diverse and agile supply chain, and importantly, a strong balance sheet. For our teams, this is a time to stay on offense while remaining prudent and agile in how we allocate our resources.

Patrice: As we turn to fiscal 'twenty six the global.

Patrice: Operating environment has become more challenged with uncertainty around tariffs and broader consumer behavior.

Patrice: Despite macro pressures, we are well positioned having fundamentally transformed our business and built a more agile organization over the past several years.

Patrice: This strong foundation is built on a timeless brand that consumers know and trust.

Patrice: A portfolio comprised of 70% core products that perform across economic cycles.

Patrice: The culture of operating discipline with an ability to flex expenses.

Patrice: A diverse and agile supply chain.

Patrice: And importantly, a strong balance sheet.

Patrice: For our teams. This is a time to stay on offense, while remaining prudent and agile in how we allocate our resources.

Patrice Louvet: We are pursuing opportunities that will strengthen our business for the long term, including further investments in our brands to increase desirability and market share, solidifying our presence in key markets and new technology, data, AI and analytics to better serve our consumers and drive greater efficiencies in our business.

Patrice: We are pursuing opportunities that will strengthen our business for the long term <unk>.

Patrice: Including further investments in our brands to increase desirability on market share.

Patrice: Solidifying our presence in key markets and new technology data AI and analytics to better serve our consumers and drive greater efficiencies in our business.

Patrice Louvet: Now, let me take you through a few highlights from the quarter where we drove continued progress across our three long-term strategic pillars. As a reminder, these include, first, elevate and energize our lifestyle brand. Second, drive the core and expand for more. And third, win in key cities with our consumer ecosystem. first on our efforts to elevate and energize our lifestyle brand. Our brand uniquely transcends generations, genders, and geographies to our authentic values and lifestyle approach. We sit at the intersection of culture, and our marketing investments reflect this, spanning fashion, celebrity, sports, gaming, music, and more.

Patrice: Now let me take you through a few highlights from the quarter.

Patrice: Where are we drove continued progress across our three long term strategic pillars.

Patrice: As a reminder, these include first elevate and energize our lifestyle brand sorry.

Patrice: Second drive that core and expand for more.

Patrice: The third win in key cities with our consumer ecosystem.

Patrice: First on our efforts to elevate and energize our lifestyle brands.

Patrice: Brian uniquely transcends generations genders, and geographies to our authentic values and lifestyle approach.

Patrice: We sit at the intersection of culture, and our marketing investments reflect this.

Patrice: Spanning fashion celebrity sports gaming music and more.

Patrice Louvet: From our unforgettable Olympics and Summer of Sports to our show-stopping fashion events in the Hamptons, Shanghai, Milan, and Paris. We create authentic, emotionally connected moments to engage and inspire consumers around the world. Highlights from the fourth quarter included, first, our global Spring 25 Hamptons campaign, capturing the understated luxury and timeless style of Ralph's cherished beach retreats. We took the concept around the world from our latest Roblox digital experience, Polo Beach, to our Ralph's Hamptons house in Dubai. all culminating in our first ever fashion event in Shanghai in early April. Second, we continue to celebrate the resilience and joy of sports with our fifth annual sponsorship of the Australian Open, our official countdown to the Milano Cortina 2026 Winter Olympics, and our 2025 Major League Baseball World Tour Tokyo Series.

Patrice: From our Unforgettable Olympics in summer of sports to our show stopping fashion events in the Hamptons, Shanghai, Milan and Paris.

Patrice: We create authentic emotionally connected moments to engage and inspire consumers around the world.

Patrice: Highlights from the fourth quarter included first our global spring twenty-five Hamptons campaign.

Patrice: Capturing the understated luxury and timeless style of Ralphs cherished Beach retreats, we took that concept around the world from our latest roadblocks digital experience Polo Beach to our Ralphs Hamptons House in Dubai.

Patrice: All culminating in our first ever fashion event in Shanghai in early April.

Patrice: Second we continued to celebrate the resilience enjoy a sports with our fifth annual sponsorship of the Australian open.

Patrice: Our official countdown to the Milano Cortina 'twenty 'twenty six Winter Olympics, and our 2025 Major League Baseball World Tour Tokyo series.

Patrice Louvet: These sports activations generated over 23 billion impressions in the quarter. Finally, our collections were featured on celebrities and friends of the brand from the street to the red carpet, including Selena Gomez at the Oscars, Hiroyuki Sanada winning his Golden Globe and Purple Label, Kacey Musgraves at the Grammys, Kendall Jenner in our iconic pony caps, Gigi Hadid carrying her Polo ID bag, and Billie Eilish on her global album tour. Together, these activities are driving strong, sustainable growth in new customer acquisition and engagement. Over the past year, we added a record 5.9 million new consumers to our DTC businesses, a high single digit increase to last year.

Patrice: These sports Activations generated over 23 billion impressions in the quarter.

Patrice: Finally, our collections were featured on celebrities and friends of the brand from the street to the Red carpet, including Selena Gomez at the Oscars Hiroyuki Sanada, winning his Golden Globe and Purple label Casey most grades at the Grammys, Kendall Jenner and our iconic pony caps Gigi Hadid carry.

Patrice: Being a polo Iga bag and Billy Islands on her global album Tour.

Patrice: Together these activities are driving strong sustainable growth in new customer acquisition and engagement.

Patrice: Over the past year, we added a record $5 9 million new consumers to our DTC businesses, a high single digit increase to last year.

Patrice Louvet: This continued to be led by younger, female and less price sensitive cohorts. And we increased our social media followers by low double digits, surpassing 65 million, led by Line, Threads, WeChat, Douyin, and TikTok.

Patrice: This continued to be led by younger female and less price sensitive cohorts.

Patrice: And we increased our social media followers by low double digits, surpassing 65 million led by line threads Wechat, Dorian and take talk.

Patrice Louvet: We plan to build on this rolling thunder of brand activities with powerful new engagements into fiscal year 26 and beyond.

Patrice: We plan to build on this rolling Thunder and brand activities with powerful new engagements into fiscal year, 'twenty six and beyond.

Patrice Louvet: Moving next to our second key initiative, Drive the Core and Expand for More. Ralph and our design teams continue to create beautiful, exceptionally styled products for our consumers' modern lifestyle. all while staying true to the quality and sophistication that define our iconic brand. As the industry faces a number of inflationary cost pressures, from freight and cotton in recent years to tariffs, we remain laser focused on our consumers and how we deliver value to them. We have a proven multi-year track record of AUR growth, all while continuing to strengthen our value and luxury perception. Our AUR growth has been driven by a combination of Investments to elevate both our brand and product quality.

Patrice: Moving next to our second key initiative drive the core and expand for more.

Patrice: Ralph and our design teams continue to create beautiful exceptionally styled products for our consumers modern lifestyles.

Patrice: All while staying true to the quality and sophistication that define our iconic brand.

Patrice: As the industry faces a number of inflationary cost pressures from freight and cotton in recent years to tariffs.

Patrice: We remain laser focused on our consumers and how we deliver value to them.

Patrice: We have a proven multi year track record of AUR growth.

Patrice: All while continuing to strengthen our value and luxury perceptions.

Patrice: Our AUR growth has been driven by a combination of it.

Patrice: Investments to elevate both our brand and product quality.

Patrice Louvet: Geographic Channel and Category Mix. Discount Reductions, and Select Pricing Actions. These multiple drivers give us confidence as we continue to manage through cost headwinds with strong pricing power. This starts with our core products, which represent the majority of our business. Our broad portfolio of core products remains an important differentiator in our industry, even more so through times of uncertainty, as consumers turn to brands and styles they know and trust. Core product sales grew low double digits in the quarter as we successfully transitioned from a strong holiday into spring. Growth was led by cable knit sweaters, outerwear, such as our quilted jackets, Bice Wing Windbreaker and Midway Down Gorham Jacket, and hats.

Patrice: Geographic channel and category mix.

Patrice: Discount reductions and select pricing actions.

Patrice: These multiple drivers give us confidence as we continue to manage through cost headwinds with strong pricing power.

Patrice: This starts with our core products, which represent the majority of our business are.

Patrice: Our broad portfolio of core products remains an important differentiator in our industry.

Patrice: Even more so through times of uncertainty as consumers turn to brands and styles, They know and trust.

Patrice: Core product sales grew low double digits in the quarter as we successfully transition from a strong holiday into spring.

Patrice: Growth was led by cable knit sweater.

Patrice: Outerwear, such as our quilted jackets, Bi-swing, windbreaker, and midway down Gorham jacket and hats.

Patrice Louvet: In addition, our newer linen offerings continue to gain momentum, up double digits to last year. Our high-potential categories, including women's apparel, auto wear, and handbags, together increased high teens. Women's and outerwear highlights this quarter included sweaters, including our iconic polo bear and flag sweaters, shirts from Oxfords to linen and poplin, dresses, and our sold out Western-inspired fringe suede jacket with metaporte. Handbag sales, once again, outpaced our expectations, growing double digits in the fourth quarter and full year. This was supported by continued strength in our sophisticated Polo ID collection, as well as the spring launch of our newest foundational handbag family, Polo Play.

Patrice: In addition, our newer Linden offerings continue to gain momentum of double digits to last year.

Patrice: Our high potential categories, including women's apparel, outerwear and handbags together increased high teens.

Patrice: Women's and outerwear highlights this quarter included sweaters, including our iconic polo bear and flagged sweaters shirts from Oxford to linen and poplin dresses and our sold out western inspired fringe suede jacket with net a porter.

Patrice: Handbag sales once again outpaced our expectations growing double digits in the fourth quarter and full year.

Patrice: This was supported by continued strength in our sophisticated polo I D collection as well as the spring launch of our newest foundational handbag family Polo play.

Patrice Louvet: Featuring a vibrant rainbow of colors in pebbled Italian leather and cotton canvas, Polo Play is off to a strong start.

Patrice: Featuring a vibrant rainbow of colors in Pebbled, Italian leather and cotton canvas total play is off to a strong start.

Patrice Louvet: Turning to our third key initiative, win in key cities with our consumer ecosystem. We continue to develop our key city ecosystems across every region this year. comprised of our own and partner stores, digital flagships, and selective wholesale presence. These ecosystems support our brand elevation and growth as we invite consumers to step into the cinematic world of Ralph Lauren. Within DTC, which comprises two-thirds of our business, we drove accelerated comp growth this quarter. comps increased 13% above our expectations with double digit growth in both digital and brick and mortar stores. Globally, we opened 83 new own and partner stores this year focused on our top cities, largely in Asia.

