Ralph Lauren Corporation finds new chief
It has appointed Patrice Louvet to replace Stefan Larsson, who quit in February after just a year in the role citing differences with executive chairman Ralph Lauren over the direction in which to take the company’s product, marketing and shopping experience.
Louvet was previously group president of Procter & Gamble’s global beauty unit that oversees 12 brands, including Head & Shoulders, Olay and Pantene.
“Finding the right partner to work with me to take us forward in our evolution has been my primary focus over the past several months,” says Lauren.
Meanwhile, Neil Saunders, MD of analysts firm, GlobalData Retail has described the retailer’s recent final quarter results as “disastrous” and show a business which has rapidly gone from bad to worse.
“Revenues have been in steady decline across the whole of this fiscal, but a 16.3 per cent drop – off the back of a 0.7 per cent dip in the prior year – is calamitous,” he said.
“Both the retail and wholesale divisions contributed to the decline, with sales at the former plunging by 16.2 per cent on a total basis and by 11 per cent in same-store terms.”
On the bottom line, Ralph Lauren posted a $268 million operating loss for the quarter, with some of this down to one-off restructuring charges, which came in at $125 million, but most of it is the result of the significant headwinds buffeting the top line.
“The one chink of light in a very dark set of figures comes from the fact that Ralph Lauren attributes some of the negative performance to its attempts to cut back distribution of the brand and to reduce promotional activity,” said Saunders.
“These are both things we see as necessary if the brand is to rebuild its credibility and strengthen its image with consumers. Indeed, this is a path that has been followed by brands like Coach and Michael Kors, with notable success.”
Saunders said the brand needs to take three steps back to take three steps forward and that while Ralph Lauren is supposed to be a premium brand, it has become far too ubiquitous and in so doing has become less special.
“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,” he said.
“The two are incongruous and, ultimately, cheapen the image of the brand.
“Much more discipline is required around ranging, and we are encouraged to see this coming through in spring assortments with a 20 per cent reduction in SKUs.
“Against a challenging backdrop, RalphLauren has become too reliant on discounting to drive sales.
“This has damaged both margins and the brand image. Our channel checks over the past few months show that there has, indeed, been much less discounting – a fact that shows up in better margin numbers.
“On this front, we believe the company is starting to make some headway. However, as other brands going through this process have shown, weaning customers off promotions can be extremely painful over the short term.”