Like many fashion and retail companies, Ralph Lauren has been in the midst of a turnaround for some time now. Last year, then-CEO Stefan Larsson (who replaced Ralph Lauren himself in the role) initiated the "Way-Forward Plan" to bring the company into the future in the wake of dwindling sales. While Larsson didn't quite work out, and left the company early this year, his replacement, Patrice Louvet, seems to be sticking with that plan for the most part, though with a bigger emphasis on taking things digital.
He addressed investors and analysts for the first time Tuesday during the company's first-quarter earnings conference call, and he had fairly good news to report. Though revenue declined — 13 percent to $1.3 billion — it did beat estimates and offered an indication that Ralph Lauren's turnaround measures are beginning to pay off. Those measures include reducing inventory, speeding up the supply chain to react more quickly to trends and demand, closing underperforming stores, pulling out of underperforming department stores and focusing on core product. Some of these measures have cost the company money (e.g. a continued North American wholesale revenue decline) in the short term, but should pay off in the long term.
There wasn't much new to report except that Louvet and CFO Jane Hamilton Nielsen repeatedly brought up plans to focus on digital — both in terms of retail and marketing. The company announced a new campaign to promote a new capsule collection of limited-edition polos with one to be released each month supported by collaborations with Instagram influencers (example above). The goal, according to Nielsen? To "position [the] polo as [an] item to covet, reach a new consumer and garner fashion editorial coverage." She also noted plans to ramp up e-commerce business, both its own and with other retailers, calling U.S. department store websites a "sweet spot." It's all in an effort to woo millennials, a generation known for our social-media addiction and online-shopping habits. Louvet feels that, fundamentally, Ralph Lauren, as a brand, is well-positioned to appeal to the millennial consumer.
"Ralph and I have actually had a number of conversations on this that says, okay, what are the core values of the Ralph Lauren brand?" began Louvet, after being asked how the company is staying relevant for millennials. "We would say they're entrepreneurship, creativity, stylish living and authenticity, and all that is coupled with a very rich heritage of real storytelling. All of that is timeless, right, if you think through the values that are relevant to today's consumer, millennials would raise their hand and say that makes lot of sense to them." Louvet also notes that millennials are looking for "meaning" in brands and that Ralph Lauren is "incredibly well-positioned on this whole meaning space."
Of course, to show its proficiency in "this whole meaning space," it has to reach millennials on the web. "We know we are going to have to make some changes in terms of how we engage the consumer, where we engage the consumer," he explained. "Go back to the earlier conversation we're having on social media, back to the earlier discussion we're having on driving digital harder because we know a number of the millennial consumers are not interested in going into brick-and-mortar."
It will be more interesting to see how this strategy translates when it comes to marketing and how the brand will continue to leverage influencers and social media without diluting what's made it so iconic in the first place. Perhaps we'll have a better idea at Lauren's blowout "see now, buy now" Spring 2018 runway show next month at his garage 45 miles north of New York City in Bedford.