RL 10-K & 10-Q changes, risk factors and insider trading

The global economy and retail industry are impactedaffected by manynumerous uncontrollablefactors factors,beyond our control, including, among others, changes in diplomatic and trade relationships,relationships (including potentialthe imposition of new tariffs or other changes to international trade policies or agreements, such as the imposition of new tariffsagreements); general domestic and international political conditions; consumer perceptions of current and future economic conditions,conditions (including anyan recessionaryeconomic fears;slowdown inflation;or potential downturn, inflation, interest rates;rates, foreign currency exchange rates;rates, thecommodity availability and price of commodities, (including fuel and energy costs)); employment levels and wage rates; stock market performance; the housing market conditions; consumer debt levels; theand availabilityaccess ofto consumer credit; the health and stability of the banking sector; global food supplies; taxation; the threat, outbreak, or escalation of terrorism, military conflicts, or other hostilities; consumer perceptions of personal well-being and safety; man-made or natural disasters,disasters (including pandemic diseases); and weather conditions.

Other recent economic conditions, including increases in oil and other energy prices, ongoing inflationary pressures, organized labor disputes, high interest rates, significant foreign currency volatility, and military conflicts (as discussed below), continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as to reduce elevated inventory levels, many retailers (particularly in the U.S. and Europe) continue to resort to promotional activity in an attempt to offset traffic declines and increase conversion. Our gross margins could be adversely impacted if we were to apply a similar strategy over a prolonged period of time.

The global economy has also been negatively impacted by ongoing military conflicts, including the Russia-Ukraineconflicts andinvolving Israel-Hamas wars, militant attacks on cargo vessels in the Red Sea,Iran and other hostilities in the Middle East. Although our voluntary decision to suspend operations in Russia has not resulted in a material impact to our consolidated financial statements and our ongoing operations in Israelthe Middle East are also not material, our business has been, and may continue to be, affected by the broader macroeconomic implications resulting from these and other military conflicts, including inflationary pressures, unfavorable foreign currency exchange rates, increases in energy prices, food shortages, and financial market volatility, among other factors, which have adversely impacted consumer sentiment and confidence. Although our business has not been significantly impacted by the Red Sea crisis, it could lead to shipping delays, inventory shortages, and/or higher freight costs in the near future and beyond. It is not clear at this time how long these conflicts will endure, or if they will escalate further with additional countries declaringtaking war against each other,part, which could further amplify the impacts of the various macroeconomic factors described above and potentially result in a global economic slowdown or recession.

Consumer purchases of discretionary items and luxury retail products, including our products, tend to decline during periods of recession,economic weakness, high inflation, or rising interest rates, and at other times when disposable income is lower. Unfavorable economic conditions and other factors, such as pandemic diseases and other health-related concerns, political unrest, military conflicts, and acts of terrorism, may also reduce consumers' willingness and ability to travel to major cities and vacation destinations in which our stores and shop-within-shops are located. Further, consumers may prefer to spend more of their discretionary income on "experiences," such as dining and entertainment, over consumer goods. Stay-at-home orders, social gathering restrictions, and work-from-home arrangements, such as those resulting from pandemic diseases, may also diminish consumers' demand for luxury apparel products. Accordingly, a downturn or an uncertain outlook in the economies in which we, or our wholesale customers and licensing partners, sell our products, or other changes in consumer preferences, may materially adversely affect our business.

Although we believe that our existing cash and investments, cash provided by operations, and available borrowing capacity under our credit and overdraft facilities and commercial paper borrowing program will provide us with sufficient liquidity, the impact of adverse economic conditions (such as ongoing inflationary pressures and high interest rates) on our major customers, suppliers, vendors, and lenders and their ability to access global capital markets cannot be predicted. The inability of third parties to manufacture and/or ship our products due to insufficient liquidity or otherwise could impair our ability to meet the delivery date requirements of our customers. A disruption in the ability of our significant customers to access liquidity could cause serious disruptions or an overall deterioration of their businesses which could lead to a significant reduction in their future orders of our products and the inability or failure on their part to meet their payment obligations to us, any of which could have a material adverse effect on our business.

Any deterioration in global financial or capital markets could affect our ability to access sources of liquidity to provide for our future cash needs, increase the cost of any future financing, or cause our lenders to be unable to meet their funding commitments under our credit and overdraft facilities. We also regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation ("FDIC") insured banks, which exceed the FDIC insurance limits. In addition, we maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies. Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis. Our major customers, suppliers, and vendors may also be subject to similar risks, which in turn could have a resulting material adverse impact on our business if they were to lose access to sufficient liquidity.

Our business is exposed to foreign currency exchange risk. Specifically, changesChanges in exchange rates between the U.S. Dollar and other currencies impact our financial results from a transactional perspective, as our foreign operations generally purchase inventory in U.S. Dollars. Given that we source mostthe vast majority of our products overseas, the cost of these products to our foreign operations may be affected by changes in the value of thetheir relevantrespective local currencies. In addition, changes in exchange rates of non-U.S. Dollar currencies impact our financial results, as our operations incur certain other costs that are denominated in various other foreign currencies. Changes in currency exchange rates may also impact consumers' willingness or ability to travel abroad and/or purchase our products while traveling,traveling. asAdditionally, wellfrom asa affectfinancial reporting perspective, the U.S. Dollar valuetranslation of the foreign currency denominated prices at which our international businessessubsidiaries' sellrespective products.local Additionally, thecurrency operating results and financial position ofinto ourU.S. internationalDollars subsidiaries areis exposed to foreign exchange rate fluctuations as theirpart financial results are translated from the respective local currency into U.S. Dollars duringof the financial statement consolidation process. The foreign currencies to which we are exposed to from a transactional and translational perspectiveperspectives primarily include the Euro, the Japanese Yen, the BritishChinese Pound Sterling,Renminbi, the South Korean Won, the ChineseAustralian Renminbi,Dollar, the CanadianBritish Dollar,Pound Sterling, the Swiss Franc, and the AustralianCanadian Dollar. The continued expansion of our international business naturally increases our exposure to such foreign currency exchange risk.risks.

Although we hedge certain exposures to changes in foreign currency exchange rates arising in the ordinary course of business, we cannot fully anticipate all of our currency exposures and therefore foreign currency fluctuations may have a material adverse impact on our business. In addition, factorsFactors that could impact the effectiveness of our hedging activities include the volatility of currency markets, the accuracy of forecasted transactions, and the availability of hedging instruments. As such, our hedging activities may not completely mitigate the impact of foreign currency fluctuations on our results of operations.business.

Infectious disease outbreaks, such as the COVID-19 pandemic,outbreaks could have a material adverse effect on our business.

Achievement of our growth strategy may require investment in new capabilities, distribution channels, and technologies, such as those related to our Next Generation Transformation project.project, as described in Item 1 — "Business — Recent Developments." These investments may result in short-term costs without accompanying current revenues and, therefore, may be dilutive to our earnings in the short term. There can be no assurance regarding the timing of or extent to which we will realize the anticipated benefits of these investments and other costs, if at all.

The success of our business also depends largely on our ability to continue to maintain, enhance, and expand our digital footprint and capabilities. Consumers continue to increasingly shop online using computers, smartphones, tablets, and other devices, and also use such devices to perform comparison shopping on a real-time basis. In addition, customers are increasingly utilizing tools and devices powered by AI as part of their shopping experience. Certain adverse events, such as pandemic diseases and severe weather, tend to amplify this trend, as consumers may find it difficult to travel to our brick and mortar locations or otherwise prefer to avoid populated locations, such as indoor shopping centers. Any failure on our part, or on the part of our third-party digital partners, to provide attractive, reliable, secure, and user-friendly digital commerce platforms, including mobile apps, and to effectively leverage AI could negatively impact our customers' shopping experience resulting in reduced website traffic, diminished loyalty to our brands, and lost sales. In addition, as we continue to expand and increase the global presence of our digital commerce business, sales from our brick and mortar stores and wholesale channels of distribution in areas where digital commerce sites are introduced may decline due to changes in consumer shopping habits and cannibalization.

The success of our business also depends on our ability to continue to develop and maintain a reliable omni-channel experience for our customers, as well as our ability to maintain and/or introduce new ConnectedOnline Retailto capabilities,Offline experiences, such as those described in Item 1 — "Business — Digital Ecosystem." Our business has evolved from an in-store experience to a shopping experience through multiple technologies, including computers, smartphones, tablets, and other devices, as well as AI-enabled devices, as our customers have become increasingly technologically savvy and expect a seamless omni-channel experience regardless of whether they are shopping in stores or online. We are increasingly using digital and social media platforms to interact with customers and enhance their shopping experience. If we are unable to develop and continuously improve our customer-facing technologies,technologies and/or to effectively leverage AI, the efforts of which typically require significant capital investments, we may not be able to provide a convenient and consistent experience to our customers regardless of the sales channel. This could negatively affect our ability to compete with other retailers and result in diminished loyalty to our brands, which could adversely impact our business.