Patrice: Turning to our third key initiative went in key cities with our consumer ecosystem.

Patrice: We continue to develop our key city ecosystems across every region. This year.

Patrice: Comprised of our owned and partner stores digital flagships and selective wholesale presence. These ecosystem support our brand elevation and growth as we invite consumers to step into the cinematic world of Ralph Lauren.

Patrice: Within DTC, which comprises two thirds of our business, we drove accelerated comp growth this quarter.

Patrice: Comps increased 13%.

Patrice: Above our expectations with double digit growth in both digital and brick and mortar stores.

Patrice: Globally, we opened 83, new owned and partner stores. This year focused on our top cities largely in Asia.

Patrice Louvet: Recent store opening highlights included Our Polo Store opening on Jackson Street in San Francisco, marking our first return to the city since the pandemic. New stores in Beijing's Joy City and Seasons Place shopping centers. and our newest boutique in Cannes and candy shop concept at Brand Cross in London, reinforcing our presence in the France and UK market. All three regions outperformed our expectations again in the fourth quarter following our strong Q3 holiday results. We were particularly encouraged by double-digit growth in both Europe and Asia. including sustained growth in the UK and more than 20% growth in China on top of a strong double-digit compare last year.

Patrice: Recent store opening highlights included.

Patrice: Our polo store opening on Jackson Street in San Francisco, marking our first return to the city since the pandemic.

Patrice: New stores in Beijing Joy City in seasons play shopping centers.

Patrice: And our newest boutique in Cannes and Candy shop concept at brand Cross in London, reinforcing our presence in the France and U K markets.

Patrice: All three regions outperformed our expectations again in the fourth quarter.

Patrice: Following our strong Q3 holiday results.

Patrice: We were particularly encouraged by double digit growth in both Europe and Asia.

Patrice: Including sustained growth in the U K and more than 20% growth in China on top of a strong double digit compare last year.

Patrice Louvet: And North America maintain healthy trends of mid-single digits on ongoing strength in DTC and planned stabilization in wholesale.

Patrice: North America maintained healthy trends up mid single digits on ongoing strength in DTC and planned stabilization in wholesale.

Patrice Louvet: And finally, touching on our enablers. Our business continued to be supported by our five key enablers. Some of the highlights over the past year included successfully integrating predictive buying across 25% of our international DTC businesses, allowing us to drive greater inventory efficiencies and better service consumer demand. Celebrating the opening of the Ralph Lauren Center for Cancer Prevention at USC Norris, the first on the West Coast and third in the U.S. Funded by the Ralph Lauren Corporate Foundation, these centers are part of an ongoing commitment to cancer care in underserved communities. And who could forget Ralph becoming the first fashion designer ever to receive the U.S.

Patrice: And finally touching on our enablers.

Patrice: Our business continued to be supported by our five key enablers.

Patrice: Some of the highlights over the past year included successfully integrating predictive buying across 25% of our international DTC businesses, allowing us to drive greater inventory efficiencies and better service consumer demand.

Patrice: Celebrating the opening of the Ralph Lauren sensor for cancer prevention at USC Norris the first on the West Coast and third in the U S.

Patrice: Funded by the Ralph Lauren Corporate Foundation.

Patrice: These centers are part of an ongoing commitment to cancer care and underserved communities.

Patrice: And who could forget Ralph becoming the first fashion designer ever to receive the U S presidential medal of freedom, recognizing his extraordinary contributions to culture and society.

Patrice Louvet: Presidential Medal of Freedom, recognizing his extraordinary contributions to culture and society.

Patrice Louvet: In closing, Ralph and I are proud of our team's dedication, agility and excellent execution in delivering on our commitment. Our strong Fiscal 25 performance reinforces our confidence in our powerful brand, diversified growth drivers, and Fortress balance sheet to support future growth and mitigate near-term economic headwinds. As we look ahead to Fiscal 26, we are staying prudent and flexible in what clearly continues to be a complex and dynamic global operating environment. Even within this context, we remain on offense, with a focus on driving our brand momentum and consistently executing on our strategic priorities.

Patrice: In closing.

Speaker Change: Ralph and I are proud of our team's dedication agility and excellent execution and delivering on our commitments.

Patrice: Our strong fiscal twenty-five performance reinforces our confidence and our powerful brand diversified growth drivers and fortress balance sheet to support future growth and mitigate near term economic headwinds.

Patrice: As we look ahead to fiscal 'twenty six we are staying prudent and flexible in what clearly continues to be a complex and dynamic global operating environment.

Patrice: Even within this context, we remain on offense with a focus on driving our brand momentum and consistently executing on our strategic priorities and with that I'll hand, it over to Justin and I'll join him at the end to answer your questions.

Justin Piccici: And with that, I'll hand it over to Justin, and I'll join him at the end to answer your question. Thanks, Patrice, and good morning, everyone. Fiscal 25 was another successful year for Ralph Lauren. We delivered on the financial commitments we laid out last May and made meaningful progress against our long-term strategic priorities. We closed out the year with fourth quarter results that exceeded our expectations across revenues and gross and operating margins. All three regions contributed to both revenue growth and operating margin expansion. In addition to driving excitement and desirability for our brand and products around the world, we were especially proud to reinforce our strong quality of sales, consistent with our long-term elevation strategy.

Justin: Thanks, Patrice and good morning, everyone.

Justin: 25 was another successful year for Ralph Lauren we delivered on the financial commitments, we laid out last may and made meaningful progress against our long term strategic priorities.

Patrice: We closed out the year with fourth quarter results that exceeded our expectations across revenues and gross and operating margins.

Patrice: All three regions contributed to both revenue growth and operating margin expansion.

Patrice: In addition to driving excitement and desirability for our brand and products around the world, we were especially proud to reinforce our strong quality of sales consistent with our long term elevation strategy.

Justin Piccici: At the same time, our strong balance sheet and cash flow generation enabled us to continue investing behind our key strategic growth drivers while maintaining our commitments to shareholders. We generated $1 billion of free cash flow this year, enabling us to return $625 million to shareholders through dividends and repurchases. and our Board of Directors recently authorized a 10% increase in our annual dividend and an additional $1.5 billion in share repurchases to support future returns. These results are strong proof points of our multiple drivers of growth as we enter the new fiscal year in the midst of a more uncertain global consumer backdrop.

Patrice: At the same time, our strong balance sheet and cash flow generation enabled us to continue investing behind our key strategic growth drivers, while maintaining our commitments to shareholders.

Patrice: We generated 1 billion of free cash flow this year, enabling us to return $625 million to shareholders through dividends and repurchases.

Patrice: And our board of Directors recently authorized a 10% increase in our annual dividend and an additional $1 5 billion in share repurchases to support future returns.

Patrice: These results are strong proof points of our multiple drivers of growth as we enter the new fiscal year in the midst of a more uncertain global consumer backdrop.

Justin Piccici: Let me walk you through our financial highlights from the fourth quarter, which, as a reminder, are provided on a constant currency basis. Total company fourth quarter revenue growth of 10% was above our 6-7% outlook, driven by better performance in both our direct-to-consumer and wholesale channels. This year's later Easter shifted about one point of sales growth from the fourth quarter into the first quarter of next fiscal year. By region, Europe led our performance with sales increasing 16% followed by Asia up 13% and North America up 6%. Total company comp sales increased 13%, led by an acceleration in our own digital business and ongoing momentum in our brick and mortar channels.

Patrice: Let me walk you through our financial highlights from the fourth quarter, which as a reminder are provided on a constant currency basis.

Patrice: Total company fourth quarter revenue growth of 10% was above our 6% to 7% outlook driven by better performance in both our direct to consumer and wholesale channels.

Patrice: This year's later Easter shifted about one point of sales growth from the fourth quarter into the first quarter of next fiscal year.

Patrice: By region Europe led our performance with sales, increasing 16% followed by Asia up, 13% and North America up 6%.

Patrice: Total company comp sales increased 13% led by an acceleration in our own digital business and ongoing momentum in our brick and mortar channels.

Justin Piccici: Total digital ecosystem sales, including owned sites and wholesale digital accounts, grew high teens, led by Europe. Total Company Adjusted Gross Margin expanded 260 basis points to 69.2%. This increase was driven by AUR growth, favorable mix shift towards our full price in international businesses, and lower cotton costs, more than offsetting higher non cotton material costs. AUR increased 9% in the fourth quarter, supported by strong full price selling trends, reduced discounting, and favorable channel and geographic mix. We expect similar high single-digit AUR growth in the first quarter of fiscal 26, reflecting our ongoing brand elevation strategy. Adjusted operating expenses grew 11% to 58.1% of sales, up 30 basis points to last year.

Patrice: Total digital ecosystem sales, including owned sites and wholesale digital accounts grew high teens led by Europe.

Patrice: Total company adjusted gross margin expanded 260 basis points to 69, 2%.

Patrice: This increase was driven by <unk>.

Patrice: Our growth.

Patrice: Favorable mix shift towards our full price and international businesses.

Patrice: And lower cotton cost.

Patrice: More than offsetting higher non cotton material cost.

Patrice: You are increased 9% in the fourth quarter supported by strong full price selling trends reduced discounting and favorable channel and geographic mix.

Patrice: We expect similar high single digit AUR growth in the first quarter of fiscal 'twenty, six reflecting our ongoing brand elevation strategy.

Patrice: Adjusted operating expenses grew 11% to 58, 1% of sales up 30 basis points to last year.

Justin Piccici: The increase was primarily driven by higher compensation and variable selling expenses. Fourth quarter marketing investments increased 9% to 6.5% of sales. Full-year marketing grew 11% to 7.3% of sales, ahead of our long-term strategic target of 7%, and we expect a similar level of marketing as a percentage of sales in fiscal 26. Fourth Quarter Adjusted Operating Margin expanded 240 basis points to 11.1%, and Operating Profit increased 40%, both ahead of plan.

Patrice: The increase was primarily driven by higher compensation and variable selling expenses.

Patrice: Fourth quarter marketing investments increased 9% to six 5% of sales.

