A marketing blitz involving supermodels and Instagram helped Ralph Lauren woo more customers and report another quarter of better-than-expected sales and earnings, sending its shares up over 12 percent on Tuesday.
The 50-year-old luxury retailer, known for its preppy Polo shirts, spent about 18 percent more on marketing during the December quarter when compared with a year earlier, sponsoring fashion events and hiring supermodels and actors to promote its brand on Instagram.
Victoria’s Secret model Taylor Hill promoted a new line of Ralph Lauren fragrances, while “Quantico” star Priyanka Chopra and singer Nick Jonas wore Ralph Lauren at their much-followed wedding.
“You can have the best product in the world but the Gen Z, Gen Y and even Gen X consumer will know nothing about it without the right influencers and the right social media,” Jane Hali, head of investment research firm Jane Hali & Associates, said.
Ralph Lauren now has 9.8 million followers on Instagram, some 1.6 million more than it did in October, research from Hali’s firm showed.
The marketing helped Ralph Lauren sell more coats, shirts and accessories at higher prices even when the market was flooded with holiday-season discounts, Chief Executive Officer Patrice Louvet said on a conference call with analysts.
Ralph Lauren has also begun timed, limited-edition sales on its mobile app, often called a “drop,” copying Supreme and other popular brands which use the strategy to create brand awareness and a sense of exclusivity.
Louvet also said a menswear launch with UK-based Palace had sold out in under an hour, while three-fourths of the people who bought it globally were completely new to Ralph Lauren.
“It’s not really directly affecting sales because the drops aren’t that large but it creates hype,” Hali said.
NO CONCERNS ABOUT CHINA
Ralph Lauren said there were no signs of a slowdown in China, allaying concerns about customer demand in a cooling economy in the midst of a trade dispute with the United States.
Quarterly revenue from Greater China rose 19 percent in constant currency terms, Ralph Lauren said, as it opened new stores and partnered with distributors on platforms like Tmall and WeChat. Still, the New York-headquartered company was “highly underdeveloped” in the region, executives said.
Overall, its net revenue rose 5.1 percent to $1.73 billion, topping analysts’ average estimate of $1.66 billion, according to IBES data from Refinitiv.
Excluding one-time items, it earned $2.32 per share, which also exceeded analysts’ estimates of $2.15, marking the ninth successive quarter of better-than-expected sales and earnings for Ralph Lauren.