Ralph Lauren results top estimates as shoppers snap up Polos, pricey sweaters
- Higher-income customer base is resilient and growing, says CEO
- Fourth-quarter China sales up more than 30%
May 25 (Reuters) - Ralph Lauren Corp (RL.N) beat profit estimates and reported a surprise rise in fourth-quarter revenue on Thursday as its new seasonal collections resonated with affluent shoppers at a time when luxury spending has cooled in the United States.
The company's shares rose nearly 8% after it also posted a more than 30% jump in sales in China, with demand in the key luxury market rebounding sharply.
While overall U.S. luxury spending has taken a hit, Ralph Lauren's moves to double down on its outdoor wear and women's clothing collections have drawn more shoppers.
Strong demand for its cable-knit sweaters and Polos have also helped the company keep promotions minimal, with quarterly revenue in North America, its biggest market, decreasing a smaller-than-expected 3%.
Ralph Lauren's core higher-income customer base has been resilient, even in North America, Chief Executive Patrice Louvet said.
"(The) more value-oriented consumers are a smaller part of our customer base and getting smaller and smaller, as we bring in more higher-value consumers."
Meanwhile, luxury companies ranging from LVMH (LVMH.PA) and Gucci-owner Kering (PRTP.PA) to Coach handbag maker Tapestry (TPR.N) have flagged softer demand in the United States.
"Ralph Lauren has been running a really good business on all fronts, so even in a volatile sort of time, they've been able to have a decent performance," said Jessica Ramirez, senior analyst at Jane Hali and Associates.
The company's Asia segment revenue rose 13% to $390 million.
Fourth-quarter net revenue increased 1% to $1.54 billion, compared with analysts' estimates of a drop to $1.47 billion, according to Refinitiv IBES data.
Excluding items, Ralph Lauren earned 90 cents per share, beating estimates of 61 cents.
The company forecast fiscal 2024 revenue to increase in the low-single digit range, on a constant currency basis. Analysts are expecting a 5.6% rise to $6.73 billion.
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