Feb 5 (Reuters) - Ralph Lauren posted third-quarter sales that topped Wall Street estimates on Thursday, but the luxury retailer's warning of margin pressure tied to U.S. tariffs sent its shares down 6.6% in premarket trading.
The company expects fourth-quarter margins to shrink about 80 to 120 basis points due to higher tariff pressure and marketing spend.
Ralph Lauren sources its products from regions such as China, India and Vietnam, which face steep import duties under the Trump administration.
Executives said in November that the fourth quarter, which is also the smallest revenue period, would see an outsized impact from tariffs and earlier-than-usual inventory receipts.
The company, which sells $148 striped linen shirts and $498 leather handbags, has tightened inventory, lifted full-price sales and refreshed core styles, boosting its appeal among higher-income and younger shoppers, including Gen Z.
Higher-income households are still splurging on luxury items, travel and restaurant meals, while lower- and middle-income consumers are strained by higher costs for rents and food as well as a softer job market.
The luxury retailer said quarterly revenue rose 12% to $2.41 billion. Analysts on average estimated a 7.9% rise to $2.31 billion, according to data compiled by LSEG.
Ralph Lauren now expects fiscal 2026 revenue to increase in the high-single to low-double digits on a constant currency basis, up from its prior forecast of a 5% to 7% increase.
(Reporting by Savyata Mishra in Bengaluru; Editing by Tasim Zahid)
