Ralph Lauren Corporation (NYSE: RL) today shared details
regarding the additional steps the Company is taking to navigate
the impacts of COVID-19.
From the onset of the global pandemic, our priority has been to
ensure the safety and well-being of our employees, consumers and
the communities in which we operate globally. We have taken a
number of related steps over the last few months, including the
decision to temporarily close stores, during which we have been
paying employees their normal salaries. On March 31, we provided
additional updates on how we are managing our business through the
unfolding health crisis, including pausing capital improvement
projects and aligning inventory to anticipate future product
demands. The Ralph Lauren Corporate Foundation also allocated $10
million for emergency relief, with the majority of those funds
earmarked to assist Company employees with urgent needs resulting
from the global pandemic. The Foundation, in partnership with the
Council of Fashion Designers of America (CFDA), is also allocating
a portion of the relief funds to manufacture and donate 250,000
masks and 25,000 isolation gowns to workers on the front lines.
Over the past several weeks, as the scope and severity of the
COVID-19 crisis has grown, the vast majority of our employees and
consumers in North America, Europe and select other parts of the
world have been under “stay at home” orders except for essential
needs. During this time, we have evaluated the necessary steps for
adapting to evolving circumstances. Throughout this process, we are
focused on the need to support our employees and safeguard our
business so that we are positioned to emerge quickly from this
crisis in a place of strength.
“The impact of COVID-19 on the world, on our industry and on our
business is profound and wide-reaching,” said Ralph Lauren,
Executive Chairman & Chief Creative Officer. “For more than 50
years, we have embraced the idea of timelessness – focusing on what
lasts. It has defined not only our products but our business and
our culture. It has helped guide our actions in both the best and
the most challenging times. And as we face the implications of this
global pandemic, it will remain our guiding principle – so that we
will not only endure this crisis but thrive again for years to
come.”
“We have a great responsibility to all of our stakeholders – our
teams, our consumers, our investors, our partners and the
communities who count on us – to ensure that every decision we make
in this unprecedented global health crisis considers our ability to
serve them over the long-term,” said Patrice Louvet, President
& Chief Executive Officer. “We have overcome many challenges
over the last 53 years because the Purpose and values of our
Company have guided us and enabled us to come out stronger on the
other side. They are our compass in this moment too, as we make
tough decisions in the short-term to position us for continued
long-term strength – as a company, a leader in our industry and an
employer to thousands of people around the world.”
Below, the Company provides details on additional measures it is
taking in response to the global pandemic.
Executive Compensation
Across the Company, business leaders will reduce their salaries
and compensation as follows:
- Our Executive Chairman and Chief Creative Officer, Ralph
Lauren, will forego his entire salary for Fiscal Year 2021 in
addition to his full Fiscal Year 2020 bonus.
- Our President & Chief Executive Officer, Patrice Louvet,
will reduce his salary by 50% during the crisis.
- Every other member of the Executive and Global Leadership Team,
a group of 140 business leaders across the Company, will reduce
their salaries by 20% for the first quarter of Fiscal 2021.
- Lastly, our Board of Directors will forego their quarterly cash
compensation for the first quarter of Fiscal 2021.
A part of these compensation reductions will be contributed to
the Company’s Employee Relief Fund, administered by the Emergency
Assistance Foundation, to provide grants to employees facing
special circumstances and financial hardships during this time.
This will build on the initial funding provided through the Ralph
Lauren Corporate Foundation.
Employee Compensation
Our store employees in North America have been compensated since
store closures went into effect in mid-March and will continue to
be paid in full through April 11, 2020. International store
employees in regions where retail operations are required to remain
closed have received similar compensation to-date, as guided by
local government regulations and authorities.
Following this period, all of our store employees where retail
operations are suspended, as well as employees whose jobs are not
conducive to continued remote working, will be placed on unpaid
temporary furlough. This includes the majority of our store
employees and a portion of our corporate employees in North
America, Europe and select other parts of the world. These
employees will continue to receive regular employee benefits,
including health benefits and any government assistance for those
eligible. International store employees in regions where retail
operations remain closed will receive compensation as guided by
local governments and authorities. Our hope is to bring our
employees back to work as soon as it is safe and practical.
We are also working to leverage the talent and experience of our
employees by actively reassigning them across other areas of our
business, placing them in high-need functions directly involved in
managing urgent business needs and continuity as well as our
ongoing efforts to manufacture medical supplies, including masks
and gowns, for donation.
