The Business of Fashion
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Ralph Lauren Corp. raised its outlook for the year, citing strong sales in Europe and Asia and expectations for a solid holiday shopping season.
The apparel retailer is forecasting annual revenue to increase between 3 percent to 4 percent. That’s above analysts’ estimates and the company’s previous forecast of an increase between 2 percent to 3 percent, excluding currency fluctuations.
The company’s shares rose as much as 7 percent in premarket trading on the better-than-expected report. Shares have risen 44 percent this year through Wednesday trading, outpacing a 24 percent increase in the S&P 500.
Ralph Lauren reported strong revenue growth in Asia in the most recent quarter, with sales in China up by what it said was a low-teen percentage increase.
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China has been a source of weakness for other high-end apparel and accessory brands in recent quarters, as consumers in the country pull back on spending. For Ralph Lauren, though, the company’s growth this quarter was led by strong China performance. Revenue is still increasing in part because it has more room to grow: it only generates around 8 percent of sales in China versus more than 20 percent at other premium global brands.
The company plans to continue to expand in China and is building on solid sales growth in the US and Europe. Ralph Lauren executives have been successful during the last several years raising the cachet of the brand, which has allowed the company to charge more for some products, sell more expensive items and cut back on discounts – steps that have boosted profitability.
By Jeannette Neumann
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