Is Ralph Lauren positioned to accelerate its growth?
At Ralph Lauren Corporation’s Investor Day, CEO Patrice Louvet claimed that a four-year transformation has elevated the brand’s status, product and go-to-market strategy to serve as a foundation for accelerated growth.
The “Next Great Chapter: Accelerate” three-year plan calls for sales growth at a mid-to-high single digit pace through 2025, an acceleration from the low-to-mid-single digit pace under its previous five-year plan. The retailer expects the fastest growth from digital commerce, including third-party sites, up to the low-to-mid teens. That is followed by owned brick and mortar in the mid-single digits and then wholesale brick and mortar, low-to-mid single digits.
The plan builds on past success with three strategic drivers:
“Elevate and energize our lifestyle brand”: Mr. Louvet said four years ago “there were questions about our ability to appeal to the next generation.” However, making marketing investments and tapping data science for better targeting have helped strengthen “brand desirability, especially among the young generation.” A recent survey showed 74 percent of consumers perceive Ralph Lauren as a luxury brand, including 80 percent in the U.S. Over the past four years, AURs (average unit retail price) have increased 64 percent and 20 million new consumers, mostly younger ones, have shopped Ralph Lauren direct-to-consumer (DTC) channels.
“Drive the core and expand for more”: Core product — chinos, double-breasted blazers, cable-knit sweaters, polo shirts — are “powerful pillars” that have been expanded over the last four years, to 70 percent of Ralph Lauren’s mix. At the same time, the merchant is pursuing “high-potential, under-penetrated” categories, with outerwear, denim and sneakers showing healthy momentum. Women’s, only one-third of revenues, is seen to be a major opportunity.
“Win in key cities with our consumer ecosystem”: Go-to-market changes over the last four years significantly reduced “brand-dilutive distribution” and included exiting two-thirds of department store accounts and reducing off-price exposure by over 50 percent in North America. At the same time, DTC has expanded 600 basis points to 63 percent of revenue. Digital commerce has grown to 26 percent of sales. Ralph Lauren’s forward focus is on scaling its digital-first approach across the top 30 cities globally. Mr. Louvet said “taking direct ownership of the consumer experience” is critical with multi-channel shopping. He said, “We have to be agnostic about where inspiration and transactions take place.”
- Ralph Lauren Presents Its Updated Strategic Growth Plan, “Next Great Chapter: Accelerate,” And Long-Term Financial Outlook – Ralph Lauren
- Ralph Lauren 2022 Investor Day (webcast) – Ralph Lauren
- Ralph Lauren Accelerates, Sets Strategic Plan to Build on ‘Fortress Foundation’ – WWD
- Ralph Lauren Has an Ambitious New Look – The Wall Street Journal
- Ralph Lauren to Open 250 Stores Globally Over the Next 3 Years – Footwear News
- ‘Epic turnaround’ unfolds at Ralph Lauren – Crain’s New York
DISCUSSION QUESTIONS: What’s been the key to Ralph Lauren’s turnaround and how should it be looking to further capitalize on the progress? How confident are you that Ralph Lauren’s repositioning over the last four years has put the brand back in growth mode?