Turnarounds

Ralph Lauren Taking Steps to Save $140 Million

“These are important actions we are taking to continue our evolution and deliver on the Way Forward commitments we made in June," CFO Jane Nielsen ...
Matthew HellerApril 4, 2017
Ralph Lauren Taking Steps to Save $140 Million

Ralph Lauren is taking additional restructuring steps amid sluggish sales on luxury apparel and accessories, including closing its flagship Polo store in Manhattan and shifting its digital operation to a cheaper platform.

In a regulatory filing, the retailer said Tuesday the restructuring moves will result in job cuts and realize $140 million in annualized expense savings. The savings are in addition to the $180-$220 million of annualized expense savings that Ralph Lauren announced in June as part of then-CEO Stefan Larsson’s Way Forward Plan.

“These are important actions we are taking to continue our evolution and deliver on the Way Forward commitments we made in June,” CFO Jane Nielsen said in a news release.

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She said the company is continuing to review its store footprint in each market “to ensure we have the right distribution and customer experience in place” and the decision to close the Polo store “will optimize our store portfolio in the New York area and allow us to focus on opportunities to pilot new and innovative customer experiences.”

Ralph Lauren opened the flagship in mid-2014 after signing a lease the year before for a 15-year term that set the yearly rent at $25 million, WWD reported, citing real estate sources. The Polo product from the store will be integrated into the Ralph Lauren men’s and women’s flagship stores on Madison Avenue, as well as the brand’s other locations in downtown New York.

“The Polo brand remains strong, and we expect it to further strengthen as we continue to evolve the Polo product and marketing,” Nielsen said.

The company will also shift its digital operation to “a more cost-effective, flexible e-commerce platform” through a collaboration with Salesforce’s Commerce Cloud. “The new solution is expected to deliver a more consistent customer experience across the global digital ecosystem, with an advantaged total operating cost,” it said.

According to USA Today, the moves follow a “turbulent period” defined by falling revenue, lower profit and the departure in February of Larsson, who had “creative differences” with executive chairman and company namesake Ralph Lauren.