Ralph Lauren has raised its outlook for this year, citing strong sales in Europe and Asia and expectations for a strong holiday season.
The apparel retailer expects annual revenue to increase 3% to 4%. This exceeded analyst expectations and the company’s previous forecast of a 2-3% increase excluding currency fluctuations.
The company’s shares rose as much as 7% in premarket trading after the better-than-expected report. The stock has risen 44% this year through Wednesday’s trading, outpacing the S&P 500’s 24% rise.
Ralph Lauren reported strong sales growth in Asia in its most recent quarter, with sales in China increasing in the low teens.
China has been a slump for other luxury apparel and accessory brands in recent quarters as domestic consumers cut back on spending. But for Ralph Lauren, the company’s growth this quarter was driven by strong performance in China. One reason revenue is still increasing is that the company still has room to grow. China accounts for only about 8% of sales, compared to more than 20% for other premium global brands.
The company plans to continue expanding in China and is also building strong sales growth in the US and Europe. Ralph Lauren’s management has been successful in increasing the brand’s prestige in recent years, allowing the company to raise prices on some products, sell more expensive items, and reduce discounts. As a result, profitability improved.
Written by Janet Newman
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