Ralph Lauren Corp is expecting an improvement in its margins for the full year as the demand for luxury apparel remains strong in key markets like North America and Europe. This is in contrast to major U.S. retailers who are facing profit declines due to inflation. Despite the higher prices for essential goods, higher-income customers have not been affected and are now indulging in fashion as they return to their usual routines and increase their social activities.

Jane Nielsen, the Chief Financial Officer, noted that Ralph Lauren’s customers have shown their resilience, particularly those in higher income demographics who have continued to desire the brand even during the COVID-19 pandemic.

The 55-year-old brand has also projected a revenue increase in high single digits, surpassing the expectations of Wall Street which predicted a 3.6% increase. In order to counteract rising freight and product costs, Ralph Lauren is considering raising prices further. Additionally, the company has forecasted a gross margin increase of 30 to 50 basis points for fiscal year 2023 on a comparable, constant currency basis.

On the other hand, major discount chains have been experiencing diminishing profits. While Ralph Lauren’s shares have seen a slight decline alongside broader market declines, the company has also predicted a decrease in gross margin for the first half of fiscal year 2023 due to higher expenses and a strong U.S. dollar. However, it remains optimistic about its business in China expanding this year.

In the fourth quarter, Ralph Lauren reported a 18% increase in net revenue to $1.52 billion, surpassing the estimated $1.46 billion. The adjusted per-share profit was 49 cents, exceeding the estimate of 36 cents. Furthermore, the company has raised its quarterly dividend by 9%.

Tom Nikic, an analyst from Wedbush, believes that Ralph Lauren is well-prepared to handle the current uncertainty in the macro environment and will benefit from the anticipated return to office and events.

Useful links:
Link 1: The article discussing Ralph Lauren’s improved outlook and higher full-year margins.
Link 2: An article providing more information on Ralph Lauren’s expected revenue and margin for fiscal year 2023.