(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, Kering 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 analysts.
Revenue from North America, which contributed about 44% to Ralph Lauren’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, 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.
(Reporting by Savyata Mishra in Bengaluru; Editing by Shinjini Ganguli)
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