To receive the Vogue Business newsletter, sign up here.
Ralph Lauren revenues rose 3 per cent in the second quarter of 2024 to $1.6 billion, the company said on Wednesday, beating analyst expectations. Shares were up 2.33 per cent on Wednesday morning in pre-market trading.
“Our multiple engines of growth across categories and regions enable our teams to deliver against our strategic and financial commitments even in a choppier backdrop,” CEO Patrice Louvet told analysts on Wednesday morning’s earnings call. “Second-quarter results exceeded expectations on the top and bottom line.”
Highlights included Ralph Lauren’s New York Fashion Week show; US Open and Wimbledon sponsorships and collaborations; and the brand’s continued partnership with survival game Fortnite.
Direct-to-consumer sales rose 6 per cent year-on-year. Louvet identified the DTC growth as a highlight of the quarter. “Our DTC channels are really where we can best control the consumer experience,” he said. “These channels represent two-thirds of our business… a different picture than a few years ago.”
Wholesale, on the other hand, fared worse. Channel revenues were down 7 per cent in North America and flat in Europe. “Wholesale is an important environment for us for consumer discovery,” said CFO Jane Nielsen, describing why it remains an important and profitable channel. “Our focus on matching sell-in to demand and tight inventory management is something that we’re doing today and, as we think about the future, is something we have to continue to lean into.”
To this end, Ralph Lauren plans to continue to be agile in its wholesale strategy. “We evaluate every day where we should be, looking at that on a door-to-door basis and will continue to do so.”
This wholesale lag impacted North America’s overall revenue decline, down 1 per cent at $718 million. Though still a dip, it’s an improvement on last quarter’s US performance, which saw a 10 per cent year-on-year decline. The wholesale decline was expected, Nielsen said, as the company manages sell-in to the channel to align with softer consumer demand. “This channel is also experiencing some challenges due to macro-inflation pressures,” she said. DTC channels in the US, however, were up — digital commerce and bricks-and-mortar grew 4 per cent each.
Once again, Ralph Lauren saw growth in both Asia and Europe, which offset the North America decline. Asia revenue increased 10 per cent to $348 million, and Europe revenue increased 7 per cent to $527 million. “Our performance in China remains a standout,” Louvet said. “With sales up more than 20 per cent this quarter, this was ahead of our expectations driven by strong brand momentum and high-quality new customer recruitment.” He added: “Looking ahead, we still see significant opportunities to drive our business with global Chinese consumers.” Growth in China outpaced the rest of the region, according to Nielsen. Second-quarter sales in Japan were also up double-digits.
For fiscal 2024, Ralph Lauren still expects revenues to increase approximately low-single digits year-on-year, reflecting slightly increased caution around the wholesale channel where year-to-date demand has been soft, Nielsen said. The brand expects top-line growth to be led by Asia, and continues to expect a low-single digit decline in North America based on softer spring trends. And for the third quarter, the company expects revenues to be up 1 to 2 per cent year-on-year.
“Looking ahead as the important holiday season gets underway, we are executing on our long-term game plan and keenly focused on what we can control,” Louvet said. “We are elevating our brand positioning in the marketplace while staying grounded in the realities of the macro environment.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
More from this author:
