Despite raising prices on its clothing, luxury retailer Ralph Lauren (NYSE: RL) has maintained its popularity among shoppers who are seeking a certain aesthetic.
One reason the company has been able to keep its legions of fans happy could be that the company has stuck to its core style, avoiding fashion trends that have often wound up to be short-lived.
Ralph Lauren’s sales increased by 14% to $1.72 billion in its first quarter ending in June compared to last year, beating Wall Street estimates of $1.66 billion.
Shareholders also benefited, as the company announced adjusted earnings per share of $3.77, which beat the $3.51 estimate by analysts, according to FactSet.
The clothing, accessories, home goods and fragrances company believes that sales will continue on their current trajectory. It raised its guidance for 2025, and increased it to “low- to mid-single digits” for fiscal 2026.
Sales of Ralph Lauren’s items rose the most in Asia, with growth of 21%, while Europe spent the second largest amount, with an increase of 16%. Revenue in North America climbed 8%. Country-wise, the company’s sales rose the most in China, with an increase of over 30%. Revenue for retail online sales rose the most in China, followed by the U.S. and Europe.
Stock surge
Shareholders have been rewarded. The stock rose 77% during the past year and 329% during the past five years. To be sure, the price moved up only 4.6% over the last six months..
Unlike some other retailers, Ralph Lauren is moving forward with its expansion plans. The majority of the 24 new stores the company opened during the quarter were in China. Ralph Lauren opened stores in major cities, including Vancouver’s Alberni Street, representing its second store in Canada; its latest Candy Store concept in Marbella, Spain; and its first luxury concept in Korea at Shinsegae Centum City.
Retail companies, especially American ones, have faced a myriad of geopolitical and economic issues this year. That includes tariffs imposed by the U.S., slowing job growth, inflation and weak consumer confidence..
But Ralph Lauren has been able to maintain its pace of sales and does not forecast a decline in the near term. “We haven’t really seen any softening of the macro set into the business at this point,” CFO Justin Piccici told Barron’s.
The company also has continued its strategy of increasing prices during the past several years and cutting back on discounts to preserve its brand aura of offering a luxury lifestyle.
Ralph Lauren’s timing appears to have been opportune. That’s because consumers now prefer “quiet luxury” or the concept of buying quality pieces that are not part of a broader fashion trend and can be worn more times over a longer period.
Since the company appeals to shoppers who have more disposable income, consumers have accepted increases in prices for their discretionary items. Passing the cost of tariffs to its customers could be a possibility for Ralph Lauren. But companies are aware that some price hikes will not be well received by its shoppers, even the most loyal ones.
“The customer has let us know they will follow us on that journey, but we’ve got options,” Piccici told Barron’s.
Nice read Ellen