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Ralph Lauren rides strong holiday demand, China rebound to post upbeat results

Published February 8, 2024

By Deborah Mary Sophia

Feb 8 (Reuters) - Ralph Lauren (RL.N), opens new tab beat profit expectations for the 14th straight quarter on Thursday, driven by robust holiday demand for its pricey cashmere sweaters, coats and cocktail dresses in the U.S. and a rebound in China.

Its shares closed up nearly 17% on Thursday.

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Wealthy U.S. shoppers snapped up luxury goods over the holidays, despite economic uncertainty, driving higher sales at Ralph Lauren's own stores and on its online platform. That offset pressures in its wholesale business.

 

Known for its timeless, understated fashion, Ralph Lauren has capitalized on the "quiet luxury" trend through its understated, neutral-toned shirts, jackets and trousers.

 

Holiday-related marketing campaigns and celebrities like Taylor Swift and Jodie Foster donning Ralph Lauren clothing helped fuel the company's strongest quarter of customer acquisition since the pandemic, CEO Patrice Louvet said on a post-earnings call.

 

The company added 1.7 million new customers in its direct-to-consumer business in the quarter and was attracting higher-value, younger consumers, Louvet added.

 

Its more price-sensitive customers were holding up well, too.

 

"They're still shopping. They're looking for quality brands they trust, but wanting to get a deal," Jane Nielsen, the company's chief financial and operating officer, told Reuters in an interview. She said targeted promotions, particularly at outlet stores, were driving sales.

 

A recovery in luxury demand in China also helped.

 

Ralph Lauren's sales surged more than 30% in that market, mirroring strong sales at companies including LVMH (LVMH.PA), opens new tab, Cartier-owner Richemont (CFR.S), opens new tab and Coach handbags maker Tapestry (TPR.N), opens new tab.

 

China represents about 7% of Ralph Lauren's business and is home to its youngest customers, Nielsen said.

 

"Ralph Lauren has really been focused on the Chinese consumer and ... bringing in unique product in the rest of Asia," said Jessica Ramirez, senior research analyst at Jane Hali & Associates.

 

Third-quarter revenue climbed a better-than-expected 6% to $1.93 billion, while adjusted per-share profit of $4.17 surpassed LSEG estimates of $3.54.

 

Reporting by Deborah Sophia in Bengaluru; editing by Milla Nissi and Sayantani Ghosh

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