The companys board of directors has approved a Fiscal 2019 Restructuring Plan as part of the firms bid to drive sustainable long-term growth

The company's board of directors has approved a 'Fiscal 2019 Restructuring Plan' as part of the firm's bid to drive sustainable long-term growth

Ralph Lauren has announced a new plan to return the US luxury retailer to sustainable long-term growth and value by overhauling core products, accelerating under-developed categories, and focusing on digital growth across all activities.

Its board of directors also approved a 'Fiscal 2019 Restructuring Plan,' which may lead to job cuts as well as incurring restructuring charges of US$100-$150m as its consolidates its global distribution network and corporate offices.

The latest strategy, 'Writing Our Next Great Chapter,' was presented to investors and analysts last week alongside the group's long-term financial outlook.

Ralph Lauren, which reiterated its fiscal 2019 guidance, said over the next five years it expects revenue to rise at a compounded annual growth rate of low to mid-single digits in constant currency. Operating margin is expected to expand to mid-teens over the same period, while the company said it is targeting a return to revenue growth in fiscal 2020 in constant currency.

The retailer also announced a $1bn stock repurchase programme in addition to the $100m available at the end of the fourth quarter of fiscal 2018, and a 25% increase in its regular quarterly cash dividend.

It also plans to return 100% of free cash flow to shareholders over the next five years, returning over $2.5bn on a cumulative basis through fiscal 2023 through dividends and repurchases.

Meanwhile, as part of its new strategic plan, Ralph Lauren identified five strategic priorities:

  • Win over a new generation of consumers;
  • Energise core products and accelerate under-developed categories;
  • Drive targeted expansion in its regions and channels;
  • Lead with digital across all activities;
  • Operate with discipline to fuel growth.

"We are confident that with our clear strategic plan in place, we can return Ralph Lauren to sustainable long-term growth and value creation," said CEO Patrice Louvet. "We are building on a solid foundation, starting with our iconic Ralph Lauren brand, our engaged global organisation and a strong balance sheet.

"By putting the consumer back at the centre of our business, elevating and energising our brands and balancing productivity with growth, we'll be well-positioned to deliver our next great chapter."

The restructuring charges are expected to be substantially recognised by the end of fiscal 2019 and are in addition to the $100m of Way Forward Plan charges that are expected to be recognised in the same year.

Unveiled in June 2016 by former CEO  Stefan Larsson, the Way Forward plan included an overhaul of the retailer's supply chain and was also aimed at building the business to its full potential. 

According to the retailer, the restructuring plan activities are expected to result in about $60-$80m of gross annualised expense savings. This is in addition to the cost savings realised associated with the company's Way Forward Plan.

Ralph Lauren did not respond to just-style's request for comment regarding the possibility of job losses.

Last month, Ralph Lauren beat analyst forecasts for earnings and sales in the fourth quarter as the US fashion retailer benefited from an early Easter and improved pricing.