Patrice: Full year marketing grew 11% to 7.3% of sales ahead of our long term strategic target of 7% and we expect a similar level of marketing as a percentage of sales in fiscal 'twenty six.

Patrice: Fourth quarter, adjusted operating margin expanded 240 basis points to 11, 1% and operating profit increased 40%. Both ahead of plan.

Justin Piccici: Moving to Segment Performance, and starting with North America. Fourth quarter revenue increased 6%, exceeding our outlook due to stronger than expected sales in both our DTC and wholesale channels. And the region delivered its highest fourth quarter adjusted operating margin since we began our elevation journey more than eight years ago. in North America retail, fourth quarter comps increased nine percent with strong growth in both our Ralph Lauren and outlet stores. Digital comps increased 8%, improving sequentially on recent interventions. And we drove another strong quarter in our digital wholesale business with sellout up low teens. Total North America Wholesale Revenue increased 2%.

Patrice: Moving to segment performance and starting with North America.

Patrice: Fourth quarter revenue increased 6% exceeding our outlook due to stronger than expected sales in both our DTC and wholesale channels.

Patrice: And the region delivered its highest fourth quarter adjusted operating margin since we began our elevation journey more than eight years ago.

Patrice: In North America retail fourth quarter comps increased 9% with strong growth in both our Ralph Lauren and outlet stores.

Patrice: Digital comps increased 8% improving sequentially on a recent interventions.

Patrice: And we drove another strong quarter in our digital wholesale business with sell out up low teens.

Patrice: Total North America wholesale revenue increased 2%.

Justin Piccici: Our Wholesale AUR increased low single digits on well-positioned inventories in the channel. Full price sellout was once again in line with sell in this quarter after adjusting for the Easter shift, supported by a strong product offering and growth in core replenishment. While we are encouraged by our recent stabilization in the channel, we maintain our cautious outlook into Fiscal 26 on potential macro challenges in the broader North America market. We completed the exit of 60 department store doors this fiscal year. and we plan to exit about 90 doors in fiscal 26 with approximately half of these related to Hudson's Bay.

Patrice: Our wholesale AUR increase low single digits on well positioned inventories in the channel.

Patrice: Full price sellout was once again in line with sell in this quarter after adjusting for the Easter shift supported by a strong product offering and growth in core replenishment.

Patrice: While we are encouraged by our recent stabilization in the channel we maintain our cautious outlook into fiscal 'twenty six on potential macro challenges in the broader north American market.

Patrice: We completed the exit of 60 Department store doors this fiscal year.

Patrice: And we plan to exit about 90 doors in fiscal 'twenty six with approximately half of these related to Hudson's Bay.

Justin Piccici: While the ongoing exits are not material to our financial results, we continue to proactively evaluate and refine our brand presence on a door-by-door basis.

Patrice: While the ongoing exits are not material to our financial results, we continue to proactively evaluate and refine our brand presence on a door by door basis move.

Justin Piccici: Moving to Europe. Fourth quarter revenue increased 16% driven by double digit growth in both our retail and wholesale channels. All of our key markets delivered growth in the quarter and for the full year, led by Germany, France, and Italy. Sales grew in the UK for the second consecutive quarter, following several years of inflationary pressures, reflecting strong brand momentum and continued improvement in our underlying trends. Europe retail comps increased 18% to last year, led by our digital channels, with continued strong momentum in our brick-and-mortar businesses. Our digital ecosystem, including owned and wholesale digital accounts, grew more than 20% on top of a solid compare last year.

Patrice: Moving to Europe.

Patrice: Fourth quarter revenue increased 16% driven by double digit growth in both our retail and wholesale channels.

Patrice: All of our key markets delivered growth in the quarter and for the full year led by Germany, France and Italy.

Patrice: Sales grew in the U K for the second consecutive quarter. Following several years of inflationary pressures, reflecting strong brand momentum and continued improvement in our underlying trends.

Patrice: Europe retail comps increased 18% to last year led by our digital channels with continued strong momentum in our brick and mortar businesses.

Patrice: Our digital ecosystem, including owned and wholesale digital accounts grew more than 20% on top of a solid compare last year.

Justin Piccici: Europe Wholesale increased 14% supported by strong reorder trends and the previously discussed timing shift of receipts from the second quarter to the back half of the year. Adjusting for the shifts, wholesale would have increased roughly mid-single digits to last year, in line with our underlying trend of low to mid-single digit growth in the channel.

Patrice: Europe wholesale increased 14% supported by strong reorder trends and the previously discussed timing shift of receipts from the second quarter to the back half of the year.

Patrice: Adjusting for the shifts wholesale would've increased roughly mid single digits to last year in line with our underlying trend of low to mid single digit growth in the channel.

Justin Piccici: turning to Asia. Fourth quarter revenue increased 13% with all markets contributing to growth for both the quarter and the full year. Retail comps were up 15%, with strong growth in both digital and brick-and-mortar stores, fueled by our impactful brand activations across the region. By market, our performance was led by China, which grew more than 20% to last year on continued comp growth, high-quality new customer recruitment, and key marketing moments, including our Lunar New Year activations. Sales in Japan increased mid-teen to last year, driven by strong full-price selling and reduced discounting, along with continued tailwinds from foreign tourism.

Patrice: Turning to Asia.

Patrice: Fourth quarter revenue increased 13% with all markets contributing to growth for both the quarter and the full year.

Patrice: Retail comps were up 15% with strong growth in both digital and brick and mortar stores fueled by our impactful brand activations across the region by market. Our performance was led by China, which grew more than 20% to last year on continued comp growth hi.

Patrice: High quality new customer recruitment.

Patrice: And key marketing moments, including our lunar new year Activations.

Patrice: Sales in Japan increased mid teens to last year, driven by strong full price selling and reduce discounting along with continued tailwind from foreign tourism.

Justin Piccici: moving to the balance sheet. We ended the year with $2.1 billion in cash and short-term investments and $1.1 billion in total debt. Net inventory was up 5% to last year, reflecting increased global demand for our products and the timing shift of Easter into the first quarter of Fiscal 26. Inventory levels are well positioned relative to our outlook, and we continue to manage inventories with discipline in line with consumer demand. Strategic and thoughtful balance sheet management has been a key enabler for Ralph Lauren. Our strong balance sheet has allowed us to weather significant industry volatility, make the best long-term decisions to protect and enhance our brand, and fuel our strategic investments while also returning cash to shareholders.

Patrice: Moving to the balance sheet.

Patrice: We ended the year with $2 1 billion in cash and short term investments and $1 1 billion in total debt.

Patrice: Net inventory was up 5% to last year, reflecting increased global demand for our products and the timing shift of Easter into the first quarter of fiscal 'twenty six.

Patrice: Inventory levels are well positioned relative to our outlook and we continue to manage inventories with discipline in line with consumer demand.

Patrice: T J and thoughtful balance sheet management has been a key enabler for Ralph Lauren.

Patrice: Our strong balance sheet has allowed us to weather significant industry volatility.

Patrice: The best long term decisions to protect and enhance our brand.

Patrice: And fuel our strategic investments, while also returning cash to shareholders.

Justin Piccici: In the current environment, we are focused on leaning into market opportunities and investing for long-term growth. This includes investing in key city marketing activations, upgrading our store experiences, and pursuing very selective real estate opportunities as we continue to drive DTC-led growth. For example, in April, we acquired our Global Polo flagship location in Soho, Manhattan, one of New York's premier shopping destinations.

Patrice: In the current environment, we are focused on leaning into market opportunities and investing for long term growth.

Patrice: This includes investing in key city marketing Activations upgrading our store experiences and pursuing very selective real estate opportunities as we continue to drive DTC led growth.

Patrice: For example in April we acquired our global Polo flagship location in Soho Manhattan, one of New York's Premier shopping destinations.

Justin Piccici: looking ahead. Our outlook remains based on our best assessment of the current operating environment and consumer behavior. This includes tariffs, inflationary pressures, and other consumer spending related headwinds. Supply Chain Disruptions, and Foreign Currency Fluctuations, among other considerations. Given the high level of volatility in the current context, we consider our full year outlook to be preliminary based on the information available today and subject to change as trade dynamics and other macro factors continue to evolve. For Fiscal 26, we expect constant currency revenues to increase low single digits driven by our growth in our Asia and Europe businesses.

Patrice: Looking ahead.

Patrice: Our outlook remains based on our best assessment of the current operating environment and consumer behavior.

Patrice: This includes tariffs inflationary pressures and other consumer spending related headwinds.

Patrice: Supply chain disruptions and foreign currency fluctuations among other considerations.

Patrice: Given the high level of volatility in the current context, we consider our full year outlook to be preliminary based on the information available today and subject to change as trade dynamics and other macro factors continue to evolve.

Patrice: For fiscal 'twenty, six we expect constant currency revenues to increase low single digits, driven by our growth in our Asia and Europe businesses.

Justin Piccici: We expect this year's performance to be heavily weighted to the first half of the year, notably Q1, with first half revenues up roughly mid-single digit. While we have not seen a change in our underlying business trends from Q4 into Q1 to date, we believe it is prudent to take a more cautious view on the second half of the year, based on a number of macro indicators, notably the impact of tariffs. Weakening consumer confidence in the U.S. and increased risk of a broader consumer pullback and a more uncertain global operating environment in general. We currently expect operating margin to expand modestly in constant currency, largely driven by SG&A leverage.

Patrice: We expect this year's performance to be heavily weighted to the first half of the year, notably Q1 with first half revenues are properly mid single digits.

Patrice: While we have not seen a change in our underlying business trends from Q4 into Q1 to date. We believe it is prudent to take a more cautious view on the second half of the year based on a number of macro indicators, notably the impact of tariffs.

Patrice: Weakening consumer confidence in the U S and increased risk of a broader consumer pullback.

Patrice: In a more uncertain global operating environment in general.

Patrice: We currently expect operating margin to expand modestly in constant currency largely driven by SG&A leverage.

Justin Piccici: Based on our current view of the tariff landscape, we expect gross margins to be roughly flat to last year, with AUR growth, discount reductions, and favorable product, DTC, and international mix, offsetting negative impacts from tariffs and non-cotton material costs. We are assessing additional pricing actions for Fall 25 and Spring 26 to mitigate the potential impact of evolving tariffs. This is on top of the proactive pricing we already planned for Fall 25 in North America and Asia. While tariffs will primarily impact our gross margins beginning in the second half of the year, we have a proven toolkit to manage cost inflation headwinds.

