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Ralph Lauren reduces workforce

By Kristopher Fraser

Jun 8, 2015

New York - Sometimes even the most legendary of American fashion brands have to cut down on their workforce. Ralph Lauren began cutting 5 percent of their staff, or 750 jobs, in mid-May, as part of their approach to building a new business model. The company is expecting it to take several months before they fully shift to their new business model.

As of the fourth quarter ending on March 28, Ralph Lauren had 25,000 employees, consisting of 15,000 full-time employees and 10,000 part-time employees. As of now, it is unclear how many more jobs could be affected as the company continues it shift to a new model. Many positions were cut due to redundancy in job duties.

In a statement, a spokesman for Ralph Lauren said, “Consistent with what was reported after our May earnings call, as part of Ralph Lauren Corp.’s new brand management structure to maximize growth and achieve meaningful operating and financial efficiencies, we are reducing our full-time workforce. Making these kinds of decisions is difficult but necessary, and our new structure will create a platform for profitable growth by allowing us to both improve our global brand equities and drive operating efficiency over time.”

The structural changes began earlier in February as Ralph Lauren decided to adopt a business model that could potentially save them 100 million dollars. The premise of the model is that there will be a core management team focused on one brand for the sake of consistency and unified brand messaging. According to WWD, there will be six brand groups: the Ralph Lauren luxury brands, excluding home, under the oversight of Valerie Hermann as brand president; Polo; Denim & Supply; Lauren, Chaps and American Living in the same group; Ralph Lauren Home, and Club Monaco.

Ralph Lauren lays off 750 workers

Last April, Christopher Peterson became the president, Global brands, a position that will have all six global brand presidents reporting to him. He is expecting the new model to significantly reduce stock keeping units, which lead to better inventory returns and gross margins, as well as improve their SG&A saving costs. Peterson, a former employee of Procter & Gamble, has based the new organizational structure on the latter mentioned company where he held several senior positions.

Peterson hopes to shift the company from a market-driven structure to this new global brand position. Under the new structure, Jackwyn Nemerov will continue as President and Chief Operating Officer, with her range of oversight including e-commerce, wholesale, retail, and licensing. She has long been considered an expert on merchandising and product assortment.

In the company's most recent quarterly result, net income fell 19 percent to 124 million dollars, or 1 dollar and 41 cents a diluted share, from 153 million dollars, or 1 dollar and 6 cents a diluted share, a year ago. Net revenues rose 1 percent to 1.89 billion dollars from 1.87 billion dollars. Two primary factors in the declining numbers were a strengthening U.S. dollar and lower tourist traffic.