(Reuters) -Ralph Lauren raised its annual revenue forecast after beating quarterly estimates on Thursday due to resilient demand for its high-priced Polo shirts and cotton cable knit sweaters across regions.
Shares of the company surged about 4% in early trading.
The affordable luxury apparel maker has seen resilient sales despite raising prices of select products, supported by loyalty of its affluent customer base.
Ralph Lauren’s visibility has been bolstered by celebrities such as Taylor Swift and Selena Gomez wearing its designs at special events. Coupled with investments in innovation and marketing, the company is attracting younger shoppers seeking trendy, affordable luxury styles.
Second quarter revenue from North America rose 13% on reported basis, while that from Europe increased 22%. For China, it was up more than 30%, in line with the previous quarter.
“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 non-material cotton costs, expanding 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, compared with its 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.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Leroy Leo)
