RALPH LAUREN’S RETREAT FROM DISCOUNTING HELPS BOLSTER PROFITS
Ralph Lauren Corp’s quarterly revenue and profit beat Wall Street estimates on Thursday, selling more of its high-end clothes at full price and keeping a lid on costs, sending its shares up more than 5 percent on Thursday.
The company is in the midst of a two-year turnaround plan that seems to be taking hold, as margins and revenue increase across its store base. Ralph Lauren had been struggling to compete in a brutal retail sector, as fast-fashion apparel brands and a rapid decline in traffic to malls and stores due to the shift to online shopping, knocked established names to the side. The luxury retailer was also hurt by allowing department stores and off-price retailers such as TJX to discount its products heavily.
To regain its luxury stature with customers, Ralph Lauren embarked on a two-year cost-cutting plan that included pulling back inventory from department stores and outlets, cutting jobs, and streamlining its management layers to reduce bureaucracy.
Sales fell 9 percent to $1.67 billion, hurt in part by its decision to pull back from department stores and factory outlets. But that figure beat analysts’ estimates of $1.65 billion, according to Reuters.
“I am pleased with the progress we are making as we continue to strengthen the foundations of our business and elevate the expression of our iconic brand,” said Ralph Lauren, executive chairman and chief creative officer. “Patrice has already proven to be an invaluable partner who is embracing our core values, bringing unique expertise and uniting and empowering our capable teams.”
“We are focused on creating value for all of our stakeholders by continuing to drive productivity and re-igniting quality growth,” added Patrice Louvet, president and chief executive officer. “While there is a lot of work to be done, I am encouraged by the early progress we are making across multiple fronts to strengthen our brand and better connect with consumers.”
