Latest news with #PatriceLouvet
Washington Post
4 days ago
- Business
- Washington Post
Why shoppers will keep buying these brands despite tariff price hikes
Ralph Lauren knows it's attracting a customer with expensive taste. It's what the company has been aiming for: Over the past eight years, Ralph Lauren has upped its premium assortment to improve its 'value proposition,' CEO Patrice Louvet said in an earnings call last week. During that time, the average price per item sold has doubled. The strategy is paying off as wealthier consumers retreat from traditional luxury brands and middle-income shoppers become choosier about their spending as tariffs take a bite. By leveraging price increases while demonstrating its products' high quality, Ralph Lauren has found a way to 'elevate' the brand and attract 'a more elevated full-price consumer base,' Louvet said. Ralph Lauren is not alone. Analysts point to Coach, Birkenstock, On and Urban Outfitters — which includes Anthropologie and Free People — as companies with strong-enough customer loyalty and interest, as well as compelling 'newness,' to avoid pullback from consumers once tariff pricing sets in. 'It's all about brand equity,' said Simeon Siegel, a managing director and senior analyst at BMO Capital Markets. 'Whether it's because of tariff pressure … supply chain pressure, or a port strike, brand equity is what allows companies to weather volatile cost periods, raise prices and pass on the cost to consumers.' Birkenstock, the cork-soled sandals that regained popularity in recent years, raised prices on select items on July 1. But the company saw 'no impact whatsoever' on sales, President David Kahan said in an earnings call Thursday. This kind of standing with consumers is increasingly important as tariffs — which are paid by businesses to the U.S. government on imported goods, and often passed along to the consumer — cause inflation to heat up. It's already started, with the core consumer price index, which excludes volatile food and energy, rising 3.1 percent in July from a year ago. Economists expect prices to continue going up as retailers run out of the inventory that they front-loaded before tariffs kicked in. These import taxes will cost Americans an average of $2,400 per year, according to estimates from the Budget Lab at Yale University. Consumers are reacting by being choosier and more purposeful about their spending. They're holding out for sales, comparing prices and finding cheaper alternatives for groceries and small luxuries, said Katie Thomas, who runs Kearney Consumer Institute. Meanwhile, analysts are watching to see which brands manage to convince their customer that paying more for $180 sneakers, $350 handbags or $698 blazers is worth the expense. Companies like Ralph Lauren, Coach and Anthropologie fall into this consumer sweet spot. As higher-income buyers move away from luxury brands like Louis Vuitton, Christian Dior and Gucci — fed up by the increasing handbag prices with little newness on shelves — Ralph Lauren is an example of a reasonable trade-down, said David Swartz, an analyst at Morningstar. The company raised its full-year guidance earlier this month and saw net revenue surge 14 percent in its first quarter over last year to $1.7 billion. Its stock price has roughly quadrupled in the past five years. The brand also added 1.4 million new customers to its direct-to-consumer business, a mid-single-digit increase over last year, and attracted 'full-price store customers' who 'skew more toward women, luxury and next-generation younger cohort,' Louvet said in the earnings call. Meanwhile, Coach and Anthropologie are well-suited for a middle-earning shoppers with disposable income who are looking for accessible luxury and on-trend style. Coach is particularly popular among Gen Z and millennials, who accounted for the majority of the brand's more than 6.8 million new customers in North America over its recent fiscal year, the company said Thursday. In recent years, the brand has improved its style and design and adopted a 'fashion-forward approach,' which 'simulates a greater buying frequency among customers of all ages,' said Neil Saunders, a managing director at retail analytics firm GlobalData. In its recent quarter, Coach sales increased 14 percent year over year to $1.4 billion. The stock price for its parent company Tapestry has almost doubled in the past year, largely because of Coach's success. Urban Outfitters and its subsidiaries Free People and Anthropologie are taking a similar approach, slowing markdowns and attracting more full-price customers. Chief Operating Officer Francis Conforti told investors in May the company is 'gently and sparingly raising some prices,' mostly on already higher-priced items. The company's net sales increased 10.7 percent over last year in its first quarter to a record $1.33 billion, with Anthropologie leading the pack. Shoppers are also swayed when they see the value in their purchase, Thomas said, explaining they're 'no longer willing to pay more for nothing.' And consumers want to know that if the price is going up, it either means it's better quality or something new and innovative, said Janine Stichter, a retail analyst at BTIG. Ralph Lauren, Coach and Swiss sportswear brand On have pointed to this as part of their pricing strategies. On, which saw second-quarter net sales surge 32 percent year-over-year to 749.2 million Swiss francs ($929 million), raised prices on select designs in the U.S. in early July, chief executive Martin Hoffman said in an earnings call this week. The company is focused 'on innovation, on quality, on customer experience' to stand out in the crowded sportswear industry, he added, arguing that a higher price helps with that 'premium' brand perception. Coach also reduced its promotions and moved its discounted handbag to a separate outlet store website to maintain consumers' quality perception of the brand, said Swartz, of Morningstar. Unlike its accessible-luxury competitor Michael Kors, Coach has been able to raise prices. 'People see Coach as a better brand even if their products are probably not that much different than Michael Kors,' he added. Not all brands will get away with raising prices as easily, analysts warn. Consumers could 'rebel against companies that don't deserve to' hike prices, Siegel, of BMO Capital Markets, said. Stichter expects that fallout will lead to promotions in the next few months as brands and retailers push to clear their shelves before the following season's inventory comes in. 'Even if you can afford to pay for something, no one likes feeling like they're being taken advantage of,' she said.
