How Will Ralph Lauren Perform In The First Quarter Of Its FY 2017?

Ralph Lauren (NYSE:RL) is expected to report its first quarter results, ended June 2016, on August 10, 2016.

See Our Complete Analysis For Ralph Lauren Here

Key Trends In The Quarter:

1) Inventory Build Up

• The company has performed quite poorly in the past few years when it comes to inventory management.
• The growth in inventories has far outpaced the revenue growth for the company. Even in FY 2016, despite a 3% fall in revenue, the inventory increased 8%.
• This trend has also significantly impacted the margins of the company.
• A number of steps are being taken by the company to fix this problem, the primary one being reducing the long lead times, which results in a mismatch of demand and supply.
• Currently, the lead times are 15 months, on an average. The company intends to reduce this by six months.

2) Outfitting Athletes For The Olympics

• The company is making clothes that will be worn by 600 athletes and 200 coaches of Team USA during the opening ceremony of the Olympics.
• This is the fifth time Ralph Lauren has designed clothes for the United States Olympics and Paralympics team, and includes the Flag Bearer’s jacket which has electroluminescent panels that light up the team patch and the letters USA.
• Ralph Lauren is also providing the American team with all the clothing they will wear throughout the games.
• This partnership signifies that no other US apparel company is more associated with classic American style than Ralph Lauren.
• This may help to put the company back in viewers’ minds, particularly during the election year, when national spirit is high.
• All these items are available for purchase by the consumers, with customizable name printing.
• The company was also revealed to be the designer of Hillary Clinton’s white pant suit, which she wore while accepting the Democratic Party’s nomination.

3) Focus on Polo And Ralph Lauren Brands

• While revealing the “Way Forward” plan, CEO Stefan Larsson revealed that currently 30% of the styles contribute to 70% of the business, while 65% of the styles are considered unproductive.
• This has prompted the company to cut back a third of the unproductive styles in the past six months, and further cut the number of styles in the future.
• Ralph Lauren has also undertaken to focus on the core brands of Ralph Lauren, Polo, and Lauren, which account for a vast majority of the brand strength and performance.
• The company has also shifted its marketing spend from its luxury lines to the more affordable Polo and Ralph Lauren lines. From January to May 2015, 55% of the marketing was spent on its most expensive lines – Purple Label and Ralph Lauren Collection. Fast forward a year, the allocation dropped to 26%, shifting instead to its lower-priced Polo and Ralph Lauren lines, which constitute 64% of all ads.

Have more questions on Ralph Lauren? See the links below:

• What Are The Main Facets Of Ralph Lauren’s Turnaround Plan?
• How Will Ralph Lauren Perform In 2016?
• How Has Ralph Lauren Performed In Terms Of Inventory Management?
• What Are The Challenges Facing Ralph Lauren?
• What Led To A Sudden Drop In Ralph Lauren’s Share Price?
• What Percentage Of Ralph Lauren’s Stock Price Can Be Attributed To Growth?
• Ralph Lauren Q4 And FY 2016 Earnings And Revenue Beat Expectations
• Why Have Ralph Lauren’s Licensing Revenues Been Declining In Recent Years?
• How Have The Number Of Ralph Lauren Stores Operated By The Company Changed Over The Past Five Years?
• Why Is The Online Market Place The Next Big Thing For Ralph Lauren?
• How Has Ralph Lauren Performed In Comparison To Its Peers?
• How Has Ralph Lauren’s Sales Breakdown According To Geographic Locations Changed Over The Past Five Years?
• How Will Ralph Lauren’s Retail Division Perform In The Next Five Years?
• How Did Just The Month Of February Make Ralph Lauren One Of The Worst Performing Companies, Amongst Its Peers?
• Why Did We Revise Our Price Estimate Of Ralph Lauren To $102?
• How Will Ralph Lauren’s Revenue And EBITDA Composition Change In The Next 3 Years?
• What Is Ralph Lauren’s Fundamental Value Based On Expected 2016 Results?
• Ralph Lauren: Year 2015 In Review

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