Ralph Lauren swings to Q1 loss; accelerates focus on direct-to-consumer
Ralph Lauren Corp. was hit hard in its first quarter by the COVID-19 pandemic, but it is using the disruption to accelerate its core strategic focus areas.
"The past few months have marked a period of extraordinary challenge, but also agility and resilience," said Patrice Louvet, president and CEO. "Our financial performance this quarter reflects an unprecedented three months of COVID-19-related impact around the world. We are taking the opportunity to leverage this period of disruption to accelerate our core strategic focus areas, drive new areas of growth, and realign our resources accordingly.”
Those areas include going after a new generation of shoppers, energizing core products and leading with digital, reported WWD.
“The focus for us going forward is [direct-to-consumer] first,” Louvet said in the report. After this comes digital commerce, through the retailer’s own site and others.
During the past few weeks, the company has pull out of about 200 brick-and-mortar wholesale accounts in the U.S., WWD reported.
Ralph Lauren reported a net loss of $127.7 million, or $1.75 a diluted share, in the quarter ended June 27, down from earnings of $117.1 million, or $1.47, in the year-ago period. Adjusted losses of $1.82 per share were wider than the $1.75 per share loss analysts had forecast.
Revenue dropped to $487.5 million $1.43 billion last year and was below the $600.0 million analysts had expected. North America revenue in the first quarter decreased 77% to $165 million. Comparable sales in North America were down 64%, driven by a 77% decrease in brick-and-mortar stores and a 3% increase in digital commerce. North America wholesale revenue decreased 93%.
Digital comparable sales increased 13%. Ralph Lauren’s average unit retail price increased 25%, driven by geographic and retail channel mix shifts and the company’s continuing efforts to elevate the brand and improve the quality of its sales.
The majority of Ralph Lauren stores in its key markets were closed during the first quarter for an average of eight to 10 weeks. Currently, most of its stores are now open in North America, Europe and Asia.