Macy's and Ralph Lauren lead US apparel growth

Macy’s and Polo Ralph Lauren reported strong profit growth in quarterly results on Wednesday, which showed some high-end apparel retailers are thriving in spite of a weak US economy and subdued consumer sentiment. Net profit at Macy’s, the US department store group that also owns Bloomingdale’s, surged 64 per cent to $241m from the previous year and beat market expectations, while sales grew 7.3 per cent to $5.9bn. Ralph Lauren, which earns two-thirds of its revenue in the US, reported a 52 per cent increase in net profit to $184m and a 32 per cent rise in its combined retail and wholesale sales to $1.5bn. Executives said it was too early to judge the impact of this week’s extreme volatility in financial markets, which can affect the mood of well-off shoppers via their investment portfolios. But the companies’ results indicated that in the past quarter luxury shoppers – and especially international tourists – were still willing to splash out on well-known fashion brands, while underlining the importance of distinctive products and e-commerce initiatives. Macy’s attributed its growth partly to its success in securing exclusive rights to sell products from certain brands in the US – including Tommy Hilfiger, Donald Trump and Martha Stewart – and to an initiative to customise merchandise in each store to the local area. Ralph Lauren’s revenues outside the US rose by 60 per cent and it said its business was growing across its own branded stores, department stores, speciality stores and online. Macy’s said its online sales jumped 40.2 per cent, contributing 1.2 percentage points to like-for-like sales growth of 6.4 per cent at stores open at least a year. “The interaction between our stores, the internet, and mobile devices is making it harder and harder to really distinguish between store sales transactions and internet sales transactions,” said Karen Hoguet, Macy’s chief financial officer. “We know that customers are sometimes shopping in the stores and then going home and ordering online, while other times the reverse is done.” Both companies must still contend with the impact of price rises on sales as they continue to pass on higher input costs driven by commodity inflation. Roger Farah, president of Ralph Lauren, said: “We will not know the impact of our pricing actions until mid to late September. By then, the customer has probably had enough time to adjust to the pricing paradigm and we should see how the macroeconomic [situation] affects global consumption trends.” Image: Ralph Lauren campaign