Is Ralph Lauren leaving luxury?
Ralph Lauren announced in June plans to lower its real estate and cut jobs, which the Wall Street Journal reported would be as many as 1,000 full-time jobs. The decision follows the company’s consecutive quarterly sales declines and a 10% drop in shares (the company opened on Monday, June 27 at $88.48 and closed at $87.38).
MediaRadar, a multimedia sales intelligence tool with 1,400 clients including Bloomberg, The Wall Street Journal and Vogue, reported on how Ralph Lauren can turn its business around. The company analyzed Ralph Lauren’s advertising before and after CEO Stefan Larsson joined the company and found two key changes that could be in the new Ralph Lauren business strategy.
The first key change is to move away from luxury. MediaRadar found that in the first five months of 2015, 55% of Ralph Lauren’s marketing was for its luxury labels, Purple Label and Ralph Lauren Collection, and in the following year, the company slashed its marketing allocation almost in half to 26% to put its focus into Polo and its namesake label. The multimedia company added Larsson’s experiences revitalizing H&M and Old Navy as more reason to shift to more affordable fashion.
The second key change is to narrow its product focus. Ralph Lauren marketed as many as 29 specific product lines from January 2015 to May 2015 and that number decreased to 14 in the following year.
Victoria’s Secret this year acted according to the second change. L Brands, Victoria’s Secret parent company, restructured the brand’s business by cutting swimwear and its catalogs.
MediaRadar’s analysis is merely speculative, but the fact remains that Ralph Lauren is restructuring and it expects record charges of $400 million mostly in the current fiscal year.
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