The nature of the apparel retail industry requires us to carry a significant amount of inventory, especially prior to the peak holiday selling season when we build up our inventory levels in order to meet anticipated consumer demand. Although we have shortened lead times for the design, sourcing, and production of certain of our product lines,lines and are implementing integrated business planning tools that improve demand forecasting to support inventory and purchasing decisions, we expect to continue to place orders with our vendors for the majority of products in advance of the related selling season. As a result, we are vulnerable to changes in consumer preferences and demand and pricing shifts. Our failure to continue to shorten lead times or to correctly anticipate consumer preferences and demand could result in the build-up of excess inventory. Other factors beyond our control could also result in the build-up of excess inventory, including unforeseen adverse economic conditions or business disruptions, such as those caused by pandemic diseases.disruptions. Excess inventory levels could result in the utilization of less-preferred distribution channels, markdowns, promotional sales, donations, or destruction to disposerecycling of such excess or slow-moving inventory, which may negatively impact our overall profitability and/or impair the image of our brands. Conversely, if we underestimate consumer demand for our products or if manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages, which may negatively impact customer relationships, diminish brand loyalty, and result in lost sales. Any of these outcomes could have a material adverse effect on our business.

Additionally, our industry is subject to significant pricing pressure caused by many factors, including inflationary pressures, intense competition and a highly promotional retail environment, consolidation in the retail industry, pressure from retailers to reduce the costs of products, excess inventory levels in the marketplace, and changes in consumer spending patterns. Changes to existing trade policies and agreements, including new or higher tariffs on U.S. imports, could exacerbate such pricing pressures. Although we continue to limit our promotional activity in connection with our quality of sales initiatives, these factors may cause us to reduce our sales prices to retailers and consumers, which could cause our gross margin to decline. If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our profitability will decline. In addition, changes in our customer, channel, and geographic sales mix could have a negative impact on our profitability. Any of these outcomes could have a material adverse effect on our business.

If we are not successful in implementing and managing our restructuring plans, we may not be able to achieve targeted operating enhancements, sales growth, and/or cost reductions, which could adversely impact our business. Our failure to achieve targeted results for any reason, including business disruptions resulting from adverse economic conditions or catastrophic events such as pandemic diseases,events, could also lead to the implementation of additional restructuring-related activities, which may be dilutive to our earnings in the short term.

Competition in our industry to attract and retain employees is intense and is influenced by our reputation, our ability to offer competitive compensation and benefits, and economic conditions, among other factors. Furthermore, the retail industry (among others) has experienced, and could again experience in the future, overall labor shortages resulting from a combination of pandemic diseases, labor disputes, strikes, and other factors. The introduction of new work arrangements and company-specific requirements regarding when and how often employees are required to work on-site versus remotely may also impact companies' ability to attract and retain employees. As companies increasingly allow employees to work remotely, traditional geographic competition for talent may change in ways that we cannot predict. The departure of key individuals or our failure to maintain sufficient employee staffing levels could have a material adverse impact on our business, as well as impede our ability to maintain an effective system of internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002.

We do not own or operate any manufacturing facilities and depend exclusively on independent third parties for the manufacture of our products. Our products are manufactured to our specifications through arrangements with approximately 300 foreign manufacturers in various countries. In Fiscal 2025,2026, approximatelythe 96%vast majority of our products (by dollar value) were produced outside of the U.S., primarily in Asia, Europe, and Latin America, with approximately 20%21% of our products sourced from Vietnam, 16% from Cambodia, and 12%11% from China.India. Risks inherent in importing our products include (i) the imposition of additional tariffs, duties, taxes, and other charges on imports or exports, such as those recently announced by the U.S. as discussed below; (ii) changes in diplomatic and trade relationships, including thesanctions, imposition of any sanctions,trade restrictions, and other responsesretaliatory measures; (iii) the imposition of additional regulations, quotas, trade sanctions, or safeguards relating to imports or exports, and costs of complying with such regulations and other laws relating to the identificationsourcing and reporting ofrequirements the sources of raw materials used in our products, whichthat could increase compliance costs or lead to the detention, exclusion, or seizure of goods and imposition of monetary penalties and fines; (iv) adverse changes in local economic conditions, such as prolonged periods of recession,economic weakness, high inflation and/or interest rates, or other factors described herein; (v) changes in social or political conditions, including those resulting from military conflicts, terrorist acts, or other hostilities, that could result in the disruption of trade from the countries in which our manufacturers or suppliers are located; (vi) pandemic diseases, which could result in closed factories, reduced workforces, scarcity of raw materials, port congestion, and scrutiny or embargoing of goods produced in infected areas; (vii) unfavorable changes in the availability, cost, or quality of raw materials and commodities; (viiivii) labor shortages within our supply chain resulting from labor disputes, strikes, or otherwise; (ixviii) increases in the cost of labor or transportation; (xix) disruptions of shipping and international trade caused by natural and man-made disasters, severe weather, military conflicts, terrorist acts, or other hostilitieshostilities, (suchpandemic as militant attacks on cargo vessels in the Red Sea),diseases, or other unforeseen events, including any resulting impact to shipping prices and shipping times; (xix) heightened terrorism-related cargo and supply chain security concerns, which could subject imported or exported goods to additional, more frequent, or more thorough inspections,concerns leading to increased inspections and delays in the delivery of cargo; and (xiixi) decreasedinsufficient scrutinyenforcement by customs officials foragainst counterfeit goods, leading to lost sales, increased costs for our anti-counterfeiting measures, and damage to the reputation of our brands.

As previously discussed, in April 2025, the U.S. announced significantrecent changes toin itsU.S. trade policies, including atariff-related universaldevelopments baselinesurrounding tariffthe ofIEEPA 10%and onother all U.S. imported goods, plus additional country-specific tariffs. In return, many countriesauthorities, have announced retaliatory tariffs on U.S. exports, resulting inincreased uncertainty ofregarding the future relationship between the U.S. and other countries, as well as the potential offor an ensuing global trade war and recession.economic Whileslowdown. theThe U.S. implemented a 90-day pause on the majorityimposition of itsnew proposedtariffs tariffs,could weresult cannotin predictpotential atretaliatory thistariffs timefrom ifother countries and whencould anycontinue ofto theimpact proposedour tariffssupply willchain become effective.costs. As approximately 96% of our products are currently produced outside of the U.S., any material change in tariffs or other trade restrictions could result in a significant increase to our product costs. There can be no assurance that we will be able to offset potential increased product costs through higher sales prices to our consumers, supply chain diversification, or other mitigating measures, which in turn could have a material adverse effect on our business due to lower profitability.

In addition, the entire apparel industry, including our Company, has faced, and could continue to face, supply chain challenges as a result of inflationary pressures, political instability, severe weather, military conflicts and other hostilities, pandemic diseases, and other factors,challenges, including reduced freight availability, port congestion, labor shortages, and rising wageswages, oil prices and other energy costs, among others, as a result of unfavorable macroeconomic conditions and other factors. The inability of a manufacturer to ship orders of our products in a timely manner or to meet our strict quality standards could cause us to miss the delivery date requirements of our customers for those items, which could result in cancellation of orders, refusal to accept deliveries, or a substantial reduction in purchase prices. We have also incurred, and may continue to incur, higher freight and other logistic costs as a result of certain of the beforementioned factors. In addition, the cost and availability of raw materials used to manufacture our products are subject to significant fluctuation as a result of certain of the beforementioned factors (including inflationary pressures), as well as crop yields which could be negatively impacted by severe weather conditions. We may not be able to implement price increases that fully offset increases in raw materials, freight, or other sourcing costs and/or any such price increases could have an adverse impact on consumer demand for our products. Any one of these factors could have a material adverse effect on our business.

We also rely upon third-party transportation providers for substantially all of our product shipments, including shipments to and from our distribution centers, to our stores and shop-within-shops, and to our digital commerce and wholesale customers. Our utilization of these shipping services is subject to various risks, including, but not limited to, potential labor shortages (stemming from labor disputes, strikes, or otherwise), severe weather, and pandemic diseases, which could delay the timing of shipments, and increases in wages and fuel prices, which could result in higher transportation costs. The rapid increase of online shopping driven by changes in consumer shopping preferences has amplified certain of these risks resulting in capacity constraints. We have incurred, and may continue to incur, higher freight and other logistic costs as a result of certain of the beforementioned factors. Any delays in the timing of our product shipments or increases in transportation costs could have a material adverse effect on our business.

Our success depends on the value and reputation of our brands and our ability to consistently anticipate, identify, and respond to customers' demands, preferences, and fashion trends in the design, pricing, and production of our products, including the preferencepreferences for certain products to be manufactured in the U.S., and to deliver high-quality and sustainable products supported by engaging marketing campaigns. Any negative publicity regarding Mr. R. Lauren, or other members of our management team, or our Company as a whole, especially through social media which acceleratescan accelerate and increasesincrease the potential scopereach of such negative publicity, which could adversely impact the image of our brands with our customers and result in diminished loyalty to our brands and potentially lead to adverse consumer actions, including boycotts, even if the subject of such publicity is unverified or inaccurate and we seek to correct it. Consumer sentimentperception canmay also be influenced by geopolitical developments, including periods of heightened anti-American sentiment in certain international markets, as well as our partnership with athletes and other public figures, our relationships with wholesale customers, licensees, and suppliers, our views on political and social issues, or our long-term initiativesenvironmental and goalssocial regarding our impact on the environment and societyinitiatives as a whole, among other factors. Even if we reactrespond appropriately to negative publicity,publicity or other external influences, our customers' perception of our brand image and our reputation could be negatively impacted. Any failure on our part to retain the value and reputation of brands could adversely impact our business.

