Ralph Lauren, Chanel defy luxury downturn — for now

What happened Ralph Lauren Corporation reported that revenue rose 3 percent in constant currency to $1.6 billion in the fourth quarter ended March 30, beating expectations. In the three-month period, sales were driven by the Asia Pacific region, up 7 percent in constant currency to $394 million, with China delivering low double-digit growth. Asia also led during the full fiscal year, with China increasing 25 percent in sales. In addition to focusing on customer recruitment through key brand moments, such as Chinese New Year, the company continued to elevate its product offering and raise average unit prices. “We marry elegance and style in aspirational worlds — from our recent fashion show featuring elevated classics to the vibrant home line we showcased last month in Milan — our teams around the world are delivering our vision with passion and care,” said Ralph Lauren, Executive Chairman and Chief Creative Officer, in a statement. The Jing Take Despite a difficult consumer landscape for luxury, Ralph Lauren Corp.’s robust performance points to the continued desirability of its classics. In China, the Ralph Lauren brand has benefited from style trends like the clean fit, old money, Maillard, and American retro aesthetics, helping the hashtag “Ralph Lauren” amass nearly 482 million views on Xiaohongshu. “What’s really working there is the team is doing a great job connecting the brand with the local consumer, tapping into this whole quiet luxury moment,” said Ralph Lauren Corp. CEO Patrice Louvet on an earnings call. “Our core products, our staples, our icons are really resonating, so think cable knit sweaters, think our Oxford shirts, Polo shirts, unconstructed jackets.” China now accounts for 7 percent of the company’s total business, up from 3 percent pre-pandemic, and is expected to lead growth going forward, Louvet added. Ralph Lauren Corp. isn’t the only luxury player posting strong results this week. On Tuesday, Chanel reported that revenues in 2023 increased by 16 percent at comparable rates to $19.7 billion, supported by double-digit growth across all categories. The brand’s ready-to-wear business, headed by creative director Virginie Viard, grew 23 percent last year. Despite uncertainty around Chinese luxury consumption as outbound travel resumes, Chanel plans to continue investing in the market. This includes opening new stores in the mainland, after logging 47 net openings worldwide last year. That said, neither brand is oblivious to the macroeconomic challenges that lie ahead. Chanel warned that the industry is “now entering a more challenging environment,” which caused luxury stocks in Europe to fall on Wednesday. Similarly cautious, the American Polo shirt maker provided a lower-than-anticipated outlook, expecting revenues to increase by 2 percent to 3 percent in the next fiscal year. “Looking ahead to fiscal 2025, we are staying on offense by continuing to invest in our brand, our portfolio of iconic core products, and our consumer-centric ecosystems in top cities globally,” said Louvet. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Ralph Lauren, Chanel defy luxury downturn — for now

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Published May 23, 2024

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Ralph Lauren, Chanel defy luxury downturn — for now