Ralph Lauren Ditching 25% of its Department Store Outlets

Although its strategic plan has been struggling to gain traction, Ralph Lauren says that while its efforts have led to sales decline, its margins have gone up, according to its first quarter earnings report.

Ralph Lauren earnings surpassed analysts’ estimates as the chain’s bottom-line profited from fewer discounting events and reduced inventory. For the first quarter, Ralph Lauren raked in $59.5 million, compared with a loss of $22.3 million, the previous year.

The company’s inventory levels were pulled back 31%, which it says will be reduced further by 20 to 25% during the second half of the year. In a recent address to analysts, the company also confirmed it would be ditching 25% of its struggling department store outlets in an attempt to boost profit margins further.

The decision to axe stores isn’t just about the dollars – it’s part of Ralph Lauren’s strategy to bring clarity to the brand, according to GlobalData Retail managing director, Neil Saunders, who says that in order to win back old customers and gain new ones, younger ones in particular, who have no connection to the brand – “it simply isn’t credible for a high-end brand to simultaneously showcase itself in a glitzy store on Madison Avenue while at the same time hawking a random assortment of sweaters thrown in a ragtag way on a table in Macy’s.”

In April this year, the luxury fashion label also announced it will close 10% of its Polo stores, and focus more on its e-commerce operations, as part of its Way Forward plan. The company confirmed that in order to return to sustainable, profitable growth and continue to move its business and iconic brand forward, it will put greater focus on its e-commerce operations.

Part of Ralph Lauren’s turnaround strategy includes shifting its e-commerce site to Salesforce Commerce Cloud, which it says will enable a more consistent user experience across its global digital ecosystem with an advantaged total operating cost.

Aside from ramping up its e-commerce operations, Ralph Lauren has also been moving towards accentuating its best selling styles, as well as providing more “see now buy now” digital experiences for its customers, saying it is looking carefully at the way consumers are shopping online and building that into its digital strategy.

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