Ralph Lauren (NYSE:RL) Cutting about 1,000 Jobs & Closing 50 Stores
Ralph Lauren Corp (NYSE:RL). is cutting about 1,000 jobs and closing 50 stores as part of a sweeping plan to lower costs and revive sales growth at the luxury fashion brand.
Shares of Ralph Lauren, which also forecast declines in FY (fiscal year)and Q-1 revenue, fell as much as 10.4% to 86.32 in early trading Tuesday.
The jobs being eliminated represent about 8% of the company’s full-time jobs, spokesman Ryan Lally said.
Ralph Lauren, like some other luxury brands, has been struggling amid sluggish spending on luxury apparel and accessories. The company’s margins have taken a knock as department stores discount heavily to get rid of excess inventory.
Moreover, the company’s lower-end Polo and Lauren brands are facing competition from retailers such as H&M and Inditex’s Zara, which are known for their shorter production times.
Ralph Lauren said Tuesday it would try to reduce the time taken to get new products to shelves to 9 months from 15.
The company brought in Stefan Larsson as CEO late last year in the hope that he would replicate his success of reviving sales at Gap Inc’s Old Navy, where he cut down production times and focused on offering trendy clothes at low prices.
Ms. Larsson has also worked with H&M for about 15 years, where he helped grow the company’s sales to $17-B from $3-B and introduced partnerships with luxury brands such as Versace and Karl Lagerfeld.
The company will focus on its luxury Ralph Lauren line and the lower-end Polo and Lauren brands, Ms. Larsson said in the 49-year old company’s 1st investor day call Tuesday.
The company’s sales have fallen in every Quarter in FY 2016, leading to a full-year sales decline of nearly 3%.
Ralph Lauren said it expects net revenue for the current FY to fall in the low-double digit percentage range, hurt partly by store closures, pullback in inventory receipts and weak traffic.
The company said it expects to record restructuring charges of up to $400-M and an inventory reduction-related charge of up to $150-M, mostly in the current FY.
The restructuring measures are expected to result in annualized savings of about $180-220-M.
The company had about 493 directly operated retail stores and employed about 26,000 people, roughly 15,000 of who work full time as of 2 April.
Up to Monday’s close of 96.33, the stock had fallen 14% YTD.
|NYSE:RL||94.06||7 Jun 2016||-2.27||86.25||96.14||86.25||7,916,300|
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