NEW YORK, United States — Ralph Lauren Corporation has exceeded market expectations with its holiday-quarter profits, showcasing robust performance in an otherwise challenging economic landscape. On Tuesday, the iconic fashion brand announced that rising prices for its winter apparel contributed to improved profit margins, resulting in a 6 percent increase in shares during premarket trading.
The company attributed its ability to command higher prices to an intensified marketing strategy, particularly through social media. Collaborations with supermodels and celebrities have significantly enhanced the brand’s image, enabling Ralph Lauren to position itself more favorably in the highly competitive fashion market.
During the third quarter, Ralph Lauren’s marketing expenditure surged by 16 percent. This investment paid off, as average transaction prices across its retail outlets and website climbed by 6 percent. Moreover, the brand reported a 60 basis point increase in its adjusted gross margin, signaling effective cost management and pricing strategies.
In terms of revenue, Ralph Lauren experienced a 1.4 percent increase, with total net revenue reaching $1.75 billion for the quarter ending on December 28. This figure slightly surpassed the average analyst forecast of $1.72 billion, based on IBES data from Refinitiv, highlighting the brand’s resilience amidst market fluctuations.
Looking ahead, Ralph Lauren forecasts a revenue growth of 2 to 3 percent for fiscal year 2020, excluding the effect of foreign exchange fluctuations. Importantly, this projection does not account for any potential repercussions from the recent outbreak of a novel coronavirus in China, which could influence global supply chains and consumer demand.
The company’s net income saw a remarkable increase, nearly tripling to $334.1 million, or $4.41 per share, primarily due to a one-time tax benefit. When adjusted for non-recurring items, Ralph Lauren reported earnings of $2.86 per share, which outstripped analysts’ expectations of $2.45 per share, further affirming the company’s strong operational performance.
By Uday Sampath; editors: Saumyadeb Chakrabarty and Arun Koyyur.
