By Neil J Kanatt and Danielle Kaye
Nov 5 (Reuters) – Ralph Lauren forecast third-quarter revenue growth below Wall Street expectations on Thursday, sending its shares lower, even as the company reported strong demand in North America and Asia and raised its annual outlook.
Shares of the New York-based premium apparel brand fell about 3% in early trading. They had risen about 16% this year as of the previous close.
The company has outperformed the wider luxury sector in recent quarters as higher-income US shoppers continue to spend on cable-knit sweaters and Polo shirts. China has also emerged as a growth engine, with revenue up 35% in the second quarter.
But expectations for the company to sustain a rapid pace of growth have set a high bar, leaving Wall Street disappointed by Ralph Lauren’s latest forecast.
The company projected third-quarter sales growth of 3% to 4%, below analysts’ expectations for a 4.2% rise, as investors looked for signs of stronger momentum after Ralph Lauren’s recent outperformance. The company cited a “negative impact” from the timing of wholesale shipments and fewer off-price sales.
Ralph Lauren has usually been strong at setting investor expectations and then outperforming them, Guggenheim Securities analyst Simeon Siegel said. It tends “to beat, guide conservatively and rinse and repeat.”
The company forecast fiscal 2027 revenue growth of around 6% to 7%, compared with its previous forecast of 5% to 6% growth.
CEO Patrice Louvet cited optimism about the holiday season, pointing to the brand’s value and distinctive styling, while naming women and younger shoppers as key growth drivers.
It expects annual operating margin to grow about 80 to 100 basis points on a constant-currency basis, compared with its previous forecast of 60 to 80 basis points.
Founded by designer Ralph Lauren in 1967, the company launched a turnaround plan about a decade ago when it hired its first outside CEO. It has boosted sales by refocusing on higher-priced apparel and drawing in a younger generation of shoppers.
Coach handbag maker Tapestry also raised its annual forecasts on Thursday, betting on holiday demand, even as the broader luxury sector grapples with a spending slowdown.
Second-quarter revenue rose 9% to $2.19 billion, above analysts’ estimate of $2.12 billion, while adjusted profit per share of $4.64 beat estimates of $4.26, according to data compiled by LSEG.
(Reporting by Neil J Kanatt in Bengaluru and Danielle Kaye in New York; Editing by Tasim Zahid)
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