Investing.com – Ralph Lauren stock (NYSE:RL) fell nearly 5% on Tuesday on the apparel retailer’s plans to increase spending in the current half of the year.
Operating expenses jumped around 20% from last year in the second quarter ended September 25 and the company said they “continue to reflect the company's plans to increase marketing and other strategic investments to support long-term growth, including a higher level of spend in the second half of the fiscal year."
Second-quarter reported revenue rose 26%, to $1.5 billion, above expectations with double-digit growth across all regions. Adjusted profit per share was $2.62 and above estimates.
Parts of Ralph Lauren’s key markets – China and Japan among them – are still reeling under the pandemic, with restrictions of varying limits imposed locally. Availability of raw materials is a big issue as some factories in China and Vietnam are still shut while shipping lines remain congested, both due to higher traffic and lack of personnel.
About 40% of Ralph Lauren products are manufactured in China and Vietnam.
A sharply brighter outlook and a promise to resume share repurchases failed to cheer up investors, who worry about the impact of supply chain challenges on retailers.
The retailer said it expects constant currency fiscal 2022 revenue to rise 35% at the center of the projected range compared to the 27.5% increase at midpoint it predicted earlier.
It kept its full-year operating margin forecast unchanged at 12.5% at the top end, flagging higher shipping costs.