Ralph Lauren gains momentum in ‘shaky’ retail landscape – WWD

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Patrice Louvet said that Ralph Lauren Corp. exceeded its expectations for the first quarter and is progressing rapidly – ​​but remains vigilant in an uncertain world.

“We know we live in a turbulent and uncertain environment, so as we have during COVID[-19]we continue to build on our strengths and stay in touch with reality,” Louvet, the company’s president and CEO, told WWD.

Responding to this reality means staying agile and being ready to follow market changes. And with the threat of recession looming, inflation soaring, COVID-19 still disrupting the supply chain, and war in Europe, the changes may continue to happen.

Louvet said the company has a balanced go-to-market strategy, a diverse geographic base and a supply chain that is both broad and ready to adapt as needed.

Patrice Louvet, CEO of Ralph Lauren.

Patrick McLeod

Revenue for the three months ended July 2 rose 8.3% to $1.5 billion from $1.4 billion. And at constant exchange rates, revenue was up 13%, ahead of the 8% rise the company announced.

In North America, net revenue increased 6% to $701 million, while Europe increased 17% to $416 million and Asia increased 16% to $334 million. At constant exchange rates, Europe and Asia grew by more than 25%.

But the exchange rate and rising operating expenses, partly to fuel “short- and long-term strategic growth”, weighed on the bottom line.

Net income fell 25% to $123.4 million, or $1.73 per diluted share, from $164.7 million, or $2.18, a year earlier. Adjusted earnings per share slipped to $1.88.

The uncertainty plaguing fashion companies is also prevalent on Wall Street.

While investors initially reacted positively to the company’s quarterly update, its shares then began to fall with the market, falling 4.3% to $96.77 on Tuesday.

“We’ve repositioned the business over the past four years to really establish a strong brand, a sound foundation that puts in place a diverse set of growth engines,” Louvet said, noting that Ralph Lauren has “clear lasting benefits “.

Chief among them is an “iconic lifestyle brand”, which Louvet says can “offer categories from sneakers to tuxedos – we really have the ability to dial in and dial out.”

The CEO said: “We measure brand appeal on a monthly basis in our core markets and consistently see the desirability of the Ralph Lauren brand improve in each market.”

So far, the company’s consumers are resisting.

“In the US, our consumers remain strong, especially in our full-price channel, they are clearly responding to our storytelling, clearly engaging with the breath of our wallet,” Louvet said.

National point-of-sale activity was also good in the first quarter, but the CEO said: “We obviously, like others, are watching the more value-driven consumer because we’re not naïve here, because you’re looking to the future, it’s likely that the situation of the inflation will have an impact on this consumer group.”

As sales surge, the company has further increased inventory, seeking to circumvent supply chain delays that have complicated life in fashion while meeting consumer demand.

Inventories in the first quarter rose 47% to $1.2 billion, mostly with an increase in goods in transit.

Louvet told analysts on a conference call that Ralph Lauren is poised to grab more business as consumers change.

“It’s actually really interesting to see what’s happening with the consumer right now,” he said. “And we’re actually really uniquely positioned to capture the evolution of consumer wardrobe choices. Because what we’re seeing is a combination of reinvesting in basic wardrobes. So specifically, it’s products like sweaters or denim, and then a pivot to novelty and elevation and sophistication, right?

“So the pivot to novelty for us will be more upscale cashmere sweaters, for example. … And then you have consumers who don’t go out during the day, right? It’s still just the beginning of this journey, and therefore, a need for bigger outerwear and a need for bigger dresses and a need for bigger sport coats,” Louvet said.

Fashion companies sought to ensure they had enough classic and staple products on hand to tell their stories to consumers.

And Ralph Lauren always has a story.

Ralph Lauren, Executive Chairman and Chief Creative Officer, said, “Our vision of timelessness and an authentic life well lived continues to resonate around the world. From the elegant spirit of Wimbledon to celebrating the anniversary of our iconic polo shirt, our brand inspires people to achieve their dreams.

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