Ralph Lauren second quarter revenues down 7,6%

According to the Ralph Lauren’s CEO Stefan Larsson, the shortfall is under control. Ralph Lauren’s wholesale business actually lost 10.4% compared to last year, down to $831 million, but this reflects the initial impact of a restructuring plan which has drastically reduced deliveries in North America. For example, the group explained how the number of SKUs delivered in autumn 2016 was cut by 10%. At the same time, retail revenue fell by 5.4% to $942 million, equivalent to a 9% decline in like-for-like terms and before the impact of exchange rate effects. Finally, the licensing business grew by 1.6% to $48 million.

The group has however recorded a marked downturn in operating income, which was recorded at $76 million, for an operating margin of 4.2%. A year ago, operating income was $230 million, equivalent to an 11.7% margin. Specifically, wholesale operating income fell from $247 to $203, and that for retail from $123 down to $19 million. Licenses contributed for $44 million, compared to $42 million last year. The group indicated that it has allocated $150 million for reorganisation activities. Yet, even taking this into account, the margins are slumping. In the course of the quarter, the group also provided other clues, such as the discontinuation of the Denim & Supply brand.

For the entire 2016-17 fiscal year, Ralph Lauren is forecasting revenue to decrease by a little less than 10%, and operating margin, excluding the restructuring costs, to reach approximately 10%.