Home Handbags Ralph Lauren and Capri are riding the wave of demand for inflation-resilient luxury

Ralph Lauren and Capri are riding the wave of demand for inflation-resilient luxury

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Aug 9 (Reuters) – Ralph Lauren Corp (RL.N) and Michael Kors owner Capri Holdings (CPRI.N) blew up past earnings estimates, pointing to unwavering demand for clothing and handbags from luxury from affluent consumers who remain largely unscathed from red-hot inflation.

The price spike had little impact on middle- and upper-income households who splurged on designer brands, using what they saved up during the pandemic when everything from holidays to abroad to restaurants.

“High-income consumers are buying in a different way than other periods of inflation,” said Jane Hali & Associates analyst Jessica Ramirez.

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“Their priority is to shop for the events they are returning to now after coming out of the shutdowns and that puts the luxury goods companies in good stead.”

Still, the two companies’ shares fell about 3% in a broader, weaker market as their sales in China still proved to be a sore spot amid recurring COVID-19 lockdowns.

Capri chief executive John Idol said he was “less optimistic” about the pace of demand recovery in the key luxury goods market.

Meanwhile, European rivals LVMH (LVMH.PA) and Gucci owner Kering (PRTP.PA) also saw a surge in sales, benefiting from some luxury spending shifting to Europe as tourists Americans benefited from a stronger dollar. Read more

BALLOON INVENTORIES

Capri and Ralph Lauren saw inventory rises of 66% and 47%, respectively, at the end of their first quarters as the companies ramped up shipments of seasonal products to avoid year-long supply chain delays. last.

Increased freight spending to get products to shelves faster has led to lower gross profit margins at Capri and Ralph Lauren, despite the company’s price increases.

A STRONG GAME

Revenue from Ralph Lauren rose 8.3% to $1.49 billion in the first quarter, while revenue from Capri rose 8.5% to $1.36 billion, beating analysts’ expectations.

Excluding items, Capri earned $1.50 per share, beating estimates of $1.36, while Ralph Lauren’s earnings of $1.88 per share beat expectations of $1.75, according to Refinitiv data. BIBS.

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Reporting by Uday Sampath and Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli

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