Patrice: Based on our current view of the tariff landscape, we expect gross margins to be roughly flat to last year with AUR growth discount reductions and favorable product DTC and international mix offsetting negative impacts from tariffs and non cotton material costs.

Patrice: We are assessing additional pricing actions for fall 'twenty, five and spring 'twenty six to mitigate the potential impact of evolving Paris.

Patrice: This is on top of the proactive pricing, we already planned for fall 'twenty five in North America and Asia.

Patrice: While tariffs will primarily impact our gross margins beginning in the second half of the year, we have a proven toolkit to manage cost inflation headwinds. This includes.

Justin Piccici: This includes, first, significant supply chain diversification. We work with our many key suppliers worldwide to flex volumes based on quality and cost. No single country accounts for more than 20% of our production volumes, with most countries representing a single-digit percentage, including our China production for the U.S. Second, partnering with our suppliers to drive other efficiencies in our cost of goods and broader supply chain operations. And third, taking selective pricing actions and strategic discount reductions with a goal of continuing to deliver the best value proposition for our consumers. While tariffs are expected to be a headwind, we are better positioned than ever before with greater agility to mitigate related pressures with a more elevated, less price sensitive customer base.

Patrice: Our first significant supply chain diversification.

Patrice: We work with our many key suppliers worldwide to flex volume is based on quality and cost.

Patrice: No single country accounts for more than 20% of our production volumes with most countries, representing a single digit percentage, including our China production for the U S.

Patrice: Second partnering with our suppliers to drive other efficiencies in our cost of goods and broader supply chain operations.

Patrice: And third taking selective pricing actions and strategic discount reductions with a goal of continuing to deliver the best value proposition for our consumers.

Patrice: While tariffs are expected to be a headwind, we are better positioned than ever before with greater agility to mitigate related pressures with a more elevated less price sensitive customer base.

Justin Piccici: international business that now represents 57% of our total revenues up from 45% pre pandemic Gross Margins that are 700 basis points higher than our pre-pandemic levels and Discipline Inventory Management and the Ability to Flex Expenses. We expect freight to be roughly neutral in fiscal 26 based on our recent ocean contract renewals. Foreign currency is expected to have a relatively minimal impact on revenue as well as on gross and operating margins in fiscal 26. for the first quarter, which is marginally impacted by tariffs. We expect constant currency revenues to increase approximately high single digits. We expect first quarter operating margin to expand approximately 150 to 200 basis points in constant currency, driven primarily by gross margin expansion, as well as by modest operating expense leverage.

Patrice: International business that now represents 57% of our total revenues up from 45% pre pandemic.

Patrice: Gross margins that are 700 basis points higher than our pre pandemic levels.

Patrice: And disciplined inventory management and the ability to flex expenses.

Patrice: We expect freight to be roughly neutral in fiscal 'twenty six based on our recent ocean contract renewals.

Patrice: Foreign currency is expected to have a relatively minimal impact on revenue as well as on gross and operating margins in fiscal 'twenty six.

Patrice: For the first quarter, which is marginally impacted by tariffs.

Patrice: We expect constant currency revenues to increase approximately high single digits.

Patrice: We expect first quarter operating margin to expand approximately 150 to 200 basis points in constant currency, driven primarily by gross margin expansion as well as by modest operating expense leverage.

Justin Piccici: Foreign currency is expected to have a roughly neutral impact on revenue and on gross and operating margins in the first quarter. We expect our first quarter tax rate to be in the range of 20 to 21 percent and a full year fiscal 26 tax rate of approximately 20 to 22 percent. Capital expenditures are expected in the range of approximately 4 to 5 percent of sales in line with our long term outlook. This includes our recent print street store acquisition and ongoing investments in our key city ecosystems, technology and AI, and our multi-year next generation transformation project, which we kicked off in fiscal 24.

Patrice: Foreign currency is expected to have a roughly neutral impact on revenue and on a gross and operating margins in the first quarter.

Patrice: We expect our first quarter tax rate to be in the range of 20% to 21% and our full year fiscal 'twenty six tax rate of approximately 20% to 22% capital expenditures are expected in the range of approximately 4% to 5% of sales in line with our long term outlook.

Patrice: This includes our recent Prince Street store acquisition and ongoing investments in our key city ecosystems technology and AI.

Patrice: And our multi year next generation transformation project, which we kicked off in fiscal 'twenty four.

Patrice Louvet: In Closing We are proud of our team's execution in this third and final year of our Next Great Chapter Accelerate plan, guided by Ralph's enduring vision of inspiring people everywhere to step into their dream of a better life. We will continue to navigate the evolving global environment with agility and resolve and remain acutely focused on delivering on our strategic priorities.

Patrice: In closing we.

Patrice: We are proud of our team's execution in this third and final year of our next great chapter accelerate plan.

Ralph Lauren: Added by Ralph's enduring vision of inspiring people everywhere to step into their dream of a better life.

Ralph Lauren: We will continue to navigate the evolving global environment with agility and resolve and remain acutely focused on delivering on our strategic priorities.

Operator: With that, let's open up the call for your questions. Ladies and gentlemen, if you wish to ask a question, please press star then 1 on your touchtone phone. You will hear a tone indicating you have been placed into queue. You may remove yourself from the queue at any time by pressing star 2. If you are using a speakerphone, please pick up the handset before pressing the numbers. We ask that you limit yourself to one question per caller. Once again, if you have a question, please press star 1 at this time. One moment please for the first question.

Ralph Lauren: With that let's open up the call for your questions.

Speaker Change: Ladies and gentlemen, if you wish to ask a question. Please press Star then one on your Touchtone phone.

Ralph Lauren: You were here at town, indicating you had been placed into care you may remove yourself from the queue at any time by pressing star tail. After you gave us on a speakerphone. Please pick up the handset before pressing the numbers, we ask that you limit yourself to one question per caller.

Ralph Lauren: Once again, if you have a question. Please press star one at this time one moment. Please for the first question.

Matthew Boss: The first question comes from Matt Boss with J.P. Morgan. Thanks and congrats on another great quarter. So Patrice, given the continued strong performance in a choppy environment, how are you thinking about the health of your consumer across regions in today's more uncertain backdrop? Or what changes, if any, are you making to your strategy? And then, Justin, maybe could you just help bridge the delta between high single digit revenue growth in the first quarter relative to low single digits for the full year?

Matt Boss: The first question comes from Matt Boss with JP Morgan.

Matt Boss: Thanks, and congrats on another great quarter.

Speaker Change: Thank you Matt.

Speaker Change: So patrice given the continued strong performance in a choppy environment. How are you thinking about the health of your consumer across regions and today is more uncertain backdrop or or what changes. If any are you making to your strategy and then Justin maybe could you just help bridge the delta between high single digit revenue.

Justin: Growth in the first quarter relative to low single digits for the full year or what are you embedding in the back half by region relative to performance that you're seeing today.

Patrice Louvet: Or what are you embedding in the back half by region relative to performance that you're seeing Good morning, Matt, and thanks for your question. So I'm going to start with the last part of your question and then address the consumer and then we'll turn it over to Justin. So first of all, the last few years have really demonstrated that our strategy can deliver through very different types of environments. We have strong brand momentum with significant potential to continue growing across key markets and to continue to take market share. And we have proven resilience in our business model supported by strong execution by our teams across our key cities around the world, our agile and diversified supply chain, and our powerful balance.

Justin: Good morning, and thanks for your question.

Justin: I'm going to start with the last part of your question and then address the consumer and then we'll turn it over to Justin So first of all the last few years. It really demonstrated that our strategy can deliver very different types of environments.

Justin: We have strong brand momentum with significant potential to continue growing across key markets and to continue to take market share and we have proven resilience in our business model supported by strong execution by our teams across our key cities around the world are agile and diversified supply chain and our.

Justin: Powerful balance sheet.

Patrice Louvet: So I would say the backbone of our strategy is as relevant today as it was a few years ago and will remain broadly unchanged.

Justin: So I would say the backbone of our strategy is as relevant today as it was a few years ago and will remain broadly unchanged. Obviously, we'll be sharing more updates when we get together later this year for Investor day.

Patrice Louvet: Obviously, we'll be sharing more updates when we get together later this year for Invest Today. Right, but the keynote tenets are... Continuing to invest in our brand and continuing to focus on driving desirability and value perception across generations. We are continuing to leverage the breadth of our lifestyle portfolio, leaning into products that consumers know and trust, from our iconic sweaters to Oxford shirts to pony caps. And then we're deepening and expanding our key city ecosystem, go-to-market model. with our brand really resonating around the world. That's one of the things Justin and I are most excited about, about our recent performance is the breadth of our performance across the markets wherever you go.

Justin: Alright, but the kina tenants are continuing to invest in our brand and continuing to focus on driving desirability and value perception across generations.

Justin: We're continuing to leverage the breadth of our lifestyle portfolio.

Justin: Leaning into products that consumers know and trust from our iconic sweaters to Oxford shirts to pony caps.

Justin: And then we're deepening and expanding our key city ecosystem go to market model.

Justin: With our brand really resonating around the world. That's one of the things Justin and I are most excited about our recent performance is the breadth of our performance across the markets wherever you wherever you go with Brian is resonating from Milan in Munich, all the way to Shanghai, Melbourne and closer to home here in New York.

Patrice Louvet: The brand is resonating from Milan and Munich all the way to Shanghai, Melbourne and closer to home here in New York.

Patrice Louvet: Now, we're keenly aware of the uncertainty that defines the current environment. One element of our culture and capabilities that we really reinforced in recent years is this muscle of agility. But as you've heard on this call, it's not about playing defense for us, it's about leaning into opportunity. Now specifically on your question regarding the consumer and what we're seeing, so it's clear that the consumer in general is pressured by the geopolitical and economic environment and we see that in Consumer Sentiment Surveys in the U.S., in China, in the U.K. When it comes to our core consumer, which, as you know, are more elevated consumers.

Justin: Now, we're keenly aware of the uncertainty that defines the current environment.

Justin: One element of our culture and capabilities that we really reinforced in recent years is this muscle of agility.

Justin: But as you've heard on this call it's not about playing defense for us it's about leaning into opportunities.

Justin: Now specifically on your question regarding the consumer and what we're seeing.

