Ralph Lauren beats profit estimates on stable demand in Europe, China
Adds CFO comment in paragraph 3, analyst comment in paragraph 6
By Savyata Mishra
Aug 7 (Reuters) -Ralph Lauren RL.N beat first-quarter profit estimates on Wednesday as steady demand for its pricey denims and polo shirts in Europe and China offset slower sales in the U.S.
Resilient demand for designer fashionfrom wealthier consumers has benefited companiessuch as Canada Goose GOOS.TO and Miu Miu-owner Prada 1913.F, even as their European rivals hinted at a slowdowndue 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 $608 million during the quarter.
"We expect North America wholesale declines to moderate through the remainder of the year," CFO Justin Picicci said on a post-earnings call, 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 salesin Europe and Asia grew from last year, contrastinga recent string of bleak earnings from European rivals including the world's biggest luxury group LVMH LVMH.PA, German fashion house Hugo Boss BOSSn.DE, Burberry BRBY.L and Gucci owner Kering PRTP.PA.
"AUR (average selling price) continued its impressive run of expansion ...in the quarter, demonstrating the success, in our view, of management's efforts to invest in the brand and attract new, younger, high-value consumers," said Dana Telsey of Telsey Advisory Group.
The Polo Bear sweaters maker's net revenue rose 1% to $1.51 billion in the first quarter. Analysts on average had expected a decline of 0.46%, according to LSEG data.
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.
Ralph Lauren's AUR rose6%, compared with a 15% increase in the same quarter lastyear.
For the current quarter, it expects constant currency revenues to grow in the range of 3% to 4%, higher than estimates for a3% rise.
The company also reaffirmedits fiscal 2025 sales and margin expectations.
Reporting by Savyata Mishra in Bengaluru; Editing by Devika Syamnath
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