Ralph Lauren sales rise as metaverse investments lure new shoppers
Partnerships with Roblox and Zepeto helped Ralph Lauren’s digital business jump by 40 per cent in the third quarter.
Published February 2022
Ralph Lauren said third-quarter revenue increased 27 per cent to $1.8 billion, beating analyst expectations as investments in the metaverse, such as its Roblox Winter Escape world, lured new younger shoppers.
Metaverse partnerships with Roblox and Zepeto were particularly effective in driving digital sales and reaching new Gen Z customers, according to CEO Patrice Louvet while presenting earnings.
In December, Ralph Lauren launched an exclusive digital clothing collection on Roblox as part of the Ralph Lauren Winter Escape, a holiday-themed branded world on the digital platform. The collection riffed on the brand’s 90s aesthetic and featured eight gender-neutral Polo Sport looks. That helped new digital customer acquisition increase by 58 per cent in the quarter. Previously, Ralph Lauren also designed digital outfits for avatars on Zepeto. “The investment helped recruit younger, full-price customers, particularly in digital channels,” Louvet said.
The company raised its full year outlook to align with pre-pandemic revenue levels, with an increase on last year between 39 and 41 per cent. In 2021, full year sales fell 29 per cent to $4.4 billion. For the third quarter, profits increased to $218 million, an 82 per cent jump over the same period last year. Shares were up 6 per cent in early trading.
Ongoing pandemic disruptions and inflation rates in the US were raised as areas of concern. Sales were up across regions, with US revenue increasing 30 per cent, European revenue increasing 50 per cent and revenue in Asia up 20 per cent. Digital sales were up 40 per cent overall, with Ralph Lauren’s own e-commerce site sales increasing 30 per cent.
Luxury competitors in the US and Europe have reported rebounding sales in recent quarters, suggesting an industry-wide reset following the pandemic.
Yesterday, Capri Holdings, which owns Michael Kors, Jimmy Choo and Versace, said it also plans to return to pre-pandemic growth by the end of the year despite a decline in China and ongoing supply chain setbacks.
At Ralph Lauren, a strategic reorganisation plan rolled out in September 2020 to grow online sales and reduce wholesale partners with less reliance on discounts is driving a rebound. In addition to the metaverse, digital investments including a new mobile, virtual clienteling tools, live streaming and buy-online, pick-up-in-store capabilities drove sales. This week, the company announced a partnership with Franklin Ventures to invest in consumer tech companies with a focus on sustainability and female-led businesses.
Luxury prices are on the rise across the industry. At Ralph Lauren, prices have steadily increased over the past several years, with average unit prices up 14 per cent according to retail analytics firm Jane Hali & Associates, who noted improvements in wholesale, direct-to-consumer sales and production will have a long-term positive effect for the company’s outlook.
Louvet warned of challenges going into next year, but said the company was no longer playing catch-up. “We have fundamentally repositioned our business. The company is back on offense. We are healthier than we were two years ago.”