Ralph Lauren cutting 1200 jobs as luxury market continues to falter
Ralph Lauren will cut 1,200 jobs, or 8% of its workforce, as part of a cost-cutting drive. The US fashion brand also planned to close more than 50 stores and simplify its management structure.
The company said the measures should save between $180m (£1235m) and $220m a year. Last year Ralph Lauren, who founded the company, stepped down as chief executive and was replaced by Stefan Larsson.
The cuts are the first major move for the new boss, who is credited with turning around the fortunes of Gap’s low-end brand Old Navy. The new savings will come on top of $125m of cuts made by Ralph Lauren last year. It expected to incur $400m in restructuring charges this year as well as $150m of costs relating to stock reduction.
Revenue was expected to fall by a single digit figure in the first quarter and by low double digits for the full year.
Shares in Ralph Lauren have fallen by 30% over the past 12 months and shed a further 2% in afternoon trading in New York to $94.38.
The luxury sector has been hit by declining sales in recent months. On Monday Burberry revealed that chief executive Christopher Bailey had taken a 75% pay cut following a slump in sales.
But Ralph Lauren in particular has struggled to match its sales with its stockpiles of clothing and accessories.
Over the past three years its sales rose by 7%, but its stock levels increased by 26%. The disparity forced the company to offer discounts that dented the brand’s allure with some customers.
Ralph Lauren, known for its polo player logo, said it will focus on its most popular brands: Ralph Lauren, Polo and Lauren.
The company was also attempting to reduce the time it took to make an item from 15 to 9 months in a bid to better reflect demand.