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.