Ralph Lauren Sees Muted Q2 Sales as US Market Loses Steam

People walk past Ralph Lauren Corp.'s flagship Polo store on Fifth Avenue in New York City, US, April 4, 2017. (Reuters)
People walk past Ralph Lauren Corp.'s flagship Polo store on Fifth Avenue in New York City, US, April 4, 2017. (Reuters)
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Ralph Lauren Sees Muted Q2 Sales as US Market Loses Steam

People walk past Ralph Lauren Corp.'s flagship Polo store on Fifth Avenue in New York City, US, April 4, 2017. (Reuters)
People walk past Ralph Lauren Corp.'s flagship Polo store on Fifth Avenue in New York City, US, April 4, 2017. (Reuters)

Ralph Lauren on Thursday forecast current-quarter sales largely below Wall Street expectations, as demand for its pricey sweaters, shirts and outdoor wear tapers amid a broad slowdown in US luxury spending.

After a robust spending spree last year, affluent shoppers in the US have now cut back on luxury goods purchases as sticky inflation and high interest rates have spooked even the wealthy.

Ralph Lauren saw a 10% drop in quarterly revenue in North America, joining luxury names from LVMH and Gucci-owner Kering to Canada Goose in reporting weaker demand in the region, also hurt by shrinking wholesale orders.

While Ralph Lauren's core higher-income customers remained resilient, CFO Jane Nielsen said the company was cautious on North America where the sector was growing increasingly promotional.

But she added the market was expected to improve sequentially in the current quarter.

Meanwhile, sales in China surged more than 50% in the first quarter ended July 1, as demand picked up following the lifting of COVID-19 restrictions. That drove Asia revenues up 13% to $378 million.

However, China's recovery has been slower than expected, with concerns mounting around consumer spending, in a hit to the luxury sector that had heavily banked on a sharp China rebound to bolster sales.

"Going into 2023, luxury brands were expecting the second half of the year to be better. But as the US consumer has really slowed down on discretionary spending, that really has added to the conservatism (in forecasts)," said Jessica Ramirez, senior analyst at Jane Hali & Associates.

Shares were down marginally in early trading.

Ralph Lauren expects second-quarter revenue to be flat or rise slightly from a year earlier, compared to analysts' estimate for a 3.3% rise. It reiterated annual sales forecast.

Net revenue rose slightly to $1.50 billion in the first quarter, while analysts had expected a marginal drop. Adjusted earnings of $2.34 per share also topped Refinitiv estimates of $2.13.



Adidas Raises 2024 Guidance Again, Citing Good Brand Momentum

An Adidas shoe is seen in a store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022.  (Reuters)
An Adidas shoe is seen in a store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022. (Reuters)
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Adidas Raises 2024 Guidance Again, Citing Good Brand Momentum

An Adidas shoe is seen in a store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022.  (Reuters)
An Adidas shoe is seen in a store at the Woodbury Common Premium Outlets in Central Valley, New York, US, February 15, 2022. (Reuters)

Adidas on Tuesday raised its full-year sales and profit guidance, citing better than expected performance in the third quarter and good brand momentum as it benefits from popularity of its three-striped Samba and Gazelle shoes.

The German sportswear brand raised its forecasts for the third time this year, saying it now expected currency-neutral revenues to increase by around 10% this year, having previously forecast a high single-digit rate.

Adidas also raised its profit forecast for the year to 1.2 billion euros ($1.31 billion) from 1 billion euros.

Over the third quarter, Adidas revenue grew 7% to 6.438 billion euros, slightly above analysts' estimates of 6.416 billion euros.