Ralph Lauren Corporation (NYSE: RL) today announced steps to accelerate its Next Great Chapter plan to deliver sustainable long-term growth and value creation, which include establishing a simplified global organizational structure and rolling out enhanced technology platforms to support the Company’s global operations.
“Over 53 years ago, this Company started with a single tie and a dream that made it into a way of life. The timeless values we were founded on have propelled us on an incredible journey – one that has seen great challenges and amazing opportunities along the way,” said Ralph Lauren, Chairman and Chief Creative Officer. “Through it all, our commitment to stay true to who we are, while evolving with the world around us, has helped to secure our future and our place as one of the world’s most beloved and inspiring brands.”
Over the past two fiscal years, the Company has made marked progress on its brand elevation journey and the strategic priorities outlined in its Next Great Chapter plan, including to: 1) win over a new generation of consumers; 2) energize core products and accelerate high potential, underdeveloped categories; 3) drive targeted expansion; 4) lead with digital; and 5) operate with discipline to fuel growth. In the context of today’s rapidly evolving consumer, industry shifts and global dynamics, Ralph Lauren is accelerating key areas of the plan, beginning with the implementation of new technology platforms and the simplification of its organizational structure.
“The changes happening in the world around us have accelerated the shifts we saw pre-COVID, and we are fast-tracking some of our plans to match them – including advancing our digital transformation and simplifying our team structures,” said Patrice Louvet, President and Chief Executive Officer. “These steps will enable us to progress our brand elevation journey and deliver Ralph’s vision in today’s dynamic environment – inspiring our consumers around the world and creating value for all of our stakeholders.”
Simplified Organizational Structure
Creating simpler, flatter team structures will enable more agility and greater consumer responsiveness. This includes the consolidation of the Company’s global Marketing and Branding functions; the establishment of a new Consumer Intelligence and Experience (CIX) organization, focused on leveraging consumer insights and predictive analytics to drive personalized consumer experiences at scale; and the re-organization of the Company’s Corporate Merchandising teams to combine core brand propositions, enabling greater connectivity and productivity. Ralph Lauren also continues to integrate Global Citizenship & Sustainability into every aspect of its business, making it a key responsibility for all leaders.
Digital Transformation
The Company is transforming how it operates with the implementation of new technology platforms across several key areas of its business. This includes rolling out a cloud-based human resources and planning system globally as well as elevating how it delivers for consumers through its Digitizing the Value Chain project. This is a Company-wide initiative to simplify ways of working, better connect teams and digitize the product journey. It will enable faster and more connected decision-making from product design to market. Ralph Lauren is also continuing to invest in technologies that help deliver an enhanced consumer experience – with new digital capabilities that support areas like omni-channel shopping, personalization, social commerce and augmented reality.
Together, these organizational and digital transformation changes will:
- Support the delivery of one elevated Ralph Lauren vision and voice globally, while maintaining strong local capabilities and expertise;
- Enable stronger consumer insights to drive more powerful connections;
- Empower teams to make faster decisions and collaborate more easily; and
- Streamline the organization and simplify reporting lines.
Financial Impact
On its First Quarter Fiscal 2021 earnings call on August 4, 2020, management noted that a strategic review was underway to support future growth and profitability, and to create a sustainable cost structure. This includes the evaluation of the Company’s: (i) team organizational structures and ways of working; (ii) real estate footprint and related costs across distribution centers, corporate offices, and direct-to-consumer retail and wholesale doors; and (iii) brand portfolio.
In connection with the first initiative, Ralph Lauren is today announcing plans (the “Fiscal 2021 Strategic Realignment Plan”) to reduce its global workforce by the end of the Company’s Fiscal 2021, which is expected to result in gross annualized pre-tax expense savings of approximately $180 million to $200 million, with savings realization primarily beginning in the Company’s Fiscal 2022. In connection with the reduction in workforce, the Company expects to incur total estimated pre-tax charges of approximately $120 million to $160 million.
In addition to the actions announced today, the Company anticipates additional actions associated with the aforementioned initiatives as part of the Fiscal 2021 Strategic Realignment Plan.