Yahoo
4 days ago
- Business
- Yahoo
Jim Cramer on Ralph Lauren: 'They Can't Actually Transcend the Coming Negatives'
Ralph Lauren Corporation (NYSE:RL) is one of the stocks Jim Cramer commented on. Cramer discussed the company's earnings and conference call during the episode, as he stated: 'Today, something happened on the Ralph Lauren conference call that was a harsh reminder not to expect that this market cares at all about what's already happened. It only cares about what's going to happen next… I gotta tell you, I loved it. Patrice Louvet is an amazing CEO, and Ralph Lauren's been a terrific performer, a real standout in apparel. The actual quarterly results were phenomenal… Louvet was effusive about the business… which is what made me say this one could be a real winner today on Squawk on the Street. Pixabay/Public Domain Ralph Lauren Corporation (NYSE:RL) designs, markets, and sells clothing, accessories, home goods, and fragrances. While we acknowledge the potential of RL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Asharq Al-Awsat
5 days ago
- Business
- Asharq Al-Awsat
Ralph Lauren Lifts Annual Revenue View on Demand from Affluent Shoppers
Ralph Lauren raised its annual revenue forecast on Thursday, signaling robust demand from affluent shoppers for its Polo shirts and cable-knit sweaters in North America, Europe and China. Shares of the apparel maker rose 2% in premarket trading as it also beat first-quarter revenue and profit expectations. Ralph, which sells its popular Polo Bear sweater for up to $398 on its website, has relied on its loyal, high-income customers to fuel sales and profit growth, Reuters reported. The company's strategy to ramp up marketing spend and product innovation, as well as reduce promotions have helped it gain market share in its core categories such as knitwear and handbags. CEO Patrice Louvet said the company remains cautious about the global operating environment in the back half of the fiscal year. "We're encouraged by RL's recent launches and believe the campaign can build on the brand's summer momentum, notably its presence at Wimbledon," Jefferies analyst Ashley Helgans wrote in a note. Ralph is an official outfitter for the tournament that began in mid-July. The company's strong quarter underlines consumer preference for accessible luxury brands, similar to Tapestry, which has seen solid demand for its Coach handbags. Tapestry will report quarterly earnings next week. Ralph Lauren's upbeat forecast, however, is in contrast to bigger European rivals such as Gucci-owner Kering and Dior-parent LVMH, which have seen a sales slowdown. The company expects fiscal 2026 revenue to rise low- to mid-single digits from last year, compared with its prior target of a low-single digits increase. Operating margin is forecast to expand roughly 40-60 basis points after adjusting for currency fluctuations, up from its prior forecast of a modest growth. Its net revenue in the first quarter came in at $1.72 billion, exceeding expectations of $1.66 billion, according to data compiled by LSEG. On an adjusted basis, it earned $3.77 per share, above estimates of $3.50, aided by a 14% jump in average unit retail in its direct-to-consumer channel.
