Ralph Lauren posts losses in Q3 as part of restructuring
Ralph Lauren on Thursday reported its third quarter 2017 results in addition to the CEO departure announcement. The company experienced decreases throughout the company due to its restructuring, which in the third quarter included lowering inventory levels 23%, reducing product SKUs over 20%, and closing 12 underperforming stores among others.
Former CEO Stefan Larsson, who announced his departure from the company on Thursday, said “This quarter, we continued to drive the execution of the Way Forward plan -- refocusing and evolving our iconic product core, cutting our lead times, and aligning supply with demand -- to put the foundation in place to drive demand back to the business,”
The Way Forward plan is the company’s initiative to return to long-term profitable growth. “Our third quarter results demonstrate the continued actions we are taking to further strengthen our business and move us forward. We are making the right strategic decisions to support the future growth of the Company,” said Ralph Lauren, Executive Chairman and Chief Creative Officer.
Larsson is stepping down from the company citing disagreements in the company's plan. He will remain with the company until May 1, 2017, and Chief Financial Officer Jane Nielsen will lead execution of the plan until a new CEO joins the Company.
Net revenues in the quarter decreased 12% to $1.7 billion with wholesale decreasing 26% and retail decreasing 2%. Licensing revenue also fell 4% to $44 million.
Gross profit was $983 million due in part to reduced international promotional activity, but unfavorable foreign currency effects offset this. Operating income was $128 million and operating margin was 7.5%, which was above expectations due to better gross margin and expense management.
In addition, net income fell to $82 million, or $0.98 per diluted share, from $131 million, or $1.54 per diluted share, in the prior year period.
Ralph Lauren expects its fourth quarter consolidated net revenues to be down mid-teens on a reported basis, and the company reaffirms its full year guidance for consolidated net revenue, which is expected to decrease at a low-double digit rate consistent with the Way Forward plan.
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