We will also continue to offer all employees, including those
placed on furlough, access to our Employee Relief Fund, which
provides aid to Ralph Lauren employees facing special circumstances
and financial hardships during this time, including medical,
eldercare or childcare needs. As stated above, the majority of the
previously announced $10 million donation by the Ralph Lauren
Corporate Foundation has been placed into the Company’s Employee
Relief Fund and a portion of executive compensation reductions will
be added to this fund.
Store Closures
As previously shared, the majority of our retail stores in North
America and Europe, as well as select other parts of the world,
remain temporarily closed due to the global pandemic. We will
continue to assess our operations location by location, taking into
account the guidance of local governments and global health
organizations to determine when our operations can begin returning
to business. We are encouraged by the improving situation in China
and South Korea, where most of our retail stores have reopened, and
are applying lessons from the outbreaks in the region to
effectively manage our operations globally.
Online Operations Continue
Our digital flagship businesses remain open and our fulfillment
operations have also resumed following a brief closure period to
enhance health and safety protocols in our distribution centers.
These actions include extensive deep cleanings, implementation of
social distancing on-site and staggered work shifts and break
schedules.
Supplier Payments
Our suppliers around the world are another critical stakeholder
for our Company. In accordance with our responsible purchasing
practices, we will settle payment for finished goods and goods
already in production.
Understanding that the scale of the ongoing slowdown of future
orders can have a significant impact on our partners’ liquidity, we
have a vendor payments program in place which enables suppliers to
receive payments on a shortened time frame at favorable market
rates.
Over the long-term, we are committed to partnering with peers,
non-governmental organizations and governments to advocate and
generate new sources of support and long-term job security for
factory workers, while strengthening the resilience of business in
the countries in which we manufacture our products.
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The Company believes the additional measures announced today are
necessary as we navigate an unprecedented and dynamic situation. We
remain focused on the need to support our employees and safeguard
our business in order to emerge from this crisis in a position of
strength.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the
design, marketing and distribution of premium lifestyle products in
five categories: apparel, footwear & accessories, home,
fragrances and hospitality. For more than 50 years, Ralph Lauren’s
reputation and distinctive image have been consistently developed
across an expanding number of products, brands and international
markets. The Company’s brand names, which include Ralph Lauren,
Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph
Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children,
Chaps and Club Monaco, among others, constitute one of the world’s
most widely recognized families of consumer brands. For more
information, go to https://corporate.ralphlauren.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made from time to time
by representatives of the Company, may contain certain
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements regarding, among other things, our
current expectations about the Company’s future results and
financial condition, revenues, store openings and closings,
employee reductions, margins, expenses, earnings, and citizenship
and sustainability goals and are indicated by words or phrases such
as “anticipate,” “outlook,” “estimate,” “expect,” “project,” “we
believe,” “can,” “will,” and similar words or phrases. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from the
future results, performance or achievements expressed in or implied
by such forward-looking statements. Forward-looking statements are
based largely on the Company’s expectations and judgments and are
subject to certain risks and uncertainties, many of which are
unforeseeable and beyond our control. The factors that could cause
actual results to materially differ include, among others: disease
pandemics, epidemics and health related concerns, such as the
current outbreak of COVID-19, which could result in and, in the
case of the COVID-19 outbreak, has resulted in some of the
following, supply chain disruptions due to closed factories,
reduced workforces, scarcity of raw materials and scrutiny or
embargoing of goods produced in affected areas, closed stores,
reduced consumer traffic and purchasing as consumers become ill or
limit or cease shopping in order to avoid exposure, or governments
impose mandatory business closures, travel restrictions or the like
to prevent the spread of disease, and market or other changes that
could result in impairments to the Company’s assets; disruption to
capital markets; the loss of key personnel, including Mr. Ralph
Lauren, or other changes in our executive and senior management
team or to our operating structure, and our ability to effectively
transfer knowledge during periods of transition; our ability to
successfully implement our long-term growth strategy; our ability
to continue to expand and grow our business internationally and the
impact of related changes in our customer, channel, and geographic
sales mix as a result, as well as our ability to accelerate growth
in certain product categories; our ability to open new retail
stores and concession shops, as well as enhance and expand our
digital footprint and capabilities, all in an effort to expand our
direct-to-consumer presence; our ability to respond to constantly
changing fashion and retail trends and consumer demands in a timely
