Ralph Lauren shares fall as quarterly revenue forecast disappoints

Nov 5 (Reuters) – Ralph Lauren forecast third-quarter revenue below Wall Street expectations on Thursday, sending its shares 7% lower in premarket trading, even as the company reported strong demand in ​North America and Asia and raised its annual outlook.

Shares ‌of the New York-based premium apparel brand had risen about 16% so far this year, as of the previous close.

The company has outperformed the wider luxury sector in recent quarters as higher-income US shoppers continued to spend on cable-knit sweaters ‌and ​Polo shirts. China has emerged as a ⁠growth engine, with revenue up ⁠35% in the second quarter.

But expectations for the company to sustain a rapid pace of growth have set a high bar, leaving investors disappointed by Ralph Lauren’s latest forecast.

Ralph Lauren now expects ​fiscal 2027 revenue to rise in the mid- to high-single-digit range, centered around 6% to 7%, compared with its prior forecast for ⁠growth centered around 5% to 6%.

It ⁠expects annual operating margin to grow about 80 to ​100 basis points on a constant-currency basis, compared with its previous forecast ​of 60 to 80 basis points.

Coach handbag maker Tapestry also ‌raised its annual forecasts on Thursday, betting on holiday demand, even as the broader luxury sector grapples with a spending slowdown.

Ralph Lauren said it expects third-quarter revenue to grow in the low- to mid-single-digit ⁠range, centered around 3% to 4%, largely below analysts’ expectations of a 4.2% rise, as it is hurt by the timing of wholesale shipments and ⁠fewer off-price sales.

Second-quarter ‌revenue rose 9% to $2.19 billion, above analysts’ estimate ⁠of $2.12 billion, while adjusted profit per share of $4.64 beat ​estimates ‌of $4.26, according to data compiled by LSEG.

Founded by ​designer Ralph Lauren ⁠in 1967, the company launched a turnaround plan about a decade ago when it hired its first outside CEO. It has improved sales by focusing more on higher-priced apparel and updating its product range.

(Reporting by Neil J Kanatt in Bengaluru and Danielle Kaye in New York; Editing ​by Tasim Zahid)