Ralph Lauren To Close Flagship Fifth Avenue Store; Cut Jobs

Tyler Durden's picture

The ongoing retail massacre claimed its latest victim this morning when iconic luxury retailer Ralph Lauren said it would shut its flagship Polo store on Fifth Avenue in New York City, among other office and store locations, and cut jobs as part of a cost-cutting plan. The company also said on Tuesday that it would integrate its products from the Fifth Avenue store into the Ralph Lauren men's and women's flagship stores on Madison Avenue and its downtown locations.

From the press release:

As part of Ralph Lauren's continued commitment to optimizing its store footprint, the Company will close its dedicated Polo store at 711 Fifth Avenue and integrate its product into the Ralph Lauren Men's and Women's flagship stores on Madison Avenue and its downtown locations. The Company will continue to operate its seven additional store locations and its flagship Polo Bar Restaurant in New York City.

 

These decisions, together with actions to continue to streamline the organization, cost structure and real estate portfolio, will result in approximately $140 million in annualized expense savings, which will also help fund investments for future growth. These savings are in addition to the $180-$220 million of annualized expense savings announced at the Company's June 7, 2016 Investor Day and are a part of achieving its financial objectives. Ralph Lauren expects to incur restructuring charges of approximately $370 million as a result of these new activities.

 

The Company will also explore new retail concepts, including leveraging Ralph's Coffee, and developing new store formats that connect the brand to loyal and new consumers.

The retailer also said its e-commerce business would move to Salesforce.com Inc's cheaper and more efficient Commerce Cloud platform. Ralph Lauren had said last year it was building an in-house global e-commerce platform.

Ralph Lauren said it expects to incur about $370 million in charges and save about $140 million from the new measures, which are part of a cost-cutting plan announced in June. The retailer did not specify how many jobs it would cut.

Last June, Ralph Lauren said it would cut 1,000 jobs and close 50 stores to lower costs and revive sales growth. As Reuters adds, Ralph Lauren, like other luxury brands, has been struggling as Americans spend lesser on apparel and accessories, resulting in falling sales in the last seven quarters.

Is was not immediately clear which CMBS loan would be impacted as a result of the imminent rent shortfall from Ralph Lauren's vacancy, or whether a new renter had already signed up to take over the soon to be vacant space.

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ronaldwilsonreagan's picture

What about the Drumpf effect?

Truther's picture

He inherited this fucking mess and has to deal with it. Fuck you Obama.

ToSoft4Truth's picture

Hey, that's what Obamabots said about Bush.  How weird.

Cheka_Mate's picture

Howard Schultz stepping down from Starbucks 

Now Ralph Lifshitz closing down flagship store...

RiverRoad's picture

So this is what Ralph gets for making Melania's inauguration suit?  He'll think twice before he does that again.

"These decisions, together with actions to continue to streamline the organization, cost structure and real estate portfolio, will result in approximately $140 million in annualized expense savings, which will also help fund investments for future growth."

Seeing a lot of future growth there, Ralph?

"Ralph's Coffee?????

rivercity's picture

Well - interesting point there. Speaking as a female - that was a knockout outfit!

No_More's picture

That was a beautifully made suit. Nice color, well tailored. Would love to have gotten a chance to see the fabric close up (it looked to be excellent quality).

I don't think dressing Melania hurt RL though. I think the people who are upper middle class ($100K up to a million/two per household per year) are finally financially on the ropes and that is what is freeing up retail space in Manhattan. Worrying news for the economy for sure.

Truther's picture

Retailpocalypse.... Dead already.

 

NugginFuts's picture

I don't know anyone who shops at these places anyway.... who holds up retail lately? FUBU?

I am Jobe's picture

Americans love being pussies and enjoy slave labor items. PUSSIFIED AMERICA. Yes WE CAN

Truther's picture

Man: Hey kid, do you know how to build a kite?

Kid: Noooo, but I know what a Kunt looks like.

Seasmoke's picture

I've been wearing Polo since high school in the 80s. The quality has dropped so far in 30 years it's mind boggling. I still have shirts from the 80s that feel better than shirts from 2010. Perhaps the problem is I have so many Polo shirts, I have no need for any more. My polo purchases must have dropped 99% since 2007.  