Justin: So it's clear that the consumer in general is pressured by the geopolitical and economic environment and we see that in.

Justin: Consumer sentiment surveys in the U S and China and the U K.

Justin: When it comes to our core consumer, which as you know a more elevated consumers.

Patrice Louvet: They have remained resilient, as you heard from Justin's prepared remarks. We have not seen a change in the underlying trajectory of any of our three regions, APAC, EMEA or North America. And our full price sales continue to grow at a healthy pace. Now at the same time, we're in touch with reality, and like all of you, we continue to closely monitor the map. So to sum it up, we are. Still encouraged by what we're seeing so far a few weeks into our new fiscal year. We are clearly staying on offense.

Justin: They have remained resilient as you heard from Justin's prepared remarks, we have not seen a change in the underlying trajectory of any of our three regions APAC, India, All North America.

Justin: In our full price sales continued to grow at a healthy pace.

Justin: Now at the same time, we're in touch with reality.

Justin: All of you we continue to closely monitor the macros.

Justin: So to sum it up we are.

Justin: Still encouraged about what we're seeing so far a few weeks into our new fiscal year.

Justin: We're clearly staying on offense.

Patrice Louvet: while remaining prudent and agile in how we allocate our resources and execute in this environment.

Justin: While remaining prudent and agile in how we allocate our resources.

Justin: And execute in this environment I'll turn it over to Justin to answer your question on the fiscal year planning, Yeah, Hey, Matt.

Justin Piccici: I'll turn it over to Justin to answer your question on the fiscal year planning. Yeah. Hey, Matt. So as Patrice mentioned, we're still seeing really nice momentum in our business across regions. And for our full year outlook, you saw us guide pretty consistent growth trends for international, led by Asia, followed by Europe. Now, North America is where we took a bit more of a cautious approach to our preliminary guide, given the macro environment and the impact of cost inflation on consumer spending, and notably for that second half of the year. So now we're focusing on our current trends, right?

Speaker Change: <unk> mentioned that we're still seeing really nice momentum in our business across regions and FERC. Our full year outlook, you saw Scott pretty consistent growth trends for international led by Asia, Although by Europe, and North America is where we took a bit more of a cautious approach to our preliminary guide given the macro environment and the impact of cost inflation on consumer spending.

Justin: Notably for that second half of the year. So now we're hoping that our current trends right. The Q1 guide still reflects side.

Unknown Executive: The Q1 guide still reflects , John Greenewald, Denga Gupta, Fielzer Let's great. Thank you.

Justin: Positive growth right.

Justin: Our call on our part of the map, but it's really consumer sentiment and the expectation that.

Justin: Customers have to deal with significant pricing across the board as a result of cost inflation. It's our best estimate at this time of those two.

Speaker Change: <unk> for the second half and the rest doesn't materialize and Lasalle opportunity to chase into and capture that higher demand like we saw a super high.

Operator: Next question, please. Thank you.

Speaker Change: Thank you next question please.

Jay Sole: The next question comes from Jay Sole with UBS. Great, thank you so much.

Jay Sole: The next question comes from Jay sole with UBS.

Jay Sole: Great. Thank you so much Justin we understand that the tariff situation is still unfolding in your outlook is subject to change based on some of these moving targets, but how should we think about your pricing strategy for fiscal 'twenty, especially in the context of all the AUR growth you've already delivered over the past eight years.

Justin Piccici: Justin, we understand that the tariff situation is still unfolding and your outlook is subject to change based on, you know, some of these moving targets, but how should we think about your pricing strategy for fiscal 26, especially in the context of all the AUR growth you've already delivered over the past eight years? Thanks, Jay. You know, our company's well-positioned to manage a variety of cost headworks. As Patrice just talked, we've been on a multi-year strategic journey to elevate our brand, our products, our customer environments and experiences. And one notable output of that, of course, has been AUR, which has grown every quarter for the past eight years.

Jay Sole: Okay. Thanks Jay.

Speaker Change: He is well positioned to manage through a variety of cost headwinds Patrice just path, we've been on a multiyear strategic journey to elevate our brand our products our customer environment that experiences.

Jay Sole: One notable output of that of course has been AUR, which has grown every quarter for the past eight years. It is up pretty meaningfully over that same period of time another important output.

Justin Piccici: It is up pretty meaningfully over that same period of time. Another important output has been our luxury and value perceptions, which have also grown progressively over time.

Jay Sole: But our luxury and value perception.

Jay Sole: Also grown progressively over time.

Justin Piccici: So for Fall 25, we proactively plan for select pricing actions in North America and a certain number of other global markets like Japan, where, as we all know, we're offsetting several years of structural FX headwinds. So with the recent tariff announcement, What we're doing is we're assessing and we're activating our various proven levers to offset the related impact. And these levers include the first... As you know, we've already significantly diversified our global supply chain over the past eight, nine years. And as the cost equation shifts, we'll continue to reallocate production to markets with lower overall landing costs, while at the same time maintaining our high levels of quality.

Jay Sole: So the first one five we proactively plan the select pricing actions in North America, and certain of our other global markets like Japan, whereas as we all know we're offsetting several years of structural FX headwinds so with the recent tariff announcements what we're doing is we're assessing and reactivating our our various proven levers.

Jay Sole: To offset the related impact and these levers include the first.

Jay Sole: As you know we've already significantly diversified our global supply chain of the past eight nine years and add the cost equation shifts will continue to reallocate production to markets with lower overall landed costs, while at the same time, maintaining our high level well today as a result of our diversification no single country is over 20% of our.

Justin Piccici: You know, today, as a result of our diversification, no single country is over 20% of our production exposure. And our China to the US production is a single-digit percentage. Second, we're working together with our strategic supply chain partners to drive greater cost efficiencies. Third, continuing to drive overall cost savings across the value chain and increasingly leveraging AI analytics to enable even more efficient inventory planning. And fourth, assessing selective pricing actions and further reductions in discounting, both in North America and in our other regions, with a continued focus on providing a compelling value proposition to our customers.

Jay Sole: Exposure in our China to the U S production is a single digit percentage.

Jay Sole: Working together with our strategic supply chain partners to drive greater cost efficiencies.

Jay Sole: Third continuing to drive overall cost savings across the value chain and increasingly leveraging AI analytics to enable even more efficient inventory planning and for assessing selective pricing actions and further reductions in discount both in North America and in our other regions with a continued focus on providing a compelling.

Jay Sole: <unk> proposition to our consumers so specifically Jay to your question, we expect AUR to Q1 to trend consistently with the quarter. We just reported so up roughly high single digits, the last year and for balance of the year. We're staying flexible we have a range of established levers we can activate that.

Justin Piccici: So, specifically, Jay, to your question, we took AUR for Q1 to trim consistently with the quarter we just reported, so up roughly five single digits to last year. And for balance of year, we're staying flexible. We have a range of established levers we can activate as needed. Thank you.

Operator: Next question. Thank you.

Jay Sole: Thank you next question.

Michael Binetti: The next question comes from Michael Binetti with Evercore ISI. Thanks for all the details today. Congrats on a great quarter. Justin, could you just double-click a little bit on the comment that you made earlier on pricing? It sounds like you had some that you do have included in the year that I think you phrased it as proactive, but it sounds like you haven't included pricing in full for the tariffs that are on the table right now for the back half of the year. Maybe just some commentary there. And then if you could just maybe offer a little bit more color to one of your answers earlier on revenues by the geographies in first quarter to understand.

Speaker Change: Thank you. The next question comes from Michael Binetti with Evercore ISI.

Michael Binetti: Thanks for all the detail today, congrats on a great quarter.

Speaker Change: Justin could you just.

Speaker Change: Double click a little bit on the comment that you made earlier on pricing. It sounds like you had some that you've that you do have included in the year that I think.

Speaker Change: You phrased it is proactive.

Speaker Change: But it sounds like your patent included pricing in full for the tariffs that are on the table right now for the back half of the year, maybe just some commentary there and then.

Speaker Change: If you could just.

Speaker Change: Maybe offer a little bit more color to one of your answers earlier on revenues by the geographies in the first quarter to understand it sounds like the momentum is continuing across all three.

Justin Piccici: It sounds like momentum is continuing across all three where we need to be mindful of any shifting or one-offs as we think about building up the model by the geographies and segments for the first quarter. Thank you. Sure. So on pricing, just to take a step back for a moment, right? So we're on a long-term brand elevation journey, and you've seen our AUR grow along with our value perception, and there are a number of durable drivers behind that AUR growth, right? There's product elevation and mix, there's channel and geo favorable mix, there's discount reductions, and there's targeted pricing action, right?

Speaker Change: We need to be mindful of any shifting or one offs as we think about building up the model by the geographies and segments for the first quarter. Thank you.

Speaker Change: Sure. So on pricing just to take a step back for a moment right. So we're on a long term brand elevation and you've seen our AUR grow along with our value per section and there are a number of durable drivers behind the AUR growth right if product elevation and mix of channel.

Speaker Change: And geo favorable mix and discount reductions and theres targeted pricing right.

Justin Piccici: And as we discussed, we expect that high single-digit AUR growth in Q1 consists of past quarters. But tariffs and any related mitigation actions have a minimal impact on that quarter. So while the situation is fluid and still evolving, we're confident we have the flexibility to do what we need to do to offset any potential cost headwinds. You saw us do it during cotton inflation. You saw us do it in freight cost peak. You saw us do it for structural FX weakness. And as you would expect, we're approaching this by looking at our full toolkit to mitigate any potential cost headwinds, right?

Speaker Change: Right now as we discussed we expect a high single digit AUR growth in coupons consist with past quarters.

Speaker Change: But tariffs related mitigation actions have a minimal impact on that quarter. So while the situation is fluid and still evolving we're confident we have the flexibility to do what we need to do to offset any potential cost headwinds you saw us do it during cotton inflation you saw savings in freight cost you saw us do infrastructural FX weakness.

Speaker Change: And as you would expect we're approaching this by looking at our whole toolkit to mitigate any potential cost headwinds right.

Justin Piccici: And one of those tools is price, but there are other tools as I just laid out. Now, we did proactively take price, as I mentioned, for fall 25 a few months ago. And so we're focused on reassessing additional opportunities as the situation evolves. And really, the number one foundational focus is ensuring the customer is seeing value in our elevation work across product, marketing, experience.

