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What's going on?
Ralph Lauren, the preppy fashion retailer, said on Tuesday it would close its flagship Fifth Avenue Polo store in New York (tweet this) and continue to cut jobs as it tries to turn around falling profits.
What does this mean?
Like many clothing retailers, Ralph Lauren has been struggling amid a shift to online shopping and competition from fast fashion retailers like Zara. In June last year, Ralph Lauren laid out a plan to cut jobs and close stores and on Tuesday the company essentially said its plans were on track and gave investors some more details. The retailer intends to invest the money its saving through cost-cutting into new initiatives aimed at boosting sales in the future, like an improved online offering (see below).
Why should I care?
The bigger picture: More bad news for brick-and-mortar retailers.
After disappointing results from Nike and Lululemon in recent weeks, the bad news for traditional clothing retailers just keeps coming. Late on Monday, Urban Outfitters said its sales so far this quarter had fallen about 5% and its stock sold off more than 3% on Tuesday. Shares of department stores like Macys and Kohls fell about 3% on the signs of broad weakness in the sector. Now is a tough time to be an investor in retail.
For the markets: Ralph Lauren is turning to Salesforce for help.
Less than a year ago, Ralph Lauren said it would prioritize developing its own in-house global ecommerce platform, but on Tuesday it announced it was ditching that idea in favor of using the Salesforce Commerce Cloud platform. The move illustrates the opportunity that struggling retailers present for Salesforce, which is aiming to provide traditional retailers with the tools to compete in ecommerce (e.g. tracking a consumer from a Facebook ad through to purchase).
Originally posted as part of the Finimize daily email.
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