Ralph Lauren’s difficult year (which seems to have caught Kering’s interest)

Ralph Lauren’s difficult year (which seems to have caught Kering’s interest)

The market was perplexed. Not so much for the latest quarterly results of Ralph Lauren, but rather for the forecasts in the medium term. The luxury brand inevitably had a challenging year, due to the pandemic. And so, it undertook a long and relevant pathway to revise business, which is involving the workforce as well. Some analysts consider this to be a “transitory” situation, which makes the indiscretions related to a potential acquisition by Kering more plausible.

Ralph Lauren’s difficult year

Faced by the pandemic that has impacted the manufacturers of formal attire, Ralph Lauren put in place a series of strategies that included the cutting of 15% of the labor force. In order: marketing investments, digitalization and social media, to attract a younger clientele. Reducing promotions and sales, making e-commerce more profitable. Accelerating the development of the Chinese market, which is now only worth 5%, as written by ladymax.cn.

Kering’s interest

In order to free up resources, Ralph Lauren also sold the brand Club Monaco (after 22 years) to the PE fund Regent. All operations that, according to analysts, will allow the company to be reborn after the pandemic. Apparently, these actions are so concrete and credible that Kering, according to some rumors heard since January, has shown an interest for the US-based brand.

Our repositioning

“During our fiscal year, we repositioned our company – says the CEO Patrice Louvet -. We focused our brand portfolio, re-aligning our cost structure”. Big actions that brought, in the 4th quarter (closed on march 27th) we had a net revenue of 1.29 billion USD, +1% at current rates and -3% at constant rates, with IBES’ analysts, of Refinitiv, expecting it to be of 1.21 billion USD, according to Business of Fashion. The fiscal year 20/21 concluded with a revenue of 4.4 billion USD, -29% compared to the previous fiscal year. Damaging the stock value of the group were the estimates 21/22 for the company: slower growth compared to the analysts’ forecasts: +20% – +25%, against +31.1%.

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