Ralph Lauren has always cultivated a certain timelessness with his preppy take on Americana.
Patrice Louvet, chief executive officer of Ralph Lauren Corp., is looking to do the same with the company’s business model.
Louvet will launch Ralph Lauren’s next strategic plan during an investor meeting at the New York Stock Exchange on Tuesday, bringing the company into the “Next Great Chapter: Drive” and introducing new financial targets.
After executives ring the opening bell to start the trading day, investors will get the skinny on the new three-year plan, which has more than just the name in common with the former strategy, “Next Great Chapter: Accelerate.”
You May Also Like
Ralph Lauren’s three strategic growth drivers are staying the same, with the company continuing to focus on:
- Elevating and energizing its lifestyle brand.
- Driving core product categories, like polos, and expanding for more business in other areas.
- Winning in key cities by scaling in the brand’s 30 top-10 urban areas, while also starting to develop the next 20 top cities.
In a preview for WWD, Louvet said the three strategic pillars are “evergreen” to some extent.
“It’s really about how do you bring it to life? How do you execute?” the CEO said. “The strategy is wonderful on paper, but ultimately it’s about excellence and execution at every touch point. I think our teams have done that well around the world, and now we’re going to focus on doing that.”
And the company — which has already seen its stock rise 74 percent over the past year and has a market capitalization of $19.1 billion — is planning on seeing some results.
While Ralph Lauren continues to take a cautious stance on the back half of this fiscal year, it expects to see revenues increase at a midsingle-digit compounded annual rate over the next three years, through fiscal 2028.
Operating margins are expected to expand 100 to 150 basis points by Fiscal 2028 in constant currency and capital expenditures are expected to equal 4 percent to 5 percent of the top line annually.
All together the company plans to shell out $2 billion in cash dividends and share repurchases over the three years.
To get there, Ralph Lauren has the same strategic goals, but Louvet said the company will be tweaking just how it pursues those ambitions.
“On the brand side, you’re going to hear us talk about how we’re going to build our desirability in the future,” Louvet said. “On the product front, you’re going to hear more about how we’re going to tap into the women’s opportunity. Then on the key city front, we’re going to talk about how we’re going to deepen our penetration of the top 30 cities.”
Ralph Lauren, for instance, is opening new stores in the already established markets of London and Paris, while looking to expand in new target cities, including Austin, Zurich and Vienna.
As the company continues to grow, it will make changes here and there to meet the moment.
“I had a boss a long time ago who actually said that the organizational structure that has actually survived the longest over history is the amoeba,” Louvet said. “And so we believe in the amoeba concept, which is you have to constantly evolve to make sure that you are set up to bring your strategy to life.
“This characterizes our philosophy and this company looks different than it did three years ago, and I suspect three years from now it’ll look different than it does today, but it’ll stay true to our philosophy as a brand, our core values as a company and the culture that we’ve established,” he said.
Notably, the preview had no mention of the supply chain or tariffs or anything even vaguely trade war-y.
When asked, Justin Picicci, chief financial officer, said the company was prepared.
“We have a range of proven tools in our toolkit to mitigate cost inflation tariffs and other pressures,” Picicci said. “It starts with our supply chain, but we’re diversified so that we don’t have any one country of origin responsible for more than 20 percent of our sourcing, and most are in the single-digit percentage range.
“We also have really strong supplier relationships that we’ve sort of forged over the past decades, and they’re working with us on this process,” he said.
Louvet suggested the company was taking the challenge in stride.
“We don’t feel like we need a major overhaul,” the CEO said. “It’s going to be volatile, but I think we’re well positioned. There’s a dynamic element to our operations in a way that we can adjust to the terrain, even if the terrain is a little bumpy, that has proven to be a real competitive advantage for us, and that will continue to be, and we work really hard to avoid surprises.”
And all the while there’s Lauren himself, who is executive chairman and chief creative officer, pointing the way forward.
“For nearly 60 years, we have stayed true to our vision of timeless style, authenticity, optimism and a life well-lived,” the designer said. “As our teams carry this vision into the future, I am so proud of how they are working together with passion and commitment to who we are as we inspire more and more people all over the world to step into their dreams.”