Our trademarks, intellectual property, and other proprietary rights are extremely important to our success and our competitive position. We devote substantial resources to the establishment and protection of our trademarks and anti-counterfeiting activities worldwide. However, significant counterfeiting and imitation of our products continue to exist.exist, and emerging AI technologies may further facilitate the unauthorized replication, imitation, and distribution of products, branding, logos, marketing materials, and digital content that closely resemble our own. In addition, the laws of certain foreign countries may not protect trademarks or other proprietary rights to the same extent as do the laws of the U.S. and, as a result, our intellectual property may be more vulnerable and difficult to protect in such countries. Over the course of our international expansion, we have experienced conflicts with various third parties that have acquired or claimed ownership rights to some of our key trademarks that include Polo and/or a representation of a polo player astride a horse, or otherwise have contested our rights to our trademarks. We have resolved certain of these conflicts through both legal action and negotiated settlements. We cannot guarantee that the actions we have taken to establish and protect our trademarks and other proprietary rights will be adequate to prevent counterfeiting, lost business, or brand dilution, any of which may have a material adverse effect on our business. We expect to continue to devote substantial resources to challenge brands imitating our products.products, including in response to evolving AI-driven threats. Also, there can be no assurance that others will not assert rights in, or ownership of, trademarks and other proprietary rights of ours or that we will be able to successfully resolve these types of conflicts to our satisfaction or at all.

The department store sector has experienced numerous consolidations, restructurings, bankruptcies, and other ownership changes in recent times, which could potentially increase in frequency as a result of current adverse economic conditions, including changes to existing trade policies and agreements (including higher tariffs on U.S. imports), ongoing inflationary pressures and high interest rates, and/or changes in consumer shopping preferences, such as the continued shift away from traditional brick and mortar wholesale retailers to larger online retailers. Such disruptions have typically resulted in actual or anticipated bankruptcies (such as HudsonSaks Bay Company'sGlobal's recent bankruptcy filing), store closures (such as Macy's previously announced plan to close 150 stores over a 3-year period through calendar 20262028), centralized purchasing decisions, and increased emphasis on inventory management and productivity, which could result in fewer stores carrying our products or reduced demand of our products by our wholesale customers. There can be no assurance that our wholesale customers have adequate financial resources and/or access to additional capital to withstand prolonged periods of adverse economic conditions. The loss of one or more significant wholesale customers, or the loss of a large number of smaller wholesale customers, could have a material adverse effect on our business. Furthermore, the consolidation or other changes with respect to our wholesale customers could decrease our opportunities in the market, increase our reliance on a smaller number of large wholesale customers, and/or decrease our negotiating strength with our wholesale customers.

As of March 29,28, 2025,2026, our consolidated indebtedness was approximately $1.1$1.2 billion, comprised of our outstanding unsecured senior notes. We also maintain several credit and overdraft facilities, including our Global Credit Facility, which collectively had a remaining availability of approximately $805 million as of March 29,28, 2025.2026. Accordingly, the amount of our indebtedness could further increase materially if we decide to draw upon our credit or overdraft facilities. This substantial level of indebtedness could have adverse consequences to our business, including (i) making it more difficult to satisfy our debt obligations as they become due; (ii) impairing our ability to obtain additional financing in the future; (iii) requiring a substantial portion of our cash flows from operations to be used for the payment of principal and interest on our indebtedness, thereby reducing the amount of cash available to fund working capital needs, capital expenditures, and other general corporate purposes; (iv) limiting our flexibility to plan for, or react to, changes in our business; and (v) increasing our vulnerability to adverse economic and industry conditions.

Additionally, interest rates have been at elevated levels in recent years and it is uncertain if and when such rates may decline. Higher interest rates may increase the cost of any borrowings under our various credit and overdraft facilities, as well as negatively impact consumer sentiment and the global economy as a whole, which could result in a material adverse effect on our business.

Although a number of our license agreements prohibitrestrict our licensing partners from entering into licensing arrangements with our competitors, our licensing partners generally are not precluded from offering, under other non-competitor brands, the types of products covered by their license agreements with us. A substantial portion of sales of our products by our domestic licensing partners are also made to our largest customers. While we have significant control over our licensing partners' products and advertising, we rely on our licensing partners for, among other things, operational and financial control over their businesses. Changes in management, reduced sales of licensed products, poor execution, or financial difficulties with respect to any of our licensing partners could adversely affect our revenues, both directly from reduced licensing revenue received and indirectly from reduced sales of our other products. Although we believe that we could replace our existing licensing partners in most circumstances, if necessary, our inability to do so for any period of time could have a material adverse effect on our business.

We are dependent on information technology systems and networks, including the Internet, for a significant portion of our direct-to-consumer sales, including our digital commerce operations and retail business credit card transaction authorization and processing (among other electronic payment methods that we accept). We are also responsible for storing data relating to our customers and employees and rely on third parties for the operation of our digital commerce sites and for the various social media tools and websites we use as part of our marketing strategy. In our normal course of business, we often collect, transmit, and/or retain certain sensitive and confidential customer information, including credit card information. There is significant concern by consumers, employees, and lawmakers alike over the security of personal information transmitted over the Internet, consumer identity theft, and user privacy.privacy, further heightened by advancements in AI.

Cyber-criminals are constantly devising new, sophisticated schemes to gain unauthorized access to computer systems and confidential or sensitive data, including through the increasing use of artificial intelligence.AI. Despite the security measures we currently have in place (including those described in Item 1C — "Cybersecurity"), our facilities and systems and those of our third-party service providers may be vulnerable to targeted or random attacks that could lead to security breaches, acts of vandalism, phishing attacks, denial-of-service attacks, computer viruses, malware, ransomware, misplaced or lost data, programming and/or human errors, or other Internet or email events. Further, our employees may intentionally or inadvertently cause data security breaches that result in the unauthorized access or release of our private and sensitive information, the risk of which may be compounded as the use of artificial intelligenceAI becomes more prevalent. The extensive use of AI-enabled smartphones, tablets, and other wireless devices, as well as our hybrid work policy, under which a substantial portion of our corporate employees work remotely for part of the work week, heighten these and other operational risks. Given the sensitive nature of information collected and processed, the retail industry in particular continues to be the target of many cyber-attacks, which are becoming increasingly more frequent and difficult to anticipate, prevent, and timely detect due to their rapidly evolving nature. Furthermore, economic sanctions issued by one country against another or trade disputes could increase the risk of retaliatory state-sponsored cyber-attacks. Given the rapidly evolving nature, sophistication, and complexity of cyber-attacks, despite our reasonable efforts to mitigate and prevent such attacks, it is possible that we may not be able to anticipate, prevent, timely detect, or implement effective preventive measures to protect against all cyber-attack incidents.

Despite our preventative efforts, our systems are vulnerable to damage or interruption from, among other things, security breaches, computer viruses, technical malfunctions, inadequate system capacity, power outages, natural disasters, and usage errors by our employees or third-party consultants. If our information technology systems become damaged or otherwise cease to function properly, we may have to make significant investments to repair or replace them. Additionally, confidential or sensitive data related to our customers, employees, or vendors could be lost or compromised.compromised, which could expose us to litigation risk.

We are continually improving and upgrading our computer systems, software, and related processes. As described in Item 1 — "Business — Recent Developments," weour areNext inGeneration the early stages of executing a large-scale multi-year transformationalTransformation project, which began during Fiscal 2024, entails upgrading and enhancing our technology infrastructureinfrastructure, including AI and machine learning capabilities, to better enable us to implement process changes to improve productivity and operational efficiencies on a global scale (the "Next Generation Transformation project" or "NGT project").scale. A system project of this scope requires a significant investment in human and financial resources and involves many risks and uncertainties, including failure to operate as designed, failure to properly integrate with other systems, potential loss of data or information, cost overruns, and implementation delays. Any disruptions, delays, or deficiencies in the design, implementation, or transition of such systems could also result in disruptions to our business operations, including the sourcing, sale, and shipment of our product, delays in the collection of cash from our customers, diversion of management attention, and/or adversely affect our ability to accurately report our financial results in a timely manner or otherwise maintain compliance with internal controls. There is also no guarantee that we will realize the anticipated global synergies and benefits related to this project. Any material disruptions in our information technology systems could have a material adverse effect on our business.

In addition, the tax laws and regulations in the countries where we operate may change, or there may be changes in interpretation and enforcement of existing tax laws, which could materially affect our income tax expense in our consolidated financial statements. For example, the Organisation for Economic Co-operation and Development (the "OECD"), which represents a coalition of member countries, has proposed changes to numerous long-standing tax principles through its Base Erosion and Profit Shifting project, which is focused on a number of issues, including the creation of a global minimum tax rate of 15% commonly referred to as "Pillar Two." Although the U.S. effectively withdrew from the OECD global tax agreement in January 2025, other countries where we conduct business, including Switzerland, the United Kingdom, and Germany,business have enacted similar legislation implementing Pillar Two rules (in whole or in part), and additional countries could implement related legislation in the future. In January 2026, the OECD released administrative guidance containing a Side-by-Side ("SbS") system which modifies the operation of the OECD's Pillar Two Global Anti-Base Erosion ("GloBE") Model Rules. The SbS system provides a safe harbor for multinational enterprise ("MNE") groups with an ultimate parent entity in the U.S., which will exempt a U.S. headquartered MNE group from the application of two of the three Pillar Two top-up taxes. We cannot be certain if or when other countries will enact new legislation or how closely any such new legislation will align with the OECD's Pillar Two framework. In addition, in July 2025, the U.S. signed into law tax legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which extended many of the provisions of the Tax Cuts and Jobs Act of 2017 and introduced additional tax provisions. While we continue to evaluate the impact of these legislative changes as new guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. Accordingly, although our business has not currently been materially impacted by those countries that have enacted Pillar Two rules to date,date or the U.S. OBBBA, we cannot guarantee that such impacts will remain immaterial to our business in the future. Furthermore, other taxing authorities of certain state, local, and other foreign jurisdictions may also decide to modify existing tax laws. We cannot predict which, if any, of these items or others will be enacted into law or the resulting impact any such enactment will have on our business operations, which could be material.

