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Shares of the company dropped 3% premarket as it stuck to its annual revenue forecast despite beating expectations for first-quarter sales and profit.
Although higher-income shoppers have remained resilient in the U.S. for longer, sticky inflation and high interest rates have spooked even the wealthy, who have now hit a pause on a luxury goods spending spree that drove sales for several companies exiting the pandemic.
Luxury names ranging from LVMH and Gucci-owner Kering (EPA:PRTP) to Canada Goose have all seen their sales slow down in the United States.
Ralph Lauren (NYSE:RL) – which typically makes nearly a half of its annual revenues in North America – saw a 10% drop in quarterly sales in the region, also hurt by shrinking wholesale orders as department stores and apparel retailers cut back on purchases to manage their inventories.
Meanwhile, demand picked up in China as the market reopens from COVID-19 curbs, with Ralph Lauren seeing a more than 50% jump in China sales in the first quarter, pulling Asia region revenues up 13% to $378 million.
But China’s recovery has been slower than expected, with concerns mounting around consumer spending, in a hit to luxury sector that had heavily banked on a sharp China rebound to bolster sales this year.
Ralph Lauren forecast second-quarter revenues to be flat to slightly up year over year, compared to analysts’ estimate for a 3.3% rise.
Net revenue rose slightly to $1.50 billion in the first quarter, while analysts had expected a marginal drop to $1.48 billion, according to Refinitiv data.
Adjusted earnings of $2.34 per share also topped estimates of $2.13.
