By Anuja Bharat Mistry and Danielle Kaye
Aug 6 (Reuters) - Ralph Lauren beat Wall Street estimates for first-quarter results on Thursday, driven by persistent demand from young shoppers in Asia and North America for its high-end collections, from linen shorts to alligator-skin leather bags.
Shares of the New York-based company, which also lifted its annual revenue forecast, rose about 7% in morning trading.
The premium apparel company, founded by designer Ralph Lauren in 1967, has reported strong growth
across regions, including North America, despite broader strain on the global luxury sector. Chinese superfans have also helped fuel a resurgence for the American brand.
Sales in Asia jumped 24% on a reported basis in the first quarter, fueled by China, where sales were up more than 40% over last year. CEO Patrice Louvet pointed to momentum from its first-ever Polo Cup in Beijing in May.
In North America, Ralph Lauren's largest region, first-quarter sales rose 13%.
But the company is taking "an appropriately prudent view on Europe due to the macro-economic uncertainty," finance chief Justin Picicci said on a post-earnings call, pointing to the Iran war and dampened tourism to the region.
Store traffic in Europe was hit by the economic strain, Picicci said.
First-quarter sales in Europe rose 7% on a reported basis, a slowdown from the previous quarter.
Ralph Lauren began a turnaround plan about a decade ago when it hired its first outside CEO, helping revive sales in recent years through a sharper focus on higher-end apparel.
The company plans to accelerate its reduction of off-price sales and abandon lower-tier full-price stores in the second half of fiscal 2027, Picicci said.
The company has been refreshing its product lineup with updated versions of fleece, sweatshirts and hoodies aimed at attracting younger shoppers. It has also been leaning on its marketing efforts, from sporting events to fashion shows.
OUTPERFORMING BROADER SECTOR
Ralph Lauren's assortment of price points has helped keep sales afloat, analysts say, even as inflation-wary shoppers pull back on discretionary spending and shy away from price hikes from luxury rivals.
The brand sells everything from $118 polo shirts and $498 leather bags to $5,295 Purple Label hand-tailored cashmere jackets.
"Consumers continue to tell us that they see unique value in our offerings, from handbags to outerwear and beyond," Louvet said on a post-earnings call. Still, he added, "a healthier luxury market would be a tailwind for us."
Ralph Lauren is drawing a wide range of consumers through its "much broader lifestyle position," said Neil Saunders, managing director at GlobalData, adding that nostalgia and structured formal styles are helping attract younger shoppers.
French luxury group LVMH last month reported an uptick in sales in the second quarter driven by strong demand from affluent U.S. shoppers. But the relatively modest sales growth might not be enough to reassure investors that the $400 billion luxury sector is emerging from a two-year downturn.
Kering's flagship brand Gucci also reported better-than-expected quarterly sales in July.
Ralph Lauren posted quarterly revenue of $1.96 billion, compared with analysts' estimates of $1.87 billion, according to data compiled by LSEG.
Its adjusted earnings per share of $4.59 for the reported quarter beat estimates of $4.32 per share.
(Reporting by Anuja Bharat Mistry in Bengaluru and Danielle Kaye in New York; Editing by Tasim Zahid)
