Ralph Lauren’s growth slows amid wider trend in luxury market

Ralph Lauren has reported a lower growth rate for its fourth-quarter revenue, but an analyst said the brand is still doing well amid a wider slowdown in the luxury market.

The company’s revenue rose a modest 1.8 per cent during the quarter, compared to the 5.6 per cent uplift in the previous quarter.

Neil Saunders, MD of GlobalData, said the moderate growth was in line with expectations given the general trend in the luxury market. “In our view, the numbers are actually good when set against the performance of other luxury brands,” he added.

While wholesale revenue dropped 4.6 per cent, the retail segment – which includes all the sales made direct to consumers in-store and online – grew 5.8 per cent.

According to Saunders, the difference shows that Ralph Lauren performs better when it controls the sales channel. “There are too many key shopping destinations in the US and overseas where Ralph Lauren does not operate stores; this effectively means that the brand loses both visibility and sales,” he remarked.

Away from stores and distribution, the brand succeeded in adding new consumers, including many younger demographics, thanks to good social media campaigns and interesting capsules, the analyst continued.

By region, sales in the US and Europe rose 1.8 per cent, driven down by poor wholesale numbers, offset by better direct-to-consumer sales. Sales in Asia were up 1.1 per cent as slower economies in some markets dampened consumer spending.

For the full year, net revenues increased 3 per cent to $6.6 billion, including a 2 per cent drop in North America revenue, 7 per cent uplift in Europe revenue and 10 per cent growth in Asia revenue. Net income rose to $646 million from $523 million in the prior year.

“Looking ahead, the next fiscal will be one of modest expansion for Ralph Lauren; this is mostly because consumer demand will remain soft.

“However, if Ralph Lauren expands the revenue line off the back of last year’s solid increases, we see this as a win in a more difficult market,” Saunders concluded.

The company expects revenues to increase by low-single digits in FY25.

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