By Tonya Garcia, MarketWatch
“Given the brand’s significant exposure to the challenged North American wholesale channel, albeit reduced from prior years, we think further footprint distribution rationalization is likely to occur for the brand,” wrote analysts led by John Kernan.
“Revenue recapture may not be linear even with the shift to digital and improved CRM [customer relations management] capabilities.”
Rural lifestyle specialty chain Tractor Supply Co. /zigman2/quotes/202009274/composite TSCO +0.35% , do-it-yourself home goods retailer Lowe’s Cos. Inc. /zigman2/quotes/205563664/composite LOW -0.42% and athletic goods retailer Hibbett Sports Inc. /zigman2/quotes/201173500/composite HIBB -2.82% have been among the shops that consumers have been flocking to amid the pandemic. Also on the list are grocers like Kroger Co. /zigman2/quotes/206215053/composite KR +0.31% , Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.09% and Target Corp. /zigman2/quotes/207799045/composite TGT -0.62% .
But GlobalData’s Saunders also points out that Capri and Ralph Lauren face hurdles that pre-date the coronavirus.
“Looking beyond the pandemic, when Capri does emerge it will not only have to fix the financial damage but also tackle issues with some of its brands — particularly Michael Kors,” he said. “Even before the crisis, performance was not where it should be because of a lack of clarity in ranges and brand messages.”
And Ralph Lauren must continue its turnaround efforts.
“Ralph Lauren cannot be blamed for the terrible numbers,” Saunders said. “However, as consumer preferences shift, the company needs to work harder to reinvent itself and to pivot into new channels and segments to secure growth.”
Ralph Lauren stock has fallen 44.3% for the year to date while Capri shares are down 60.6% for the period.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.19% has risen 3.6% for 2020 to date.