Fibre2Fashion
08-08-2025
- Business
- Fibre2Fashion
US' Ralph Lauren posts 14% revenue surge in Q1 FY26, ups outlook
American luxury lifestyle brand Ralph Lauren Corporation's net revenue for the first quarter (Q1) of fiscal 2026 (FY26) rose 14 per cent to $1.7 billion on a reported basis, and 11 per cent on constant currency, driven by strong performance across Asia, Europe, and North America. Asia led regional growth with a 21 per cent increase in revenue, followed by Europe at 16 per cent and North America at 8 per cent. The company's earnings per diluted share was $3.52, up 35 per cent year-over-year (YoY) on a reported basis, and $3.77, up 40 per cent on an adjusted basis. Ralph Lauren has reported a 14 per cent YoY rise in its revenue to $1.7 billion in Q1 FY26, with net income at $220 million and adjusted EPS up 40 per cent to $3.77. The growth was led by Asia, Europe, and North America. Strong DTC sales, margin expansion, and new store openings boosted performance. The company raised its full-year outlook while maintaining a cautious global outlook. The net income for the quarter reached $220 million on a reported basis and $236 million on an adjusted basis. The gross profit stood at $1.2 billion, with a gross margin of 72.3 per cent, up 180 basis points (bps) from the prior year, aided by higher average unit retail (AUR), favourable product and geographic mix, and lower cotton costs. AUR rose 14 per cent across the company's direct-to-consumer (DTC) network, Ralph Lauren said in a press release. The operating income totalled $274 million (15.9 per cent margin) on a reported basis, and $293 million (17 per cent margin) on an adjusted basis. Operating margins improved across all key regions, with Asia leading at 30.7 per cent, Europe at 26.4 per cent, and North America at 20.7 per cent. The company also reported continued progress on its brand-building initiatives. Ralph Lauren acquired 1.4 million new DTC customers in Q1 and reached nearly 66 million social media followers. The quarter featured high-impact events such as the brand's first-ever fashion show in Shanghai, the MLB World Tour Tokyo Series activations, and a Spring '26 runway show in Milan. 'What we stand for—aspiration, optimism, individuality and authenticity—inspires people in every corner of the world," said Ralph Lauren, executive chairman and chief creative officer at the company . "And we are bringing these values to life and inviting people to step into their dreams in new and powerful ways—from our first-ever fashion presentation in Shanghai this April to our MLB World Tour Tokyo Series activations and our Women's Polo presentation in Paris.' The company ended the quarter with $2.3 billion in cash and short-term investments and $1.6 billion in total debt. Inventory levels rose 18 per cent to $1.2 billion. Ralph Lauren also repurchased approximately $250 million worth of Class A common stock during the quarter. 'We delivered strong first quarter results across geographies, channels and consumer segments," said Patrice Louvet, p resident and c hief e xecutive o fficer (CEO) at Ralph Lauren . 'While we continue to approach the current global operating environment with prudence, we are encouraged by the broad-based strength in our brand and our businesses as we execute on our long-term strategic priorities—including recruiting new and younger consumers, strengthening our core and high-potential categories, and developing our key city ecosystems in each region." Looking ahead, the company raised its FY26 guidance. It now expects revenue to increase in the low-to-mid-single digits in constant currency, with foreign exchange expected to provide a 150 to 200 basis point benefit. The operating margin is projected to expand 40 to 60 bps in constant currency, with additional FX benefits. For the second quarter (Q2), the revenue is expected to grow by high single digits in constant currency, with operating margin expansion of 120 to 160 bps. The company anticipates a tax rate of approximately 19 to 20 per cent for the full year, and 15 to 17 per cent for the second quarter. Capital expenditure for FY26 remains estimated at 4 to 5 per cent of revenue. Fibre2Fashion News Desk (SG)
Reuters
07-08-2025
- Business
- Reuters
Ralph Lauren warns that tariffs will pressure margins, shares fall
Aug 7 (Reuters) - Ralph Lauren (RL.N), opens new tab cautioned on Thursday that tariff-related costs would pressure its margins this year and said it was bracing to see how inflation was weighing on price-sensitive consumers, sending its shares down 7%. The comments overshadowed a rise in its annual revenue forecast, which was powered by solid demand for its Polo shirts and cable-knit sweaters in North America. "The most meaningful offset is really the incremental cost inflation from the tariffs," CEO Patrice Louvet said on a conference call with analysts. "The bigger unknown here today is the price sensitivity and how the consumer reacts to the broader pricing environment and how sensitive that consumer is. So that's what we're watching very closely as we head into the second half." Ralph Lauren, which sells its popular Polo Bear sweater for up to $398 on its website, has relied on its loyal, high-income customers to fuel sales and profit growth. Its stock has gained nearly 76% over the past 12 months. Louvet said Ralph Lauren's core consumer has remained resilient around the world as the brand has shifted toward a full-price model. "The consumer will pay up - just not indefinitely - so brands must pivot from price hikes to product storytelling before the runway lights dim," said Michael Ashley Schulman, chief investment officer of Running Point Capital. Ralph Lauren's strategy to ramp up marketing spend and product innovation, as well as reduce promotions, has helped it gain market share in its core categories such as knitwear and handbags. "Our high potential categories, including women's apparel, outerwear and handbags, continue to be accelerators for our business," Louvet said. He said highlights include the Cable-Knit jersey and Polo Bear sweaters, linen shirts, dresses, the Cotton Canvas city jacket, and a handbag collection launched earlier this spring called "Polo Play." The comments underline consumer preference for accessible luxury brands, similar to Tapestry (TPR.N), opens new tab, which has seen solid demand for its Coach handbags. Tapestry will report quarterly earnings next week. Ralph Lauren's upbeat forecast is in contrast to bigger European rivals such as Gucci-owner Kering ( opens new tab and Dior-parent LVMH ( opens new tab, which have seen a sales slowdown. The company expects fiscal 2026 revenue to rise by low- to mid-single digits from last year, compared with its prior target of a low-single digit increase. Operating margin is forecast to expand roughly 40-60 basis points after adjusting for currency fluctuations, up from its prior forecast of modest growth. Net revenue in the first quarter came in at $1.72 billion, exceeding expectations of $1.66 billion, according to data compiled by LSEG. On an adjusted basis, it earned $3.77 per share, above estimates of $3.50, aided by a 14% jump in average unit retail in its direct-to-consumer channel.
