For eight years, Ralph Lauren has been dicretely moving upmarket. Prices are rising every quarter and promotions and special offers are becoming rarer. While the middle classes are turning away from the big names, the brand retains a loyal customer base.

Its valuation is on a par with those of LVMH and Moncler, buoyed by the dynamism of markets such as China. Although still modest (less than 10% of sales), this market is growing rapidly, with 30% growth this quarter, stimulated by the brand's first local fashion show.

The potential for growth also lies in margins. Ralph Lauren is now focusing more than ever on the women's segment, which accounts for 60% of its customer base, but only 30% of its revenue. Accessories and leather goods, which are more profitable, account for just 10% of sales, compared with over 70% at Tapestry, the owner of Coach. In figures, this gives an EBITDA margin of 23% for Tapestry, compared with less than 18% for Ralph Lauren.

The strategy of moving upmarket is paying off, with margins rising for the third year in a row, which is also supporting the stock's valuation.

Solid results, cautious outlook

In Q1 2026, revenue rose 14%, but increased 11% excluding currency effects (thanks to the dollar). Sales increased by 8% in North America ($656m), 16% in Europe ($555m) and 21% in Asia ($474m). Net income climbed 30.7% to $220.4m, with EPS of $3.62.

Results above expectations... an upward revision of annual forecasts, but the stock price fell on the stockmarket. However, rest assured, there is still a rational explanation for this.

The group now anticipates annual growth of up to 5% excluding currency effects. CEO Patrice Louvet justified this caution: "We are particularly cautious in North America, where the environment is likely to be more inflationary. Many companies are announcing price increases linked to new tariffs, and we don't know how consumers will react."

This analysis echoes that of Mary Ross Gilbert, an analyst at Bloomberg, who notes: "Much of the pricing power has already been exercised—we expect this lever to contribute less in the future."

The group is particularly cautious about the US market - its main market. While consumers there are increasingly sensitive to promotions, Ralph Lauren is pursuing a counter-cyclical strategy.

Management is adopting a pragmatic tone, arguing that there is no point in playing too much with forecasts when the group's fiscal year has only just begun and the US economic environment is becoming increasingly uncertain.