As of March 29,28, 2025,2026, Mr. Ralph Lauren, or entities controlled by the Lauren family, held approximately 85% of the voting power of the outstanding common stock of our Company. In addition, Mr. R. Lauren serves as our Executive Chairman and Chief Creative Officer, Mr. R. Lauren's son, Mr. David Lauren, serves as our Chief Branding and Innovation Officer, Strategic Advisor to the CEO, and Vice Chairman of the Board of Directors, and we employ other members of the Lauren family. From time to time, we may have other business dealings with Mr. R. Lauren, members of the Lauren family, or entities affiliated with Mr. R. Lauren or the Lauren family. As a result of his stock ownership and position in our Company, Mr. R. Lauren has the ability to exercise significant control over our business, including, without limitation, (i) the election of our Class B common stock directors, voting separately as a class and (ii) any action requiring the approval of our stockholders, including the adoption of amendments to our certificate of incorporation and the approval of mergers or sales of all or substantially all of our assets.

The following management's discussion and analysis of financial condition and results of operations ("MD&A") should be read together with our audited consolidated financial statements and notes thereto, which are included in this Annual Report on Form 10-K. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, Fiscal 2026 ended on March 28, 2026 and was a 52-week period; Fiscal 2025 ended on March 29, 2025 and was a 52-week period; Fiscal 2024 ended on March 30, 2024 and was a 52-week period; Fiscal 2023 ended on April 1, 2023 and was a 52-week period; and Fiscal 20262027 will end on MarchApril 28,3, 20262027 and will be a 52-week53-week period.

•Results of operations. This section provides an analysis of our results of operations for Fiscal 2025 and Fiscal 2024 as2026 compared to theFiscal respective prior fiscal year.2025.

•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of March 29,28, 2025,2026, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for Fiscal 2025 and Fiscal 2024 as2026 compared to the respective prior fiscal year; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, our supplier finance program, outstanding debt and covenant compliance, common stock repurchases, and payments of dividends; and (iv) a summary of our material cash requirements as of March 29,28, 2025.2026.

Our Company is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, handbags, footwear & accessories, fragrances, home, fragrances, and hospitality. Our long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others.

We diversify our business by geography (North America, Europe, and Asia, among other regions) and channel of distribution (retail, wholesale, and licensing). This allows us to maintain a dynamic balance as our operating results do not depend solely on the performance of any single geographic area or channel of distribution. We sell directly to consumers through our integrated retail channel, which includes our retail stores, concession-based shop-within-shops, and digital commerce operations around the world. Our wholesale sales are made principally to major department stores, specialty stores, and third-party digital partners around the world, as well as to certain third-party-owned stores to which we have licensed the right to operate in defined geographic territories using our trademarks. In addition, we license to third parties for specified periods and geographies the right to access our various trademarks in connection with the licensees' manufacture and sale of designated products, such as certain apparel categories, eyewear, fragrances, and home furnishings.

We are in the early stages of executingbegan a large-scale, multi-year global project in Fiscal 2024 that is expected to significantly transform the way in which we operate our business and further enable our long-term strategic pivot towards a global direct-to-consumer-oriented model (the "Next Generation Transformation project" or "NGT project"). The NGT project willis beexpected completedto continue over the next several years, with implementation expected to occur in phases by region and/or capability, and involves the redesigning of certain end-to-end processes and the implementation of a suite of technology systems on a global scale. Such efforts are expected to result in significant process improvements and the creation of synergies across core areas of operations, includingas merchandisewell buying and planning, procurement, inventory management, retail and wholesale operations, andas financial planning and reporting, better enabling us to optimize inventory levels and increase the speed with which we react to changes in consumer demand across markets, among other benefits.

In connection with the preliminary phase of the NGT project, we incurred other charges of $83.9 million, $25.2 millionmillion, and $5.1 million during Fiscal 20252026, Fiscal 2025, and Fiscal 2024, respectively, which were recorded within restructuring and other charges, net in the consolidated statements of operations.

The global economy and retail industry are impacted by many uncontrollablefactors factors.beyond Mostour recently,control. In April 2025, the U.S. announced significant changes to its trade policies,policies under the authority of the International Emergency Economic Powers Act ("IEEPA"), including widespread tariff increases on imported goods, with potential for new tariffs and further increases andon existing tariffs in the future, as well as revisions or terminations to existing trade agreements. In response, many countries have announced or are otherwise considering retaliatory tariffs on U.S. exports and other trade restrictions. ThisIn hasFebruary led2026, the U.S. Supreme Court invalidated the IEEPA tariffs previously applied to significantour imports, after which a new round of tariffs was announced by the current administration under an alternative U.S. Trade Act authority. In March 2026, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection to refund IEEPA tariffs that were previously collected, and in April 2026, U.S. Customs and Border Protection announced the refund process, leveraging the Consolidated Administration and Processing of Entries Claim Portal through a phased rollout. Although we have taken steps to preserve our rights with respect to the potential refunds, there can be no assurance that we will receive any refunds, in whole or in part. These developments have also increased uncertainty regarding the future relationship between the U.S. and other countries,countries asand wellcould ascontribute growing concerns aboutto a global trade war, higher inflation, and a potential global recession,economic slowdown, any of which has alreadycaused, causedand could continue to cause, significant volatility ofin global stock markets and foreign currency exchange rates.

Other recent economic conditions, including increases in oil and other energy prices, ongoing inflationary pressures, organized labor disputes, high interest rates, significant foreign currency volatility, and military conflicts (as discussed below), continue to impact consumer discretionary income levels, spending, and sentiment in the U.S. and beyond. In response to such pressures, as well as to reduce elevated inventory levels, many retailers (particularly in the U.S. and Europe) continue to resort to promotional activity in an attempt to offset traffic declines and increase conversion. Furthermore, the department store sector has also experienced consolidations, restructurings, bankruptcies, and other ownership changes in recent times, as well as an increase in store closures.

The global economy has also been negatively impacted by ongoing military conflicts, including the Russia-Ukraineconflicts andinvolving Israel-Hamas wars, militant attacks on cargo vessels in the Red Sea,Iran and other hostilities in the Middle East. Although our voluntary decision to suspend operations in Russia has not resulted in a material impact to our consolidated financial statements and our ongoing operations in Israelthe Middle East are also not material, our business has been, and may continue to be, affected by the broader macroeconomic implications resulting from these and other military conflicts, including inflationary pressures, unfavorable foreign currency exchange rates, increases in oil prices and other energy prices, food shortages, and financial market volatility, among other factors, which have adversely impacted consumer sentiment and confidence. It is not clear at this time how long these conflicts will endure, or if they will escalate further with additional countries declaringtaking war against each other,part, which could further amplify the impacts of the various macroeconomic factors described above and potentially result in a prolonged global economic slowdown or recession.

The global supply chain has also been negatively impacted by various factors, including disruptions at U.S. ports and in the Red Sea.Sea and recent increases in oil and gas prices, as discussed above. Although our business has not been significantly impacted by such disruptions, we have experienced some shipping delays impactingaffecting the timing of inventory receipts,receipts. and if suchProlonged disruptions wereor tosustained continueincreases overin afuel prolonged period, itprices could result in further inventory receipt delays and/or higher freight and transportation costs in the near-term and beyond.

We have implemented various global strategies to address many of these challenges and continue to build a foundation for long-term profitable growth by strengthening our consumer-facing areas and driving a more efficient operating model. We continue to monitor the current geopolitical landscape, including the potential impact of higherchanges tariffsto should they become effective.tariffs. We have taken proactive measures in recent years to diversify our supply chain from a geographic perspective and believe we can further mitigate potential cost pressures associated with new tariffs through a combination of our disciplined inventory management, leveraging our relationships with suppliers to reduce product costs, our ability to change country of origin, and pricing actions. However, should the proposed tariffs become effective, our profitability will be negatively impacted.impacted should tariffs increase significantly across our supply chain. Regarding mitigating inflationary pressures, our strategy includes numerous levers, including our ability to effectively increase prices, leveraging our diversified supply chain and strong supplier relationships, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts. Despite the competitive environment, we plan to continue driving our broader long-term strategy of brand elevation, which includes multiple levers to continue driving average unit retail growth and brand equity.

