Ralph Lauren CEO Quits After Clash With Founder -- Update
February 02 2017 - 11:53AM
Dow Jones News
By Imani Moise
A dispute over creative control led Ralph Lauren Corp. Chief
Executive Stefan Larsson to leave the struggling luxury fashion
brand after less than two years a the helm.
Mr. Larsson, a 42-year-old fast-fashion executive tapped to work
alongside founder Ralph Lauren, said Thursday that the two men
agreed the business needed to evolve but disagreed over the
company's creative and customer-facing strategies.
"The board, Ralph and I have over the last month worked very
hard to find common ground," Mr. Larsson said on a conference call
Thursday with investors, calling his abrupt exit a mutual decision.
"However, we have found that we have different views on how to
evolve."
Mr. Lauren, 77, who is the company's biggest shareholder,
executive chairman and chief creative officer, didn't participate
in the call. In a press release, the founder said he was committed
to the business plan and would continue "to move our business and
iconic brand forward as we have done for the last 50 years."
Shares fell 11% to $77.42 Thursday morning, and are now down 30%
over the past year. The company reported another slide in quarterly
sales, as it closes stores, pulls back on discounts and jettisons
some of its smaller labels. Executives said turnaround efforts were
on track and promised smaller revenue declines next fiscal
year.
Until a few weeks ago, all had been going well, according to a
person familiar with the situation. Mr. Larsson had made strides
streamlining the supply chain, with the help of new executives he
had brought on board, and Mr. Lauren was supportive of the progress
he was making.
Then, Mr. Larsson told Mr. Lauren that in order for him to be
accountable for executing the business plan outlined in June,
called "The Way Forward," he would need control of the creative
side of the business, which was Mr. Lauren's domain, this person
continued.
In particular, Mr. Larsson argued that he needed the ability to
hire and fire creative talent, this person said. Mr. Lauren, who
has overseen the creative side of the business since he founded his
label in 1967, was unwilling to cede that control.
Tensions continued to bubble over the next few weeks, with the
two men disagreeing over how the design, marketing and creative
vision should evolve, another person said. The board met to discuss
the impasse in recent days, and directors backed Mr. Lauren, this
person continued.
Mr. Larsson will leave Ralp Lauren on May 1 and the company has
started a CEO search. Its finance chief, Jane Nielsen, will lead
the turnaround effort in the interim, the company said.
"Ralph is not interested in running the business day to day,"
said Ms. Nielsen.
Mr. Larsson took the helm in November 2015 amid sagging profit
at the American fashion house. His strategy has been to focus on
fewer brands and speed the company's supply chain. He has also
started to slash costs, cutting jobs and closing dozens of
stores.
He joined the company from Gap Inc.'s Old Navy, where he was
credited with helping revive sales at the casual apparel brand.
Previously, he spent 15 years at fast-fashion retailer Hennes &
Mauritz AB.
For the fiscal third quarter, Ralph Lauren reported a profit of
$82 million, or 98 cents a share, down from $131 million, or $1.54,
a year earlier. Revenue fell 12% to $1.71 billion.
Executives said Thursday they expected sales to decline by
midteens percentage for the fiscal year and to shrink by a mid
single-digit percentage next fiscal year.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
February 02, 2017 11:38 ET (16:38 GMT)
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