manner, develop products that resonate with our existing customers
and attract new customers, and execute marketing and advertising
programs that appeal to consumers; our ability to effectively
manage inventory levels and the increasing pressure on our margins
in a highly promotional retail environment; our ability to continue
to maintain our brand image and reputation and protect our
trademarks; our ability to competitively price our products and
create an acceptable value proposition for consumers; the impact to
our business resulting from changes in consumers’ ability,
willingness, or preferences to purchase discretionary items and
luxury retail products, which tends to decline during recessionary
periods, and our ability to accurately forecast consumer demand,
the failure of which could result in either a build-up or shortage
of inventory; our ability to achieve anticipated operating
enhancements and cost reductions from our restructuring plans, as
well as the impact to our business resulting from
restructuring-related charges, which may be dilutive to our
earnings in the short term; the impact to our business resulting
from potential costs and obligations related to the early closure
of our stores or termination of our long-term, non-cancellable
leases; a variety of legal, regulatory, tax, political, and
economic risks, including risks related to the importation and
exportation of products which our operations are currently subject
to, or may become subject to as a result of potential changes in
legislation, and other risks associated with our international
operations, such as compliance with the Foreign Corrupt Practices
Act or violations of other anti-bribery and corruption laws
prohibiting improper payments, and the burdens of complying with a
variety of foreign laws and regulations, including tax laws, trade
and labor restrictions, and related laws that may reduce the
flexibility of our business; the potential impact to our business
resulting from the imposition of additional duties, tariffs, taxes,
and other charges or barriers to trade, including those resulting
from current trade developments with China and the related impact
to global stock markets, as well as our ability to implement
mitigating sourcing strategies; the impact to our business
resulting from the United Kingdom’s exit from the European Union
and the uncertainty surrounding its future relationship with the
European Union, including trade agreements, as well as the related
impact to global stock markets and currency exchange rates; the
impact to our business resulting from increases in the costs of raw
materials, transportation, and labor, including wages, healthcare,
and other benefit-related costs; our ability to secure our
facilities and systems and those of our third-party service
providers from, among other things, cybersecurity breaches, acts of
vandalism, computer viruses, or similar Internet or email events;
our efforts to successfully enhance, upgrade, and/or transition our
global information technology systems and digital commerce
platforms; changes in our tax obligations and effective tax rate
due to a variety of other factors, including potential changes in
U.S. or foreign tax laws and regulations, accounting rules, or the
mix and level of earnings by jurisdiction in future periods that
are not currently known or anticipated; our exposure to currency
exchange rate fluctuations from both a transactional and
translational perspective; the potential impact to our business
resulting from the financial difficulties of certain of our large
wholesale customers, which may result in consolidations,
liquidations, restructurings, and other ownership changes in the
retail industry, as well as other changes in the competitive
marketplace, including the introduction of new products or pricing
changes by our competitors; the impact of economic, political, and
other conditions on us, our customers, suppliers, vendors, and
lenders, including business disruptions in Hong Kong resulting from
ongoing protests and political unrest; the potential impact to our
business if any of our distribution centers were to become
inoperable or inaccessible; the potential impact on our operations
and on our suppliers and customers resulting from man-made or
natural disasters, such as severe weather, geological events, and
epidemic diseases such as the COVID-19 outbreak, and other
catastrophic events; the impact to our business of events of unrest
and instability that are currently taking place in certain parts of
the world, as well as from any terrorist action, retaliation, and
the threat of further action or retaliation; our ability to access
sources of liquidity to provide for our cash needs, including our
debt obligations, tax obligations, payment of dividends, capital
expenditures, and potential repurchases of our Class A common
stock, as well as the ability of our customers, suppliers, vendors,
and lenders to access sources of liquidity to provide for their own
cash needs; the potential impact to the trading prices of our
securities if our Class A common stock share repurchase activity
and/or cash dividend payments differ from investors’ expectations;
our ability to maintain our credit profile and ratings within the
financial community; our intention to introduce new products or
brands, or enter into or renew alliances; changes in the business
of, and our relationships with, major department store customers
and licensing partners; our ability to achieve our goals regarding
environmental, social, and governance practices; our ability to
make certain strategic acquisitions and successfully integrate the
acquired businesses into our existing operations; and other risk
factors identified in the Company’s Annual Report on Form 10-K,
Form 10-Q and Form 8-K reports filed with the Securities and
Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
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