Speaker Change: One of those tools is price, but there are other tools as I've just laid out now we did proactively take price as I mentioned for all 25 of you.

Speaker Change: Once ago, and so we're focused on reassessing additional opportunities as the situation evolves and it really the number one foundational focus is ensuring the customers see value in our elevation across product marketing experience and environments.

Speaker Change: And revenues by geography, so the revenues by geography, I talked a little bit about this but before we think about the shape of the year overall, we're guiding sort of that low single digit growth I would say led by Asia at that sort of high single digit Mark followed by Europe in that mid single digit growth range and then.

Unknown Executive: , Matthew Boruchow, Robert Drbul, Rakesh Patel, Jay Sole, Ralph Lauren Corp, Justin Piccicci, Next question, please. Thank you.

Speaker Change: North America with that caution in the second half overall down low to mid single digits.

Speaker Change: Next question please.

Dana Telsey: The next question comes from Dana Telsey with Telsey Advisory Group. All right, Dana, thank you. Good morning. So listen, on marketing, you know, that we've taken marketing up significantly over the past few years, used to be less than 4% of revenue, we're at record high 7.3% of revenue. This past fiscal year, we expect to continue at that level in the fiscal year that we just started. What that enables is a portfolio of marketing activations that enables us to talk to many different generations, ranging from activities around the Hampton Show to our Major League Baseball activation in Tokyo to our Roblox Polo Beach activity.

Dana Telsey: Thank you. The next question comes from Dana Telsey with Telsey Advisory group.

Dana Telsey: Good morning, everyone.

Speaker Change: Given the as we think about last year, how are you thinking about marketing spend and Patrice the potential categories of women outerwear and handbags did very well our pie clue how are those being plan going forward and what are you seeing that and just lastly, the real estate ownership with Soho was very interesting what is the real estate plans.

Speaker Change: For this upcoming fiscal year and does any other ownership.

Speaker Change: <unk> thought about thank you.

Dana Telsey: All right Dana. Thank you good morning, so listen on marketing you know that we've taken marketing up significantly over the past few years used to be less than 4% of revenue were a record high of seven 3% of revenue. This past fiscal year, we expect to continue at that level in the fiscal year that we just start.

Speaker Change: <unk>.

Speaker Change: What that enables is a portfolio of marketing activations that enables us to talk to many different generations ranging from activities around the Hampton show.

Speaker Change: Who are our major league baseball activation in.

Speaker Change: Tokyo, two roadblocks polo Beach activity, so expect that to continue and then as we've talked in prior meetings you know over time, we would like to continue to expand our marketing investments. While also continuing to expand the overall profitability of the company so more to come on that when we get together for Investor Day in September.

Justin Piccici: So expect that to continue. And then as we've talked in prior meetings, you know, over time, we would like to continue to expand our marketing investments, while also continuing to expand the overall profitability of the company. So more to come on that when we get together for Investor Day in September. I'm glad you noticed our high potential categories have done particularly well. We're really pleased with the work that our teams are doing on women's apparel, outerwear across all brands, and handbags. We have very nice momentum across all three. We are building scale across these businesses.

Speaker Change: Timber.

Speaker Change: I'm glad you noticed our hypothetical categories have done, particularly well, we're really pleased with the work that our teams are doing on women's apparel outerwear across all brands and handbags, we have very nice momentum across all three we are building scale across these businesses I feel very good about the capabilities.

Patrice Louvet: I feel very good about the capabilities that we have in place. These markets, as you know, to use Matt's favorite terminology of TAM, Total Addressable Market, have significant potential for us. And so you're going to see us continue to build on the core, because that's the foundation of this company, and the core did well again this quarter, but continue to drive accelerated performance across all three of these different businesses where the consumer is clearly responding across generations.

Speaker Change: We have in place these markets as you know to use mats favorite terminology of Tam total addressable market.

Speaker Change: Significant potential for us and so youre going to see us continue to build on the core because that's the foundation of this company and the court did well again this quarter, but continued to drive accelerated performance across all three of these different businesses, where the consumer is clearly responding across the cross generational.

Patrice Louvet: When it comes to real estate. Perfect. So then, you know, when you think about our capital allocation principles that we've talked, they're consistent, and they remain largely unchanged. The first and foremost principle is investing in our business focused on strong ROI opportunities, right, both in the short term and the long term. And I would include targeted real estate acquisitions here as well. You know, the Print Street Purchase is really about investing in our business by pursuing a selected key location of a store that we plan to be in for the long term that plays an iconic role in our key city ecosystem, right?

Speaker Change: <unk>.

Speaker Change: When it comes to real estate sales.

Speaker Change: I'll turn it over to Justin.

Justin: Perfect. So then when you think about our capital allocation principles that we've talked to they are consistent and they remain largely unchanged first and foremost principle is investing in our business focused on strong ROI opportunities. Both in the short term and the longer term and I would include targeted real estate acquisitions here as well.

Justin: French Street purchase is really about investing in our business by pursuing a selected key location of our stores, we plan to be in for the long term place in iconic role and our key city ecosystem right New York City, one of our key ecosystems, principally store our global polo flagship you've been there for many years, it's a really smart investment.

Patrice Louvet: New York City, one of our key, top ecosystems. Print Street Store, our global polo flagship. We've been there for many years. It's a really smart investment to purchase this location to future-proof our business in this critical market. And it also results in pretty meaningful year-over-year P&L benefit due to the rent savings. You know, we're on a DTC-led growth path here, and this is reinforcing that strategy by putting our balance sheet to work a little bit more and show that we can do both. We can deliver on our short-term commitments and also continue to make investments for longer term.

Justin: Richard location to future proof our business in this critical market and it also results in pretty meaningful year over year P&L benefit due to the run rate. We're on a deep red growth Peppier and this is reinforcing that strategy of putting our balance sheet to work a little bit more and show that we can do both we can deliver on our short term commitments and also continue to make investments.

Patrice Louvet: And then, Dana, I think as you look ahead, exactly to Justin's point, as we build these key city ecosystems, we're going to be very selective where we see these real estate opportunities, but where we have prime presence that we believe will be important for the business for the long term. And if there's an opportunity to put our resources to use in a smart way, then we will do that, but expect us to do that very selectively for iconic locations.

Speaker Change: For longer term and then Dan I think as you look ahead.

Speaker Change: Exactly to Justin's point as we build these key city ecosystem, we're going to be very selective where we see these real estate opportunities, but where we have prime presence that we believe will be important for the business for the long term and if theres, obviously to put our resources to use in a smart way that we will do that but expect.

Speaker Change: As to do that very selectively for iconic locations next.

Operator: Next question, please. Thank you.

Speaker Change: Next question please.

Ike Boruchow: The next question comes from Ike Boruchow with Wells Fargo. Sure. So, you know, I would say we're encouraged by the, you know, sequential improvement that we've seen in that channel, the stabilization of the business in recent quarters. We have sell-in aligned with sell-out and positive sell-out, which continues to date, market shares across our brand portfolio and consistently solid quality of sales. So our brand's in a strong position here, and our presentation and door exposure in the channel, as you mentioned, is more elevated after we've gone through the step change in refining our distribution. And we've been on this multi-year journey to shift our customer base towards less price-sensitive consumers, especially in the full-price channel.

Speaker Change: The next question comes from Ike <unk> with Wells Fargo.

Speaker Change: Hey, everyone. Let me add my congrats to the quarter to the brand heat.

Speaker Change: Maybe just a monitor kind of poke focus on the U S. Wholesale channel so you've kind of seems like sell in sell out and stabilize the <unk>.

Speaker Change: <unk> is growing a little bit, but I know you've got some door closures and your sole refining it to some extent can you kind of just talk about the outlook for that channel from a growth perspective, and how you're kind of thinking about multi year from here.

Speaker Change: Sure.

Speaker Change: No.

Speaker Change: I would say we're encouraged by the sequential improvement that we've seen in that side of the stabilization of the business in recent quarters, we have sell in aligned with sell out in positive sellout, which continues to date market shares across our brand portfolio and consistently solid.

Speaker Change: Quality of sales so our brands in a strong position here.

Speaker Change: Presentation of our door exposure in the channel as you mentioned is more elevated after we've gone through the step change in <unk>.

Speaker Change: In refining our distribution we've been on this multiyear journey to shift our customer base towards less price sensitive consumers, especially in the full price channel. So that's sort of.

Justin Piccici: So this sort of fits that bill. In Q4, again, continuation of trends, and I would say no impact on our underlying trends to date, but the macro headlines are pretty prevalent in the U.S. right now, right? And they're weighing on consumer sentiment. So we want to be mindful of that in our assumptions, and our outlook for the U.S. for fiscal 26 does take into consideration some unilateral activity in the second half in reaction to broader industry price increases, particularly where consumers are more price-sensitive. You know, that said, we've got momentum here. Our strategy is, you know, continue to prune the lower tiers and add to the top.

Speaker Change: That bill in Q4 again continuation of trend.

Speaker Change: And I would say no no impact on our underlying trends to date, but the macro headlines are pretty prevalent in the U S. Right now right in there weighing on consumer sentiment. So we want to be mindful of that in our assumptions in our outlook for the U S for fiscal 'twenty six does take into consideration some elasticity in the second half.

Speaker Change: In reaction to broader industry price increases, particularly where consumers are more price sensitive that said, we've got momentum here. Our strategy is continue to prune the lower tiers and add to the top we have great traction in our top tier distribution and accounts strong traction in <unk>.

Justin Piccici: We have great traction in our top-tier distribution and accounts, strong traction in digital, strong traction in key doors. We're going to continue to lean in there and take share and navigate what we expect to be a chapter. Thank you.

Speaker Change: Strong traction in key doors related casino lean in there and take share and navigate what we expect to be a choppy environment.

Speaker Change: Thank you. Your next question. Please Angela. Thank you. The next question comes from John Kernan with TD Kelly.

Operator: Next question, please, Angela. Thank you.

John Kernan: The next question comes from John Kernan with TD Cowen. Good morning, let me add my congrats as well. Thank you, John. Thank you. You bet. Justin, I wanted to talk Europe, you know, obviously tremendous growth, particularly in DTC. The geographic EBIT margin, you know, now at 26%, it's your highest margin region. Let's maybe talk more about, you know, the key city approach here, you know, the high growth categories like women's and also the outlook for the operating margin here as it continues to provide a nice accretive margin mixture. Absolutely, John. So we're encouraged by our underlying momentum in Europe, and really by our strong, elevated brand positioning throughout the region.

