Retail

Ralph Lauren Cuts Workforce; Focuses On eCommerce

The combined dynamics of the digital shift and the pandemic have caught up to Ralph Lauren. Tuesday morning (Sept. 22) the company announced steps to cut its workforce and accelerate its digital transformation.

While it did not announce the number of employees that will be affected by the move, the company has positioned today’s announcement as part of its “Next Great Chapter” plan outlined two years ago. The announcement, coupled with a financial savings commitment, adds urgency to the plan rather than adding detail to its execution. The transformation plan, according to the company, aims to attract younger consumers, drive targeted expansion, lead with digital and operate more efficiently.

“In the context of today’s rapidly evolving consumer, industry shifts and global dynamics, Ralph Lauren is accelerating key areas of the plan, beginning with the implementation of new technology platforms and the simplification of its organizational structure,” said the company in a statement.

According to the new “Fiscal 2021 Strategic Realignment Plan” Ralph Lauren will reduce its global workforce, which is expected to result in expense savings of $180 million to $200 million, with savings realization primarily beginning in the company’s fiscal 2022.

“The changes happening in the world around us have accelerated the shifts we saw pre-COVID, and we are fast-tracking some of our plans to match them — including advancing our digital transformation and simplifying our team structures,” said President and Chief Executive Officer Patrice Louvet. “These steps will enable us to progress our brand elevation journey and deliver Ralph’s vision in today’s dynamic environment — inspiring our consumers around the world and creating value for all of our stakeholders.”

The problem with the transformation plan is that the company has not shown a propensity toward pushing shoppers toward its current digital assets. Its last quarterly earnings statement, released in early August and driven by the pandemic, showed North America revenue in the first quarter decreased 77 percent to $165 million. In retail, comparable store sales in North America were down 64 percent driven by a 77 percent decrease in brick-and-mortar stores and a 3 percent increase in digital commerce. North America wholesale revenue decreased 93 percent.

“The Company is transforming how it operates with the implementation of new technology platforms across several key areas of its business,” it said in a statement. “This includes rolling out a cloud-based human resources and planning system globally as well as elevating how it delivers for consumers through its Digitizing the Value Chain project. This is a Company-wide initiative to simplify ways of working, better connect teams and digitize the product journey. It will enable faster and more connected decision-making from product design to market. Ralph Lauren is also continuing to invest in technologies that help deliver an enhanced consumer experience — with new digital capabilities that support areas like omni-channel shopping, personalization, social commerce and augmented reality.”

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