(An image from Ralph Lauren's 1988 catalog.Ralph Lauren on Instagram)
Ralph Lauren is struggling.
Sales were down in its most recent quarter. Retail revenue dipped 3%, consolidated comparable sales declined 6% on a reported basis, and wholesale revenue declined 5% — something that shouldn't be too surprising, considering how many department stores — from Macy's to Nordstrom — have reported negative comparable sales in recent quarters.
And, as Bloomberg's Kim Bhasin has pointed out, it is losing its positioning with preppy shoppers.
Here are three reasons Ralph Lauren is losing its status.
1. Macy's
(Inside the Macy's Last Act section of the flagship store in Herald Square.Mallory Schlossberg/Business Insider)
Macy's has become notorious for messy stores and discounted apparel, which doesn't help luxury brands who sell products there.
"While Ralph Lauren has representation in stores like Macy’s the fact that its sales areas look like a flea-market do nothing to help the brand or its revenues. This is further exacerbated by the generally weak customer traffic at department stores across the past few months," Håkon Helgesen, retail analyst at consulting firm Conlumino, wrote in a note to clients.
"In our view, decisive action is needed to put the brand on the right track. This includes withdrawing from department stores like Macy’s which, in our view, are now actively damaging the Ralph Lauren brand, and focusing only on more upscale department stores like Nordstrom and Neiman Marcus as sales channels," he wrote.
Macy's is working to fix its problems; it is currently eliminating about 100 of its own stores
2. Preppy people have new brands to buy
(Vineyard Vines.Vineyard Vines)
Helgesen points to Vineyard Vines an example of a preppy brand that has captured consumers.
The company uses real people in its catalogs, as opposed to models. Its strategy is paying off. In May, Reuters had reported that the company was looking to sell a stake to Goldman Sachs in May, which would make it worth $1 billion. When Business Insider spoke to the brand, they declined to comment on those financials.
Bhasin points to Smathers & Branson and Southern Tide as two other up-and-coming preppy brands that have managed to capture consumers.
3. It isn't relevant to young consumers
(Via Flickr)
Helgesen likens Ralph Lauren's woes to those of Tiffany & Co., another brand that has struggled to be relevant to young consumers who demand speed and newness.
"Reconnecting with younger consumers is also a priority. Rather like Tiffany, Ralph Lauren is seen as an older, established brand that, while not actively disliked, is less relevant than it was a generation ago. Spin-offs like Club Monaco and RRL have helped to remedy this, but the company needs to put more energy and effort around extending and expanding their reach," he wrote.