Ralph Lauren Corp has announced its plans to implement a 15% reduction in its global workforce by the end of the fiscal year. The move comes as the luxury retailer aims to mitigate the impact of COVID-19 on sales and adapt to changing shopping habits. With 530 stores worldwide, Ralph Lauren intends to shift its focus towards online operations as part of its overall strategy.

While the company did not specify the exact number or types of jobs that will be affected, it is estimated that over 3,700 employees could be impacted based on its previous workforce of approximately 24,900 individuals. Chief Executive Officer Patrice Louvet stated that the ongoing global changes have accelerated trends that Ralph Lauren was already observing prior to the pandemic. As a result, the company is fast-tracking its plans to adapt accordingly.

The COVID-19 crisis has significantly impacted the demand for luxury handbags, apparel, and accessories, as customers have become more cautious with their discretionary spending. This has resulted in many companies in the industry scaling back their expansion strategies. The proposed merger between Ralph Lauren and Tiffany & Co. has also been affected by the pandemic, with LVMH attempting to withdraw from the $16 billion deal. Additionally, other luxury brands such as Burberry Group and Harrods have had to make job cuts as well.

Jessica Ramirez, a retail analyst at Jane Hali & Associates, explained that high-end clothing companies are now entering the next phase of recovery, which involves assessing their financials and seeking ways to improve profitability. Often, this leads to store closures and reductions in the workforce. On the other hand, online sales of luxury goods have experienced a significant surge during this time. Recognizing this trend, Ralph Lauren plans to invest in digital platforms to support its e-commerce operations and expand its range of personalized products.

The job cuts implemented by Ralph Lauren are expected to result in gross annual pre-tax savings of approximately $180 million to $200 million. However, the company also expects to face one-time pre-tax charges of around $120 million to $160 million in fiscal year 2021.

As the fashion industry continues to grapple with the effects of the COVID-19 pandemic, Ralph Lauren’s decision to reduce its workforce and prioritize online operations demonstrates the need for brands to adapt to changing consumer behaviors. By embracing e-commerce and personalized offerings, Ralph Lauren aims to position itself for long-term success in a rapidly evolving retail landscape.

Useful links:
1. Article on the crisis facing luxury brands
2. Article on LVMH’s departure from Tiffany & Co.