The news: While higher-income households become more selective as they concentrate their retail spending on brands with a strong identity, on-trend products, and clear product stories.

The contrast: The starkly different results from Ralph Lauren and Capri, parent of Michael Kors and Jimmy Choo, demonstrate why some brands are outperforming while others struggle.

Ralph Lauren raised its full-year revenue and adjusted operating margin expansion outlook after growing its fiscal Q1 revenues 13% on a constant basis. The company was aided by investment in brand building, product innovation, and customer engagement.

• High-profile brand campaigns included a collaboration with the US Postal Service featuring the brand’s American Icons collection of commemorative stamps; year-long celebrations in Japan, including the “Very Ralph” documentary at Akasaka Palace; and sports-led moments like the first Ralph Lauren Polo Cup in Beijing and Sydney and its continued sponsorship of Wimbledon.
• The retailer has also grown its social media following to more than 70 million across Instagram, LINE, Douyin, and TikTok.
• Product and channel innovations included refreshed core assortments like foundational sweaters and shirts, new launches such as the “By the Lake” kids’ apparel line, and expanded digital and city-specific experiences that are helping attract new customers and deepen loyalty.

By contrast, Capri lowered its revenue guidance, citing headwinds related to the war in Iran and inventory delays at Michael Kors. The move came as it reported fiscal Q1 revenues fell 4.1% on a constant basis, driven in part by a 7.6% decline at Michael Kors.

Having sold Versace to Prada Group last year, Capri is looking to turn around Michael Kors, which accounts for more than three quarters of the company’s revenues. It plans to reduce promotions and refocus on full-price selling.

• Capri projects Michael Kors’ revenues will return to growth in the back half of FY2027, driven by new product introductions, increased marketing investments, normalized promotional activity, and benefits from store renovations.
• Company initiatives include more immersive, destination-driven brand storytelling, such as its Saint-Tropez “Hotel Stories” summer campaign featuring Suki Waterhouse, Dani Ramirez, and brand ambassador JCT.

Implications for brands: Challenging macro environments increase the importance of execution. Even though we expect US personal luxury sales will grow 3.3% this year, a significant jump from a sluggish 1.2% gain last year, that rising tide won’t lift all boats. Ralph Lauren’s strong brand is delivering growth, while Capri is struggling to keep its margins in check.

That divergence highlights a growing split in the market. As higher-income consumers become more discriminating, they are favoring brands with a compelling product story and moving away from those that lack differentiation. Brands with pricing power can continue to grow, while others risk getting left behind.