The Wall Street Journal has a major feature on the struggles at Ralph Lauren, whose profits are down 50% over the past two years while market value has fallen from $16 billion to $8 billion.
A new CEO has been appointed to help turn around the company, which will include closing stores and reducing discounts. It may seem odd then that the CEO Stefan Larsson, has previously headed inexpensive fast-fashion brands Old Navy and H&M.
Here are a few excerpts from the article:
Mr. Larsson, 41, is expected to unveil a new corporate strategy on Tuesday at a meeting for analysts. By his reckoning, the company has too many brands and retail stores. It is reliant on department stores, where shoppers are hooked on discounts. Its costs are bloated and its inventory system inefficient.
In an interview, he said the company will refocus on its core Ralph Lauren, Polo and Lauren labels. Fifty stores, or roughly 10% of the company’s retail footprint, mainly high-end shops, will be closed. And shipments to department stores will be reduced in the hopes that scarcity will translate into more full-price sales. Mr. Larsson also wants to slash six months from production times and strip out three layers of management.
Mr. Lauren remains the company’s chairman, chief creative officer and its single largest shareholder. He and entities controlled by his family have voting power of more than 82% of the common stock. He is one of the few designers of his generation to still play an active role in his company. And his company is one of the few design houses not to have been gobbled by a conglomerate.
The new CEO is even considering testing some ideas pioneered by online startups, such as creating a subscription service for shirts and ties and allowing shoppers to rent high-end tuxedos.