Ralph Lauren Jumps as North America Sales Beat Expectations

(Bloomberg) -- Ralph Lauren Corp. beat Wall Street’s revenue expectations in its fiscal first quarter, buoyed by rebounds in the U.S. and Europe as those markets continue to reopen. The shares jumped the most in eight months.

• Same-store sales, a closely-watched metric, increased 108% on a constant currency basis during the period ending June 26, the company said Tuesday in a statement. That compared with the 97.6% average estimate compiled by Consensus Metrix. Comparable sales jumped 176% in North America, topping estimates.
• See more details.

Key Insights

• The results hint at a possible recovery for the upscale apparel company after a challenging stretch during the earlier days of the pandemic. Ralph Lauren grappled with flagging demand as economic lockdowns resulted in temporary store closures in key markets.
• The company benefited from “stronger than expected re-openings across North America and Europe,” Chief Executive Officer Patrice Louvet said in the statement. Ralph Lauren sees growth opportunities even as it continues “to manage through Covid-related challenges in select markets and in our global supply chain.”
• While the results appear “highly impressive” on the surface, they come after a sharp decline earlier in the pandemic, GlobalData analyst Neil Saunders said in a note. Sales are still below 2019 levels, and Ralph Lauren has lost market share, in part because of deliberate efforts to pull back in wholesale channels and streamline offerings, he said.
• In Europe, comparable sales jumped 98%. The performance came despite restrictions in the region due to a slower start to Europe’s vaccination campaign.
• Comparable sales in Asia rose 43% in the first quarter. The market began recovering earlier than North America and Europe, with China in particular propping up Ralph Lauren’s results in recent quarters.
• For fiscal 2022, the company said it expects revenue to increase approximately 25% to 30% to last year on a constant currency and 53-week reported basis. It had previously projected an increase of 20% to 25% on a 52-week basis.

Market Reaction

• Ralph Lauren shares jumped 9.5% at 9:31 a.m. in New York, the biggest gain since December. The stock had climbed 14% this year through Monday’s close.

Get More

• Read the statement.
• See Ralph Lauren estimates.

©2021 Bloomberg L.P.