Dive Brief:

• Ralph Lauren on Tuesday reported that fourth quarter revenue fell 1.5% to $1.5 billion from $1.53 billion in the year-ago quarter, with foreign currency hurting revenue growth by some 270 basis points. Revenue rose 1.2% in constant currency, according to a company press release.

• In North America year over year, revenue in the quarter fell 7% to $708 million, with wholesale revenue in the region down 10%. Comp sales rose 1% overall, and fell 4% in North America with digital comps rising 6% and brick-and-mortar comps falling 7% in the region, which executives on a conference call Tuesday said was due to slower traffic and lower tourist spending.

• Overall gross profit reached $901 million and gross margin was 59.9%, the company also said. Operating income in the quarter reached $28 million as net income fell to $32 million from $41 million in the year-ago quarter.

Dive Insight:

Ralph Lauren executives sounded pleased Tuesday morning with the clear signs of progress in its turnaround extending beyond the busy fourth quarter. 

The company continues to purposefully sacrifice some wholesale revenue in order to pull back from off-price and department store channels, and, particularly in off price, that will continue, according to CFO Jane Nielsen. The company sees particular runway in China, where revenue rose 30% on the Mainland. But store openings have slowed amid traffic slips as the company keeps its eye on profitability, CEO Patrice Louvet said.

The half century-old brand also clearly recognizes the importance of bringing on new customers from younger generations, and Louvet noted its 15 million Instagram followers across its brands as evidence that those consumers are coming on board. He also said that limited edition collections and tie-ups like its partnership with European skate brand Palace is resonating with those shoppers.

That's showing up in outside research, too, including from GlobalData Retail. "Our data show brand affinity to Ralph Lauren continues to rise and that brand recall and awareness remain elevated compared to a year ago," GlobalData Retail Managing Director Neil Saunders said in comments emailed to Retail Dive. "The uplift is pronounced among younger shoppers."

But the company may need to be even bolder if it's to really gain a meaningful cross-generational following, especially at home, where middle-income shoppers are starting to feel some financial squeeze, he also warned, adding that the brand's offer must be elevated in order to win over their dollars. "Unfortunately, this quarter the conversion of consumers interested in the brand to customers buying the brand fell sharply, especially in the United States," he said. "As much as there have been improvements, we believe that Ralph Lauren has much further to go in creating compelling assortments and 'must have' products. Current ranges remain a bit 'hit and miss' and are not good enough to maximize conversion by compelling customers to buy. This is particularly the case in North America where competition is fierce."

That will require "more creativity and excitement," of the kind found in partnerships at Target, according to Saunders. "We note, for example, the upcoming limited collaboration between Vineyard Vines and Target," he said. "While this vehicle may not have been entirely appropriate for Ralph Lauren, it is an example of the type of 'out of the box' thinking that Ralph Lauren does not always employ."