Shares of popular apparel retailer Ralph Lauren (NYSE:RL) dropped as much as over 11% this morning before recovering to a drop of just 5% around 11 am ET, as the company released its plans for a restructuring that calls for job cuts and store closings.
The plan is expected to cost Ralph Lauren up to $400 million in fiscal 2017, as well as an inventory charge of up to $150 million. The company also expects the plan to lead to a double-digit revenue decline in fiscal 2017.
Despite the major losses that are expected, the company believes the plan will result in somewhere between $180 million to $220 million in annualized expense savings. With the “Way Forward Plan”, Ralph Lauren will “build on our strengths, refocusing on our core brands and instilling a financial discipline that is highly focused on return on investment”, according to a statement from President and CEO Stefan Larson. He also added that the multiyear growth plan will lead “to profitable sales growth and long-term shareholder value creation”.
The restructuring of Ralph Lauren comes as the company has seen its fair share of ups and downs in recent history. The company currently holds a Zacks Rank #5 (Strong Sell), and shares of RL are down around 17% year-to-date. Hopefully the company can push through the revenue hit it will take, and this restructure of the company can turn things around, for the sake of the Ralph Lauren, its employees, and its shareholders.
RALPH LAUREN CP (RL): Free Stock Analysis Report
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