Ralph Lauren Corp is predicting a larger decline in fourth-quarter revenue than previously expected, as new lockdown measures in Europe and Japan continue to impact the high-end fashion brand. This news caused a 2% drop in the company’s shares ahead of the market opening, adding to concerns following Ralph Lauren’s third-quarter revenue miss.

The reimposition of lockdown measures towards the end of 2020 in response to a surge in COVID-19 cases has created challenges for Ralph Lauren and other luxury brands. These strict restrictions have greatly hindered the luxury goods market and dashed hopes for a strong holiday shopping season, which was seen as a potential lifeline during the ongoing pandemic.

Ralph Lauren has already warned investors about disappointing results, stating that it anticipates a mid-to-high single-digit decline in fourth-quarter revenue for fiscal 2021. This projection falls short of analysts’ expectations, who had predicted a more modest 2.9% drop in revenue. In the third quarter, the company’s net revenue dropped to $1.43 billion from $1.75 billion in the same period the previous year, missing the average analyst estimate of $1.47 billion.

Despite these challenges, Ralph Lauren is hopeful about future growth opportunities. The company plans to reinstate its quarterly dividend in the first half of fiscal 2022, signaling its commitment to shareholders and confidence in its ability to recover from the pandemic-induced downturn.

The fashion industry as a whole has been significantly impacted by the COVID-19 crisis, with lockdowns and travel restrictions severely affecting consumer demand. Luxury fashion brands have been particularly affected due to store closures, reduced foot traffic, and the absence of international tourists who typically drive sales. Ralph Lauren’s struggles mirror those of other luxury brands worldwide.

With the pandemic still ongoing, it remains uncertain when these restrictions will be fully lifted and consumer spending patterns will return to normal. Fashion brands will need to adapt to changing consumer behaviors, explore online sales channels, and potentially shift their focus to markets that have effectively controlled the spread of the virus.

Although the challenges are daunting, fashion brands can draw inspiration from past crises. Luxury brands have consistently shown resilience and the ability to bounce back during economic downturns. By focusing on innovation, creativity, and maintaining strong connections with their customer base, Ralph Lauren and other luxury fashion brands have the opportunity to navigate this storm and emerge stronger in the post-pandemic era.

Useful links:
How Covid-19 crisis is different from other crises in fashion history
Luxury fashion after Covid-19