Ralph Lauren (RL) earnings Q3 2021

People walk by Ralph Lauren’s Fifth Avenue Polo store in New York City.

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Ralph Lauren on Thursday forecast a bigger-than-expected drop in fourth-quarter revenue, as the high-end apparel maker contends with new lockdowns in its major markets of Europe and Japan.

Many European governments put their economies back into lockdown late last year due to a spike in coronavirus cases, crimping sales to a major market for global luxury goods makers who were banking on a strong holiday shopping season to help ride out the hammering from the virus earlier in 2020.

The New York-based designer said it expects fourth-quarter fiscal 2021 revenue to fall by mid-to-high single digits, while analysts’ were expecting a 2.9% drop, according to IBES data from Refinitiv.

“Our current outlook could be negatively impacted if government-mandated lockdowns or restrictions are extended,” the company said.

Echoing luxury goods rivals, Asia was a bright spot for Ralph Lauren in the third quarter. Mainland China sales surged more than 40%.

Ralph Lauren on Wednesday also said it would look to cut costs further for the fiscal year by consolidating its corporate offices and re-negotiating store rents.

The company has already announced plans to cut 15% of its global workforce by the end of this fiscal year.

Adjusted net income fell over 42% to $125 million, or $1.67 per share, in the third quarter ended Dec. 26, but beat analysts’ estimates of $1.63.

Ralph Lauren’s gross margin rose 320 basis points, as it, like other luxury goods companies such as Tapestry Inc and Capri Holdings Ltd, cut shipments to discount-prone department stores.

Ralph Lauren said it plans to reinstate its quarterly dividend in the first half of fiscal 2022.

Net revenue fell 18.2% to $1.43 billion, missing estimates of $1.47 billion.

Shares were down about 2% at market open.

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