Nov 5 (Reuters) – Ralph Lauren forecast third-quarter revenue below Wall Street expectations on Thursday, sending its shares 7% lower in premarket trading, even as the company reported strong demand in North America and Asia and raised its annual outlook.
Shares of the New York-based premium apparel brand had risen about 16% so far this year, as of the previous close.
The company has outperformed the wider luxury sector in recent quarters as higher-income US shoppers continued to spend on cable-knit sweaters and Polo shirts. China has emerged as a growth engine, with revenue up 35% in the second quarter.
But expectations for the company to sustain a rapid pace of growth have set a high bar, leaving investors disappointed by Ralph Lauren’s latest forecast.
Ralph Lauren now expects fiscal 2027 revenue to rise in the mid- to high-single-digit range, centered around 6% to 7%, compared with its prior forecast for growth centered around 5% to 6%.
It expects annual operating margin to grow about 80 to 100 basis points on a constant-currency basis, compared with its previous forecast of 60 to 80 basis points.
Coach handbag maker Tapestry also raised its annual forecasts on Thursday, betting on holiday demand, even as the broader luxury sector grapples with a spending slowdown.
Ralph Lauren said it expects third-quarter revenue to grow in the low- to mid-single-digit range, centered around 3% to 4%, largely below analysts’ expectations of a 4.2% rise, as it is hurt by the timing of wholesale shipments and fewer off-price sales.
Second-quarter revenue rose 9% to $2.19 billion, above analysts’ estimate of $2.12 billion, while adjusted profit per share of $4.64 beat estimates of $4.26, according to data compiled by LSEG.
Founded by designer Ralph Lauren in 1967, the company launched a turnaround plan about a decade ago when it hired its first outside CEO. It has improved sales by focusing more on higher-priced apparel and updating its product range.
(Reporting by Neil J Kanatt in Bengaluru and Danielle Kaye in New York; Editing by Tasim Zahid)
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