In what some are calling the latest victim of the grim economy, Ralph Lauren Corporation is closing at least 50 retail stores and cutting 8 percent of its full-time workforce – about 1,000 employees. CEO Stefan Larsson hopes this will create a leaner business that operates with fewer layers of management.
Centered in New York City, the company – home of the original Polo emblem – designs, markets and sells luxury apparel, footwear, accessories, fragrances and home furnishings under its portfolio of various brands.
As of April 2010, the Ralph Lauren Corporation operated a total of 179 full-price stores, 171 factory stores, and 281 “concessions-based shop-within-shops” – a total of 631 locations worldwide.
The company has been struggling with falling sales and profits attributed to several factors, including failing to keep up with rapidly changing retail trends and new style preferences, and the decline in popularity of brick-and-mortar stores in favor of online shopping. The company’s stocks have fallen nearly 48 percent from its December 2014 high of $182.74
“The business has struggled over the last three years,” said Larsson. “We have to do a better job to give the consumer something really exciting.”
The restructuring is aimed at saving $220 million over the next year. With the changes, Ralph Lauren says it will be profitable by fiscal year 2019.
Ralph Lauren is just the latest of a string of retail closures.
- Last month, Sports Authority announced it was closing its entire 463-store chain, claiming it could not compete against online competition.
- In early May, JCPenny announced it would slash payroll, freeze overtime and take other drastic cost-cutting steps to protect its bottom line.
- The retailer Aeropostale filed for bankruptcy in early May after losing money for 13 consecutive quarters. The company said it would be closing 113 stores in the United States, in addition to its 41 stories in Canada, as it seeks to “achieve long-term financial stability.”
- In February, Sears announced plans to “accelerate” the closing of at least 50 unprofitable stores. The retail giant, which also owns Kmart, originally planned to close the stores over the next few months, but poor sales have sped up the timeline.
The website Retail Industry lists a grim roll call of additional store closures for 2016, including Kmart, Hancock Fabrics, Mens Wearhouse, Office Depot/Office Max, Barnes & Noble, Children’s Place, Walgreens, Walmart, American Eagle Outfitters and many others.
The list is admittedly partial. “It’s generally easy for retail chain leaders to know far in advance which brick-and-mortar leases of underperforming stores won’t be renewed,” notes the website. “But that doesn’t mean those leaders want to reveal their store closing future to every retail analysts, investor, and consumer on planet Earth.”
The dire statistics from 2016 come hard on the heels of equally grisly statistics from 2015, during which major U.S. retailers announced the closing of more than 6,000 stores from coast to coast. The list included only those retailers that have announced plans to close more than 10 outlets during 2015/2016 and included such casualties as Radio Shack and Dollar Tree/Family Dollar stores.
The growing list of stores being shuttered coincides with the decline in discretionary consumer spending over the past year.
“Expect to see more storefronts closed at malls across the country,” one retail watcher told WND. “It’s getting ugly out there.”
As WND noted, KWWL.com in Iowa reported that even though major department store chains have been “shrinking their footprints for a number of years now, the closures haven’t been enough to spark a turnaround, and according to estimates by Green Street Advisors, more drastic measures are needed.”
Michael Snyder, a University of Florida law-school graduate and former Washington, D.C., attorney, wrote on the End of the American Dream blog: “In impoverished urban centers all over the nation, it is not uncommon to find entire malls that have now been completely abandoned. It has been estimated that there is about a billion square feet of retail space sitting empty in this country, and this crisis is only going to get worse as the retail apocalypse accelerates.”
According to Green Street Advisors, the department store industry has been struggling for some time and is likely oversaturated in today’s retail environment. The company said a faster pace of department store closures could happen in the next few years.
Green Street found 800 locations would need to go if department stores want to return to pre-recession health, adding: “Put another way, that’s all of the anchors at 200 malls, or 20 percent of mall anchor space in the country. And that’s bad news for malls, especially in smaller and less-affluent markets.”
In addition to the rising popularity of online shopping, retail closures can be partially attributed to the dwindling amount of exports.
“Exports are plummeting all over the globe,” Snyder said. “The amount of stuff being shipped around by air, truck and rail inside this country has been dropping significantly and this tells us that real economic activity is really slowing down.”
As a result, malls are being torn down or repurposed, according to Vicki Howard of Hartwick College. She worried that the closing of anchor stores hurts smaller metro areas where shopping already is limited.
“The heyday of malls seems to be passing,” she said.