[Management View]
Ralph Lauren Corporation reported Q4 FY2025 revenue and profitability metrics that exceeded previous expectations, with international operations now comprising the majority of sales mix. The company outlined the disciplined and flexible execution of its brand elevation and product strategies, supporting ongoing AUR growth in multiple global markets. Management emphasized record marketing and direct-to-consumer investments while projecting continued high single-digit AUR gains for Q1 FY2026.

[Outlook]
The preliminary outlook for FY2026 incorporates anticipated macroeconomic and tariff headwinds, particularly in North America, resulting in a heavier first-half weighting for revenue and margin expansion expectations. Capital deployment remains focused on high-return investments, including flagship real estate purchases, technology enhancements, and targeted geographic expansion.

[Financial Performance]
- Total Revenue: 10% constant-currency growth in Q4 FY2025, surpassing the 6%-7% outlook.
- Adjusted Operating Profit: Increased 40% in Q4 FY2025.
- International Revenue Mix: Europe and Asia now account for 57% of total revenue in FY2025, up from 45% pre-pandemic.
- Regional Performance: Europe revenue up 16%, North America up 6%, and China revenue increased over 20% in Q4 FY2025.
- Comparable Sales: Total company comparable sales increased 13% in Q4 FY2025.
- Average Unit Retail (AUR): AUR grew 9% in Q4 FY2025.
- Gross Margin: Adjusted gross margin rose 260 basis points to 69.2% in Q4 FY2025.
- Operating Margin: Adjusted operating margin expanded 240 basis points to 11.1% in Q4 FY2025.
- Free Cash Flow: $1 billion generated in FY2025.
- Dividend and Share Repurchases: 10% annual dividend increase and an additional $1.5 billion share repurchase authorization.

[Q&A Highlights]
Question 1: Given the continued strong performance in a choppy environment, how are you thinking about the health of your consumer across regions, and what changes, if any, are you making to your strategy? (Line breaks here)
Answer: The strategy remains broadly unchanged, focusing on brand investment, driving desirability, and expanding the key city ecosystem. The core consumer remains resilient, with no change in the underlying trajectory across regions. The company is staying on offense while remaining prudent and agile in resource allocation.

Question 2: How should we think about your pricing strategy for fiscal 2026, especially in the context of all the AUR growth you've already delivered over the past eight years? (Line breaks here)
Answer: The company is well-positioned to manage cost headwinds with a diversified supply chain, strategic pricing actions, and cost efficiencies. AUR is expected to trend consistently with high single-digit growth in Q1 FY2026, with flexibility to adjust as needed.

Question 3: Can you discuss the outlook for the US wholesale channel from a growth perspective and how you're thinking about it multiyear from here? (Line breaks here)
Answer: The US wholesale channel is stabilizing with positive sell-out trends. The strategy focuses on pruning lower tiers and adding to top-tier distribution, with a cautious outlook for fiscal 2026 due to macro challenges.

Question 4: Can you discuss your confidence level in driving operating margins higher beyond this year's expectation of modest expansion? (Line breaks here)
Answer: The company aims to balance margin expansion with long-term strategic investments. Modest operating margin expansion is expected in fiscal 2026, driven by SG&A leverage and continued AUR growth.

Question 5: Is there any caution or pushback from consumers outside the US given the political situation? (Line breaks here)
Answer: There are no current concerns with anti-American sentiment affecting the brand. The company's values of optimism, authenticity, and timelessness resonate globally, and there is no slowing brand momentum internationally.

[Sentiment Analysis]
The tone of the analysts was positive, with a focus on understanding the company's strategy and outlook amidst macroeconomic uncertainties. Management maintained a confident and proactive stance, emphasizing resilience and strategic flexibility.

[Quarterly Comparison]
| Key Metrics | Q4 FY2025 | Q4 FY2024 |
|----------------------------|-----------|-----------|
| Total Revenue Growth | 10% | 8% |
| Adjusted Operating Profit | +40% | +30% |
| International Revenue Mix | 57% | 50% |
| Comparable Sales Growth | 13% | 10% |
| AUR Growth | 9% | 7% |
| Adjusted Gross Margin | 69.2% | 66.6% |
| Adjusted Operating Margin | 11.1% | 8.7% |
| Free Cash Flow | $1B | $900M |

[Risks and Concerns]
- Impact of tariffs and macroeconomic uncertainty in North America.
- Potential consumer pullback and cost inflation affecting US consumer spending.
- Global operating environment volatility, including geopolitical tensions.

[Final Takeaway]
Ralph Lauren Corporation delivered strong Q4 FY2025 results, driven by robust international growth and strategic investments in brand elevation and direct-to-consumer channels. The company remains well-positioned to navigate macroeconomic challenges with a resilient business model and a focus on long-term growth. Investors should monitor the impact of tariffs and consumer sentiment, particularly in North America, while recognizing the company's strategic flexibility and strong brand momentum globally.