© Reuters. People sit outside a Ralph Lauren store on New Bond Street in London, Britain, March 11, 2023. REUTERS/Henry Nicholls/ File Photo
(Reuters) -Ralph Lauren beat Wall Street estimates for quarterly results on Wednesday as its younger, more affluent customer base continued to snap up its pricey shirts and sweaters in the U.S., signaling steady demand ahead of the key holiday season.
Shares of the company were up about 3% in premarket trading, after it also posted a 20% jump in sales in China at a time when feeble recovery in the key luxury goods market has hurt other firms.
Ralph Lauren (NYSE:)’s cable-knit jumpers, Polo shirts and handbags have continued to pull shoppers even as the wider luxury industry saw a slowdown in the United States that has hit companies such as luxury powerhouse LVMH and parka maker Canada Goose.
Leaning on its own website and physical stores has helped bolster Ralph Lauren’s revenues despite a weaker wholesale business stemming from retailers ordering fewer products as they assume caution heading into the holiday season.
Ralph Lauren added 1.3 million new customers to its direct-to-consumer (DTC) channel, which aided a 6% jump in global DTC same-store sales in the second quarter though September.
“The customer is still interested in Ralph Lauren. It’s a brand that the customer is loyal to … so when they’re (spending cautiously), they’re likely to go to brands that they trust,” said Jessica Ramírez, senior research analyst at Jane Hali & Associates.
Ralph Lauren largely maintained its annual revenue forecast, saying sales growth would be around 1-2% for the fiscal 2024, but projected current-quarter sales below expectations citing caution around wholesale demand.
It expects third-quarter revenue to grow by 1% to 2%, compared with estimates for a 3.8% rise, according to LSEG data.
Net revenue rose more than 3% to $1.63 billion in the second quarter, beating analysts’ forecast of $1.61 billion.
On an adjusted basis, the company posted a per-share profit of $2.10, also surpassing expectations of $1.93 per share.