Ralph Lauren Takes a Victory Lap

NEW YORK — For the better part of a decade, Ralph Lauren executives have talked about elevating the American sportswear brand. Monday night’s show at the label’s Madison Avenue headquarters is what it looks like when you believe the top might finally be in sight.

Where recent venues recreated bits of Ralph’s world — the designer’s Manhattan apartment at the Museum of Modern Art, or his Colorado ranch inside a warehouse at Brooklyn’s Navy Yard – the brand went with the real thing this time. The show was held inside Ralph Lauren’s private design studio at its Madison Avenue offices, followed by a dinner at Polo Bar, Ralph Lauren’s perpetually booked-up restaurant down the street.

Lauren showed a smaller collection than some past runways, which have featured as many as 120 looks. Instead of the brand’s full range, the focus was on luxury womenswear and accessories — two major pushes for the brand — with plenty of sparkly, metallic, red carpet-ready evening dresses (and one tuxedo), plus the expected fringed nods to cowboy Americana (the final look of the night combined the two themes in a shimmering gown paired with a cowboy hat).

The setting, though, was a fitting move to show at the brand’s corporate headquarters at a time when business is the strongest it’s been in years. Its stock just hit a record high, and sales and profits topped forecasts in the company’s most recent quarter.

“In the context of a super volatile market where you’re starting to see a separation of the winners and the losers, I think it’s a realisation that this company delivers consistently,” chief executive Patrice Louvet told BoF before the show. “We do what we say, we say what we do and the results are coming consistently quarter after quarter.”

Of course, Louvet and other executives have always projected confidence in their plan for Ralph Lauren’s “next great chapter,” as they called it when first laying out their turnaround plans in June 2018. Despite an uneven recovery from Covid-19, the company has stuck with its vision for yanking Ralph Lauren out of the discount bin and putting it back in the luxury conversation.

Over the last six years, the brand has exited underperforming department stores in the US and opened more of its own shops, particularly in China, where its bread-and-butter Polo line is more firmly established as a premium label. New categories were added and others expanded, with an emphasis on items like outerwear and bags, that could command premium prices. Getting a sluggish womenswear business back on track was a particular priority. The marketing budget was significantly boosted, with untold millions lavished on shows like Monday’s, and events like the upcoming Olympics, where the brand will once again dress the US team.

The entire strategy could be summed up in a single image: Taylor Swift on the cover of Time’s Person of the Year issue in December, wearing a women’s Polo coat that cost $698. Swift isn’t a high fashion icon, Time isn’t a fashion magazine and a $698 coat isn’t luxury. But her embrace of the brand at the height of her fame – she’s also been spotted wearing a $50 Ralph Lauren baseball cap and sporting the $1,800 Wellington bag – speaks to the more democratic form of luxury that the designer has been exploring for over five decades.

Success was never a given: How many brands have made bold statements about leaving department stores behind and moving upmarket, only to discover their customers didn’t want to come with them? Sales and margins have inched higher over the years, but progress was uneven. Wall Street certainly wasn’t convinced; on the day that Swift cover dropped, the company’s stock was trading below its price when the “next great chapter” was announced over five years earlier.

The sceptics are a much smaller group today. Ralph Lauren’s latest earnings, released in February, offered the clearest signs yet that consumers are responding to the new products: fourth-quarter net revenue hit $1.9 billion, a 5.6 percent increase from a year earlier, driven by some 1.7 million new customers shopping at the brand’s own stores and website. Net income rose 28 percent to $276.6 million, reflecting average prices that are over 70 percent higher than before the pandemic. The brand has even managed to raise prices at its outlet stores, which have remained core to the business even as it’s pruned other off-price channels.

After those results, Ralph Lauren’s stock spiked 17 percent, and hit a record high soon after.

“The elevation journey is always ongoing but they have reached a turning point,” said BNP Paribas analyst Laurent Vasilescu. “They’re now on the offense.”

What does that look like? In a word — more: more stores, more Polo Bars, more Ralph’s Coffees, more $698 coats. Louvet said he “can imagine in the future … we will likely have a hotel,” adding “we do not have any specific plans for it.”

There’s always more elevation to be done. The goal these last six years has been for Ralph Lauren to compete in the same arena as Europe’s luxury giants, while defending itself on the home front from accessible luxury competitors Coach and Michael Kors, plus a host of newer brands.

“They’re one of the biggest lifestyle brands in multiple categories,” said luxury consultant Robert Burke. “Gucci [and other luxury brands] do some things very well, but they’re not touching the consumer on every level the way Ralph does.”

Ralph Lauren has managed the tricky balancing act of selling cups of coffee and discounted polos in outlet malls while building the aura of exclusivity that comes with celebrity-packed runway shows and the Polo Bar.

It remains to be seen, however, whether Ralph Lauren’s relatable, Taylor Swift-approved concept of luxury can compete in the arena of ready-to-wear and handbags, where European labels make most of their profits. Ralph Lauren has grown both categories during the “next great chapter” era, but they remain a small part of the overall business in dollar terms. That’s slowly changing; Louvet said luxury womenswear of the sort shown on Monday is “among the fastest growing businesses of all [our] brands.”

There were plenty of bags on the runway on Monday, including the recently launched RL 888 satchel.

Whether anything that came down the runway on Monday can meaningfully contribute to the bottom line remains to be seen. But what is clear is that, with much of the work of moving upmarket now completed, it’s time to have some fun.

“I think they will continue to elevate and evolve the brand. It’ll continue to expand whether that means in other product categories of home, restaurants, hotels,” Burke said. “The world is their oyster.”