Ralph Lauren shares jump 10% as strong China sales help fuel growth

Ralph Lauren shares jumped about 10% before the bell on Thursday after the high-end apparel brand beat quarterly revenue estimates, buoyed by strong sales in China as affluent shoppers continued to buy Polo shirts and cotton cable-knit jumpers.

The revenue growth was led by sales in Asia, the company said, with particular ‌strength in China ⁠during the ⁠Lunar New Year. Wall Street investors are focused on how luxury brands are performing in the Chinese market, ​where consumers have shown signs of strain in recent months and luxury spending has recently faltered.

The nearly 60-year-old ​American label reported quarterly revenue of $1.98 billion, above analysts' estimate of $1.85 billion.


Founded by designer Ralph Lauren in 1967 as a line of ties before rising to the top ranks of American ​fashion, the brand is among companies that have recently bucked ⁠the trend ‌of a slowdown in the global luxury sector. It embarked on ​a turnaround plan ​about a decade ago and analysts attribute its recent success in part ⁠to the brand's growing appeal among a younger generation of shoppers, ​while maintaining a multi-generational consumer base.

Under the leadership of CEO Patrice ​Louvet, who took the helm in 2017, Ralph Lauren has made a concerted effort to lure in a new generation through youth-focused products and social media engagement.

Analysts have also attributed Ralph Lauren's recent momentum to its market position as a value player compared to many luxury competitors.

Ralph Lauren sells $118 polo shirts and $498 leather bags - in addition to bags that well ‌exceed $3,000. Its range of price points has helped maintain its appeal, analysts noted, even as shoppers balk at price hikes from major luxury players.

The ​company now expects ​first-quarter revenues to increase in ⁠the mid- to high-single digits on a constant currency basis, compared with analysts' estimate of a 6.9% rise, according to data compiled by LSEG.

It also expects annual constant currency revenues ​to increase by about mid-single digits over last year, centered around 4% to 5%.

On an adjusted basis, Ralph Lauren posted earnings per share of $2.80 for the reported quarter, topping an estimate of $2.55 per share.

The company, which implemented selective price hikes over past quarters, sees gains from strong full-price sales across its apparel and accessories brands.

(Reporting by Anuja Bharat Mistry in Bengaluru and Danielle Kaye in New York; Editing by Pooja Desai)