Ralph Lauren raises annual sales forecast on strong demand for high-end apparel

(Reuters) -Ralph Lauren raised its annual sales forecast on Thursday, as wealthy customers splurge on its expensive cable-knit sweaters and Oxford shirts.

Shares of the luxury retailer were up nearly 9% in premarket trading after the New-York-based company also topped second-quarter revenue estimates on strength in North America, Europe and China.

The results are in contrast to a pullback in the broader luxury sector, primarily in the key China market, which has hurt larger European fashion houses such as Hugo Boss (ETR:BOSSn ), Kering (EPA:PRTP ) and luxury bellwether LVMH.

However, Ralph has seen strong business in China owing to its relatively small sales base, which makes up roughly 7% of its total sales, according to Citigroup (NYSE:C ) analysts.

Revenue from North America, which contributed about 44% to Ralph Lauren (NYSE:RL )'s 2024 revenue, rose 3% in the quarter, while that from Europe jumped 7%.

The Polo Bear sweaters maker now expects fiscal year 2025 revenue to increase about 3% to 4% compared with its prior forecast of a 2% to 3% rise.

The company has reduced its exposure to department stores such as Macy's (NYSE:M ), which has been struggling to attract customers in recent quarters, and is instead focusing on more full-price selling and lower promotions across its branded outlets and website.



Average selling price increased 10% in the quarter ended Sept. 28, which coupled with lower cotton costs helped the company's adjusted gross margin expand 160 basis points to 67% from a year ago.

Net revenue rose 6% to $1.73 billion in the quarter from a year earlier. Analysts on average had expected revenue of $1.68 billion, according to data compiled by LSEG.

Source: Investing.com