Boris Badenov's picture

And there you have it: A company which produces quality products has a saturation factor to deal with. Very satisfied customers but repeat business on a declining scale. Like Audi since 1999 when it sold me my A4 Quattro- (actually made in Germany)- still runs like a champ, no repeat business from me. It's a terrible thing. 

ParkAveFlasher's picture

It all goes back to the money supply.  Cheap financing means crowded product offerings and high frequency.  The obsolescence curve steepens, because, why not?  Money is cheap. 

These companies Polo and Audi won market share by quality offering.  You didn't need to buy another shirt.  Now, you buy shirts, and you still need more.

I have shirts from the 90's that still look, fit, and work better than all the shirts I've bought since.

Wrenching Away's picture

It might still run like a champ, but it has cost you many thousands of dollars to keep it that way. A 1999 A4 is freaking money pit, I see Audis in my shop every day so I know first hand.

Infinite QE's picture

Plus future population growth is in muslim savages and mexicans. Neither one are big Polo consumers. LOL.

Pliskin's picture

I wear and swear by Timberland boots, quality materials, lining, stitching, the only 'boots' I'll wear, twelve years ago I owned 6 pairs (Different colours) now I own three pairs.  I still have 'a' pair from those twelve, and it says 'Made In U.S.A' the new ones I have now say 'Made in Indonesia'...

Same boots, same style, same quality, my point is that I won't stop wearing them as long as they retain their quality....looks like those Indonesians can make 'em just as good as Americans, only cheaper for Timberland. 

This can be said about MOST things nowadays that are an American brand.

Bringing jobs back to the U.S.A...Don't make me laugh!

BigFatUglyBubble's picture

Yea, as someone was saying in another article this morning; China can make decent stuff, WalMart just wants to buy the cheapest garbage possibly available.  I'd be willing to wager china's military equiptment doesn't fall apart after 30 hours of use.  If people want to be mad at someone, be mad at WalFart, which due to it's subsidies should really be called GovMart.

Berspankme's picture

Precisely. They build to spec. American companies are notorious for cheap specs and then blame mfg.

JustPastPeacefield's picture

Cut the welfare and get 'em working or begging at the local church. And get the CEO's who hire illegals to do the perp walk, and slap the tax on those 'cheap' imported goods. In 20 years, we might be close to being a first world country again. Or maybe it's too late.

RiverRoad's picture

Saturation:  When the guy shining your shoes is wearing a Polo....it's over.

No_More's picture

The Ralph Lauren brands used to also make some nice home goods (bedding, towels, etc). They were of course ridiculously overpriced when first released but you just waited 6-18 months for them to show up at discounts in stores like TJX (TJ Maxx / Marshalls / HomeGoods), Tuesday Morning or outlet malls.

But like you, you only need so much of this stuff. And yeah the quality was better the farther back in RL history you go.

Unless RL Polo is moving the flagship store to get a cheaper rent somewhere else in NYC this is definitely not good retail news.

Normalcy Bias's picture

Same here. The quality has declined, and they've changed old, dependable items in negative ways. I wore only RL boxer shorts for 30 years, but they changed the fit and fabric 4 or so years ago to an obviously cheaper fabric and construction.

After having worn RL polos for decades, I now find their $85 price to be laughable. Brooks Brothers polos are less expensive, but are definitely of a higher quality (but I hate the obnoxious logo). I'm still looking for a better option...

corporatewhore's picture

I stopped wearing Polo when everyone wanting a cigarillo and a smirnoff shot was wearing the same

Stan Smith's picture

+1 and many more.

 

I was thinking the same thing.   The quality of these shirts back in the heyday blows away what they've been making -- and really, what everyone has been making -- the past 15 to 20 years.    I have a few left still getting a run every now from back then.   I cant vouch for materials and thread counts, but I can tell you they wear out quicker than before,  with no more effort to.

If people want to buy good shirts that wear out quickly, you can spend 75% less on almost any other brands shirt to do so.   Why bother with the mark up if the product isnt any good anymore.

rivercity's picture

BTW - from the same perspective of decades - as a female - I describe women's clothes as gypsy wear. Men probably could pick up on this just walking by the womens dept. - flimsy, off the shoulder trash. They know how to gyp you.

No_More's picture

Glad to know I'm not the only female ZHer here.

I saw this stuff go gypsy back in the 1990s and knew then that it wasn't worth making the trip to outlet malls or what have you to specially get a brand name. By the 2000s I was hearing stories from male friends about how a size 36 (36 inch waist) pair of pants could vary widely, which indicates cheapening up the brand to con the mugs.

