Ralph Lauren, which is struggling with weak demand in the US, exceeded quarterly earnings but predicted yearly revenue growth below market estimates on Thursday.
Additionally, the business announced the appointment of insider Justin Picicci as chief financial officer. Jane Nielsen will remain as head of Ralph’s operations. As the business predicted excellent profits for the year, the garment maker’s shares reversed course and rose 2% in early trade. Prior to the bell, the stock had a 3% decline.
Because of improved full price sales and reduced cotton costs, Ralph Lauren anticipates an increase in its yearly gross margin of up to 100 basis points. This will help offset pressures from labor and freight expenses associated with interruptions in the Red Sea.
“Redditor Ralph Lauren has a track record of providing conservative advice. More significant than sales increase is the rise in margins, according to Morningstar Research senior analyst David Swartz.
As a result, over two-thirds of Ralph Lauren’s entire income now comes from its direct-to-consumer channel. Due to strong demand in Europe and Asia and a reduction in discounts as a result of lower inventory, its fourth-quarter revenue of $1.57 billion exceeded LSEG projections of $1.56 billion.
Ralph Lauren announced higher-than-expected earnings per share of $1.71 after excluding items.
The business also stated that Picicci, the new CFO, was most recently the Enterprise CFO for Ralph Lauren. He replaces Nielsen, who began working for the firm in 2016 as CFO and added the position of COO in 2019. Wedbush analyst Tom Nikic stated, “We do note that Nielsen is a tough act to follow, even though promoting internally will likely aid the transition.”
Ralph Lauren said on a post-earnings call that its business in the important luxury sector had more than quadrupled compared to pre-pandemic levels. Sales in China increased by more than 25%. As retailers reduce orders owing to erratic demand, the business has also been trying to draw more clients to its shops and to digital sales rather than wholesale channels.
