(Reuters) -Ralph Lauren on Thursday beat Wall Street expectations for revenue for the 12th straight quarter, powered by robust demand from wealthier U.S. shoppers for its expensive sweaters and shirts, coupled with a strong rebound in China.
Shares of the company jumped about 6% premarket, as it also bested holiday-quarter profit estimates and said it had exited the key shopping season with healthy inventory levels.
Despite economic uncertainties, wealthy shoppers in the U.S. went on a luxury spending spree over the holiday season, driving a 6% jump in Ralph Lauren’s retail store sales and a 4% increase in e-commerce.
Known for its timeless, understated fashion, Ralph Lauren has also been able to capitalize on the growing cachet for “quiet luxury” among consumers through its neutral-toned cashmere sweaters, jackets, trousers and bags.
That, coupled with a strong roster of holiday-themed apparel including bright-colored Christmas jumpers and plaid cardigans, helped the Polo shirts maker offset lingering pressures in its North American wholesale business.
Meanwhile, luxury brands have seen a roaring comeback in demand in China, which has propped up the industry with solid sales reports from LVMH and Cartier-owner Richemont in the recent weeks.
Ralph Lauren’s sales surged more than 30% in China, building on the 20% increase seen in the prior quarter. Peer Tapestry, which makes Coach handbags, also saw sales in China bounce back strongly in the quarter.
Net revenue at Ralph Lauren climbed 6% to $1.93 billion in the fiscal third quarter, beating expectations of $1.87 billion, LSEG data showed.
The company also lifted its profit margin outlook and now expects its full-year gross margin to increase by roughly 140 to 180 basis points, in constant currency, compared to the 120 to 170 basis point increase it had previously expected.
(Reporting by Deborah Sophia in Bengaluru; editing by Milla Nissi)
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