In Fiscal 2025,2026, we reported net revenues of $8.115 billion, net income of $941.1 million, and net income per diluted share of $15.11, as compared to net revenues of $7.079 billion, net income of $742.9 million, and net income per diluted share of $11.61, as compared to net revenues of $6.631 billion, net income of $646.3 million, and net income per diluted share of $9.71$11.61 in Fiscal 2024.2025. The comparability of our operating results has been affected by net restructuring-related charges, impairment of assets, and certain other charges (benefits),charges, as well as foreign currency volatility. Our operating results are also susceptible to changes in macroeconomic conditions.

Our gross profit as a percentage of net revenues increased by 180130 basis points to 68.6%69.9% during Fiscal 2025,2026, primarily driven by the favorable geographic, channel, and product mix, average unit retail ("AUR") growth, product elevation, and lowerfavorable cottonforeign costs,currency effects, more than offsetting incremental pressure from tariffs and non-cotton product costs and unfavorable foreign currency effects.costs.

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues increaseddecreased by 3070 basis points to 54.6%53.9% during Fiscal 2025,2026, largely attributable to geographicoperating andleverage channelon mix,higher asnet wellrevenues as increases across various expense categories, includingdespite higher compensation-related expensesexpenses, marketing investments, and highervariable marketingselling investments due to planned key campaign events.expenses.

Net income increased by $96.6$198.2 million to $742.9$941.1 million in Fiscal 20252026 as compared to Fiscal 2024,2025, primarily due to a $175.7$247.1 million increase in our operating income, partially offset by a $76.7$28.8 million increase in our income tax provision.provision and a $20.1 million increase in our non-operating expense, net. Net income per diluted share increased by $1.90$3.50 to $11.61$15.11 per share during Fiscal 20252026 driven by the higher level of net income and lower weighted-average diluted shares outstanding.

During Fiscal 20252026 and Fiscal 2024,2025, our operating results were negatively impacted by net restructuring-related charges, impairment of assets,charges and certain other charges (benefits) totaling $57.8$118.1 million and $69.9$57.8 million, respectively, which had an after-tax effect of reducing net income by $92.1 million, or $1.48 per diluted share, and $46.0 million, or $0.72 per diluted share, and $52.6 million, or $0.80 per diluted share, respectively. Net income during Fiscal 2024 also reflected an income tax benefit of $13.1 million, or $0.20 per diluted share, recorded in connection with non-recurring income tax events.

We ended Fiscal 20252026 in a net cash and short-term investments position (calculated as cash and cash equivalents, plus short-term investments, less total debt) of $940.4$826.1 million, as compared to $642.7$940.4 million as of the end of Fiscal 2024.2025. The increasedecrease in our net cash and short-term investments position duringat FiscalMarch 202528, 2026 as compared to FiscalMarch 202429, 2025 was primarily due to our operating cash flows of $1.235 billion, partially offset by our use of cash to support Class A common stock repurchases of $480.9$623.8 million, including withholdings in satisfaction of tax obligations for stock-based compensation awards, to invest in our business through $216.2$408.1 million in capital expenditures, and to make dividend payments of $201.1$216.5 million.million, partially offset by our operating cash flows of $1.154 billion.

Net cash provided by operating activities was $1.154 billion during Fiscal 2026, as compared to $1.235 billion during Fiscal 2025, as compared to $1.070 billion during Fiscal 2024.2025. The net increasedecrease in cash provided by operating activities was due to an increase in net income before non-cash charges, as well as a net favorableunfavorable change related to our operating assets and liabilities, including our working capital, as compared to the prior fiscal year.year, partially offset by an increase in net income before non-cash charges.

•pretaxThe comparability of our operating results for Fiscal 2026 and Fiscal 2025 has been affected by certain transactions, including net restructuring-related charges incurred in connection with our restructuring activities, as well asand certain other benefitscharges (charges)totaling as$118.1 summarizedmillion belowand (references$57.8 tomillion, "Notes"respectively. areSee toNote the notes8 to the accompanying consolidated financial statements):statements.

The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the below table below and the discussion that follows have been calculated using unrounded numbers.

Net Revenues. Net revenues increased by $447.6$1.035 million,billion, or 6.8%,14.6%, to $7.079$8.115 billion in Fiscal 20252026 as compared to Fiscal 2024,2025, reflecting growth across all of our reportable segments, partiallyincluding offset by unfavorablefavorable foreign currency effects of $66.1$201.9 million. On a constant currency basis, net revenues increased by $513.7$833.6 million, or 7.7%.11.8%.

The following table summarizes the percentage changechanges in our Fiscal 20252026 consolidated comparable store sales as compared to the prior fiscal year:

Our global average store count during Fiscal 2026 decreased by 2010 stores and concession shops during Fiscal 2025shops, compared with the prior fiscal year, largely driven by concession shop closures in Asia and lower-tierd outlet store closures in North America. The following table details our retail store presence by segment as of the periods presented:Asia.

In addition to our stores, we sell products online in North America, Europe, and Asia through our various digital commerce sites, as well as through our Polo mobile apps in the U.S. and Canada. We also sell products online through various third-party digital partner commerce sites, primarily in Asia.

•a $118.5$211.5 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $121.9$209.5 million, reflecting increasesan increase of $114.3$216.6 million in comparable store salessales, andpartially $7.6offset by a decrease of $7.1 million in non-comparable store sales. The increase in our comparable store sales reflected high-single digitmid-teens AUR growth and higher traffic during Fiscal 20252026 as compared to the prior fiscal year, as well as higher traffic.year. The following table summarizes the percentage changes in comparable store sales related to our North America retail business:

This increase was partially offset by •a $25.0$68.0 million declineincrease related to our AsiaNorth America wholesale business,business largely driven by decreasesimproved inselling South Koreatrends and Japan.strong replenishment orders.

Gross Profit. Gross profit increased by $421.1$816.3 million, or 9.5%,16.8%, to $4.853$5.669 billion in Fiscal 2025,2026, including unfavorablefavorable foreign currency effects of $62.8$163.4 million. Gross profit as a percentage of net revenues increased to 69.9% in Fiscal 2026 from 68.6% in Fiscal 2025 from 66.8% in Fiscal 2024.2025. The 180130 basis point improvement was primarily driven by thereflected favorable impactforeign currency effects of approximately 7030 basis points attributable to geographic and channel mix.points. The remaining 110100 basis point improvement was primarily due to mid-teens AUR growth of approximately high-single digits, lower cotton costs, and favorable product mix,elevation, more than offsetting incremental pressure from non-cotton products coststariffs and unfavorablenon-cotton foreignproduct currency effects of approximately 20 basis points.costs.

Selling, General, and Administrative Expenses. SG&A expenses include costs relating to compensation and benefits, marketing and advertising, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased by $262.5$508.9 million, or 7.3%,13.2%, to $3.863$4.372 billion in Fiscal 2025,2026, including favorableunfavorable foreign currency effects of $30.8$81.7 million. SG&A expenses as a percentage of net revenues increaseddecreased to 53.9% in Fiscal 2026 from 54.6% in Fiscal 2025 from 54.3% in Fiscal 2024.2025. The 3070 basis point increasedecline was largely attributable to geographicoperating andleverage channel mix resulting from growth of our international and retail businesses which typically carryon higher operatingnet expenserevenues margins, as well as increases across various expense categories, includingdespite higher compensation-related expensesexpenses, marketing investments, and marketingvariable investmentsselling due to planned key campaign events.expenses.

Restructuring and Other Charges, Net. During Fiscal 20252026 and Fiscal 2024,2025, we recorded net restructuring charges of $20.4$25.9 million and $55.8$20.4 million, respectively, primarily consisting of severance and benefits costs,costs. asWe wellalso asrecognized other chargesincome of $11.4$2.1 million and $14.0$2.8 million, respectively, primarily related to rent and occupancy costs associated with certain previously exited real estate locations in connection with our restructuring activities for which the related lease agreements have not yet expired. In addition,million during Fiscal 20252026 and Fiscal 2024, we recorded other charges of $25.2 million and $5.1 million, respectively, in connection with our Next Generation Transformation project (refer to "Recent Developments" for additional discussion) and recorded other income of $2.8 million and $7.0 million,2025, respectively, related to cash consideration received from Regent, L.P. in connection with our previously soldformer Club Monaco business.business, which was sold as part of our restructuring activities during our fiscal year ended April 2, 2022. We donated this income both years to The Ralph Lauren Corporate Foundation, a non-profit,non-profit charitable foundation, which resulted in related offsetting donation expenses of $2.8$2.1 million and $7.0$2.8 million during Fiscal 20252026 and Fiscal 2024,2025, respectively. See Note 9 to the accompanying consolidated financial statements.

Operating Income. Operating income increased by $175.7$247.1 million, or 23.2%,26.5%, to $932.1$1.179 millionbillion during Fiscal 2025,2026, reflecting unfavorablefavorable foreign currency effects of $32.0$81.8 million. Our operating results during Fiscal 20252026 and Fiscal 20242025 were negatively impacted by net restructuring-related charges, impairment of assets,charges and certain other charges (benefits) totaling $57.8$118.1 million and $69.9$57.8 million, respectively. Operating income as a percentage of net revenues was 13.2%14.5% in Fiscal 2025,2026, reflecting a 180130 basis point improvement from Fiscal 2024.2025. The improvement in operating income as a percentage of net revenues was primarily driven by the increase in our gross margin, as well as lower net restructuring-related chargesmargin and certain other charges (benefits) recorded during Fiscal 2025 as compared to the prior fiscal year, partially offset by the increasereduction in SG&A expenses as a percentage of net revenues, partially offset by higher net restructuring-related charges and certain other charges recorded during Fiscal 2026 as compared to the prior fiscal year, all as previously discussed.

