How Did Just The Month Of February Make Ralph Lauren One Of The Worst Performing Companies, Amongst Its Peers?
Ralph Lauren’s continuous underperformance has had an effect on its stock price in the last 12 months, where it has fallen 33%. Besides Kate Spade, no other company in its peer group has performed as badly. This fall is primarily attributable to the decline in the month of February, after the Q3 results were declared. While announcing the massive 39% year-on-year decline in earnings, on a reported basis, and a sales decline to $1.9 billion from $2 billion, the company also lowered its fiscal 2016 guidance to a 3% revenue decline, from an earlier estimation of flat sales. This is primarily due to foreign currency translations, which are expected to have an approximate 400 basis points negative impact on the revenue growth. The poor results have forced the company to conduct a review of the entire company, in terms of pricing and distribution, including its business with department stores. One solution identified is better inventory management, in order to prevent goods from piling up on shelves and being marked down.
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