Shares of the New York-based company fell 4% in morning trading, even after the company raised its revenue forecast for the entire year.
Unlike its European luxury counterparts, which manufacture most of their products in their domestic market, Ralph Lauren sources the vast majority from outside the United States, 40% of which are made in China and Vietnam alone, making the business more vulnerable to shipping. delays and plant closures.
These supply chain disruptions have particularly hampered the apparel industry, with garments having the highest levels of online out-of-stock levels among US retail sectors as the holiday season approaches, according to Adobe Analytics.
However, Ralph Lauren said he’s confident he will have enough stock to meet holiday demand, in part because he spends a lot shipping products by air.
“Although we expect continued variability in inventory flows from quarter to quarter, we believe our inventories are well positioned (…) to meet the demand for the next vacation and spring 22,” a said CFO Jane Nielsen.
The retailer said it expects FY2022 constant currency revenue to grow 34% to 36%, against a previous forecast of a 25% to 30% increase.
But Ralph Lauren kept its annual operating margin forecast unchanged at 12% to 12.5%, due to rising transportation costs and rising prices for raw materials such as cotton.
Ralph Lauren’s net sales increased 26% to $ 1.50 billion in the second quarter ended Sept. 25, as reviving demand for luxury goods in North America and Europe helped offset some pressure in Japan and China where the reinstatement of virus restrictions has driven people away from stores.