Ralph Lauren (NYSE: RL) reported third-quarter earnings and revenue that exceeded Wall Street expectations, supported by strong holiday demand and continued spending from higher-income consumers. However, shares fell more than 7% intra-day on Thursday after the company warned of margin pressure from tariffs.

The apparel maker posted earnings per share of $5.82, slightly above analyst estimates of $5.78. Revenue rose 12% year over year to $2.41 billion, also topping expectations of $2.30 billion.

Sales were supported by demand for products such as Polo shirts and leather handbags, as affluent consumers continued to spend on luxury goods despite economic pressure on lower- and middle-income households.

On an adjusted basis, earnings per share reached $6.22, up 29% from a year earlier, while reported EPS increased 25% from $4.66. Revenue grew 10% in constant currency terms, with foreign exchange adding roughly 220 basis points to growth.

Ralph Lauren said fourth-quarter operating margin is expected to contract by approximately 80 to 120 basis points due to higher U.S. tariffs.

For fiscal 2026, the company raised its outlook and now expects constant-currency revenue growth in the high-single-digit to low-double-digit range, up from its prior forecast of 5% to 7%. Operating margin expansion is projected at 100 to 140 basis points, compared with an earlier estimate of 60 to 80 basis points. Fourth-quarter revenue is expected to grow at a mid-single-digit rate in constant currency.