Ralph Lauren Corp. has recently unveiled its comprehensive three-year strategy aimed at boosting sales growth and expanding its customer base. The renowned luxury brand is targeting a compound annual growth rate of mid- to high-single digits for the next three years. The strategy encompasses three pivotal pillars, which include amplifying and enhancing the brand’s global presence, driving sales of core products and expanding into untapped categories, as well as expanding its digitally-led retail operations in key cities.
The executive chairman and chief creative officer of Ralph Lauren, Ralph Lauren himself, expressed the brand’s enduring commitment to timelessness, authenticity, and a well-lived life that has remained steadfast ever since its establishment over five decades ago. Lauren commended his teams for effectively expanding the brand’s reach while remaining true to its core identity.
The overarching aim of the strategy is to achieve an operating profit growth rate that surpasses the rate of top-line growth. This will be accomplished through persistent margin expansion, leveraging operating expenses, and investing in long-term strategic priorities. Ralph Lauren is aiming to obtain an operating margin of at least 15% by the end of fiscal year 2025.
From now until fiscal year 2025, the company plans to allocate approximately 4% to 5% of annual revenue toward capital expenditures. These investments will actively support the brand’s growth initiatives, ensuring a robust digital retail infrastructure.
To effectively execute its growth plan, Ralph Lauren will focus on both extending and enhancing its lifestyle brand positioning on a global scale. The primary objective is to increase customer acquisition and retention by delivering a highly desirable and elevated brand experience. The company will also concentrate on propelling growth in its core products while exploring opportunities in previously under-explored categories.
Furthermore, Ralph Lauren plans to prioritize the expansion of its digitally-led retail operations in its top 30 key cities across the globe. This strategic move will enable the brand to effectively capitalize on the growing demand for online shopping while providing seamless and unparalleled digital experiences to its customers.
Patrice Louvet, the president and CEO of Ralph Lauren, accentuated the significant progress made since the last investor day back in 2018. He emphasized the brand’s elevated positioning, timeless products, and expansion into key cities as key drivers of growth. The new growth plan, entitled “Next Great Chapter: Accelerate,” is built upon these existing strengths and aspires to further propel the brand’s growth trajectory.
In the latest trading update, Ralph Lauren reported an 8% increase in revenue during the first quarter, reaching a total of $1.5 billion. However, the net income for the same period declined to $123 million, compared to $165 million in the preceding year.
In conclusion, Ralph Lauren’s comprehensive three-year sales growth strategy is predominantly centered around expanding its global presence, driving sales of core products, and scaling its digital retail operations. With a solid foundation and positive momentum, the company aspires to achieve sustainable growth and continue providing its customers worldwide with an unparalleled and elevated brand experience.
Useful Links:
1. https://www.businessoffashion.com/articles/news-analysis/ralph-lauren-three-year-plan
2. https://www.reuters.com/article/us-ralph-lauren-strategy-idUKKBN27Z1N3
