Ralph Lauren’s net revenue increased 3 per cent year on year to US$1.6 billion (2 per cent in constant currency) in the second quarter, which the company said exceeded its expectations.
The growth was largely driven by Asia revenue, which rose 10 per cent to $348 million (13 per cent in constant currency). Comparable store sales in the region were up by 8 per cent.
North American sales dropped 1 per cent to $718 million, but revenue from Europe was up 7 per cent to $527 million but flat in constant currency.
The company posted a gross profit of $1.1 billion and an operating income of $164 million, down 20.4 per cent as sales gains were offset by higher rents and elevated costs from marketing.
Patrice Louvet, president and CEO of Ralph Lauren, said the performance was solid thanks to pricing power and continued strategic investments.
“While we continue to navigate an uncertain macro environment, we are driving offence across our Next Great Chapter: Accelerate plan’s multiple growth drivers with agility, discipline and a clear focus on what we can control,” Louvet added.
Neil Saunders, MD of GlobalData, said the luxury brand has bounced back a little after last quarter’s softer numbers.
Comparable sales, which encompasses Ralph Lauren’s direct-to-consumer operations, increased by a very solid 6 per cent.
“From our data, both the company’s outlets and full-price stores are performing well: the former because more consumers are trading down to value channels, the latter because there is some insulation against economic troubles among the higher-income customer cohort,” Saunders continued.
Meanwhile, wholesale’s performance was underweight with overall revenue down by 3.4 per cent, attributed to weaker footfall, declining sales, and nervousness about the outlook for demand.
For FY24, Ralph Lauren continues to expect revenues to increase approximately low-single digits to last year.
The company cited several challenges related to the current geopolitical and macroeconomic environment, including inflationary pressures, consumer spending-related headwinds, and foreign currency volatility.
