Ralph Lauren’s new CEO is swinging the axe
Steve’s breakdown: He has to be looking at the $54 million they spend in magazines. Pitch a marketing plan that takes them digital at half the price!
NEW YORK, NY: Ralph Lauren Corp. shares RL, -10.83% extended their losses Tuesday, tumbling 10% in premarket trade, after the company unveiled a restructuring plan aimed at boosting profitability. The high-end clothing retailer said it will take a number of steps to reduce supply chain lead times, overhauling sourcing and improving its multi-channel distribution model.
“We have assessed every value-creating component of the company and, with our Way Forward Plan, we will build on our strengths, refocusing on our core brands and instilling a financial discipline that is highly focused on return on investment,” Chief Executive Stefan Larsson said in a statement. The company is expecting to book charges of up to $400 million and an up to $150 million inventory charge related to the reduction of inventory out of current liquidation channels. The charges are expected to be mostly realized by the end of fiscal 2017.
The company expects to generate $180 million to $220 million in annualized cost savings from the restructuring. It is now expecting first-quarter revenue to be down at a mid-single digit rate, and full-year revenue to decline at a low-single digit rate. Shares are down about 14% in the year so far, while the S&P 500 has lost 3.2%.