Ralph Lauren Corp has forecast a bigger-than-expected drop in fourth-quarter revenue, as the high-end apparel maker contends with new lockdowns in its major markets of Europe and Japan.

Many European governments put their economies back into lockdown late last year due to a spike in coronavirus cases, crimping sales to a major market for global luxury goods makers who were banking on a strong holiday shopping season to help ride out the hammering from the virus earlier in 2020.

The New York-based designer said it expects fourth-quarter fiscal 2021 revenue to fall by mid-to-high single digits, while analysts’ were expecting a 2.9 percent drop, according to IBES data from Refinitiv.

“Our current outlook could be negatively impacted if government-mandated lockdowns or restrictions are extended,” the company said.

Echoing luxury goods rivals, Asia was a bright spot for Ralph Lauren in the third quarter. Mainland China sales surged more than 40 percent.

Re-negotiating store rents

Ralph Lauren on Wednesday also said it would look to cut costs further for the fiscal year by consolidating its corporate offices and re-negotiating store rents.

The company has already announced plans to cut 15 percent of its global workforce by the end of this fiscal year.

Adjusted net income fell over 42 percent to $125 million, or $1.67 per share, in the third quarter ended Dec. 26, but beat analysts’ estimates of $1.63.

Ralph Lauren’s gross margin rose 320 basis points, as it, like other luxury goods companies such as Tapestry Inc and Capri Holdings Ltd, cut shipments to discount-prone department stores.

Ralph Lauren said it plans to reinstate its quarterly dividend in the first half of fiscal 2022.

Net revenue fell 18.2 percent to $1.43 billion, missing estimates of $1.47 billion.

Shares were down about 1 percent before the bell. — Reuters