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Reuters
3 days ago
- 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.
Global News
3 days ago
- Business
- Global News
Ralph Lauren says Trump tariffs will hit its profit margins
Ralph Lauren 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 per cent. 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 US$398 on its website, has relied on its loyal, high-income customers to fuel sales and profit growth. Its stock has gained nearly 76 per cent over the past 12 months. Story continues below advertisement 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. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 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. 2:30 Business Matters: Trump's new tariffs on dozens of countries take effect '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.' Story continues below advertisement The comments underline 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 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 by low- to mid-single digits from last year, compared with its prior target of a low-single digit increase. 3:55 Trump confirms Apple's $100 billion investment in U.S., teases 100% tariffs on imported chips 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 US$1.72 billion, exceeding expectations of US$1.66 billion, according to data compiled by LSEG. Story continues below advertisement On an adjusted basis, it earned US$3.77 per share, above estimates of US$3.50, aided by a 14 per cent jump in average unit retail in its direct-to-consumer channel.
The Hindu
6 days ago
- Business
- The Hindu
Figma sheds $11 billion in market value days after blockbuster IPO
Shares of Figma slumped 23% on profit taking on Monday, as euphoria over the design software firm waned days after its blockbuster initial public offering. San Francisco, California-based Figma shares had scored a massive 250% gain during their market debut on Thursday when they were priced at $33 but finished at $115.50, giving the company a market capitalisation of about $56.3 billion. Figma's market value closed at $59.5 billion on Friday after its shares rose 5.6% to $122. The shares traded as low as $92.75 on Monday, down 23%, reducing its market value to about $45.2 billion. "The excitement for Figma's business is not over, but the euphoria that's gone into its heady stock pricing seems to be deflating as those that wanted an early piece of the action bought in during market hours while some IPO recipients are probably taking sweet profits," said Michael Ashley Schulman, chief investment officer at Running Point Capital in Los Angeles. Founded in 2012 and led by CEO Dylan Field, Figma provides cloud-based collaborative design tools, with a roster of marquee clients including Alphabet, Microsoft, Netflix and Uber. Field owns about 54.2 million Figma shares worth about $5 billion after selling 2.35 million shares in the IPO. As is common in many Silicon Valley startups, Field retains 74.1% voting power over Figma given his holdings of Class B shares. Adobe had abandoned a $20 billion deal to acquire Figma in 2023 following antitrust pushback from regulators in Europe and the UK. "With Figma at a $46 billion market capitalisation, Adobe's failed buyout offer must now seem like a distant memory," Schulman added.
Business Times
6 days ago
- Business
- Business Times
Figma sheds US$11 billion in market value days after blockbuster IPO
[NEW YORK] Shares of Figma slumped 23 per cent on profit taking on Monday (Aug 4), as euphoria over the design software firm waned days after its blockbuster initial public offering (IPO). San Francisco, California-based Figma shares had scored a massive 250 per cent gain during their market debut on Thursday when they were priced at US$33 but finished at US$115.50, giving the company a market capitalisation of about US$56.3 billion. Figma's market value closed at US$59.5 billion on Friday after its shares rose 5.6 per cent to US$122. The shares traded as low as US$92.75 on Monday, down 23 per cent, reducing its market value to about US$45.2 billion. 'The excitement for Figma's business is not over, but the euphoria that's gone into its heady stock pricing seems to be deflating as those that wanted an early piece of the action bought in during market hours while some IPO recipients are probably taking sweet profits,' said Michael Ashley Schulman, chief investment officer at Running Point Capital in Los Angeles. Founded in 2012 and led by CEO Dylan Field, Figma provides cloud-based collaborative design tools, with a roster of marquee clients including Alphabet, Microsoft, Netflix and Uber. Field owns about 54.2 million Figma shares worth about US$5 billion after selling 2.35 million shares in the IPO. As is common in many Silicon Valley startups, Field retains 74.1 per cent voting power over Figma given his holdings of Class B shares. Adobe had abandoned a US$20 billion deal to acquire Figma in 2023 following antitrust pushback from regulators in Europe and the UK. 'With Figma at a US$46 billion market capitalisation, Adobe's failed buyout offer must now seem like a distant memory,' Schulman added. REUTERS
Reuters
6 days ago
- Business
- Reuters
Figma sheds $11 billion in market value days after blockbuster IPO
NEW YORK, Aug 4 (Reuters) - Shares of Figma (FIG.N), opens new tab slumped 23% on profit taking on Monday, as euphoria over the design software firm waned days after its blockbuster initial public offering. San Francisco, California-based Figma shares had scored a massive 250% gain during their market debut on Thursday when they were priced at $33 but finished at $115.50, giving the company a market capitalization of about $56.3 billion. Figma's market value closed at $59.5 billion on Friday after its shares rose 5.6% to $122. The shares traded as low as $92.75 on Monday, down 23%, reducing its market value to about $45.2 billion. "The excitement for Figma's business is not over, but the euphoria that's gone into its heady stock pricing seems to be deflating as those that wanted an early piece of the action bought in during market hours while some IPO recipients are probably taking sweet profits," said Michael Ashley Schulman, chief investment officer at Running Point Capital in Los Angeles. Founded in 2012 and led by CEO Dylan Field, Figma provides cloud-based collaborative design tools, with a roster of marquee clients including Alphabet (GOOGL.O), opens new tab, Microsoft (MSFT.O), opens new tab, Netflix (NFLX.O), opens new tab and Uber (UBER.N), opens new tab. Field owns about 54.2 million Figma shares worth about $5 billion after selling 2.35 million shares in the IPO. As is common in many Silicon Valley startups, Field retains 74.1% voting power over Figma given his holdings of Class B shares. Adobe (ADBE.O), opens new tab had abandoned a $20 billion deal to acquire Figma in 2023 following antitrust pushback from regulators in Europe and the UK. "With Figma at a $46 billion market capitalization, Adobe's failed buyout offer must now seem like a distant memory," Schulman added.
