Ralph Lauren cuts deeply in its costs and workforce: the American fashion label wants to save up to 200 million dollars by laying off 15% of its employees. That would cost some 3,700 people their jobs.
Saving hundreds of millions
The corona crisis is raging hard on Ralph Lauren. Not only are consumers buying fewer luxury products and clothing, but the pandemic has also revealed structural weaknesses in the strategy of the fashion brand. For example, it became painfully clear that the American fashion label is still too dependent on department stores and is too little involved in e-commerce.
The brand now wants to change this by means of a drastic reorganisation, in which the costs will be tackled drastically: Ralph Lauren expects to save 180 to 200 million dollars per year (150 to 170 million euros) before tax by cutting thousands of jobs. However, this restructuring is expected to generate a one-off cost of 120 to 160 million dollars in the 2021 financial year.
15% fewer employees
Specifically, by the end of the current financial year, the fashion house aims to cut 15% of its worldwide workforce. Since the company employs a total of some 24,900 people, more than 3,700 jobs are under threat. The shifts will take place both in the back office and at the front, as the brand wants to accelerate its digitisation.
“The changes happening in the world around us have accelerated the shifts we saw pre-COVID, and we are fast-tracking some of our plans to match them,” said CEO Patrice Louvet to CNBC.
The top executive wants to invest in digital platforms to support e-commerce, expands product personalization opportunities and also says he is adding new tools such as augmented reality. Behind the scenes, the American label is working with online cloud platforms to take over some HR and planning systems.
