Restructuring the Iconic Ralph Lauren – A Long-Drawn-Out Affair

LONDON, UK / ACCESSWIRE / June 9, 2016 / ActiveWallSt.com announces its coverage of the Textile – Apparel Clothing industry. Our focus today is on Ralph Lauren’s (NYSE:RL). On Tuesday, June 7, 2016, the company’s new CEO Stefan Larsson announced his first steps to bring the iconic brand’s performance back on track. The decision to cut jobs and close stores was, in a way, expected, although the quantum might suggest the company is easing into the restructuring process. Ralph Lauren would lay off a thousand of its workforce and close over 50 full-price stores. The cuts reflect almost 4% of the company’s total employee base. Register with us now for your free membership at:

http://www.activewallst.com/register/

Today, ActiveWallSt.com is promoting its industry and company coverage with focus on RL. Get all of our research for free by signing up to http://www.activewallst.com/register/.

Ralph Lauren’s performance has been rather tepid over the past few years. Revenue growth has averaged a shade under 2% since 2012, with operating margin declining over 550 basis points over the same period. This could be largely ascribed to the company’s wholesale business, which has been struggling to grow beyond mid-single digits; in fact, revenues from the segment declined in FY2016.

Popular retail chains are part of the company’s wholesale segment customer base, with Macy’s (NYSE:M) being one of the largest and contributing almost 25% to the segment’s revenue. Most of the large retail chains, such The Gap Inc. (NYSE:GPS) and J.C. Penney Company Inc. (NYSE:JCP), have reported weak performances and many more disclosed feeble future outlook. Ralph Lauren’s wholesale segment seems to be facing the brunt of it. Discretionary spending in US brick and mortar stores is stagnating, with volumes moving on to the online platform. Almost all of the large retail chains in the US have identified e-commerce as a key element of their growth strategies. Also, Ralph Lauren receives nearly 33% of revenue from non-US countries (Asia and Europe), where economic challenges have exerted pressure on discretionary spending.

That said, the root of Ralph Lauren’s recent uninspiring performance is not entirely embedded in the wholesale business. There is a bigger overhaul at the brand that the new CEO seems to be setting out to undertake. Strategic changes such as shortening the new fashion style timeline from 15 months to nine and enhancing focusing on core brands (Ralph Lauren, Polo and Lauren etc.) are key to Mr. Larsson’s approach. Many argue that over the past couple of decades, several peripheral brands and accessories have surfaced that do not reflect the company’s core strategy and would need to be carefully examined in the future.

Ralph Lauren’s stock is down nearly 30% over the past 12 months and some may suggest prices in the weaker outlook. The company targets to achieve stability by 2018, followed by growth and market share gains beyond that. However, getting the strategy right, especially in the brick and mortar fashion industry, can be a slow and grinding process, and the restructuring process at Ralph Lauren may well be a long-drawn affair. It may not be entirely surprising if the weakness in stock and business continues to prevail at least in the months to come.

—

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst [for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly at:
Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom
Email: info@activewallst.com
Phone number: 1-858-257-3144

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street

ReleaseID: 440962