After a Tough Q1, Ralph Lauren Expects A Full Recovery in Q2 For China

Luxury lifestyle group Ralph Lauren Corporation reported 487 million in revenue for Q1 of fiscal year 2021, down 66 percent compared to 1.4 billion a year earlier, missing analysts’ expectation. The group, which owns an umbrella of Ralph Lauren brands, Club Monaco, and Chaps, suffered from COVID-19 disruptions across the board. “Our financial performance this quarter reflects an unprecedented three months of COVID-19-related impact around the world,” said president and chief executive officer, Patrice Louvet, in an earnings call on August 4, adding that the group is trying to improve core strategic focus areas and realign resources. When asked about these core strategies on the call, Louvet noted that one area of the group’s focus will be on connected retail, which includes digital clienteling, buy-online-pick-up-in-store, buy-online-ship-in-store, and virtual appointments. “Chinese mainland situation is probably our best example to bring all that to life,” he said. Sales in mainland China is on track to return to pre-pandemic growth levels in Q2, according to the group’s earnings release. Like its peers, the group has turned to digital in the first quarter upon massive store closures due to the pandemic, although results vary across regions. “We take a digital-first lens for everything we do, whether that applies to how we interact with the consumers, how we interact within our teams,” Louvet said, adding that Ralph Lauren Purple Label recently had a successful virtual showroom, while the group’s designers have also tapped into 3D design technology. In the first quarter, Asia led the pack regarding sales growth in e-commerce at 68 percent, with Europe trailing behind with a growth rate of 44 percent. The group’s largest market, the North America region, saw a three percent increase in e-commerce sales in Q1, while its brick and mortar store sales took the hardest hit, reporting a 77 percent decline. Looking forward, Ralph Lauren executives are cautiously optimistic about the upward trend in performance in the second quarter, which ranges from July to September. “Q2 revenue will continue to see an improvement, but recovery will proceed at a more moderate pace than the rate in Q1,” said chief financial officer, Jane Nielsen. So far, nearly all of Ralph Lauren’s stores are now open worldwide, although they are operated under limitations, per the earnings brief. Meanwhile, Ralph Lauren’s stock price dipped by eight percent after releasing its earnings, then slightly recovered and closed at 66.68 on August 4. The group’s shares have dropped as much as 45 percent since COVID-19 began to sweep through the world in late February, while the Samp;P 500 Index was down only by two percent during the same period.

After a Tough Q1, Ralph Lauren Expects A Full Recovery in Q2 For China

On this page

Published August 05, 2020

Sectors

Insights

Company

After a Tough Q1, Ralph Lauren Expects A Full Recovery in Q2 For China