Ralph Lauren announced second-quarter revenues rose 6 per cent year-on-year to $1.7 billion, beating company and analyst expectations.
“We delivered a strong second-quarter performance and are entering the important holiday season with continued momentum across our brand product assortments, geographies and channels,” CEO Patrice Louvet told investors on Thursday. “Our performance through the quarter and first half of the year underscore the strength of our diversified growth strategy, our growing brand desirability and our powerful engagements with an expanding and increasingly elevated consumer base across genders, generations and markets around the world.”
In light of the outcome of this week’s election, CFO Justin Picicci addressed the potential impact of tariffs that President-elect Donald Trump has said he plans to impose once he begins his second term. “Our global sourcing and supply chain is agile and well positioned. We have strong partnerships around the world [that have] served us well and been a key differentiator for us through the pandemic and beyond,” Picicci said. “We significantly diversified that source equipment over the past seven-plus years.”
He added: “So we’ll wait and see what, if any, future policy ultimately gets passed. But we’ve navigated tariffs successfully before, including not so long ago. We’re going to remain agile and continue to proactively develop and scale new global supply chain opportunities to mitigate any potential risks.”
Picicci also positioned Ralph Lauren as a reliable brand amid economic and social uncertainty. “At a time when consumers are worried about the future around the world, they’re more discerning on how they spend their money. They really turn to brands they know [and] product categories they trust,” he said. “Ralph Lauren has incredible credibility in these categories.”
By region, North America revenues in the second quarter were up 3 per cent to $739 million, returning to growth after a 4 per cent dip last quarter. Retail momentum offset a “modest, planned decline” in the wholesale channel, Picicci said.
Europe revenues were up 7 per cent to $566 million. Picicci puts this down to Ralph Lauren’s brand elevation efforts. He called out France and Germany as direct-to-consumer growth drivers, and noted the impact of the Olympics, where Ralph Lauren was an official outfitter of Team USA, on brand performance this quarter.
Asia revenues were up 9 per cent to $380 million, beating the brand’s expectations. China was a bright spot, up 13 per cent for the quarter. “We feel very good about the momentum we had in China,” Louvet said. “We’ve been growing 17 quarters in a row — through Covid, through the uncertainty on luxury, through the pressure on consumer sentiment.” Louvet flagged that China still only represents 8 per cent of total company sales; he sees significant growth opportunities there. Picicci also called out Tokyo, Seoul and Shanghai as cities where the brand’s core is really resonating.
Louvet highlighted the value of less price-sensitive customers, noting that the brand’s new consumer acquisition was led by younger, higher value and less price-sensitive shoppers. This will remain the strategy moving forward, Picicci added. “You’ll see us continue to invest in this newer muscle of customer acquisition, focusing on customers who enter the brand as high-value consumers, meaning they start shopping with us at full price and with bigger baskets,” he said. “This customer enables us to pull back on promotions and discounts and discount less over time.”
For fiscal 2025, Ralph Lauren now expects constant currency revenues to increase by approximately 3 to 4 per cent — a lift on its prior 2 to 3 per cent range. Picicci also flagged that the third quarter is expected to be negatively impacted by the timing of this year’s Thanksgiving and Christmas holidays, including a shorter holiday selling window and a shift in post-Christmas sales dates in North America outlets.
“Looking ahead as the holiday season gets underway, we have momentum and we are still firmly on offence,” Louvet said. “We are executing on our long-term game plan, further elevating our brand and positioning in the marketplace while remaining focused on what we can control.”
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