Ralph Lauren To Further Hike Prices To Raise Brand Prestige — Retail Bum

Ralph Lauren plans to continue raising the price of its products as it looks to uplift its brand value and sell higher-priced items.

Just over the past five years, the company has already raised its price points by nearly 80%, which has, in turn, helped improve its gross margins — a trend that is likely to continue in the near future.

“I don’t think there’s a limit as long as we do a good job on elevating the product, elevating the storytelling, elevating the environment,” said Chief Executive Officer Patrice Louvet.

“The onus is on us to make sure that we are able to provide this consistent elevation,” Louvet added. “Then that will support the continued growth of average unit retail.”

That said, even with the company’s industry-leading average price increases, its gross margin performance is way behind its competitors, according to BMO Capital Markets Analyst Simeon Siegel.

For the most recent quarter, Ralph Lauren’s gross margins stood at 61.7%, much lower than those reported by players such as Capri Holdings Ltd. and Tapestry Inc.

Siegel pointed out that Ralph Lauren’s approach of elevating its brand image with higher price points without commanding the ensuing margins raises questions about how elevated the brand perception really is in the consumers’ eyes.

Part of the problem that could be impacting Ralph Lauren’s image is its legacy, as consumers have been familiar with its quality and price points for a long time. That is a problem the company aims to rectify as it sees expansion in India, where it currently runs four locations.

Originally published at https://retailbum.com on July 20, 2023.