News Story about Layoffs and Hard Times:
Monday February 1 4:52 PM ET
Polo Ralph Lauren May Cut 200 Jobs
By RACHEL BECK AP Business Writer
NEW YORK (AP) - Polo Ralph Lauren Corp. (NYSE:RL - news) is expected to announce Tuesday that it will cut more than 200 jobs and take other cost-cutting measures as part of a plan to slash expenses and boost profits, according to people close to the company.
The reorganization could also include closing of some of its New York showrooms, where the fashion house displays its wears for potential buyers, said the sources, who spoke on condition of anonymity.
The company had 5,800 workers at the end of 1998 and the elimination of 200 jobs would affect 3.4 percent of that work force.
The cutbacks were expected to be announced Tuesday, when Polo releases financial results for the third quarter of its fiscal year, the sources said. The company declined to comment.
It's been a tough year for Polo, one of the best-known brands in the world of fashion today. Its merchandise is found in the most upscale country clubs and corporate boardrooms as well as on the streets of urban centers around the world.
While expenses have risen, sales and profits have slumped. Polo has been hit by a sharp sales decline at the nation's outlet centers, where it operates about 89 stores. In addition, business at department stores, where Polo sells much of its merchandise, has been less than stellar.
''Outlet sales are slowing. Men's wear sales are slowing. Women's sales are slowing,'' said Jennifer Secallus, an analyst at Atlantis Research in Parsippany, N.J. ''Polo is a great brand, but I don't think the growth is really there for them.''
After reporting lower-than-expected second-quarter earnings in November, the New York-based Polo said it would implement a cost-cutting program designed to generate $10 million to $15 million in savings in its fiscal year 2000, which begins April 1999.
Analysts expect Polo to earn about 25 cents a share in its fiscal third quarter, compared with 29 cents a year ago.
Polo's troubles have comes as somewhat of a surprise to Wall Street, which expected its financial health to largely go the way of its fashions - classic designs that weathered ever-changing trends.
But Polo never became the darling of investors - like it has been in the fashion world. Like other Seventh Avenue giants - Donna Karan and Guess - its performance fell short of investors' expectations.
The company went public in June 1997 for $26 a share. It fell 311/4 cents Monday to close at $24.561/4 a share.
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