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Ralph Lauren outlines growth plan to elevate brand image

Yahoo Finance Live anchors discuss Ralph Lauren’s plans to accelerate profit growth by updating their strategic growth plan.

Video Transcript

- All right. Let's get back to Ralph Lauren now that we just talked about. Out with updated strategic growth plans and a long-term financial outlook. The company said it's expecting mid to high single digit revenue compounded annual growth rate in its three year financial outlook. Also, operating profit growth exceeding top-line growth by fiscal 2025.

The shares are a little bit higher right now. They were a little bit higher in the pre-market as well here. So basically it is looking to accelerate growth at the company here. And it's targeting average price increases for its merchandise in the mid-single digit range as well over the next several years.

And that's interesting too because it's not just this year. It's looking out a little bit further and continuing to see price increases. So that's interesting here. What we had seen pre-pandemic, a phenomenon I've talked about before, was this rampant discounting. And in many cases, it devalued brands. So now Ralph Lauren is working on reversing that, sort of elevating the brand's image, elevating its cachet. And in part, ironically, you do that by raising prices and giving that sort of value halo around the brand.

- For this, it comes down to location, location, and somewhat vocation. And I'll break that down because location is what they're talking about, wanting to win in key cities within their consumer ecosystem. Location in terms of the tiers of market as well that they're working within and some of the core products that they're talking about, this next cohort of high potential under-penetrated categories focused on consumers.

And then the vocation. Where people are going to be wearing their clothing at the end of the day too. They're trying to re-energize this lifestyle brand. They're going to really look to target and expand and elevate their lifestyle brand positioning globally.

And they're going to be going kind of more towards this high quality consumer acquisition. So that is going to be one of the key elements that we look for from this point. But it all is going to need to play out in the numbers. They're targeting 15% operating margin expansion by fiscal year 2025. So that's one of the targets they've set forward. And it's going to cost them a little bit too. At least 4% to 5% of the revenue annually is going to be some of the capital expenditures that they're putting into these efforts as well through that time period.

- To do all that opening, to do some zhuzhing up of the stores, et cetera.

- Yeah. Exactly.