Ralph Lauren hires Old Navy head to replace him as CEO

30 Sep 2015 | Author: | No comments yet »

Ralph Lauren steps down as CEO of fashion empire.

Ralph Lauren Corp, founded by 75-year-old Lauren in 1967, appointed Larsson, the global president of Gap’s Old Navy division, as CEO effective in November.

Ralph Lauren, the quintessential American designer who built a fashion empire based on sweeping fantasies of country-club prep and the Wild West, is stepping down from his post as chief executive of the company. Larsson, who held multiple jobs at H&M for 15 years, will report to Lauren. “My job is to think always about the future of our company and how to move it forward,” said Lauren, who turns 76 next month. “Stefan Larsson is exceptionally talented, and he will bring our company a fresh and exciting global perspective.” The company attributed this to the impact of the stronger dollar, which hurts U.S. companies that do a lot of business overseas. Taking the helm at Ralph Lauren is Stefan Larsson, a former H&M executive and president of Old Navy, Gap’s down-market brand, which he is credited with reviving. 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.

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. Earnings at the upscale apparel company, known for its Polo brand, have been pressured by a strong dollar and intense competition in the luxury space.

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. In an interview with Lauren in his luxurious wood-paneled office in Midtown Manhattan, the iconic 75-year-old designer emphasized that he’s not slowing down but sees Larsson, 41, as a partner as the company spearheads future sales growth. “I am here, and I am not leaving,” said Lauren. “Stefan is coming to the company because I really believe he’s going to be an interesting addition.” Asked whether he chose Larsson because of his success in fast fashion, Lauren acknowledged he was a good businessman but more importantly they shared a common vision. Lauren said that he was looking for a proper CEO and the two connected over dinner and then had subsequent meetings. “He understands what dreams are,” Lauren said. “In this business, it’s about dreams because you are dreaming ahead and you’re about progress and change and newness.” Designer Ralph Lauren, right, poses in his office with Stefan Larsson, global brand president for Old Navy, Tuesday, Sept. 29, 2015, in New York. The Ralph Lauren company has more than 300 Polo Ralph stores across the world, including brands like Ralph Lauren Childrenswear, Lauren by Ralph Lauren, American Living, Chaps and Club Monaco. 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.

Lauren, who started the company 48 years ago selling ties, has built a vast empire that includes women’s, men’s and children’s clothing, home decor, accessories and now restaurants. Lauren, 75, said he intended to remain active at the company he founded almost a half-century ago in roles as executive chairman and chief creative officer. 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. Larsson at his side at his offices on Madison Avenue, adorned with the rustic paraphernalia — a tin toy robot, cowboy boots — that Ralph Lauren’s stores have come to be known for. During the interview, Lauren and Larsson said they are looking for more growth opportunities in China and Europe as well as pushing for more growth in the e-commerce business.

Larsson’s appointment is the start of a succession at one of America’s best-known fashion houses, which, together with the likes of Donna Karan and Calvin Klein, helped put American style on the map. Most successful fashion brands are stories of two partners — Yves Saint Laurent and Pierre Bergé, Calvin Klein and Barry Schwartz, Valentino and Giancarlo Giammetti, even Giorgio Armani and Sergio Galeotti. (Mr. Meanwhile, Gap Inc., based in San Francisco, said Larsson will step down on October 2nd and Jill Stanton would lead Old Navy in the interim while it searches for a permanent replacement.

Gap noted in a release that Stanton is a “proven industry veteran” with more than 25 years retail experience, including almost 14 years as vice president and general manager of global apparel at Nike. Farah was succeeded by Jackwyn Nemerov, another respected executive whose tenure nevertheless coincided with sluggish sales, despite steep promotions. Ralph Lauren’s shares slipped 83 cents to close at $104.05, but rose nearly 4%, or $4.07 to $108.12 in after-hours trading when the news was announced.

Larsson the title of chief executive indicates that he, at least, feels it is still important to separate the roles and have a professional manager running the brand and reassuring Wall Street. Lauren’s son, David, is on the board of directors and heads the company’s advertising and marketing divisions. “Ralph Lauren has been a poster child of stability and has historically grown talent from within,” said William Susman, managing director at Threadstone Partners, an advisory firm that focuses on the retail sector. “Bringing in Stefan must be a reflection of the need for new thinking.” Ralph Lauren would benefit from change, experts say. Lauren’s most recent show at New York Fashion Week was an ode to Americans in Biarritz, with his signature perfect leather tailoring, blue and white evening gowns, and stars in the front row (Jessica Chastain, Julianne Moore). Larsson’s success, experts say, has been built on fostering a level of attention to design that sellers of low-end, family-oriented apparel had previously not put into their wares. Now, on top of its men’s and women’s clothing lines, Ralph Lauren has a foothold, through licensing, in everything from cosmetics to leather goods, to footwear and eyeglass frames.

Larsson will also help Ralph Lauren bolster its international presence, which has become critical as the United States market has become saturated, Mr. But Stefan has a great quality that made me say: ‘You can be my new C.E.O.,’ ” he said. “He’s unique as a man, a man who’s capable of building businesses and growing companies, but at the same time he’s sensitive to people’s feelings.”

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