Ralph Lauren won’t let his polo empire go as sales falter
Founder’s reputation at stake as company faces strong competition from new brands
NEW YORK— The first time fashion designer Ralph Lauren tried sharing control of his retail empire ended badly. The new CEO left after only 18 months. Creative clashes, they both acknowledged.
Now the 77-year-old Lauren is making another bet on an outsider to help revitalize the company he founded a half-century ago. Patrice Louvet, a former Procter & Gamble Co. veteran, started as CEO in July amid promises of an amicable working arrangement.
But Lauren, who often refers to the company as “my baby,” isn’t going anywhere. He remains heavily involved in running the business, working at the Manhattan headquarters about four days a week, people familiar with the matter said. And he’s made sure that he retains control over the creative side of the company. Louvet’s contract contains a provision, largely unnoticed, that ties his hands. Lauren, who remains chief creative director, retains a final say in brand and creative decisions, as well as in hiring and firing senior executives in design and marketing areas, the contract states. The previous CEO, Stefan Larsson, 43, who left in May, had no such restraint.
All this raises questions for a company that is struggling to reverse a three-year slump in same-store sales in a tumultuous retail environment. Retail experts say Ralph Lauren could use fresh thinking as it tries to revitalize a brand that has lost cachet. Even signature Polo Ralph Lauren polo shirts aren’t selling like they used to, losing business to hipper brands such as Vineyard Vines.
“He’s obviously someone with an iconic view and what he’s achieved is incredible,” said Simeon Siegel, an analyst at Instinet LLC. “That said, retail has evolved and the company has not responded to that as fast as its peers. That’s the issue.”
This year, Ralph Lauren dropped off a ranking of the 100 best global brands for the first time since 2011, according to consultant Interbrand, which looks at things like financial return and customer loyalty. The company has been closing retail locations, including the flagship Polo store on Fifth Avenue, and its stock has dropped by more than half from its peak in 2013. The shares, which-declined 16 per cent in the past year, fell as much as 2.3 per cent on Thursday.
“The combination of Ralph and Patrice’s experience lends itself to a powerful partnership,” the company said in a statement. “Together with the company’s leadership team, they are already evolving how our iconic brand is experienced and expressed, and we are encouraged by the early progress.”
Lauren’s longevity in retail fashion is unusual. He was 23 when he had his first big success. His old-money styles have been followed and copied worldwide, and today he’s worth almost $6 billion, according to the Bloomberg Billionaires Index.
But the company, like other retailers, has been hit hard by the shift to online shopping from brick-andmortar locations, forcing department stores to discount products. Ralph Lauren relies on retailers such as T.J. Maxx and Macy’s Inc. for more than 40 per cent of its sales.
Meanwhile, its product styling and marketing remain largely stuck in the past, retail analysts say. Ralph Lauren, which has historically succeeded on the back of its founder’s vision, continues to use him as a primary face of his company.
There are signs that Ralph Lauren is trying to win back customers and create hype by bringing back its vintage pieces, for example. Its latest quarterly results showed it was making headway in getting customers to pay full price.
“A lot of his reputation is at stake on this,” Neil Saunders, managing director of Global Data Retail, said of Lauren. “If this goes wrong again, it will tie back to him and investors will start to question whether he’s actually more of a liability or an asset.”