Ralph Lauren Plans To Open 250 New Stores
Luxury clothing and lifestyle retailer Ralph Lauren has announced plans to expand its store presence in North America.
The brand is ditching a large part of its department store presence in favor of direct-to-consumer strategies — a move that will entail opening approximately 250 stores in North America, Retail Dive reports.
Direct sales make up 63% of the company’s revenue, leading Ralph Lauren to trim its department store presence in the U.S. by two-thirds and reducing exposure to off-price sales by more than half, CEO Patrice Louvet said at the retailer’s first investor day since 2018.
“Our clear and choiceful strategies are expected to deliver sustainable long-term growth and value creation — fueled by our strong balance sheet and operating discipline — as we reinforce our position as a leading luxury lifestyle company,” Louvet said in a statement.
The expansion is part of a three-year plan, during which time Ralph Lauren said it would return around $2B to investors via quarterly cash dividends and share repurchases, according to a press release.
The company’s strategy going forward involves combining physical stores with its digital retail. It has also identified 30 markets for expansion, including 14 in North America, eight in Europe and eight in Asia Pacific, Retail Dive reported.
Ralph Lauren Regional CEO of North America Bob Ranftl told the publication the company is looking to expand its presence in, among other markets, San Francisco, Seattle and Denver, saying that the company is “still significantly underpenetrated in many cities in North America.”
Ralph Lauren’s plan is a contrarian play as investors — anticipating a recession — back away from retail. Over the past three years, private real estate funds have cut their retail space holdings down from 17% to just 10%.
Still, there are some signs that retail real estate may not suffer as badly as other asset classes, having started its price correction well before the pandemic. It isn't projected to lose as much value in the coming years as office, according to recent projections from Cushman & Wakefield. Retail availability is at its lowest level nationally since the Great Recession, according to CoStar. Employment in the sector is also up, with the Federal Reserve’s August jobs report showing an additional 44,000 retail jobs added in August alone.
