At Ralph Lauren, Fashion Events, D2C, Help Burnish Brand

Ralph Lauren, which is returning to the New York Fashion Week runway for the first time since 2019, is finding new strength in direct channels. The fashion brand attributes its strong financial performance to stepped-up efforts to do what it always does, inviting “customers to step into their dream of a better life,” said Patrice Louvet, president and chief executive officer, in a conference call for investors.

In the first quarter of the company’s fiscal year, revenue beat expectations by rising 1% to $1.5 billion. Net income advanced to $132.1 million from $123.4 million in the comparable period of 2022.

Reopenings in Asia offset North American weakness. Sales rose 50% in China and 8% in Europe while falling 10% in the U.S. The company attributes that weakness to pressure on its more value-conscious shoppers. Comparable store sales slid 6% in North America to $632 million, including an 8% drop in e-commerce and a 5% fall in brick-and-mortar stores

Worldwide, direct-to-consumer comparable store sales advanced in the low-single digits.

The company’s marketing budget is 8% lower in the quarter, so it now accounts for 7.3% of sales, compared to 8.1% in the prior year. That decline reflects shifting some marketing buys into the second quarter, writes David Swartz, an analyst who follows Ralph Lauren and other apparel brands for Morningstar.

“The company intends to spend about 7% of its sales on marketing this year, which we consider worthwhile supporting its brand,” Swartz says. “Indeed, aided by its marketing and merchandising and distribution efforts, the company’s average unit retail is up 15% over the past year.”

Ralph Lauren intensified efforts to expand the lifestyle brand in new ways, including the April launch of a new luxury retail concept in Miami’s Design District, a first-ever fashion show in Los Angeles, and “California Dreaming” events throughout Europe. Actor Jennifer Lopez wore the brand to the Met Gala. And the company announced that Ralph Lauren clothes are returning to the runway for the upcoming New York Fashion Week after a four-year absence.

That buzz-building strategy is paying off, especially in the company’s D2C businesses, which added 1.6 million new consumers this quarter. Many of these are younger and less price-sensitive.

And thanks to a sharpened Instagram approach, the company boosted followers in the double digits. Ralph Lauren now boasts more than 51 million followers on all social media channels.

The company stuck by its earlier conservative forecast for the full year, predicting a low-single-digit gain in sales. “The global environment has been choppy,” Louvet says. “We are encouraged that our core consumer has remained generally resilient, which reflects the growing desirability of our brand. At the same time, we continue to watch our more value-oriented customers and channels carefully.”

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