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Ralph Lauren warns of slow down due to crisis in Europe

Ralph Lauren Corp reported higher quarterly sales gains this week, but  warned the economy remains tough and reported pressure from lower spending by tourists.

Ralph Lauren said it expects net revenue to fall by a “mid-single-digit” percentage in the second quarter, largely because of economic turmoil in Europe.

Ralph Lauren, Paris store

Ralph Lauren said it took a hit from fewer visits by tourists in Europe, its top market after North America. The clothier’s sales have been further hurt by its phase-out of stores operated by local partners in China. It plans to replace those in time with company-run shops in better locations that will enhance its brand in the world’s fastest-growing luxury market.

Chinese visitors account for less than 2 percent of Ralph Lauren’s sales in Europe, compared with as much as 40 percent for rivals, Chief Operating Officer Roger Farah said during a conference call with analysts, faulting Ralph Lauren’s relatively low profile in China. At the same time, European department stores have been more cautious in ordering. “We are seeing skittishness by our wholesale partners,” Farah said, speaking of European retailers that sell its wares.

Ralph Lauren’s net income rose 5.1 percent to $193.4 million, or $2.03 per share, in the first quarter ended June 30, from $184.1 million, or $1.90 per share, a year earlier.

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