Ralph Lauren hands CEO role to Old Navy exec

30 Sep 2015 | Author: | No comments yet »

Gap’s Loss of Old Navy Chief Brings New Storm to Retailer Adrift.

Shares of Ralph Lauren (RL) soared in in Wednesday morning trading, the day after the fashion industry icon announced he was giving up the CEO title at the company that bears his name.American designer Ralph Lauren, who built a fashion powerhouse on luxury designs inspired by country club chic, announced Tuesday he is stepping down as chief executive officer and named the head of Gap Inc.’s populist Old Navy brand to the position. He’ll remain the chief creative officer and executive chairman while Old Navy’s Stefan Larsson takes the helm. “My job is to think always about the future of our company and how to move it forward,” Lauren said in a statement Tuesday. “Stefan Larsson is exceptionally talented, and he will bring our company a fresh and exciting global perspective. “On a brilliantly sunny summer afternoon, the kind of day people dream about to get them through the dreary frigid winter, we’re in a Manhattan office building trying to figure out where Ralph Lauren will sit,” the piece begins. “Actually, we’re in Lauren’s small, all-white office on Madison Avenue, and with two large, lovely chairs and a big cushy couch laid out before us, the answer is far from obvious. Investors appeared to signal approval of Tuesday’s announcement that Stefan Larsson, most recently the global president of Gap’sOld Navy division, will succeed Lauren, 75, as CEO in November.

Lauren, is there a particular place you’d like to sit?’ His response: ‘Wherever the light makes me look best.’” The article adds: “That’s Ralph. Gap’s stock tumbled as much as 8.3 percent to $27.72 on Wednesday after Larsson’s departure was announced. “Old Navy is the concept that’s been holding up the underperformance of the other concepts, and Stefan was the captain of the ship,” said Simeon Siegel, an analyst at Nomura Securities. “It’s easy to look at that and say there’s now a big hole in the only thing that was working at the Gap.” Jill Stanton, executive vice president of global product at Old Navy, will become interim head of the division on Oct. 2. Odeon Capital analyst Rick Snyder said the company had grown to a size where it needed more “systems and controls.” The change in CEO “is just a natural progression,” Snyder said. That brings a degree of continuity to the chain, but Peck declined to say when he would name a permanent replacement. “Stefan is a leader, and we appreciate his contribution, but we have a team that built the operating model, and we’ve got momentum,” Peck said. “It takes great teams working together for these businesses to run well.” The shake-up comes as Gap heads into the holiday season, putting additional pressure on a company that has seen uneven results. Milton Pedraza, a fashion industry analyst at the Luxury Institute, said Larsson’s appointment follows a trend of luxury brands hiring leaders from mass-market companies in recent months.

He cited the appointment of Grita Loebsack, a former vice president at Unilever Plc, as CEO of Kering’s emerging brands, which include Stella McCartney and Gucci. Peck, who was Gap’s president of growth and innovation before ascending to the top job, has shuttered underperforming locations and reshuffled his leadership team in a bid to reinvigorate the company. Lauren’s fashion empire includes some 25 brands including Polo, Club Monaco and Denim & Supply, and the company makes clothing, accessories, furniture, home decor items and footwear under its labels. He didn’t grow up sketching clothes, and he didn’t go to fashion school. “I don’t know, from the time I was 12 years old I looked cool,” he explains. “My father was a painter, so maybe I got some sense of color from him.

Larsson, a Swede who before joining Gap was global head of sales at Hennes & Mauritz, brings experience of managing a fast fashion business with a supply chains considered to be among the most efficient within the apparel industry. “If he comes from a place like H&M, he understands global supply chains and that’s one of the things that Ralph Lauren is trying to implement right now,” Snyder said. “It’s going to be very positive for them.” Despite the aura of Anglo-Saxon elitism around his company, Lauren was born Ralph Lifshitz in the Bronx in 1939. I do know that whatever I had on, other kids would say, ‘Hey, where’d you get that?’ “ Lauren saw that his suit business was stagnating. “I wanted something not Italian-looking, just more sophisticated.” He envisioned elegant hand-sewn garments cut from fine fabrics, then shaped closer to the body. Lauren wanted a tasteful look for someone with a well-toned body who isn’t shy about showing it off–himself, in other words. “I’ve tried to do things honorably in my business. Peck said he doesn’t expect Larsson’s departure to delay the progress the Gap and Banana Republic brands have made in implementing Old Navy’s operating model. Lauren’s designs drew inspiration from elite and exotic realms including East Coast prepsters, the Wild West, colonists on African safari and czarist Russia.

I don’t downgrade children,” he says, getting in a parting dig at Calvin Klein. “I try to give people a clean, aspirational quality, with no bullshit. His bright colors and bold clothing became staples for some New York gangs, and rappers such as Kanye West and Lil Wayne have mentioned Lauren and his designs in their rhymes.

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