Ralph Lauren CEO to Conduct Review After Disappointing Holiday Sales
Apparel company’s sales in recent quarters have been hurt by a strong U.S. dollar
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Models at Ralph Lauren Purple Label Presentation as part of Milan Men's Fashion Week in January. Photo: Stefania D'Alessandro/Getty Images
The results, the latest in a string of disappointing quarters for the chain, sent the company’s shares tumbling. The stock fell 22% to $89.95 in 4 p.m. afternoon trading.
Stefan Larsson, who took over as CEO in November, said he had undertaken the review to identify growth opportunities. While short on details, Mr. Larsson said he was scrutinizing every facet of the company and expects to complete the review by late spring.
The results could pave the way for broad changes. On a conference call with analysts Mr. Larsson said he wants to bring more focus to the company. Some analysts have long argued that the company’s myriad labels are confusing to customers and inefficient to produce.
He is also taking a hard look at pricing and distribution, including the company’s business with department stores such as Macy’s Inc. and Nordstrom Inc. That business, long a source of strength, has lately turned more challenging as the big-box retailers have suffered. Mr. Larsson said one solution could be better inventory management to prevent goods from piling up on shelves and being marked down.
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The review’s results could pave the way for broad changes. Photo: Bebeto Matthews/Associated Press
Kohl’s now expects adjusted earnings for the year to range between $3.95 and $4.00 a share, down from its previously stated guidance of adjusted earnings near the low end of $4.40 to $4.60. Shares fell 19% to $41.52 Thursday.
Same-store sales at Kohl’s edged up 0.4% in the fourth quarter, as a slow selling start in November and soft demand in January for cold-weather goods offset stronger holiday sales. The company will report its full fourth-quarter earnings Feb. 25.
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The company posted a quarterly profit of $131 million down from $215 million a year earlier, including restructuring-related expenses, charges related to a pending customs audit and other items.
Retail sales excluding newly opened or closed stores dropped 7%, including a negative currency effect of two percentage points. Wholesale revenue fell 6%, dragged down by weaker performance at North American department stores.
For the year ending in March, Ralph Lauren lowered its guidance and now expects revenue to decline 3%, from its previous estimate for revenue to be unchanged from the year earlier.
“While our recent results have been disappointing, I am greatly encouraged by the changes that are already taking place since the appointment of Stefan Larsson as our new CEO,” Executive Chairman and Chief Creative Officer Ralph Lauren said in prepared remarks Thursday. Mr. Larsson previously worked at Hennes & Maurtiz AB and Gap Inc. ’s Old Navy chain.
The company’s sales in recent quarters have been hurt by a strong U.S. dollar, which has damped tourism to the U.S. and reduced sales abroad when converted into U.S. dollars. Ralph Lauren has moved to mitigate those challenges by raising prices in Europe, Japan, Canada and Australia, while also pressing suppliers for lower sourcing costs.
Christopher Peterson, Ralph Lauren’s president of global brands, said sales at North American stores that cater to more domestic shoppers as opposed to tourists increased in the most-recent quarter.