Women's sizing is so inconsistent as to be meaningless so they did this to us ages ago.

rivercity's picture

Interesting point there about the quality. If Lauren dropped quality - that's another indicator in general of drop of quality across the board over the years.

HenryKissingerChurchill's picture

"actions to continue to streamline the organization"

streamlining hu? sales must be pretty awesome in NY nowadays!

Pliskin's picture

Winning.

Bigly.

 

TheSilentMajority's picture

Far overpriced and out of fashion for over 30 years.

Shocked to hear that they still have any outlets remaining.

Joe Cool's picture

Polo....Say what you want about "Polo" shirts....I still have shirts from 10 years ago as well...They're on the high side but you get what you pay for

SmilinJoeFizzion's picture

New York commercial real estate is in for a few lightning strikes

ParkAveFlasher's picture

They'll just build a shiny new glass-and-steel palace in the charred footprint.

No_More's picture

Nice question as to who will be able to afford to rent it though.

Fake Trump's picture

Cutting jobs to help Trump build that fucking wall. Good News. Don't blame China this time. Matter of time, Walt Mart will start cutting jobs. Don't blame China. 

Fake Trump's picture

Obama left behind many problems and Trump is creating more problems than solutions.

ProsperD9's picture

Trump is not creating more problems. His solutions, like everything, has a good and bad side. For example, if you want more security and less corruption and spending in the government, one of the ways to do this is with illegal immigration. It has to be brought under control. In order to do that, somethings will have to go, but better things will come. Obamacare is a disaster. That has to go, so something better can come. Trump is a builder. He's building a new country. As the saying goes "this is going to hurt me more than it's going to hurt you," but it has to be done. So, take hold because the ride is going to be wild. Things will have to be destroyed before they get better. In fact, Trump should have been president #42 or 43. A lot of what's happening now could be avoided and all won't get done during his presidency. It will take dedicated people for the good to complete the necessary changes. 

SmedleyButlersGhost's picture

When he starts putting his real name - Ralph Lifshitz - on the label, I'll think about buying one if on my way to a Polo match.

Fake Trump's picture

Just let America implode and start 1929 all over again. Then get rid of Trump and reshuffle the cards. America will be great again without Trump.

Stormtrooper's picture

America could be great again if the 50 sovereign states(or 38 as required by Article V) amends Washington, D.C. out of existence entirely and starts fresh. 

Spungo's picture

I didn't even know they had a dedicated store. I know Ralph Lauren exists and I know Polo products exist, but I didn't think they had enough to make a whole store. That would be like a store that only sells Coca Cola products.

Cardinal Fang's picture

Retail used to be about shelf space.

Ever wonder why there are so many abominable coke flavors? Coke Whale Piss...it edges out the competition even if it doesn't sell, especially if it doesn't sell...

That's why there are RL Polo swizzle sticks and shit.

Now, its about Amazon and not dealing with some shit head in a store.

It's Bill Clinton's fault. His welfare reform turning it into workfare put all the welfare queens at the cash registers amd behind counters. Boom!

Twenty years later no one can stand going to a brick and mortar to deal with with the bullshit clerks on one side of the counter and ms13 girlfriends on the other.

Obama compounded it with EBT for everybody.

That set up the total decline in retail and the boom in online sales.

As an experiment, try going to Sears to buy a toaster...

JustPastPeacefield's picture

Yeah, I get that feeling of dread when I have to check out and see the quality of clerk behind the register. There's are many reasons to shop online, and that's a big one.

Greekziqrius's picture

Welfare kings and queens are nothing compared to the kings and queens of Wall Street. $150 vs $150MM.

No_More's picture

There was a time when there were a limited number of Ralph Lauren and Ralph Lauren Polo shops in the fanciest malls in the biggest population centers (like Houston's Galleria). The stuff was expensive but in the early days (70s-90s) it would end up in close-out places (TJX) or true outlets. Now these names license themselves to the discounters, make them a special line that was never sold in the higher end boutiques (but give people the false impression that they were) and take a percentage of the sales.

The older you go, the better the quality of the luxury brands used to be. But now that they've got China & India (1 billion+ new customers in each plus they mostly have not seen the mid tier luxury products of old) they can get ever cheaper to get new customers. Not a business model I'd pay a premium for, but that's their strategy.