Rise in sales for Ralph Lauren Asia
In this article (5)
Ralph Lauren Asia sales rose marginally in the second quarter as the company continued with its turnaround strategy.
Group-wide global sales, however, fell 9 per cent to US$1.7 billion, as the troubled brand pursued initiatives aimed at increasing the quality of sales, reduced promotional activity and improved distribution. North American revenue fell 16 per cent to $877 million.
However, on the positive side, the average unit sale across Ralph Lauren’s direct-to-consumer network was up 5 per cent year-on-year.
Ralph Lauren Asia sales reached $217 million, up 4 per cent on a constant-currency basis, driven by strength in both retail and wholesale channels. Same-store sales rose 3 per cent driven by improved store footfall and conversion of browsers into shoppers.
“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. He said incoming CEO Patrice Louvet has “already proven to be an invaluable partner who is embracing our core values, bringing unique expertise and uniting and empowering our capable teams”.
Louvet said that while there remains a lot of work to be done to restore the company to its previous level of success, he is encouraged by the early progress being made in strengthening the brand and better connecting with consumers.
“Faint light at end of long tunnel”
“already proven to be an invaluable partner who is embracing our core values, bringing unique expertise and uniting and empowering our capable teams”
Neil Saunders, MD of GlobalData Retail, said that while the results again showed declining sales, there is “finally a faint light at the end of Ralph Lauren’s long tunnel of reinvention”. Net profit rose 215 per cent, largely due to the streamlining of the business reducing costs, favourable exchange rates and reduced product discounting, improving gross margin.
“While the turnaround plan is delivering a bottom line improvement, the impact on the top line is less obvious,” observed Saunders.
He also believes there is more work to do in consolidating the company’s ranges and choice.
“The company still has too many sub-brands, capsule collections and labels. In theory, these are supposed to cater to different constituents of the market. In practice, there is no real delineation between many of the elements, and the result is a confused mass of product that is vaguely referred to as ‘Ralph Lauren.’ Trimming back here is necessary if the brand is to have any chance of cutting through in a very crowded and competitive marketplace,” he said.
“One of the positives we take from both this and the previous set of results is that Ralph Lauren and his new CEO, Patrice Louvet, seem to be working well together. The dynamic between the two gentlemen is crucial as it will ultimately determine whether the turnaround plan succeeds or fails. As the founder and iconic head of the brand, Ralph Lauren’s input and vision are vital, but it remains important that he allows a CEO to steer the business towards more fruitful waters. After some false starts, this now seems to be happening,” Saunders concluded.
Questions & Answers
Q.What specifically drove the sales increase for Ralph Lauren Asia?
What specifically drove the sales increase for Ralph Lauren Asia?
Ralph Lauren Asia sales were driven by strength in both the retail and wholesale channels. Same-store sales improved due to increased store footfall and better conversion of browsers into shoppers.
Q.What factors contributed to the rise in net profit despite overall falling sales?
What factors contributed to the rise in net profit despite overall falling sales?
Net profit rose due to the streamlining of the business, which reduced costs. Favourable exchange rates and reduced product discounting also contributed to this improvement, leading to a better gross margin.
Q.What is Neil Saunders' main criticism regarding Ralph Lauren's product strategy?
What is Neil Saunders' main criticism regarding Ralph Lauren's product strategy?
Saunders believes the company still has too many sub-brands, capsule collections, and labels, leading to a confused mass of product. He suggests trimming back these ranges to help the brand cut through a competitive market.
Q.How is the dynamic between Ralph Lauren and the new CEO Patrice Louvet viewed?
How is the dynamic between Ralph Lauren and the new CEO Patrice Louvet viewed?
Neil Saunders believes the dynamic between Ralph Lauren and CEO Patrice Louvet is crucial and seems to be working well. This positive relationship is seen as vital for the turnaround plan's success after some previous false starts.
Reader pulse
Is Ralph Lauren's Asia growth sustainable?
20,139 votes so far