(a)See discussion above for additional information related to impairment of assets and restructuring and other charges, net recorded during the fiscal years presented.

North America operating margin improved by 24080 basis pointspoints, primarily due to ana increasereduction of 230 basis points in gross margin and a decline of 10130 basis points in SG&A expense as a percentage of net revenues.revenues, Themore overallthan improvementoffsetting ina operating margin was inclusivedecline of the unfavorable impact of approximately 1050 basis points attributablein gross margin due to channeltariff-related mix.pressures.

•the impact to our business resulting from the potential imposition of additional tariffs, duties, or taxes, changes to existing trade agreements, and other charges or barriers to trade, including those recently announcedimposed by the U.S. following the U.S. Supreme Court ruling against the tariffs previously announced under the authority of the International Emergency Economic Powers Act ("IEEPA") and resulting potential refund status of the IEEPA tariffs, any responding retaliatory actionsmeasures implemented by impacted countries, and any related impact to global stock markets, foreign currency exchange rates, and existing inflationary pressures, as well as our ability to implement mitigating sourcing strategies;

•the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including potential business disruptions related to ongoing military conflicts taking place in various parts of the world, most notably the Russia-Ukraineconflicts andinvolving Israel-Hamas wars, the U.S.-Venezuela conflict, militant attacks on cargo vessels in the Red Sea,Iran and other recentongoing hostilities in the Middle East, civil and political unrest, diplomatic tensions between the U.S. and other countries and any resulting anti-American sentiment, high interest rates, and bank failures, among other factors described herein;

•the impact to our business resulting from a recessionprolonged slowdown in economic conditions or changes in consumers' ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionaryperiods periods,of economic downturn, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory;

•the potential impact to our business resulting from supply chain disruptions, including those caused by capacity constraints, closed factories and/or labor shortages (stemming from pandemic diseases, labor disputes, strikes, or otherwise), man-made or natural disasters, scarcity of raw materials, port congestion, and scrutiny or detention of goods produced in certain territories resulting from laws, regulations, or trade restrictions, such as those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA") or the Countering America's Adversaries Through Sanctions Act ("CAATSA"), which could result in shipment approval delays leading to inventory shortages and lost sales, as well as potential shipping delays, inventory shortages, and/or higher freight and other operating costs resulting from port strikes, the recent Red Sea crisis, and/or disruptions to major waterwayswaterways, suchand/or asincreases thein Suezoil and Panamaother canalsenergy prices;

•our ability to achieve anticipated operating enhancements and cost reductions from our strategic initiatives and restructuring plans, as well as the resulting impact to our business resulting from restructuring-related charges,business, which may be dilutive to our earnings in the short term;

In this Form 10-Q, references to "Ralph Lauren," "ourselves," "we," "our," "us," and the "Company" refer to Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise. We utilize a 52-53 week fiscal year ending on the Saturday closest to March 31. As such, fiscal year 20262027 will end on April 3, 2027 and will be a 53-week period ("Fiscal 2027"). Fiscal year 2026 ended on March 28, 2026 and will bewas a 52-week period ("Fiscal 2026"). The first quarter of Fiscal year 20252027 ended on MarchJune 29,27, 20252026 and was also a 52-week13-week period ("Fiscal 2025").period. The thirdfirst quarter of Fiscal 2026 ended on December 27, 2025 and was a 13-week period. The third quarter of Fiscal 2025 ended on DecemberJune 28, 20242025 and was also a 13-week period.

•Overview. This section provides a general description of our business, global economic conditions and industry trends, and a summary of our financial performance for the three-month and nine-month periodsperiod ended DecemberJune 27, 2025.2026. In addition, this section includes a discussion of recent developments and transactions affecting comparability that we believe are important in understanding our results of operations and financial condition, and in anticipating future trends.

•Results of operations. This section provides an analysis of our results of operations for the three-month and nine-month periodsperiod ended DecemberJune 27, 2025 as2026 compared to the three-month and nine-month periodsperiod ended DecemberJune 28, 2024.2025.

•Financial condition and liquidity. This section provides a discussion of our financial condition and liquidity as of DecemberJune 27, 2025,2026, which includes (i) an analysis of our financial condition as compared to the prior fiscal year-end; (ii) an analysis of changes in our cash flows for the ninethree months ended DecemberJune 27, 2025 as2026 compared to the ninethree months ended DecemberJune 28, 20242025; (iii) an analysis of our liquidity, including the availability under our commercial paper borrowing program and credit facilities, our supplier finance program, outstanding debt and covenant compliance, common stock repurchases, and payments of dividends; and (iv) a description of any material changes in our material cash requirements since March 29,28, 2025.2026.

Our Company is a global leader in the design, marketing, and distribution of luxury lifestyle products, including apparel, handbags, footwear & accessories, fragrances, home, fragrances, and hospitality. Our long-standing reputation and distinctive image have been developed across a wide range of products, brands, distribution channels, and international markets. Our brand names include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren Ralph Lauren, RLX Ralph Lauren, Polo Ralph Lauren Children, and Chaps, among others.

Our business is typically affected by seasonal trends, with higher levels of retail sales in our second and third fiscal quarters and higher wholesale sales in our second and fourth fiscal quarters. These trends result primarily from the timing of key vacation travel, back-to-school, and holiday shopping periods impacting our retail business and timing of seasonal wholesale shipments. As a result of changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from pandemic diseases and other catastrophic events, historical quarterly operating trends and working capital requirements may not be indicative of our future performance. In addition, fluctuations in sales, operating income (loss), and cash flows in any fiscal quarter may be affected by other events affecting retail sales, such as changes in weather patterns. Accordingly, our operating results and cash flows for the three-month and nine-month periodsperiod ended DecemberJune 27, 20252026 are not necessarily indicative of the operating results and cash flows that may be expected for the full Fiscal 2026.2027.

During Fiscal 2025, weWe began a large-scale, multi-year global project during our fiscal year ended March 30, 2024 that is expected to significantly transform the way in which we operate our business and further enable our long-term strategic pivot towards a global direct-to-consumer-oriented model (the "Next Generation Transformation project" or "NGT project"). The NGT project iswill beingspan completedthe next several years, with implementation occurring in phases by region and/or capability, and involves the redesign of certain end-to-end processes and the implementation of a suite of technology systems on a global scale. SuchThese efforts are expected to result in significant process improvements and the creation of synergies across core areas of operations, includingas merchandisewell buying and planning, procurement, inventory management, retail and wholesale operations, andas financial planning and reporting, better enabling us to optimize inventory levels and increase the speed with which we react to changes in consumer demand across markets, among other benefits.

In connection with the current phase of the NGT project, we incurred other charges of $25.0$20.8 million and $61.7$11.0 million during the three-month and nine-month periods ended DecemberJune 27, 2025, respectively,2026 and $9.1 million and $17.1 million during the three-month and nine-month periods ended DecemberJune 28, 2024,2025, respectively, which were recorded within restructuring and other charges, net in the consolidated statements of operations.

The global economy and retail industry are impacted by many factors beyond our control. MostIn recently,April 2025, the U.S. announced significant changes to its trade policies,policies under the authority of IEEPA, including widespreadbroad-based tariff increases on foreign imported goods, with potential for new tariffs and further future increases onto existing tariffs in the future,tariffs, as well as revisions or terminations to existing trade agreements. In response, many countries have announced or are otherwise considering retaliatory tariffs on U.S. exports and other trade restrictions. ThisIn hasFebruary led2026, the U.S. Supreme Court invalidated the IEEPA tariffs previously applied to significantour foreign imports, after which the U.S. announced additional tariffs under other trade authorities. In March 2026, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection ("CBP") to refund IEEPA tariffs that were previously collected, and in April 2026, CBP announced the refund process, leveraging the Consolidated Administration and Processing of Entries Claim Portal through a phased rollout. While we have submitted refund claims for eligible IEEPA tariffs previously paid, the ultimate amount and timing of collection, and approval of any such refunds remain uncertain. Moreover, trade policy developments are ongoing and continue to create uncertainty regarding the future relationship between the U.S. and other countries, asand wellcould ascontribute concernsto about a globalfurther trade war,restrictions, higher inflation, slower economic growth, supply chain disruptions, and a potential global recession, which has already caused significantcontinued volatility ofin global stock markets and foreign currency exchange rates. In addition, the U.S. signed into law tax legislation commonly referred to as the One Big Beautiful Bill Act in July 2025, which extends many of the provisions of the Tax Cuts and Jobs Act of 2017, as well as introduces certain other new provisions.