Speaker Change: Hey, Good morning, let me add my congrats as well.

Speaker Change: Thank you John Macdonald Isabelle.

Speaker Change: I just wanted to talk to Europe.

Speaker Change: Obviously tremendous growth, particularly in DTC.

Speaker Change: The geographic EBIT margin now.

Speaker Change: About 26%, it's your highest margin region.

Speaker Change: Maybe talk more about.

Speaker Change: Yeah. The key city approach here, you know the high growth categories like women's and.

Speaker Change: Also with the outlook for the operating margin here as it continues to provide.

Speaker Change: Provided a nice accretive margin mix shift.

Speaker Change: Absolutely.

Speaker Change: We're encouraged by our underlying momentum in the year, and then really by our strong elevated brand positioning throughout the week.

Justin Piccici: It's been a competitive advantage for us. We delivered another strong quarter in Q4, and really it was growth-based, right? Growth across all key markets and all channels, and we saw that momentum continuing to Q1 to date across all of our key markets. And I think some of the marketing that we've been activating in that region is really, really cutting through and driving strong new customer acquisition, as well as strong traffic. You know, we guided for continued growth in Europe in our 26 side, and we're comping up against a pretty strong second half. And as we think about the backdrop that we're operating in, I would say we're encouraged by our positioning and performance, but still cautious with sediments still pressured despite easing inflation in markets like the UK, in Germany, in Spain.

Speaker Change: Additive advantage for us and we delivered another strong quarter in Q4, and really was broad based growth across all key markets in all channels and we saw that momentum continuing into Q1 to date across all of our key markets and I think some of the marketing that we have been activating <unk>.

Speaker Change: That region is really really coming through and driving strong new customer acquisition as well as strong traffic.

Speaker Change: Guided for continued growth in Europe in our in our FY <unk>, we're comping up against a pretty strong second half and as we think about the backdrop that we're operating in I would say, we're encouraged by our positioning and performance, but still cautious.

Speaker Change: Sediment scope pressure, despite easing inflation in markets like the UK, and Germany, and Spain, and also Theres still some to geopolitical disruptions in the upper red scene towards and that we can still going on so I guess from a guide perspective, if the macro does improve as we move through the year and the rest of them materialized and I think we feel good about our opportunities to capture.

Justin Piccici: And also, there's still some geopolitical disruptions in the upper Red Sea in two wars. Still going on. So I guess from a guide perspective, if the macro's improved as we move through the year and the risk doesn't materialize, then I think we feel good about our opportunities to capture the incremental demand. I think the key city eco-strategy that we kind of started with in Asia and now kind of rolled out globally is really working well in Europe. And you're seeing not only from a marketing activation perspective, you saw it with our holiday takeovers in places like London, in places like Paris, et cetera, but also if you think about what we're doing in opening up new stores.

Speaker Change: The incremental demand I think the key city eco strategy that we kind of started with in Asia now rolled out globally is really working well in Europe and you are seeing not only from a from a marketing activation perspective, you saw with our holiday takeovers in places like one day and in places like Paris et cetera, but also if you.

Speaker Change: Think about what we're doing in opening up new stores in Europe is an area, where we have meaningful white space and we're opening up new stores into that white space across regions focused on the key cities and that's another big reason to believe that the momentum. We have currently will continue forward John just to put some color on that in terms of number of stores.

Justin Piccici: Europe is an area where we have meaningful white space and we're opening up new stores into that white space across regions focused on the key cities. And that's another big reason to believe that the momentum we have currently will continue forward. John, just to put some color on that in terms of the number of stores open. So in investor day, fiscal year 20, when we were together in September 22, we talked about opening 40 to 50 owned and partner new doors across EMEA. We're right on track on that. We're actually slightly ahead of it. And for this fiscal year, we're planning 10 new owned stores and another 25 partner stores.

Speaker Change: Opens on Investor day fiscal year 'twenty. When we were together in December 'twenty, two we talked about opening 40 to 50 owned and partner new doors across EMEA.

Speaker Change: We're right on track on that we're actually slightly ahead of it.

Speaker Change: For this fiscal year, we're planning 10, new owned stores and another 25 partners source. The starting point as you know across this region was very limited DTC presence right, particularly on full price, we're very dependent on wholesale in and our teams in Europe have done a fantastic job just transforming how we show up where are we show elevating.

Justin Piccici: The starting point, as you know, across this region was very limited DTC presence, right? We were particularly on full price. We're very dependent on wholesale and our teams in Europe have done a fantastic job just transforming how we show up, where we show up, elevating the presence, leaning into direct-to-consumer, leaning into digital. And I think you're seeing that translate into the performance this past quarter and honestly this full year where Europe delivered double-digit growth for the full year. In what continues to be, we often forget it, but a very challenging.

Speaker Change: The presence leaning into direct to consumer leaning into digital and I think youre seeing that translates into into the performance this past quarter and in all honesty. This full year, where Europe delivered double digit growth for the full year and what continues to be we often forget it but a very challenging environment.

Operator: Thank you. Next question.

Speaker Change: Thank you next question.

Laurent Vasilescu: Thank you.

Speaker Change: Thank you. The next question comes from Laura <unk> with BNP Paribas.

Patrice Louvet: The next question comes from Laurent Vasilescu with BNP Paribas. Good morning. Thank you very much for taking my question. Patrice, I wanted to ask about China. China was very strong in this course. I know you don't comment about the United States. Comment about what you're seeing, what your expectations are. better than Asia growth of high single digit for fiscal year 20. And then, Justin, on the gross margin, you mentioned that the tariff impact will start to materialize in 2H. Can you, for the audience, maybe quantify in basis points or terms, what will be the your gross margin for this year.

Laura: Good morning, Thank you very much for taking my question.

Laura: I wanted to ask about China, China was very strong this quarter I know you don't comment.

Laura: The comment about what Youre seeing what youre expectations are.

Laura: Better than that.

Laura: Asia growth of high single digits for fiscal <unk>.

Laura: And then Justin on the on the gross margin.

Laura: You mentioned that the tariff impact will start to do that.

Laura: To materialize in two age.

Laura: Can you.

Laura: Maybe quantify in basis points basis points terms what.

Laura: Sure.

Speaker Change: Most Martin for this year, thank you very much.

Patrice Louvet: Thank you very much. Good morning, Laurent. Okay, China. We're more than happy to talk about China. So, delivered a strong quarter, up 20%. This comes on top of 20% growth last quarter, and last fiscal year, this is on top of double-digit growth. So, many quarters and years now of strong, consistent performance in China. I am very proud of the work that our teams are doing in that market. What underpins this is the combination of really strong consumer engagement and marketing activation. And when we look at key metrics on our China brand performance, our awareness is increasing meaningfully.

Laura: Good morning law, Okay, China, we're more than happy to talk about China.

Speaker Change: <unk> delivered a strong quarter up 20%. This is it comes on top of 20% growth last quarter and last fiscal year. This is on top of double digit growth. So many quarters and years knowledge strong consistent performance in China I'm very proud of the work that our teams are doing in that market.

Laura: What what underpins it is the combination of <unk>.

Laura: Really strong consumer engagement and marketing activation and when we look at key metrics on our China brand performance. Our awareness is increasing meaningfully our luxury and value perception has among the highest in the world are consideration, particularly among the younger.

Patrice Louvet: Our luxury and value perception is among the highest in the world. Our consideration, particularly among the younger cohorts, is increasing meaningfully. And you are seeing the pace of marketing activations in China actually accelerate. We did the very Ralph documentary showing in Shanghai back in the fall. The number of people that viewed it live is in the tens of millions of people. We recently had very powerful Lunar New Year activations that, differently from many of our competitors, are not focused on promotional activity, but rather focused on new consumer recruiting through storytelling and engaging moments. And then we had our first fashion show in Shanghai just a few weeks ago.

Laura: Cohorts is increasing meaningfully and you are seeing the pace of marketing Activations in China actually accelerate.

Laura: Did the very Ralph documentary showing in Shanghai back in the fall the number of people that skewed. It live is in the tens of millions of people. We recently, a very powerful lunar new year activations that differently from many of our competitors are not focused on promotional activity, but rather focus on new consumer recruiting.

Laura: Whose storytelling and engaging moments and then we had our first fashion show in Shanghai just.

Laura: Two weeks ago, so marketing activation accelerating and being very impactful. We're also expanding our store footprint in a quality way in an impactful way and.

Patrice Louvet: So, marketing activation accelerating and being very impactful. We're also expanding our store footprints in a quality way, in an impactful way. All the stores that we're opening are actually coming in ahead of our expectations, generally. And then we have strong comp performance that underpins that. If you look at our expectations for this fiscal year, you're right that we generally don't guide by market. But our expectation is we're going to continue to build on the momentum we have in China. As you know, this is still a big growth opportunity for us. You know, today, China is about 9% last quarter, I think it's 9% of total companies, so significant opportunity for acceleration and continued expansion.

Laura: All the stores that we're opening are actually coming in.

Laura: Ahead of our expectations generally that we have strong comp performance that underpins that if you look at our expectations for this fiscal year, you're right that we generally don't guide by market, but our expectation is we're going to continue to build on the momentum we have in China. As you know this is still the big growth opportunity.

Laura: For us.

Laura: Today, China is about 9% last quarter I think it's 9% of total company, so significant opportunity for acceleration and continued expansion.

Justin Piccici: Our assumption at this point is that China will be up low double digits in the fiscal year. So maintaining this double digit performance as we continue to activate, recruit new consumers and expand our footprint. and Laurent Dominic Gross, the gross margin for fiscal 26 call. So based on our current view of the cost headwind landscape, you know, for the full year, we expect gross margins to be flat with our durable tailwinds of AUR growth, discount reduction and favorable product challenge, geographic mix, offsetting the headwinds from cost inflation, including tariffs and also non-material cost labor, et cetera.

Laura: Assumption at this point is that China will be up low double digits.

Laura: In this fiscal year, so maintaining this double digit performance as we continue to actively recruit new consumers and expand our footprint.

Laura: And the rock on the gross the gross margin for fiscal 'twenty six call. So based on our current view of the cost headwind landscape for the full year, we expect gross margins to be flat with our durable calvin's of AUR growth discount reduction and favorable product channel and geographic mix offsetting the headwinds from cost inflation, including.

