Despite economic uncertainties, wealthy shoppers in the U.S. went on a luxury spending spree over the holiday season, driving higher sales at Ralph Lauren's own stores and on its online platform, offsetting lingering pressures in its wholesale business.
Known for its timeless, understated fashion, Ralph Lauren has been able to capitalize on the growing cachet for "quiet luxury" among consumers through its Oxford shirts, neutral-toned jackets, trousers and bags.
Initiatives including holiday-related marketing campaigns and celebrities like Taylor Swift and Jodie Foster donning Ralph Lauren clothing helped fuel the company's strongest quarter of new customer acquisition since the pandemic, CEO Patrice Louvet said.
"The momentum we have on brand is attracting higher-value, younger consumers," Louvet said on a post-earnings call. Ralph Lauren added 1.7 million new customers in its direct-to-consumer business in the quarter.
Luxury brands have also seen a roaring comeback in demand in China, with solid sales reports from LVMH and Cartier-owner Richemont in the recent weeks. Coach handbags maker Tapestry also noted a sharp bounce-back in holiday-quarter sales in China on Thursday.
Ralph Lauren's sales surged more than 30% in China, building on the 20% increase seen in the prior quarter.
"Ralph Lauren has really been focused on the Chinese consumer and ... bringing in unique product in the rest of Asia," said Jessica Ramirez, a senior research analyst for Jane Hali & Associates.
Net revenue at Ralph Lauren climbed 6% to $1.93 billion in the fiscal third quarter, beating LSEG expectations of $1.87 billion, while adjusted per-share profit of $4.17 surpassed estimates of $3.54.
It also raised annual gross margin growth outlook to roughly 140-180 basis points in constant currency, compared to the 120-170 basis point increase it had previously forecast.
