Ralph Lauren Corp. took several steps Monday to navigate the impacts of COVID-19.
Among the moves, Ralph Lauren, executive chairman and chief creative officer, will forego his entire salary for fiscal year 2021 in addition to his full fiscal year 2020 bonus. (Lauren’s salary and bonus last year were around $11 million). Patrice Louvet, chief executive officer and president, will reduce his salary by 50 percent during the crisis. All the other 140 members of the executive and global leadership team will reduce their salaries by 20 percent for the first quarter of fiscal 2021.
In addition, the company’s board will forego their quarterly cash compensation for the first quarter of fiscal 2021.
The company said that a portion of the compensation reductions will be contributed to its Employee Relief Fund, administered by the Emergency Assistance Foundation, to provide grants to employees facing special circumstances and financial hardships during this time. The majority of its previously disclosed $10 million donation by the Ralph Lauren Corporate Foundation has been placed into the company’s Employee Relief Fund.
Lauren’s store employees in North America have been compensated since store closures went into effect in mid-March and will continue to be paid in full through April 11. International store employees in regions where retail operations are required to remain closed have received similar compensation to date, as guided by local government regulations and authorities.
The company said that following this period, all of its store employees where retail operations are suspended, as well as employees whose jobs are not conducive to continued remote working, will be placed on unpaid temporary furlough until June 1. This includes the majority of its store employees and a portion of its corporate employees in North America, Europe and select other parts of the world.
These employees will continue to receive regular employee benefits, including health benefits and any government assistance for those eligible. International store employees in regions where retail operations remain closed will receive compensation as guided by local governments and authorities. “Our hope is to bring our employees back to work as soon as it is safe and practical,” said a spokeswoman. The date for store re-openings will be assessed on a location by location basis.
The spokeswoman declined to disclose how many corporate employees are impacted. These employees are from areas such as corporate facilities and creative services who support stores.
The company is also working to reassign some employees across other areas of the business, placing them in high-need functions as well as in its ongoing efforts to manufacture medical supplies, including masks and gowns, for donation.
As reported, the majority of Lauren’s retail stores in North America and Europe, as well as other parts of the world, remain temporarily closed due to the global pandemic. The company noted, “We will continue to assess our operations location by location, taking into account the guidance of local governments and global health organizations to determine when our operations can begin returning to business. We are encouraged by the improving situation in China and South Korea, where most of our retail stores have reopened and are applying lessons from the outbreaks in the region to effectively manage our operations globally.”
The company noted that its digital flagship businesses remain open and its fulfillment operations have also resumed following a brief closure period to enhance health and safety protocols in its distribution centers. This included extensive department cleaning, implementation of social distancing on-site and staggered work shifts and break schedules.
As far as supplier payments, the company said it will settle payment for finished goods and goods already in production. “Understanding that the scale of the ongoing slowdown of future orders can have a significant impact on our partners’ liquidity, we have a vendor payments program in place which enables suppliers to receive payments on a shortened time frame at favorable market rates,” the company said.
Over the long term, the company said it is committed to partnering with peers, nongovernmental organizations and governments to advocate and generate new sources of support and long-term job security for factory workers, while strengthening business in the countries in which it manufactures its products.
“The impact of COVID-19 on the world, on our industry and on our business is profound and wide-reaching,” said Lauren. “For more than 50 years, we have embraced the idea of timelessness — focusing on what lasts. It has defined not only our products but our business and our culture. It has helped guide our actions in both the best and the most challenging times. And as we face the implications of this global pandemic, it will remain our guiding principle — so that we will not only endure this crisis but thrive again for years to come.”
Louvet added, “We have a great responsibility to all of our stakeholders — our teams, our consumers, our investors, our partners and the communities who count on us — to ensure that every decision we make in this unprecedented global health crisis considers our ability to serve them over the long term.
“We have overcome many challenges over the last 53 years because the purpose and values of our company have guided us and enabled us to come out stronger on the other side. They are our compass in this moment, too, as we make tough decisions in the short term to position us for continued long-term strength — as a company, a leader in our industry and an employer to thousands of people around the world,” added Louvet.
As reported, the Ralph Lauren Corporate Foundation allocated $10 million for emergency relief, with the majority of those funds earmarked to assist company employees with urgent needs resulting from the global pandemic. The foundation, in partnership with the Council of Fashion Designers of America, is also allocating a portion of the relief funds to manufacture and donate 250,000 masks and 25,000 isolation gowns to workers on the front lines.
As noted, the company paused capital improvement projects and aligned inventory to anticipate future product demands.
As of March 30, 2019, Ralph Lauren directly operated 501 retail stores and 653 concession-based shop-within-shops, and its international licensing partners operated 108 Ralph Lauren stores, 39 Ralph Lauren concession shops and 139 Club Monaco stores and shops.
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