Strong demand for Ralph Lauren Corp‘s Polo shirts and tweed jackets in China helped the high-end apparel retailer beat quarterly profit estimates on Thursday.
Ralph Lauren, like other high-end fashion companies from New York, Paris and Milan, has been expanding in China, where a weakening yuan currency has pushed more wealthy domestic consumers to splurge at home rather than while travelling abroad.
Apart from opening more stores in the world’s second-largest economy, the over 50-year-old company has also partnered with local e-commerce platforms such as Alibaba‘s Tmall and WeChat to boost online sales.
Chief Financial Officer Jane Nielsen said on a post-earnings call that revenue from Asia, which rose 4%, was driven by the company’s online business expansion, store openings and marketing initiatives featuring local celebrities.
Revenue in constant currency terms rose 22% on the Chinese mainland in the second quarter. However, revenue from Hong Kong fell 27% due to ongoing protests.
A marketing strategy focused on Instagram and new pop-culture-based apparel, including a collection celebrating the 25th anniversary of the hit TV show “Friends”, have also helped Ralph Lauren tap a new generation of customers and boost sales.
The company’s adjusted net income rose 6.5% to $198 million (£154 million), or $2.55 per share, in the quarter ended Sept. 28. Analysts had expected a profit $2.39 per share, according to IBES data from Refinitiv.
Net revenue rose about 1% to $1.71 billion , beating analysts’ average estimate of $1.69 billion. Ralph Lauren’s shares were last trading 11.3% higher at $112.31 and were set for their best day since May 2018.
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