Ralph Lauren has announced that its president and CEO Stefan Larsson will leave the company on May 1st following several disagreements with the brand’s founder, Ralph Lauren, around its turnaround strategy.
The announcement was made as the company reported a poor set of results for the third quarter of 2016. Their revenues fell by 12% compared to the same time in 2015, causing their shares to fall by more than 11%. The company stated that it would continue to move forward with its long term strategy that was laid out by Stefan Larson in June 2016, and the company’s CFO Jane Nielsen will lead the execution of the iconic brand’s turnaround plan.
Speaking about the decision, founder of the company Ralph Lauren said “Stefan and I share a love and respect for the DNA of this great brand, and we both recognise the need to evolve. However, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business. After many conversations with one another, and our board of directors, we have agreed to part ways. I am grateful for what Stefan has contributed during his time with us, setting us in the right direction.”
The departure will be surprising to many people, at a time when the company is attempting to inject more excitement around its clothing and products to attract younger consumers and move away from its reliance on wholesale and heavy discounting.
Luca Solca, head of luxury goods at Exane BNP Paribas told BoF that “it seems that hybridising designer fashion with mass fashion DNA is more difficult than anticipated.” Larsson’s “Way Forward’ plan was outlined to address its problems in the business. According to the Financial Times, the plan involved the closure of 50 stores, the loss of 1000 jobs and a restructuring of the company to remove three lines of management. The plan also emphasised refocusing the attention of the brand to its core products.
There are some people however who are not surprised by the move. Neil Saunders, the MD of Global Data Retail, said “Ralph Lauren is a luxury brand and more niche, and Larsson’s background is from mass merchants like H&M and Old Navy, so it is a different style. I think that really, it comes down to a very different sense of direction as to where the company goes.” He continued by stating that the move “also demonstrates the founder’s continued dominance over the business. As much as Ralph Lauren should be respected for his significant achievements and his undeniable design talent, we are concerned by the orthodoxy of his leadership, under which questioning and fresh thinking are relatively rare. This, in our view, is not the way to reinvent a brand that has clearly lost its way.”
Larsson was appointed to his role in November 2015 as the first CEO that the company had appointed after its founder stepped down from the role. He was given the job of refreshing the American brand that had struggled to cope with new developments such as e-commerce, as well as the consequences of a business model heavily reliant on wholesale and heavy discounting. Larsson looked to streamline the business and help it transition towards a faster model that would be more popular with young shoppers by switching to the new “see now buy now” method back in September.
His appointment had initially been widely heralded given his impressive tenures at Old Navy and H&M. Ralph Lauren is scheduled to show its latest womenswear collection at New York Fashion Week, on February 15th.
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