Ralph Lauren has reported another strong quarter with both sales and profit achieving double-digit growth.
The company’s revenue jumped 14 per cent to $2 billion (13 per cent in constant currency) during the first quarter ended June 27.
North America revenue rose 13 per cent, with retail sales up 9 per cent and wholesale sales up 22 per cent. Europe revenue improved 7 per cent, while Asia surged 24 per cent.
Operating income increased 25 per cent to $342 million, and net income grew 19 per cent to $262 million.
“With yet another exceptional quarter under its perfectly designed preppy belt, Ralph Lauren has proven that its brand heat remains red hot,” commented Neil Saunders, MD of GlobalData.
“Pleasingly, there has been an increase in average ticket as promotions were lower than expected and sell-through was higher than anticipated. This underlines the strong demand for the brand which, in turn, shows the affinity consumers have for Ralph Lauren.”
According to the analyst, the brand offers classic pieces for everyday purposes, more formal occasions, or even very casual moments, allowing customers to wear products extensively, which equates to good value for money.
“This position is further enhanced by the quality of the garments and the fact that many are timeless and so won’t suddenly go out of style,” he said.
The brand also knows how to infuse enough newness and statement pieces to keep consumers interested, Saunders said, adding that the gentle expansion of categories like accessories has been important.
“Although Ralph Lauren’s general strategy over the past five or so years has been to create a more disciplined and focused range, it now arguably has a much broader lifestyle position that is attracting both more consumers and a greater share of spending.
“This widening of the base includes younger shoppers, who are now very engaged with the brand thanks to its various social media efforts,” he said.
The sales growth has been helpful in supporting margins, as it has more than offset pressures from tariffs and other costs, the analyst added.
However, Saunders noted that the growth produced this quarter is exceptional rather than a new normal.
“Ralph Lauren now has a long run of impressive uplifts, and it will start lapping some tough prior year numbers in the year ahead. As such, growth may come down to the mid-single digit level. However, this remains highly respectable and reflects the fact that Ralph Lauren continues to deliver the mix of quality, fashion, and style that consumers want,” he said.
For the full year, the company expects constant-currency revenues to increase by approximately mid-single digits, centered around 5-6 per cent.
