Ralph Lauren: financial losses and positive online sales in China

Online sales made in China supported Ralph Lauren. The outcome: the brand’s revenue in the fourth quarter was (slightly) better than the forecast, but still down. On the other hand, net losses were greater than expected. Patrice Louvet, president and CEO of the brand, stated that “in the end, we have an opportunity to gain market share when we’ll emerge from this crisis”.

The 4^th quarter

Ralph Lauren closed its 4^th quarter of the year 19-20 (which ended on March 28^th), with 1.27 billion USD in sales. In other words: -15.4% at current rates and -14.3% at constant rates. The result was better than the 1.22 billion USD forecasted by analysists (Refinitiv’s IBES data). The brand’s income statement shows a net loss of 249 million USD, compared to the 31-million profit made the previous year.

China’s online sales and yearly results

Ralph Lauren closed the year with a revenue of 6.16 billion USD: -2.4% at current rates and -1.2% at constant rates. Adjusted net income was of 506 million USD: -14%. The group pointed out the solid performance of online sales in China, recording a 76% increase in the 4^th quarter. A result obtained thanks to the investments made, during the pandemic, to increase the number of stores capable of completing online orders, as well as client services. Such services are now being tested in North America and Europe.

Responsibility along the chain and no forecasts

“In accordance with our responsible purchasing practices – writes the brand in an official note -, we committed to settling payment for all finished goods and goods already in production”. The brand, though, doesn’t make any forecasts for the current quarter and the year 20-21, while acknowledging that results will be “significantly negatively impacted by the pandemic”.

During a conference call with analysts, the group’s management has ensured that crisis such as those of JCPenney and Neiman Marcus “will not impact the brand” and that investments will continue to be made on physical retail, with 90-100 new openings that will consider “the changing behavior of consumers”.

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