The luxury apparel company, like many others in the consumer retail industry, has been badly impacted by the spread of the COVID-19 coronavirus around the world.
In mid-March, as COVID-19's infection rate and death toll started rising alarmingly in the USA, Ralph Lauren announced temporary store closures across North America from March 18 until April 1. However, consumers can continue to shop from its digital commerce sites and mobile apps.
Up until that period, the company had already closed some stores across Asia and Europe. All travel had been frozen, deep cleaning was deployed in all work locations, and staggered work schedules were implemented at its distribution centers. Ralph Lauren estimated net revenue to be up for its fiscal 2020 fourth quarter, but that guidance excludes some restructuring-related and other charges.
In a further update on March 31, the company announced that it will commit $10 million to help its teams, partners, and communities that have been impacted by COVID-19. A medical expert from WorldClinic, Inc was also enlisted to guide decision-making during these challenging times.
Distribution center operations were slated to reopen April 1, and normal shipping of orders will likely resume. However, as the situation remains dynamic, the company may take on additional measures as and when deemed appropriate.
Investors should take comfort in the fact that Ralph Lauren has a strong balance sheet with $1.9 billion in cash and short-term investments as of the end of the third quarter of fiscal-year 2020, an investment-grade credit rating, and strong operating cash flow generation.
The company has also taken other measures to cope with the pandemic, including drawing down on its $475 million global credit facility to boost its cash reserves, halting share repurchases, and halting all noncritical capital expenditures and real estate projects.