Fewer discounts and tighter distribution hurt ralph lauren’s third quarter revenue

by Stephen Garner

American fashion brand Ralph Lauren Corp’s third-quarter revenue fell, as it shipped fewer products to stores and sold more items at full price, leading to a drop in sales in North America.

In the third quarter of Fiscal 2018, revenue decreased by 4 percent to $1.6 billion on a reported basis and was down 6 percent in constant currency, driven by initiatives to increase the quality of sales, reduce promotional activity, and elevate its distribution, as well as brand exits and lower consumer demand.

North America revenue in the third quarter decreased 11 percent to $886 million. The decline was due to lower sales in both the retail and wholesale channels, driven by distribution and brand exits, a strategic reduction in shipments and promotional activity to increase the quality of sales, as well as lower consumer demand.

European revenue in the third quarter increased 8 percent to $378 million on a reported basis and was flat in constant currency. On a constant currency basis, comparable store sales in Europe were down 8 percent, driven by a 9 percent decline in brick and mortar stores and a 1 percent decline in e-commerce, as the company continued to intensify its focus on driving quality of sales with a pullback in promotions.

Ralph Lauren Purple LabelThe Asian market was a bright spot for the brand, however, where revenue in the third quarter increased 7 percent in the region on both a reported and constant currency basis to $251 million, driven by strength in both retail and wholesale channels. Comparable store sales increased 3 percent in constant currency driven by improved conversion, average unit retail and the number of transactions.

“As we prepare to celebrate our 50th  anniversary and look ahead to the future, we continue to focus on evolving the expression of our iconic brand and its rich heritage to connect with today’s consumers in all the ways they experience our brand,” said Ralph Lauren, executive chairman and chief creative officer. “Our teams across the company are united around our common goals and I have great confidence in their capabilities, passion, and dedication.”

“Focused execution on our key initiatives, especially during the important holiday period, delivered better-than-expected results for the third quarter as we drove lower discounting and better quality of sales overall,” added Patrice Louvet, president and chief executive officer. “There is still a lot of work to be done to return to industry-leading revenue and earnings growth, but these results give us confidence that we are on the right track.”

Ralph Lauren Purple Label