‘Anemic’ Ralph Lauren results shows more work to be done

As Ralph Lauren pulls out all the stops to celebrate its 50th anniversary, its second-quarter results do not reflect the upbeat note of the festivities.

Indeed, if anything the Ralph Lauren results are rather anemic and are characteristic of a brand that is still not entirely confident about its place in the fashion world or its future direction.

While growth of 1.6 per cent in overall revenue and a 1.4 per cent uplift in North America are positive, the decline of 0.8 per cent in Europe is disappointing as is the flat comparable-sales result. This mixed bag shows that the brand is only firing gently on some cylinders rather than powering ahead.

While in growth, Ralph Lauren’s North American division is still underperforming. The relatively flat revenue result, which is underpinned by an anemic 1 per cent increase in comparable sales, comes against the backdrop of a robust consumer economy where spend on luxury and higher-end goods is increasing. It has also been delivered at a time of elevated marketing spend. That Ralph Lauren could not engineer a better performance underlines the fact that the brand has a lot more work to do to connect and resonate with consumers.

One of the unresolved issues at Ralph Lauren is in having a clear brand proposition that is carefully targeted at customers. While GlobalData’s numbers show that general brand perception of Ralph Lauren has improved over the past year, the number of people agreeing that it, or its sub-brands, are ‘made for people like them’ has remained flat. This is worrying and underlines that there is still a lot of repositioning and redefining required before Ralph Lauren can deliver better numbers.

None of this should suggest the company has been inactive or passive; it has not. With the Polo brand, for example, a lot of new items have been introduced and products have been enhanced with embellishments such as embroidery and added functionality. These have helped to drive some better numbers and suggest that the company is innovating, but the improvements are hampered by a lack of progress on overall brand perception, especially among younger shoppers. It will clearly take time for the various changes to drive overall perception.

One area of progress is on the digital side of the business, where comparable sales in North America rose by 9 per cent. While this is below the overall rate of growth for online luxury, it is a sign of progress and is a reflection of the various investments Ralph Lauren has made in its digital channels – including the marketing efforts on social media. Ralph Lauren now needs to apply this thinking to driving traffic in stores, where North American sales fell by 1 per cent on a comparable basis.

Outside of North America, performance in Europe was poor. While total revenue fell by 0.8 per cent, comparable sales slipped by 4 per cent. Part of this is down to inventory issues at outlet stores and part is the result of lower consumer confidence in key markets like the UK. Even so, it is disappointing given the various investments, including in digital, that Ralph Lauren has made in the region.

Overall, Ralph Lauren is gently moving in the right direction. However, the brand vision remains rather murky. It needs to be simplified and retooled so that it is clear and compelling. A young brand like Maine’s Kiel James Patrick is the perfect example of a well-curated and authentic lifestyle label that Ralph Lauren needs to emulate. Ralph Lauren has yet to prove it is up to this task.

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