Ralph Lauren and Macy's beat downturn

Two of America's largest fashion conglomerates, Ralph Lauren and Macy's, reported a rise in sales and profits in the 3rd quarter. American shoppers, it appears, are optimistic despite the global downturn. Ralph Lauren, according to the

Financial Times, forecast that revenues would grow slowly in the Christmas quarter as it reported sales up 24 per cent from a year ago to $1.9bn in the three months to October 1.

Macy’s, the department store chain, said it expected sales to grow by 4 to 4.5 per cent in the three months to the end of January. It had previously announced that for the first time it would open at midnight on the cusp of Thanksgiving and Black Friday, one of the biggest shopping days of the year in the US.

For the previous quarter Macy’s – which is focused on the US and also owns the Bloomingdale’s chain – reported a 4.1 per cent rise in sales to $5.8bn, which signalled it was gaining market share from peers, according to Morgan Stanley analysts.

Macy’s net income surged from $10m to $139m partly because of better cost control.

Deborah Weinswig, analyst at Citigroup, said Macy’s performance was driven by initiatives to integrate its online and bricks-and-mortar business, to tailor merchandise to local neighbourhoods, and to give sales associates better training.

Ralph Lauren reported a 14 per cent rise in net income to $233m from a year ago, but indicated higher material costs were still taking a toll on profitability. Roger Farah, Ralph Lauren’s president and chief operating officer, said: “Over the last two months, we have seen extreme stock market movement and negative economic news which resulted in more volatile sales and traffic at Ralph Lauren stores in the US and Europe, particularly with local customers.”

He said sales in the UK, France, Germany and Scandinavia had been “quite strong” while Italy and Spain had been “more difficult”.

Ralph Lauren is expanding its online presence in Europe and shifting more of its business from wholesale to its own retail spaces. The latter will increase operating expenses but improve gross profit margins and give it more control over its brands.

Image: Ralph Lauren