• by Sarah Mahoney  @mahoney_sarah, June 8, 2016

While business has been bad at Ralph Lauren Corp. for some time, observers are hopeful that the sweeping overhaul it laid out for investors will restore the luxury brand to its former glory.

Introducing a plan it’s calling the Way Forward, it’s making big cuts, closing some 50 stores and laying off about 1,000 employees. It’s also paring back on its relationship with department stores, which it says has hurt sales by constantly marking items down. And perhaps most importantly, it says it intends to burnish its core brands, and re-ignite connections with luxury consumers.

While the restructuring will cost some $400 million, it says it expects it to result in annualized savings of between $180-220 million. But it’s expecting more bad news in the meantime, with sales in the first quarter of its fiscal year to fall at a mid-single digit rate, and sales declines in the low double digits expected for the full fiscal year.

“We will build on our strengths, refocusing on our core brands and instilling a financial discipline that is highly focused on return on investment,” says Stefan Larsson, president and CEO, in making the announcement. 

“We have a powerful, authentic brand with unique elasticity,” Larsson says, “and we will bring our company to a stronger place than ever before by connecting our brand voice more closely to consumers.”

While skeptics might dismiss all that as palaver meant to soothe Wall Street—the company has lost about half its value in recent years—others think the refocusing will pay off.

For one thing, consumers love it. “Ralph Lauren has always been in the top-10 of our Fashion Brand Index, and was No. 4 last year,” says Robert Passikoff, founder and president of Brand Keys, which tracks consumer loyalty. “And in 2015, it showed up for the first time on our Loyalty Leaders List, something that is generally rare for fashion brands and luxury brands.”

And it’s always ranked high—No. 3 last year—among the ranking of most patriotic brands. In a sense, he says, the markdowns and outlets have “only helped broaden the base of customers for them, making a very desirable brand more accessible to a wider group of customers.”

And others are hopeful that the new management team is heading in the right direction after a slide of several years. (Larsson joined the company by way of Old Navy and H&M back in November; founder Ralph Lauren continues as chairman.)

“We are increasingly confident that the new management team and its strategies will succeed in the long run,” writes Paul Swinland, an analyst who follows the company for Morningstar. “The focal point of the strategy and tactical moves is to strengthen the core brand and top three labels,” he says, which are responsible for most of its sales and profits. And despite the negative impact of too many sub-brands, “research presented at the analyst day has further assured us that the brand is not damaged.”

The company owns 493 directly operated stores, including 144 Ralph Lauren stores, 272 Polo factory stores, and 77 Club Monaco stores. In addition, it runs 583 concession shop locations around the world.