May 23 Reuters Ralph Lauren on Thursday forecast annual revenue growth below market expectations despite beating quarterly results, as it grapples with subdued demand in the United States.

The company also named insider Justin Picicci as its new chief financial officer, replacing Jane Nielsen, who will continue as Ralph39;s operations head.

The apparel maker39;s shares reversed course to rise 2 in morning trade as the company forecast strong margins for the year. The stock fell as much as 3 before the bell.

Ralph Lauren expects annual gross margin to increase up to 100 basis points, as lower cotton costs and better full price sales help offset pressures from labor and freight costs related to Red Sea disruptions.

Ralph Lauren has a history of issuing conservative guidance. The margin improvement is more important than the sales growth, said David Swartz, senior analyst at Morningstar Research.

The company has also been working to attract more customers to its stores and to digital sales, instead of wholesale channels as retailers cut back on orders due to choppy demand.

As a result, Ralph Lauren39;s directtoconsumer channel now comprises about twothirds of the company39;s total revenue.

Its fourthquarter revenue of 1.57 billion edged past LSEG estimates of 1.56 billion, benefiting from robust demand in Europe and Asia, as well as a pullback in discounts due to leaner inventory.

Sales in China grew more than 25, with Ralph Lauren adding on a postearnings call…