Ralph Lauren Q3 smashes earnings estimates amid higher prices
Higher prices proved no deterrent shoppers to Ralph Lauren shoppers in its third quarter — a period in which the luxury retailer also some help from Taylor Swift.
Ralph Lauren Corp. raised the average unit retail price by 9% across its direct-to-consumer network during the quarter, on top of a 10% increase last year. Despite the increase, the retailer added 1.7 million new consumers in its direct-t0-consumer businesses during the quarter.
On a call with analysts, president and CEO Patrice Louvet noted that the company outfitted an "incredible roster of inspiring women including America Ferreira, Jody Foster, Greta Lee and J Lo at the L Women in Hollywood event, along with other celebrities at Art Basel in Miami.
"And who could forget Taylor Swift, who chose an all-American Ralph Lauren look for the cover of Time Magazine as their 2023 Person of the Year," Louvet said. "These activations helped to fuel our strongest quarter of new consumer acquisition since the pandemic."
Ralph Lauren reported net income of $276.6 million, or $4.19 per share, for the quarter ended Dec. 30, compared to net income of $216 million, or $3.20 per share, for the year-ago period.On an adjusted basis, net income was $275 million, or $4.17 per share, easily topping the $3.57 analysts projected, compared to net income of $226 million, or $3.35 per share on an adjusted basis, for the period last year.
Net revenue increased 5.6% to $1.9 billion. North America revenue totaled $933 million, approximately flat to last year.
In North America, comparable store sales increased 5%, exceeding expectations, led by a 6% increase in brick-and-mortar stores and 4% increase in digital commerce. Wholesale revenue decreased 15%, in-line with Its expectations amid ongoing efforts to manage sell-in to align with consumer demand in the channel.
“We continue to evaluate our brand presence on a door-by-door basis, resulting in approximately 20 department store exits completed in the region this fiscal year,” the company stated.
Ralph Lauren said it exited the holiday season with “healthy” inventory levels, with global inventories down 15% to the prior year.
“We delivered a strong holiday, with continued progress on our Next Great Chapter: Accelerate plan and third quarter results that exceeded our expectations led by continued momentum in our direct-to-consumer channels," said Patrice Louvet, president and CEO. "These results underscore the diversity of our strategic growth drivers around the world in a still-volatile operating environment as well as our culture of operating discipline and agility."
The company noted that it continued to expand and scale its “key city ecosystems” in the third quarter, including a store opening at Marina Bay Sands in Singapore, the first Ralph Lauren stores in Prague and North Carolina, the launch of a digital commerce flagship in Canada and the first Ralph’s Coffee in Paris and the United Arab Emirates.