Ralph Lauren reported a double-digit increase in sales in the third quarter, which an analyst described as “exceptionally strong” in an overall sluggish luxury market.
For the quarter ended December 28, revenue rose 11 per cent to $2.1 billion, with North America revenue up 7 per cent, Europe up 16 per cent and Asia up 14 per cent. This extended the 6 per cent sales increase in the second quarter.
Net income also grew from $277 million in the prior-year period to $297 million.
According to GlobalData MD Neil Saunders, the company positively defied the luxury slowdown this quarter with an “exceptionally strong” set of numbers and off the back of solid growth in the prior year.
“Although Ralph Lauren has been outperforming the wider market for some time, this quarter’s results represent a widening of the gap between the iconic brand and the rest of the pack,” he said.
The analyst highlighted several reasons for this, including the brand position that the company has worked hard to refine and the willingness to invest in more expensive clothing and accessories.
“This quieter approach to luxury is playing well as consumers are more amenable to investing in premium pieces that have longevity and which they will, therefore, get value out of,” he elaborated.
Another factor is activation, as the brand has engaged with customers through initiatives like holiday pop-up events in key cities, as well as the broader marketing and advertising campaigns, Saunders continued.
In addition, the wholesale channel returned to growth in the quarter after a period of softness, which is important as the company relies on this channel for brand reach, he added.
For the full year, Ralph Lauren has raised its guidance and expects revenues to increase in a range of approximately 6 per cent to 7 per cent.
“We are encouraged by this quarter’s strong performance, and we continue to be sharply focused on what’s ahead for Ralph Lauren: leveraging the incredible power of our brand and diverse drivers of growth to stay on offense into the next year and beyond,” commented president and CEO Patrice Louvet.