TheIn addition to evolving trade policies, the global economy has also been negatively impacted by ongoing military conflicts, including thethose Russia-Ukraineinvolving and Israel-Hamas wars, the U.S.-Venezuela conflict, militant attacks on cargo vessels in the Red Sea,Iran and other hostilities in the Middle East.East, which have increased uncertainty around global energy and key shipping routes. Although our voluntary decision to suspend operations in Russia has not resulted in a material impact to our consolidated financial statements and our ongoing operations in Israelthe Middle East are also not material, our business has been, and may continue to be, affected by the broader macroeconomic and supply chain implications resulting fromof these conflicts and otherrelated military conflicts,disruptions, including higher energy, freight, and transportation costs, inflationary pressures, unfavorable foreign currency exchange rates, increases in energy prices, food shortages, and financial market volatility, and periodic shipping delays, among other factors,factors. whichWhile our business has not been significantly impacted by such disruptions, we have adverselyexperienced impactedsome consumershipping sentimentdelays affecting the timing of inventory receipts. The duration and confidence.potential Itescalation is not clear at this time how longof these conflicts willand endure,related ordisruptions ifremain they will escalate further with additional countries taking part, which could further amplify the impacts of the various macroeconomic factors described aboveuncertain and potentiallycould result in afurther globalinventory recession.receipt delays and/or higher freight and transportation costs in the near-term and beyond.

WeIn response to these macroeconomic, industry, and geopolitical pressures, we have implemented various global strategies to address many of these challenges and continue to build a foundation for long-term profitable growth by strengthening our consumer-facing areas and driving a more efficient operating model. We continue to monitor the current geopolitical landscape, including the potential impact of changes to tariffs. We have takenalso proactiveproactively measures in recent years to diversifydiversified our supply chain from a geographic perspective and believe we can further mitigate potential cost pressures associated with new tariffs through a combination of our disciplined inventory management, leveragingsupplier our relationships with suppliers to reduce product costs,negotiations, our ability to change country of origin, and pricing actions. However, ourthe profitabilitytariff willenvironment beremains negativelydynamic impactedand shouldunpredictable, and significant increases in tariffs increase significantly across our supply chain.chain Regardingcould mitigatingnegatively inflationary pressures,impact our strategy includes numerous levers, including our ability to effectively increase prices, leveraging our diversified supply chain and strong supplier relationships, and leveraging our in-house quality control to reduce time and cost from the manufacturing process, among other efforts.profitability. Despite the competitive environment, we planremain tofocused continueon drivingexecuting our broader long-term strategy of brand elevation, which includes multiple levers to continue driving average unit retail growth and brand equity. We continue to monitor the geopolitical and macroeconomic environment, including evolving trade policies, tariffs, and disruption or volatility affecting key shipping routes, and adjust our operating strategies to help mitigate the related impacts on our results of operations.

During the three months ended DecemberJune 27, 2025,2026, we reported net revenues of $2.406$1.960 billion, net income of $361.6$262.2 million, and net income per diluted share of $5.82,$4.28, as compared to net revenues of $2.143$1.719 billion, net income of $297.4$220.4 million, and net income per diluted share of $4.66$3.52 during the three months ended DecemberJune 28, 2024. During the nine months ended December 27, 2025, we reported net revenues of $6.136 billion, net income of $789.5 million, and net income per diluted share of $12.66, as compared to net revenues of $5.382 billion, net income of $613.9 million, and net income per diluted share of $9.57 during the nine months ended December 28, 2024.2025. The comparability of our operating results has been affected by net restructuring-related charges and certain other charges,charges (benefits), as well as foreign currency volatility. Our operating results are also susceptible to changes in macroeconomic conditions.

Our operating performance for the three-month and nine-month periodsperiod ended DecemberJune 27, 20252026 as compared to the prior fiscal year periodsperiod reflected revenue growth of 12.2% and 14.0%, respectively,14.0% on a reported basis and 10.0% and 11.7%, respectively,13.4% on a constant currency basis, as defined within "Transactions and Trends Affecting Comparability of Results of Operations and Financial Condition" below. Net revenues reflected growth across all of our reportable segments.

Our gross profit as a percentage of net revenues increased by 150140 basis points to 69.9%73.7% during the three months ended DecemberJune 27, 2025 and by 140 basis points to 69.9% during the nine months ended December 27, 2025,2026 as compared to the prior fiscal year periods,period, primarily driven by average unit retail ("AUR") growth, favorableand, productto mix,a lesser extent, favorable foreign currency effects,channel and lowergeographic cottonmix costs,shifts, more than offsetting pressure from tariffs and non-cottonother product costs.

Selling, general, and administrative ("SG&A") expenses as a percentage of net revenues declined by 70 basis points to 49.0% during the three months ended DecemberJune 27, 20252026 anddeclined by 11020 basis points to 52.3% during the nine months ended December 27, 2025,55.0% as compared to the prior fiscal year periods,period, largely attributable to operating leverage on higher net revenues despite higher compensation-related expenses, marketing investments, and variable selling expenses.revenues.

Net income increased by $64.2$41.8 million to $361.6$262.2 million during the three months ended DecemberJune 27, 20252026 as compared to the three months ended DecemberJune 28, 2024,2025, primarily due to ana $81.6$68.8 million increase in our operating income, partiallypartly offset by a $15.9$22.4 million increase in our income tax provision. Net income per diluted share increased by $1.16$0.76 to $5.82$4.28 per share during the three months ended DecemberJune 27, 20252026 as compared to the three months ended DecemberJune 28, 2024, primarily2025, driven by the higher level of net income and lower weighted-average diluted shares outstanding. Net income increased by $175.6 million to $789.5 million during the nine months ended December 27, 2025 as compared to the nine months ended December 28, 2024, primarily due to a $213.5 million increase in our operating income, partially offset by a $20.6 million increase in our income tax provision and a $17.3 million increase in non-operating expense, net. Net income per diluted share increased by $3.09 to $12.66 per share during the nine months ended December 27, 2025 as compared to the nine months ended December 28, 2024, driven by the higher level of net income and lower weighted-average diluted shares outstanding.

Our operating results during each ofDuring the three-month periods ended DecemberJune 27, 20252026 and DecemberJune 28, 2024, were negatively impacted by net restructuring-related charges and certain other charges totaling $31.8 million and $12.2 million, respectively, which had an after-tax effect of reducing net income by $25.2 million, or $0.40 per diluted share, and $10.5 million, or $0.16 per diluted share, respectively. During the nine-month periods ended December 27, 2025 and December 28, 2024,2025, our operating results were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $88.4$23.5 million and $38.0$19.3 million, respectively, which had an after-tax effect of reducing net income by $69.9$18.8 million, or $1.12$0.31 per diluted share, and $30.7$15.4 million, or $0.48$0.25 per diluted share, respectively.

We ended the third quarterAs of FiscalJune 202627, in a2026, net cash and short-term investments position (calculated as cash and cash equivalents, plus short-term investments, less total debt) ofwas $1.013$702.2 billion,million, as compared to $940.4$826.1 million as of the end of Fiscal 2025.2026. The increasedecrease in our net cash and short-term investments position was primarily due to our operating cash flows of $1.009 billion and the favorable effect of exchange rate changes of $61.9 million, primarily related to our cash and cash equivalents, partially offset by our use of cash to support Class A common stock repurchases of $473.4$325.1 million, including $75.1 million of share withholdings in satisfaction of tax obligations forrelated to the vesting of stock-based compensation awards, to make dividend payments of $54.8 million, to invest in our business through $356.7$53.4 million inof capital expenditures, and tothe makeunfavorable dividend paymentseffect of $161.3exchange rate changes of $16.5 million, primarily related to our cash and cash equivalents, partly offset by our operating cash flows of $339.3 million.

Net cash provided by operating activities was $1.009$339.3 billionmillion during the ninethree months ended DecemberJune 27, 2025,2026, as compared to $1.113$176.1 billionmillion during the ninethree months ended DecemberJune 28, 2024.2025. The net decreaseincrease in cash provided by operating activities was primarily due to a net unfavorablefavorable change related to ourlower operatinginventory assets and liabilities, including our working capital,levels as compared to the prior fiscal year period, partiallyas offsetwell byas an increase in net income before non-cash charges.

Our equity increaseddecreased to $2.888$2.722 billion as of DecemberJune 27, 20252026 compared to $2.589$2.841 billion as of March 29,28, 20252026 due to our share repurchase activity and dividends declared during the three months ended June 27, 2026, partly offset by our comprehensive income and the net impact of stock-based compensation arrangements, partially offset by our share repurchase activity and dividends declared during the nine months ended December 27, 2025.arrangements.

The comparability of our operating results for the three-month and nine-month periods ended DecemberJune 27, 2026 and June 28, 2025 has been affected by certain transactions, including net restructuring-relatedpretax charges incurred in connection with our restructuring activities and certain other benefits (charges), totalingas $31.8summarized millionbelow and(references $88.4to million,"Notes" respectively,are and $12.2 million and $38.0 million duringto the three-month and nine-month periods ended December 28, 2024, respectively. See Note 7notes to the accompanying consolidated financial statements.statements):

Three Months Ended DecemberJune 27, 20252026 Compared to Three Months Ended DecemberJune 28, 20242025

The following table summarizes our results of operations and expresses the percentage relationship to net revenues of certain financial statement captions. All percentages shown in the table below table and the discussion that follows have been calculated using unrounded numbers.

Net Revenues. Net revenues increased by $262.5$240.7 million, or 12.2%,14.0%, to $2.406$1.960 billion during the three months ended DecemberJune 27, 20252026 as compared to the three months ended DecemberJune 28, 2024,2025, reflecting growth across all of our reportable segments, including favorable foreign currency effects of $47.9$10.0 million. On a constant currency basis, net revenues increased by $214.6$230.7 million, or 10.0%.13.4%.

