- This past week, Ralph Lauren held an investor day where it shared that the resetting of the brand and foundation was complete, and that it is now pivoting to growth. As evidence of the brand’s higher "equity" and elevation, it shared that its average unit retail (AUR) has increased +68% from 2019.
- The company's growth is to come its DTC channel, which is now two-thirds of sales. Management is forecasting revenue growth is targeted to be in the mid- to high-single-digit range, driven by the lifestyle, women's ready-to-wear, and leather goods categories. North America is expected to be the most significant dollar driver of growth. (Recall our previous discussions about global brands pivoting to the U.S. consumer to de-risk their businesses.)
- Ralph Lauren is seeking to add 15-20 locations over the next three years in 14 North American cities through smaller-format, full-price stores. The company will utilize emblematic store concepts that are 5,000-10,000 square feet to Polo boutiques that range between 1,000-5,000 square feet. The selected cities were chosen because they are a center of gravity for our consumers, for fashion and style from a population perspective, GDP and attractive household incomes. Additionally, the locations were selected not just for retail sales, but as omnichannel touch points. (Recall our theme about brands needing a physical footprint to have a digital footprint.) Lastly, over the longer-term Ralph aspires to add a total of 100 new locations.
- Polo Factory is expected to remain a part of the company's retail strategy, but management is working to elevate the product presentation, assortment, and service model. "When the consumer walks into that store, we want them to feel inspired. We want them to dream."
- Relative to the current pace of business, management reiterated the guidance that they had given on August 8, which in our view, is a positive read-through to Macy’s, Nordstrom, Bloomingdale’s, and Saks. We strongly suspect that the improved trend in traffic since the summer is the return of its shoppers to their homes after a robust (post-C19) summer travel period to resorts and international destinations.
