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Ralph Lauren's New CEO Plans to Refocus on 'Core' Product As Excess Inventory Hurts Sales

...and profits, which were down 67 percent in the fourth quarter.
Ralph Lauren. Photo: Mike Coppola/Getty Images

Ralph Lauren. Photo: Mike Coppola/Getty Images

As Ralph Lauren continues to restructure, its profits and sales continue to take a hit. Releasing its fourth-quarter earnings results on Thursday, the American lifestyle brand announced that, in the three months that ended April 2, profits sunk 67 percent to $41 million while revenue was relatively flat at $1.9 billion. Restructuring costs, low U.S. tourism and excess inventory (resulting in too many discounts) were largely to blame. Still, this beat analysts' estimates, providing a glimmer of hope that a turnaround is in sight.

That turnaround is being orchestrated by new CEO Stefan Larsson, who replaced Ralph Lauren, the man, in the position last November. And, clearly, the pressure is on. Larsson said during Thursday's earnings call that he's spent his first three months on the job doing a "deep dive" into the company to assess how the business works. A main takeaway, according to Larsson, was that Ralph Lauren needs to refocus on what it does best. "We have not focused enough on nor evolved enough the core of what made us great in product, marketing and the shopping experience," he said. "What made us great was a crystal clear focus on owning classic iconic style and putting an effortless twist to it to make it current and desirable."

He continued: "While staying true to our DNA, we will also evolve our marketing and the shopping experience to better reflect the aspirational life and style people dream of today." He also wants to make the company's cost structure more efficient and its overall organization "more nimble."

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It's hard to decipher what all of that means, but we could see the company pulling a Calvin Klein and consolidating some of its labels. We'll know more on June 7, the company's "Investor Day," when Larsson will fully outline his turnaround plan.

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