Ralph Lauren Corp on Thursday forecast a bigger-than-expected drop in fourth-quarter revenue, as the high-end apparel maker contends with new lockdowns in its major markets of Europe and Japan.
Many European governments put their economies back into lockdown late last year due to a spike in coronavirus cases, crimping sales to a major market for global luxury goods makers who were banking on a strong holiday shopping season to help ride out the hammering from the virus earlier in 2020.
The New York-based designer said it expects fourth-quarter fiscal 2021 revenue to fall by mid-to-high single digits, while analysts’ were expecting a 2.9% drop, according to IBES data from Refinitiv.
“Our current outlook could be negatively impacted if government-mandated lockdowns or restrictions are extended,” the company said.
Echoing luxury goods rivals, Asia was a bright spot for Ralph Lauren in the third quarter. Mainland China sales surged more than 40%.
Ralph Lauren on Wednesday also said it would look to cut costs further for the fiscal year by consolidating its corporate offices and re-negotiating store rents.
The company has already announced plans to cut 15% of its global workforce by the end of this fiscal year.
Adjusted net income fell over 42% to $125 million, or $1.67 per share, in the third quarter ended Dec. 26, but beat analysts’ estimates of $1.63.
Ralph Lauren’s gross margin rose 320 basis points, as it, like other luxury goods companies such as Tapestry Inc and Capri Holdings Ltd, cut shipments to discount-prone department stores.
Ralph Lauren said it plans to reinstate its quarterly dividend in the first half of fiscal 2022.
Net revenue fell 18.2% to $1.43 billion, missing estimates of $1.47 billion.
Shares were down about 1% before the bell.
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