Ralph Lauren on Thursday forecast annual revenue growth below market expectations and named insider Justin Picicci as its chief financial officer, effective immediately.
The apparel maker’s shares, which have risen about 16 percent so far this year, were down 4.5 percent in pre-market trade after the company also forecast current-quarter revenue growth below estimates.
Demand for pricier apparel in the United States has been choppy as consumers become increasingly particular about quality, style and value on their stressed discretionary budgets.
Ralph Lauren, much like its peers in the apparel space, resorted to promotions in markets like the United States in order to appeal to a more price-sensitive lower-income consumer.
The company expects annual revenue to rise in low-single digits, centring on about 2 percent to 3 percent, below market expectations of a 3.98 percent increase to $6.89 billion, as per LSEG data.
Ralph Lauren’s wholesale business has come under pressure in the United States as retailers and department stores limit orders while they face the brunt of weak demand from a cautious consumer.
Wholesale revenue in Ralph Lauren’s biggest market, North America, fell 2 percent in the quarter following a 15 percent fall in the prior quarter.
“We continue to evaluate our brand presence on a door-by-door basis, resulting in approximately 20 department store exits completed in the region (North America) this fiscal year,” the company said.
It also forecast first-quarter revenue to rise slightly, against expectations of a 2.82 percent increase to $1.54 billion.
However, the company’s fourth-quarter revenue of $1.57 billion edged past estimates of $1.56 billion, benefiting from robust demand in its direct-to-consumer channel in Europe and Asia.
Picicci, who most recently served as Ralph Lauren’s Enterprise CFO, succeeds Jane Nielsen. Nielsen joined the company as CFO in 2016, and took on the role of chief operating officer as well in 2019. She will remain as the apparel maker’s COO.
By Juveria Tabassum; Editing by Maju Samuel
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