Ralph Lauren beat profit expectations for the 14th straight quarter, driven by robust holiday demand for its pricey cashmere sweaters, coats and cocktail dresses in the US and a strong rebound in China, sending its shares 11 percent higher on Thursday.
Despite economic uncertainties, wealthy shoppers in the US went on a luxury spending spree over the holiday season, driving higher sales at Ralph Lauren’s retail store sales and on its online platform.
Known for its timeless, understated fashion, Ralph Lauren has also been able to capitalise on the growing cachet for “quiet luxury” among consumers through its neutral-toned shirts, jackets, trousers and bags.
That, coupled with a strong roster of holiday-themed apparel including bright-coloured Christmas jumpers and plaid cardigans, helped the Polo shirt maker offset lingering pressures in its North American wholesale business.
Meanwhile, luxury brands have seen a roaring comeback in demand in China which has propped up the industry, with solid sales reports from LVMH and Cartier-owner Richemont in the recent weeks.
Ralph Lauren’s sales surged more than 30 percent in China, building on the 20 percent increase seen in the prior quarter. Peer Tapestry, which makes Coach handbags, also saw sales in China bounce back strongly in the quarter.
“Ralph Lauren has really been focused on the Chinese consumer and … bringing in unique product in the rest of Asia,” said Jessica Ramirez, a senior research analyst for Jane Hali & Associates. She added this would further help the company build its direct-to-consumer business.
Net revenue at Ralph Lauren climbed 6 percent to $1.93 billion in the fiscal third quarter, beating expectations of $1.87 billion, LSEG data showed.
The company also lifted its annual profit margin outlook, expecting gross margin to increase by roughly 140-180 basis points in constant currency, compared to the 120-170 basis point increase it had previously forecast.
By Deborah Sophia in Bengaluru; editing by Milla Nissi
Ralph Lauren Beats Sales Estimates on Steady Demand
Shares of Ralph Lauren were up 1 percent in choppy pre-market trading, after it also projected current-quarter sales below market expectations citing caution around wholesale demand.