Aug 9 (Reuters) - Ralph Lauren Corp and Michael
Kors-owner Capri Holdings blew past earnings estimates,
underscoring an unwavering demand for luxury apparel and
handbags from wealthy consumers who remain largely unscathed by
Surging prices have had little impact on middle- and
high-income households who have been happily splurging on
designer labels, using what they saved during the pandemic when
everything from foreign holidays to eating out came to a halt.
"High-income consumers are shopping in a way that is
different from other times of inflation," Jane Hali & Associates
analyst Jessica Ramirez said.
"Their priority is to shop for events they are returning to
now after coming out of lockdowns and this is putting luxury
goods companies in a good place."
Still, shares of both the companies fell about 3% in weak
broader market as their sales in China still proved to be a sore
spot due to recurring COVID-19 lockdowns.
Capri Chief Executive John Idol said he was "less
optimistic" about the pace of the demand recovery in the key
luxury goods market.
Meanwhile, European rivals LVMH and Gucci-owner
Kering have also seen a strong increase in their
sales, benefiting from some luxury spending shifting to Europe
as U.S. tourists took advantage of a stronger dollar.
Capri and Ralph Lauren recorded an increase of 66% and 47%,
respectively, in inventories at the end of their first quarters,
as the companies expedited seasonal product shipments to avoid
last year's supply chain delays.
The higher spending on freight to get products to shelves
faster caused gross profit margins at Capri and Ralph Lauren to
decline, despite the companies increasing prices.
A STRONG GAME
Ralph Lauren's revenue rose 8.3% to $1.49 billion in the
first quarter, while Capri's revenue rose 8.5% to $1.36 billion,
both beating analysts' expectations.
Excluding items, Capri earned $1.50 per share, topping
estimates of $1.36, while Ralph Lauren's profit of $1.88 per
share beat expectations of $1.75, according to Refinitiv IBES
(Reporting by Uday Sampath and Ananya Mariam Rajesh in
Bengaluru; Editing by Shinjini Ganguli)