By Anuja Bharat Mistry
(Reuters) -Ralph Lauren on Thursday raised its annual revenue forecast after beating quarterly estimates on resilient demand for its high-priced Polo shirts and cotton cable-knit sweaters across regions.
The affordable luxury apparel maker has seen strong sales despite selectively raising prices, supported by loyalty of its affluent customer base.
Ralph Lauren’s visibility has grown with celebrities such as Taylor Swift and Selena Gomez wearing its designs for special events, while investments in innovation and marketing attract younger shoppers seeking trendy, affordable luxury.
“To date, we have not seen any meaningful changes in consumer behavior across our key consumer segments or markets,” said CEO Patrice Louvet, adding that demand remains healthy and the core customer is resilient.
Second quarter revenue, on a reported basis, rose 13% in North America and 22% in Europe, while for China, it was up over 30% versus a year ago.
“The brand sits in the ‘affordable luxury’, so it is well placed to capture aspirational consumers who are trading down from ultra-luxury labels but still seeking quality and heritage,” said Suzy Davidkhanian, analyst with eMarketer.
Ralph Lauren joined peers such as LVMH, L’Oreal, Hermes and Estee Lauder in reporting improved sales in China, signaling hope in one of the biggest markets for luxury brands.
Lower promotions and cotton costs, coupled with price hikes, helped Ralph Lauren counter higher tariffs and lift its quarterly gross margin by 100 basis points to 68%.
It expects full-year revenue to increase 5% to 7% on a constant currency basis, versus prior forecast of a low- to mid-single-digit percentage growth.
Its quarterly revenue of $2.01 billion beat analysts’ estimates of $1.89 billion, according to data compiled by LSEG.
Ralph Lauren’s quarterly adjusted profit of $3.79 per share topped estimates of $3.44 per share.
Shares of Ralph Lauren dipped about 1%, reflecting a decline in the broader market.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Leroy Leo)
