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Ralph Lauren scraps Rugby as it posts higher than expected results

Ralph Lauren is axing diffusion brand Rugby Ralph Lauren and closing its 14 stores as it shifts its focus to the core Ralph Lauren brand.

The premium US brand said the preppy college wear range will be scrapped so it can focus its resources on “high growth, more scalable” opportunities. Its stores and ecommerce site will be closed by the end of the 2013 financial year.

The plans are expected to cost the company $20m to $30m in pre-tax charges in the second half of the year, with 75% recorded in the third quarter.

The news comes as the company announced better than expected results in its second quarter. Revenue fell 2.2% to $1.86bn (£1.2bn), which is a lower decline than expected, suggesting that demand for luxury brands has held up over the period.

Sales in its wholesale division were down by 8% on the same period last year to $915m following a “proactive reduction in shipments to certain European speciality stores” and currency fluctuations. The period was also affected by the discontinuation of American Living and the launch of Denim & Supply.

Meanwhile, retail sales rose by 5% to $901m from £861m in the previous year thanks to same store sales growth and an incremental contribution from new stores and ecommerce. The rise was negated by store closures in Greater China as part of a repositioning in the region. Consolidated sales rose by 3%.

The licensing business posted a 3% decline to $47m also due to the closure of American Living and some changes to its South American licensing agreements.

Ralph Lauren, chairman and chief executive, said: “We continue to make excellent progress on our long-term growth objectives as we invest along many dimensions, including new stores and e-commerce platforms and emerging merchandise categories and regions. Our clarity of vision and purpose has us focused on the most compelling opportunities that we believe will create significant shareholder value over the long term.”

Ralph Lauren has 385 directly owned stores, of which 107 of Ralph Lauren, 58 are Club Monaco, 206 are Polo factory stores and 14 are Rugby. It also has 488 concessions stores. With its licensing partners, it has a further 58 Ralph Lauren stores and 29 concessions plus an additional 64 Club Monaco shops.

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