© Reuters. People sit outside a Ralph Lauren store on New Bond Street in London, Britain, March 11, 2023. REUTERS/Henry Nicholls/ File Photo
By Deborah Mary Sophia
(Reuters) -Ralph Lauren on Wednesday beat Wall Street estimates for second-quarter results as U.S. shoppers snapped up its pricey sweaters and jackets and China demand recovered steadily, defying a wider luxury industry slowdown.
The company has been strengthening its direct-to-consumer (DTC) business, acquiring new, younger and less price-sensitive shoppers through its website and stores, amid weaker U.S. wholesale demand that has hit several global brands.
Customers are going after cotton and cashmere cable-knit sweaters, Oxford shirts, jackets and other popular collections, Ralph Lauren (NYSE:) CEO Patrice Louvet said on an earnings call.
“The consumer (is) really gravitating towards this sophisticated, casual, more elevated style … They want to invest in pieces that are timeless, that they can wear beyond one specific season.”
Ralph Lauren drew 1.3 million new customers to its DTC business, aiding a 6% jump in global DTC same-store sales in the second quarter though September.
“(Ralph Lauren) is 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.
The company’s China business recovered steadily, with a more than 20% jump in sales, even as other luxury players such as LVMH and parka maker Canada Goose saw feeble demand.
Shares of Ralph Lauren rose 3% as better stock planning helped the Polo-shirts maker enter the holidays with a leaner inventory, ruling out the need for excessive promotions.
Ralph Lauren largely maintained its annual revenue outlook, but its forecast for third-quarter sales to grow 1-2% came in below market expectations, due to caution around wholesale demand.
Net revenue in the second quarter rose more than 3% to $1.63 billion, beating analysts’ average estimate of $1.61 billion, while adjusted per-share profit of $2.10 also surpassed expectations of $1.93.
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