Laura: Tariffs and also non material cost labor et cetera.

Justin Piccici: And I would say from a quarterly cadence perspective, we're planning for a stronger first half from a gross margin perspective, as opposed to the second half, which again speaks to the timing of when the cost headwinds are.

Laura: And I would say from a quarterly cadence perspective, we're planning for a stronger first half from a gross margin perspective as opposed to the second half, which again speaks to the timing of that win.

Laura: Cost headwinds art.

Operator: Next question, please. Thank you.

Laura: Next question please.

Chris Nardone: The next question comes from Chris Nardone with Bank of America. Thanks, guys. Good morning. The longer term, Patrice, can you discuss your confidence level and driving operating margins higher beyond this year's expectation of the MODIS expansion? Maybe it'd be helpful if you could discuss what geography still the potential to see further AUR gains beyond the first half of this year.

Speaker Change: Thank you. The next question comes from Chris <unk> with Bank of America.

Chris: Thanks, guys good morning.

Speaker Change: Longer term constraints can you discuss your confidence level and driving operating margins higher beyond this years expectation of the modest expansion.

Chris: It'd be helpful. If you could discuss what geographies saw the potential to see further AUR gains beyond the first half of this year.

Patrice Louvet: So why don't we tag team on this one because Justin is our resident expert on operating margin expansion. Sure. Why don't you take that and I'll talk to you on it. Absolutely. So, you know, Chris, taking a step back, and we're really pleased with where we came in this year and how we over-delivered on our three-year commitment to get to our 15% operating margin target and 22 rates at the end of fiscal 25. You know, I think as we think about the outlook going forward, you know, 15% cost dollar is not a ceiling, right? We're going to continue to balance margin expansion with making investments in long-term strategic growth.

Laura: So what are we tag team on this one.

Laura: Justin is our resident expert on operating margin expansion sure why don't you take that and I'll talk I'll talk anymore, absolutely so Chris.

Laura: Chris taking a step back and we were really pleased with where we came in this year and how we over delivered on our full year commitment to get to our 15% operating margin positive quantity rates at the end of <unk>.

Laura: Fiscal 'twenty five yes, I think as we think about the outlook going forward, 15% cost.

Laura: Cost dollars not sealed right, we're going to continue to balance.

Laura: <unk> expansion with making investments in long term strategic growth. So I think for this year, you'll see we've guided for modest operating margin expansion. Despite some macro pressures and some cost headwinds and thats really driven by SG&A leverage as we start to staff up.

Justin Piccici: So I think for this year, you see we've guided for modest operating margin expansion despite some macro pressures and some cost headwinds, and that's really driven by SG&A leverage as we start to scale some of the investments that you've seen us make over the previous couple of years. And I think, you know, beyond fiscal 26, we'll talk more at our upcoming investor day, but likely still expecting a combination of gross margin expansion, you know, modest gross margin expansion and operating expense leverage to be the driver of our profitability. And on AUR, Chris, the short answer is yes.

Laura: The investments that you've seen us make over the previous couple of years and I think beyond fiscal 'twenty six well talk more at our upcoming Investor day, but likely still expecting a combination of gross margin expansion and a modest gross margin expansion and operating expense leverage could be the driver of our profitability.

Laura: Sure.

Chris: And on AUR, Chris the short answer is yes. The bar expanded answer is as follows.

Justin Piccici: The more expanded answer is as follows. And we'll obviously, we'll guide when we get together for Invest Today on how we think about top-line growth for the next three years. But the way we think about it is really three drivers, right, for top-line growth. Continued AUR expansion. Unet Ro And New Consumer Recruiting, right? And you saw how closely New Consumer Recruiting and Top-Line Growth correlated this year. Since New Consumer Recruiting at 5.9 million is up low double digits, and we're growing high single digits. So strong correlation between the three. So all three will be drivers for Top-Line Growth moving forward.

Chris: And we'll obviously, we'll guide when we get together for Investor Day on how we think about top line growth for the next three years, but the way we think about it is really three drivers right for topline growth continued AUR expansion.

Laura: Unit growth.

Chris: And new consumer recruiting right and you saw.

Chris: How closely new consumer recruiting and topline growth correlated this year since new consumer recruiting is $5 9 million is up low double digits and we're growing high single digits. So strong correlation between industry. So all three will be drivers for top line growth moving forward as you look at the drivers for us of AUR growth.

Justin Piccici: As you look at the drivers for us of AUR growth, All right, this is still the elevation strategy that's playing out that we're going to continue to drive. So we are on an elevation journey. We are pleased with the progress we are making, and we still have meaningful opportunities looking ahead. Our AUR drivers will continue to be product-mixed. Channel and Geographic Mix. Continued promotional pullback, you saw in this last quarter, another example of our ability to significantly pull back on promotions. I think the number is 270 basis points reduction in promotional investment while at the same time strengthening consumer value perception, while at the same time strengthening luxury perception.

Chris: Alright. This is still the elevation strategy, that's playing out that we're going to continue to drive. So we are on an elevation journey. We are pleased with the progress we are making and we still have meaningful opportunities looking ahead, our AUR drivers will continue to be product mix chat.

Chris: Channel and geographic mix continued promotional pullback you saw in this last quarter. Another example of our ability to cigna.

Chris: Significantly pulled back on promotions I think the number is 270 basis points reduction in promotional investment while at the same time strengthening consumer value perception, while at the same time strengthening luxury perception and then fourth vector.

Justin Piccici: And then fourth vector is select pricing. But I think as we continue to elevate Storytelling, as we can see, to elevate the product offering and the quality, as we can see, to elevate the engagement over the shopping experience, whether that's online in brick and mortar, then that drives value perception and luxury perception. That then enables AUR. So expect that to continue. We'll talk about what we expect the relative size of these three drivers, AUR, unit, and new consumer recruiting to be in the overall mix. We see opportunities across all three regions. So interestingly, people look at our AURs in China in particular, and they say, wow, can you go further?

Chris: It's sort of like pricing, but I think as we continue to elevate.

Chris: The storytelling as we can see that elevate the product offering.

Chris: The quality as we can see to elevate the engagement over the shopping experience with us online and brick and mortar then that drives value perception and luxury perception that then enables AUR. So expect that to continue we'll talk about what we expect the relative size of these three drivers AUR unit, a new consumer drive new.

Chris: Consumer recruiting to be in the overall mix, we see opportunities across all three regions. So interestingly you know people look at our <unk>.

Chris: China in particular, and they said well can you go further and you go beyond that and I think the teams are demonstrating quarter on quarter that when we do a good job on storytelling products and shopping experience then we create the opportunity for us to continue to expand AUR. So.

Justin Piccici: Can you go beyond that? And I think the teams are demonstrating quarter on quarter that when we do a good job on storytelling, product, and shopping experience, then we create the opportunity for us to continue to expand AUR. So we're eight years into this AUR journey. We're eight years into this elevation journey. We're going to continue to run that play, again, with agility. and with discernment as we look at where we allocate our resources.

Chris: We're eight years into this AUR journey, we're eight years into this elevation journey, we're going to continue to run that play again with agility.

Chris: And with <unk>.

Chris: The assortment as we look at where we allocate our resources will take the last question. Please.

Operator: We'll take the last question, please. Thank you.

Chris: Thank you the last question.

Tom Nittick: The last question. Our final question comes from Tom Nittick with Needham. Your line is open. Hey everyone, thanks for taking my question. It sounds like most of your macro related caution is domestic. I was just curious, you know, if you're, if there's any caution or if you've seen any, you know, kind of pushback from consumers outside the U.S., just, you know, kind of given some of the rhetoric around tariffs and, you know, given how, you know, kind of Americana focused, you know, the Ralph Lauren brand image is, you know, I'm wondering if there's any caution around the international business.

Speaker Change: Final question comes from Tom <unk> with Needham Your line is open.

Tom: Hey, everyone. Thanks for taking my question.

Tom: It sounds like most of your macro related caution is domestic I was just curious.

Chris: Sure.

Chris: If theres any caution or if you've seen any kind of pushback from consumers outside the U S. Just kind of given some of the rhetoric around tariffs and.

Chris: Given how.

Chris: Kind of Americana focused.

Speaker Change: Ralph Lauren brand image as I'm wondering if there's any caution.

Chris: Around the international business.

Patrice Louvet: Unknown Speaker, given given the political situation. That's a good question, Tom, and you're right that most of our caution is As you can imagine, we're tracking consumer sentiment and social activity quite closely, both for our industry and for our brand in particular. At this stage, we have no call-outs in terms of slowing brand momentum or any concerns with anti-American sentiment that would apply to our business. Now, it's important to keep in mind that ever since Ralph founded this company, this company is founded on values that are pretty universal, right? If you think about optimism, authenticity, timelessness, elegance, family, those are globally relevant and pretty universal and I think resonating really well wherever we play, including markets where you might be concerned about anti-American sentiment.

Chris: Given given the political situation.

Chris: So thats a good question, Tom and Youre right that most of our caution is domestic.

Chris: In the second half of the year.

Speaker Change: As you can imagine we're tracking consumer sentiment on social activity quite closely.

Chris: Both for our industry and for our brand in particular.

Chris: At this stage, we have no callouts in terms of slowing brand momentum or any concerns with.

Chris: The anti American sentiment that would apply that would apply to our business no. It's important to keep in mind that Edison's Ralph founded this company. This company is founded on values that are pretty universal right do you think about optimism authenticity timelessness allergy.

Chris: Family.

Chris: Cause are globally relevant and pretty universal and I think resonating really well wherever we play including markets, where you might be concerned about anti American sentiment.

Patrice Louvet: We are not seeing any of that at this stage and obviously, we continue to monitor that and make sure that we're engaging consumers in a way that's most effective and relevant.

Chris: We are not seeing any of that at this stage. Obviously, we continue to monitor that and make sure that we're engaging consumers in a way that's most effective and relevant for them.

Chris: Okay.

Operator: Alright, well thank you everyone for joining us today. We look forward to speaking with you on our first quarter earnings call in August. And in the meantime, take care and have a great day.

Chris: Alright, well. Thank you everyone for joining us today, we look forward to speaking with you on our first quarter earnings call in August and in the meantime, take care and have a great day.

Operator: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.

Speaker Change: Ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.