Ralph Lauren reveals three-year sales growth strategy

By

Benjamin Fitzgerald

Published
Sep 20, 2022

Ralph Lauren Corp. announced on Monday its strategy to accelerate revenue growth to a compound annual growth rate of mid- to high-single digits over the next three years, as it homes in on new customers and key cities.

The New York-based luxury brand said the new outlook, which excludes currency-related fluctuations, covers the fiscal years that run through the first three months of 2025, according to a press release issued on September 19 ahead of an investor presentation.

"This company started over 50 years ago with a dream and a tie – and today, while it has expanded to become a leading luxury lifestyle brand, our vision for timelessness, authenticity and a life well-lived remains constant,” said Ralph Lauren, executive chairman and chief creative officer.

“What has changed is our ability to bring this vision to more and more people around the world, and I am so proud of our teams for building our strength and expanding our reach while staying true to who we are."

Operating profit growth is expected to exceed the rate of top-line growth as a result of continued operating margin expansion, while operating margin is expected to expand to at least 15% by fiscal 2025 in constant currency, driven by a combination of modest gross margin expansion and operating expense leverage balanced with continued investments in the company’s long-term strategic priorities.

In addition, capital expenditures are expected to represent approximately 4% - 5% of revenue annually through fiscal 2025, added the company.

Looking ahead, Ralph Lauren said it plans to focus on three strategic pillars: ​expanding and elevating its lifestyle brand positioning globally, in a bid to increase customer acquisition and retention; driving its core products along with its under-penetrated categories; and ​scaling its digitally-led retail setup with a focus on its top 30 key cities globally.

“Since our last investor day in 2018, we have transformed our business – building a strong foundation with multiple engines of growth that are already showing momentum,” said Patrice Louvet, president and chief executive officer.

“Our 'Next Great Chapter: Accelerate' plan is grounded in this meaningful progress, building on our elevated brand positioning and desirability; our distinctive, timeless products and experiences across multiple categories; and our expanding reach in key cities around the world.”

In its most recent trading update, Ralph Lauren delivered first-quarter revenue growth of 8% to $1.5 billio on a reported basis for the three months ending July 2.  However, net income in the first quarter fell to $123 million, or $1.73 per diluted share, compared to $165 million, or $2.18 per diluted share.