The news: Ralph Lauren posted higher-than-expected quarterly results and raised its full-year revenue outlook, though it warned that tariffs could pressure consumer spending in the second half.
The numbers:
- Net income rose more than 30% YoY to $220.4 million in the fiscal Q1 ended June 28.
- Adjusted per-share profit came to $3.77, ahead of the $3.51 expected by analysts.
- Revenues rose 14% to $1.72 billion, over the $1.66 billion expected. All regions had growth YoY, with Asia sales up 21%—aided by China, where sales surged more than 30%. Sales in Europe rose 16%, and North America sales gained 8%.
Lap of accessible luxury: Spending in the luxury market is beginning to soften as consumers become more cautious. Yet Ralph Lauren’s results suggest that brands that are more accessible in their price point and target market have resilience. By contrast, higher-end luxury retailer LVMH missed Q2 expectations, and Gucci parent Kering reported an 18% YoY revenue decline for the period.
Ralph Lauren raised its revenue outlook, saying it now expects an increase in the low- to mid-single digits for the year compared with an earlier view of low-single-digit growth. But the company was guarded, citing potential macroeconomic headwinds across North America as many retailers start raising prices to cope with rising tariffs.
- “The big unknown … is the price sensitivity and how the consumer reacts to the broader pricing environment,” Ralph Lauren CFO Justin Picicci said during the earnings call.
- Still, the company noted its ability to manage cost inflation through a range of levers, including its diversified supply chain—no one country accounts for over 20% of its production—flexibility in sourcing, ability to work with suppliers to drive efficiencies, and selective pricing actions.
Our take: Amid economic uncertainty, Ralph Lauren’s performance highlights the resilience of brands that sit at the intersection of aspiration and accessibility. The company appears better positioned than some of its luxury peers to weather volatility.
Its quarterly results offer a blueprint for its retail peers, showing the value of a diversified supply chain and brand equity over aggressive discounting and heavy dependence on a single market.
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