Ralph Lauren beats profit estimates amid stable demand

The Polo Bear sweaters maker's net revenue rose 1% to $1.51bn in the first quarter. 

Ralph Lauren beat first-quarter profit estimates as steady demand for its pricey denims and polo shirts in Europe and China offset slower sales in the US.

Resilient demand for designer fashion from wealthier consumers has benefited companies such as Canada Goose and Miu Miu-owner Prada, even as their European rivals hinted at a slowdown due to challenges in China and a pullback in spending by "aspirational" shoppers.

Cautious inventory planning by wholesale retailers coupled with slower digital sales led to a 4% decline in Ralph Lauren's North America revenue to $608m (€557bn) during the quarter.

The company’s chief financial officer Justin Picicci said they “expect North America wholesale declines to moderate through the remainder of the year” adding that the company will maintain inventory to chase demand for its core products.

Shares of the company reversed premarket gains to drop more than 1% in early trade, with its executives warning that third-quarter sales will be impacted by a shorter holiday selling window between Thanksgiving and Christmas, compared with last year.

Ralph Lauren's quarterly sales in Europe and Asia grew from last year, contrasting a recent string of bleak earnings from European rivals including the world's biggest luxury group LVMH, German fashion house Hugo Boss, Burberry, and Gucci owner Kering.

The Polo Bear sweaters maker's net revenue rose 1% to $1.51bn in the first quarter. Analysts on average had expected a decline of 0.46%.

It earned $2.70 per share on an adjusted basis, beating estimates of $2.47, with adjusted gross margin growing 170 basis points from the prior year on the back of lower cotton costs and full-price selling.

Reuters