Ralph Lauren Corporation announced Tuesday it will close its Polo store at 711 Fifth Avenue in New York City, moving merchandise into its Ralph Lauren men's and women's flagship stores on Madison Avenue and its downtown locations as the struggling brand continues executing its Way Forward turnaround plan. Its plans also include an unspecified number of additional store closures, "a reduction in workforce" and the elimination of some corporation operations, according to a public filing cited by USA Today.
Ralph Lauren said it will continue to operate its seven other New York City store locations and its NYC-based Polo Bar Restaurant. It also is shifting its e-commerce site to the Salesforce Commerce Cloud (formerly Demandware), which it says will enable a more consistent customer experience across its global digital ecosystem at lower cost, as well as exploring new retail concepts, including expanding sales of its private-label Ralph's Coffee, and developing new store formats.
These decisions, along with cost-cutting efforts and leveraging of its real estate portfolio, will result in some $140 million in annualized expense savings, with near-term restructuring charges of about $370 million.
Ralph Lauren seems intent on rationalizing its store footprint after a global expansion that some analysts say left the company with too many brick-and-mortar locations. One job it must fill is the chief executive spot: Stefan Larsson is exiting May 1, after a little over a year on the job.
Ralph Lauren's Way Forward plan has also included a pullback from department stores in favor of digital sales, flagship store sales (despite a closure of underperforming stores, some 10% of the fleet) and a move to emphasize best-selling styles as well as provide more “see now, buy now” opportunities for customers. The closures in New York represent the next step in that turnaround, CFO Jane Nielsen said in a statement Tuesday, indicating that the company can’t ignore the pull of e-commerce.
"We continue to review our store footprint in each market to ensure we have the right distribution and customer experience in place,” Nielsen said. “The decision will optimize our store portfolio in the New York area and allow us to focus on opportunities to pilot new and innovative customer experiences. We are looking carefully at the way consumers are shopping online and believe that shifting to the Salesforce Commerce Cloud platform will allow us to create a best-in-class solution more efficiently in all of our markets around the world.”
Ralph Lauren Corp. includes a stable of brands including Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection and Black Label, each incorporating an overarching sense of classic-yet-vogue fashion. The Polo brand in particular is one of the most recognizable in the world, and it remains strong, Nielsen insisted Tuesday. “[A]nd we expect it to further strengthen as we continue to evolve the Polo product and marketing,” she added.
In February, Ralph Lauren reported fiscal Q3 profit of $82 million or 98 cents per share; adjusted earnings were $1.86 per share, besting the Zacks Consensus Estimate of $1.64, but reflecting a 18.1% decline from $2.27 per share in the year-ago quarter. Ralph Lauren’s net revenues dropped approximately 12% (11% on a constant-currency basis) to $1.714 billion, just shy of the Zacks Consensus Estimate of $1.708 billion.