RL · 10-Q · 2026Q2 · Full report

FX / Currency Headwinds

RALPH LAUREN CORP · 2026-08-06 · Importance 20 · Surprise 24

Foreign-currency effects increased reported first-quarter net revenue by $10.0 million and gross profit by $8.9 million for the three months ended June 27, 2026. Europe revenue included a favorable $14.7 million reported foreign-exchange impact, while Asia had an unfavorable $4.8 million impact; the company reported 13.4% constant-currency revenue growth versus 14.0% reported growth. Management identified foreign-currency volatility as an ongoing macroeconomic factor and noted that exchange-rate changes reduced the net cash and short-term investments position by $16.5 million, primarily through cash and cash equivalents.

Key facts

• The company periodically designates pay-fixed, receive-fixed cross-currency swap contracts as hedges of its net investment in certain European subsidiaries to economically convert a portion of U.S. Dollar-denominated senior note obligations to Euro-denominated obligations. source
• Forward foreign currency exchange contracts are generally used to hedge exposures anticipated over the next year with maturities of two months to one year for currencies including the Euro, Japanese Yen, Chinese Renminbi, South Korean Won, Australian Dollar, British Pound Sterling, Swiss Franc, and Canadian Dollar. source
• Borrowings under the Global Credit Facility may be denominated in U.S. Dollars and certain other currencies, including Euros, Hong Kong Dollars, and Japanese Yen. source
• Unfavorable effect of exchange rate changes on cash and cash equivalents: $16.5 million. source
• Gross profit improvement included favorable foreign currency effects of $8.9 million, representing approximately 10 basis points of the 140 basis point gross margin improvement. source
• The company reported unfavorable foreign currency effects of $16.5 million primarily related to cash and cash equivalents during the three months ended June 27, 2026. source
• Effect of exchange rate changes on cash, cash equivalents, and restricted cash for the three months ended June 27, 2026: $(16.5) million; for the three months ended June 28, 2025: $76.1 million; change: $(92.6) million. source
• The company had in aggregate $13.8 million of derivative instruments in net asset positions held across three creditworthy financial institutions as of June 27, 2026. source