The dispersion story continues in luxury fashion as more end-of-2024 earnings numbers roll in. Tepid results from LVMH on January 27 led to a small luxury market sell-off, but earnings numbers from Ralph Lauren and Tapestry today show that it is not all doom and gloom.
On February 6, Ralph Lauren reported blowout results for the period of October to December, which showed an 11 percent increase in their third-quarter revenue, reaching $2.1 billion, up from $1.9 billion in the same quarter the previous year. This growth was driven by increases across all reportable segments despite unfavorable foreign currency effects. The company achieved a gross profit of $1.5 billion, with a gross margin of 68.4 percent, up from 66.5 percent in the prior year. Notably, revenue growth in China was in excess of 20 percent and fairly balanced across geographies. This allowed Ralph Lauren to lift their full year FY25 forecast to 6-7 percent.
Tapestry, the parent company of Coach, kate spade new york, and Stuart Weitzman, reported a 5 percent year-over-year increase in second-quarter revenue, totaling $2.2 billion. This growth was primarily driven by a 10 percent increase in Coach sales, attributed to the popularity of items like the Tabby and Brooklyn bags, which have resonated with Gen Z consumers. Over half of the 2.7 million new North American customers acquired by Tapestry in Q2 were Gen Z and millennials. In contrast, sales at Kate Spade and Stuart Weitzman declined by 10% and 16%, respectively. Tapestry, presumably meaning Coach, also recorded positive growth in China at 2 percent on a constant currency basis. The company achieved a gross profit of $1.6 billion, representing a 9.4% increase, supported by operational improvements and reduced freight costs. Tapestry raised its full-year 2025 earnings per share outlook to $4.85 to $4.90, up from the prior guidance of $4.50 to $4.55, and now anticipates revenue of over $6.9 billion, representing approximately 3 percent growth.
Intra-day trading in New York sees Tapestry up over 12 percent and Ralph Lauren up over 9 percent, implying YTD price appreciation of over 25 and 17 percent, respectively.
As we argued in our 2025 luxury industry preview (https://lnkd.in/djJwqbaG), brands with effective content strategies, like Ralph Lauren and Tapestry, continue to deliver strong results. This strengthens the thesis that the luxury market is not in decline as much as it is experiencing extreme dispersion. Brands that can connect with consumers with effective stories and offer seamless digital shopping experiences are winning with consumers. Note the positive correlation between sales growth and the Fashion Strategy Weekly content effectiveness index, produced by staff at It’s A Working Title, LLC®️, below.