The following table summarizes the percentage changeschange in our consolidated comparable store sales for the three months ended DecemberJune 27, 20252026 as compared to the prior fiscal year period:

Our global average store count increased by 1 store and concession shop during the three months ended DecemberJune 27, 20252026 compared with the three months ended DecemberJune 28, 2024,2025, primarily due to new full price store openings in Asia, largely offset by concession shop closures also in Asia. The following table details our retail store presence by segment as of the periods presented:

In addition to our stores, we sell products online in North America, Europe, and Asia through our various digital commerce sites, as well as through our Polo mobile apps in the U.S. and Canada. We also sell products online through various third-party digital partner commerce sites, primarily in Asia.

North America net revenues — Net revenues increased by $80.6$84.1 million, or 8.1%,12.8%, during the three months ended DecemberJune 27, 20252026 as compared to the three months ended DecemberJune 28, 2024.2025. On a constant currency basis, net revenues increased by $80.2$84.0 million, or 8.0%.12.8%.

•a $52.6$42.2 million increase related to our North America retail business. On a constant currency basis, net revenues increased by $52.1$42.1 million, reflecting increasesan increase of $49.9$42.0 million in comparable store sales and $2.2 million in non-comparable store sales. The increase in our comparable store sales reflected strong double-digithigh-teens AUR growth,growth as well asand higher traffic,traffic during the three months ended DecemberJune 27, 20252026 as compared to the priorthree fiscalmonths yearended period.June 28, 2025. The following table summarizes the percentage changes in comparable store sales related to our North America retail business:

•a $28.0$41.9 million increase related to our North America wholesale business largelybusiness, driven by improvedstrong selling trends and strong replenishment orders.orders, including resumed shipments to a luxury wholesale account, and a favorable timing shift of inventory shipments.

Europe net revenues — Net revenues increased by $72.1$39.9 million, or 11.9%,7.2%, during the three months ended DecemberJune 27, 20252026 as compared to the three months ended DecemberJune 28, 2024.2025. On a constant currency basis, net revenues increased by $25.3$25.2 million, or 4.2%.4.6%.

•a $40.8$30.8 million increase related to our Europe wholesale business largelybusiness, driven by strongerpositive re-orderselling trends and a favorable timing shift of inventory shipments, as well as favorable foreign currency effects of $20.8$8.3 million, which more than offset a timing shift of inventory shipments into the first half of Fiscal 2026 and planned reductions within the off-price wholesale channelmillion; and

•a $31.3$9.1 million increase related to our Europe retail business, inclusive of favorable foreign currency effects of $26.0$6.4 million. On a constant currency basis, net revenues increased by $5.3$2.7 million, reflecting increasesan increase of $4.2$3.7 million in comparable store sales, partly offset by a decrease of $1.0 million in non-comparable store sales and $1.1 million in comparable store sales. The increase in our comparable store sales reflected mid-singlelow-single digit AUR growth, as well as higher traffic,growth during the three months ended DecemberJune 27, 20252026 as compared to the priorthree fiscalmonths yearended period.June 28, 2025. The following table summarizes the percentage changes in comparable store sales related to our Europe retail business:

Asia net revenues — Net revenues increased by $113.6$115.3 million, or 22.4%,24.3%, during the three months ended DecemberJune 27, 20252026 as compared to the three months ended DecemberJune 28, 2024.2025. On a constant currency basis, net revenues increased by $112.9$120.1 million, or 22.3%.25.3%.

•a $111.3$116.8 million increase related to our Asia retail business, inclusive of favorableunfavorable foreign currency effects of $0.7$5.0 million. On a constant currency basis, net revenues increased by $110.6$121.8 million, reflecting increases of $79.9$88.3 million in comparable store sales and $30.7$33.5 million in non-comparable store sales. The increase in our comparable store sales reflected mid-teens AUR growth,growth as well asand higher traffic,traffic during the three months ended DecemberJune 27, 20252026 as compared to the priorthree fiscalmonths yearended period.June 28, 2025. The following table summarizes the percentage changes in comparable store sales related to our Asia retail business:

Gross Profit. Gross profit increased by $215.6$201.9 million, or 14.7%,16.2%, to $1.682$1.444 billion for the three months ended DecemberJune 27, 2025,2026, including favorable foreign currency effects of $34.6$8.9 million. Gross profit as a percentage of net revenues increased to 69.9%73.7% for the three months ended DecemberJune 27, 20252026 from 68.4%72.3% for the three months ended DecemberJune 28, 2024.2025. The 150140 basis point increase reflected favorable foreign currency effects of approximately 10 basis points. The remaining 140130 basis point improvement was primarily due to high-teensmid-teens AUR growth,growth as well as favorable product mix,channel and lowergeographic cottonmix costs,shifts, more than offsetting pressure from tariffs and non-cottonother product costs.

Selling, General, and Administrative Expenses. SG&A expenses include costs relating to compensation and benefits, marketing and advertising, rent and occupancy, distribution, information technology, legal, depreciation and amortization, bad debt, and other selling and administrative costs. SG&A expenses increased by $114.4$127.6 million, or 10.7%,13.4%, to $1.179$1.077 billion for the three months ended DecemberJune 27, 2025,2026, including unfavorable foreign currency effects of $18.9$4.4 million. SG&A expenses as a percentage of net revenues declined to 49.0%55.0% for the three months ended DecemberJune 27, 20252026 from 49.7%55.2% for the three months ended DecemberJune 28, 2024.2025. The 7020 basis point improvementdecline was largely attributable to operating leverage on higher net revenues despite higher marketing investments, compensation-related expenses, and variable selling expenses.revenues.

Restructuring and Other Charges, Net. DuringRestructuring and other charges, net during the three-month periods ended DecemberJune 27, 20252026 and DecemberJune 28, 2024,2025 weconsisted recordedprimarily of net restructuring charges of $6.5$3.0 million and $1.6$6.4 million, respectively, primarilyassociated consisting ofwith severance and benefits costs, as well as other charges of $0.8$20.8 million and $2.2$11.0 million, respectively, related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. In addition, during the three-month periods ended December 27, 2025 and December 28, 2024, we recorded other charges of $25.0 million and $9.1 million, respectively,incurred in connection with our Next Generation Transformation project (refer to "Recent Developments" for additional discussion) and other income of $0.5 million and $0.7 million during the three-month periods ended December 27, 2025 and December 28, 2024, respectively, related to consideration received from Regent, L.P. in connection with our previously sold Club Monaco business.. See Note 7 to the accompanying consolidated financial statements.

Operating Income. Operating income increased by $81.6$68.8 million, or 21.0%,25.2%, to $471.3$342.4 million for the three months ended DecemberJune 27, 2025,2026, reflecting favorable foreign currency effects of $15.7$4.5 million. Our operating results during the three-month periods ended DecemberJune 27, 20252026 and DecemberJune 28, 20242025 were negatively impacted by net restructuring-related charges and certain other charges (benefits) totaling $31.8$23.5 million and $12.2$19.3 million, respectively. Operating income as a percentage of net revenues was 19.6%17.5% for the three months ended DecemberJune 27, 2025,2026, reflecting a 140160 basis point increase from the prior fiscal year period. The increase in operating income as a percentage of net revenues was primarily driven by the increase in our gross margin, as well as thea decrease in SG&A expenses as a percentage of net revenues, partially offset by the higher net restructuring-related charges and certain other charges recorded during the three months ended December 27, 2025 as compared to the prior fiscal year period, all as previously discussed.revenues.

North America operating margin improved by 70240 basis points, primarily due to a declinereduction of 50130 basis points in SG&A expense as a percentage of net revenues and an increase of 30120 basis points in gross margin.

Europe operating margin declinedwas byflat, 150 basis points, primarily due towith an increase of 210160 basis points in gross margin offset by an increase in SG&A expenses as a percentage of net revenues, drivenwhich largelyincluded by the timing ofhigher marketing investments,expenses. partially offset by a 60 basis point increase in gross margin. The overall decline inThis operating margin was inclusive of the favorable impact of approximately 40 basis points related to foreign currency effects.

Asia operating margin improved by 490280 basis points, primarily due to an increase of 250 basis points in gross margin and a declinereduction of 240 basis points in SG&A expenses as a percentage of net revenues.revenues and an increase of 50 basis points in gross margin. The overall improvement in operating margin was inclusive of the favorable impact of 10 basis points related to foreign currency effects.

Corporate expenses decreasedincreased by $4.4$25.2 million to $192.5$190.0 million during the three months ended DecemberJune 27, 20252026 as compared to the prior fiscal year period.year. The declineincrease in corporate expenses was primarily due to higher compensation-related expenses of $25.9 million and staff-related expenses of $2.9 million, partly offset by higher intercompany sourcing commission of $9.9$3.6 million (which is offset at the segment level and eliminates in consolidation), partially offset by higher compensation-related expenses of $4.5 million and higher other charges of $1.0 million..

Non-operating Income (Expense), Net. Non-operating income (expense), net is comprised of interest expense, interest income, and other income (expense), net, which includes foreign currency gains (losses), equity in income (losses) from our equity-method investees, and other non-operating expenses. During the three months ended DecemberJune 27, 2025,2026, we reported non-operating expense, net of $7.5$0.2 million as compared to $6.0non-operating income, net of $4.4 million during the three months ended DecemberJune 28, 2024. The $1.5 million increase in non-operating expense, net was driven by:2025.