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Analysis of and Recommendations for Ralph Lauren

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MEMORANDUM

Date:                 October 10, 2016

To:                 David Lauren, VP of Marketing Operations

From:                 Robert Bucchianeri

Subject:        Analysis of and Recommendations for Ralph Lauren

Ralph Lauren Corporation is a company that has continued to produce high quality products ranging from clothing for men, women, and children, related accessories, home furnishings and fragrances ("Press Releases", 2016). The brand longevity sources to 1967, when founder Ralph Lauren began making men’s ties. On March 20, 1997 the successor to Polo Ralph Lauren Corporation was incorporated in the state of Delaware. Over the years, Ralph Lauren has expanded to manage numerous other brands such as Ralph Lauren Purple Label, Ralph Lauren Black Label and the Ralph Lauren Collection. Their brand and subsidiary brands have been successful at targeting people of all ages and genders, but mainly those who are fashion-minded.


Company operations are divided into three areas: Wholesale, Retail, and Licensing. Wholesale manages apparel for men, women, & children, as well as linked accessories and related products. The merchandise is sold through company-owned and licensed retail stores worldwide. The Retail area focuses on retail sales at full-price and factory stores as well as managing concessions-based shop-within-shops. Company e-commerce sites, RalphLauren.com and Rugby.com, are also handled by Retail.

This BEAR report will analyze the Ralph Lauren Brand. The report will cover major areas related to the brand such as:

  1. The current state of the brand
  2. Recent investments/Changes to leadership
  3. Challenges facing the brand

This will be followed by a conclusion that outlines possible recommendations that Ralph Lauren should take in order to continue to grow over the years.

A Stable Brand Increasing in Value

 

The luxury brand Ralph Lauren is a top competitor in its industry. By increasing the number of subsidiaries and consistently producing new fashion collections, the firm displays a consistent competitive strength in the consumer marketplace. Nasdaq reports underscore how shareholders have benefited from corporate earnings which have increased over the past ten years ("Ralph Lauren Is a Strong Brand", 2014). Moreover, continued stock buybacks since 2008 points to a confident and effective management team supported by presumably contented shareholders.   Currently, as of market close 10/11/16, Ralph Lauren Corp’s stock price is $102.33, with a 52-week range of $82.15 to $137.38 ("Ralph Lauren Corp.", 2016).

Overall Financial Health

In 2000, the company launched their online shop as polo.com. Such early-adopter choices positioned the company well to better serve a customer base which has tended to be both more technically savvy than the general public as well as holding more discretionary spending power. From 2012 to 2016, corporate revenue has increased steadily. Figure 1 below shows Ralph Lauren’s revenue:

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The annual reports have the revenue in 2015 being more than the 2016 revenue, but that is because the 2016 fiscal year has not ended ("Ralph Lauren Corp.", 2016).

In 2015, Ralph Lauren was one of the worst performing stocks, being down by almost 30% (Long, 2016). The company had declining profits which is unusual especially with a growing consumers shopping online (Halzack, 2016). Two proposed reasons for these results are other competitors and so-called millennials. Competitors such as Under Armor are directly targeting the millennial demographic, and consequently are eating away at Ralph Lauren Golf apparel sales. On Amazon, golf shirts by Under Armor have a higher rating than Ralph Lauren’s golf shirts (Long, 2016). With reference to marketing analysis, some researchers believe that millennials are looking for brands that are hard to find and more importantly set them apart from other millennials. For Ralph Lauren to more effectively head back in the right direction, the company has implemented new strategies and invested in new opportunities (Long, 2016).

E-commerce Marketplace

Ralph Lauren’s revenue growth in 2015 can mainly be attributed to its e-commerce marketplaces. Consumers are finding it more convenient with greater available than classic brick-and-mortar stores (Nathman, 2016). Currently, Ralph Lauren outsources the operation of their e-commerce platform to eBay.  The decision has been made however, that once the contract ends in 2017, Ralph Lauren will insource the platform (Nathman, 2016). As part of their revenue enhancement strategy, Ralph Lauren would no longer have to fund the eBay operation, recapturing this revenue portion for the benefit of shareholders and corporate growth plans.

 

Recent Investments and Changes to Infrastructure

To stay ahead of the competition, Ralph Lauren Corp needs to continue to take advantage of unique and perhaps unusual opportunities that increase their brand equity. For example, they quickly seized the opportunity to outfit the U.S. Olympic team for the 2016 Rio Games. Marketing ventures like these help to differentiate them from other brands. Nowadays, with an ever growing social media presence, brands need to adapt to different platforms like Twitter in order to remain current. Ralph Lauren does a great job on Twitter at maintaining a positive online presence which increases brand awareness as well as keeps consumers up-to-date on current projects the brand is undertaking.  Considered by many to have been Ralph Lauren Corp’s most significant change undertaken in recent times, the CEO was replaced with hopes of accelerating the rebounding of sales.

 

Outfitting U.S. Olympic Team

In 2008, Ralph Lauren signed a contract with the U.S. Olympic team to outfit them for the 2008 Olympics held in Beijing. The partnership continued for the Winter Olympics in 2010 and the Summer Olympics in 2012 (Levin & Turner, 2016). Ralph Lauren was criticized in 2012 for manufacturing the uniforms in China instead of America. This misstep by Ralph Lauren garnered a great deal of negative controversy from Olympic athletes, U.S. Senators, and the public (Associated Press, 2016). The emotional outrage was such that a bill was introduced in Congress called “Team USA Made in America Act of 2012” which would have required uniforms to be made in the U.S. (“S.3387 – 112th Congress”, 2016). While the bill never passed, its very introduction spoke volumes to company management about the need to steer a new course to not only enhance profitability but preserve what revenue they could while emerging from the debacle.

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