American designer Ralph Lauren, who built a fashion powerhouse on luxury designs inspired by country club chic, announced Tuesday he is stepping down as chief executive officer and named the head of Gap's populist Old Navy brand to the position.
Ralph Lauren, founded by 75-year-old Lauren in 1967, appointed Stefan Larsson, the global president of Gap’s Old Navy division, as CEO effective in November. Lauren will continue to serve as executive chairman and head its design team, the company said in a statement.
Lauren, who got his start designing neckties, plans to stay active at the company and Larsson will report to him.
“When they start designing things I can’t understand, I’ll quit,” Mr Lauren told the New York Times in an interview.
Ralph Lauren shares rose 3.79 per cent to $108 in trading after the bell. Gap shares fell 3 per cent to $29.30.
The company has been struggling to boost profits as a stronger dollar reduces the value of sales from overseas. Net revenue in its first quarter ended June 27 fell 5 per cent, mainly due to currency fluctuations.
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,” Mr 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. He cited the appointment of Grita Loebsack, a former vice president at Unilever, as CEO of Kering’s emerging brands, which include Stella McCartney and Gucci.
Larsson, 41, is credited with reviving sales at Old Navy, successfully implementing a model of offering trendy clothes at low prices.
Annual sales at the division rose 8 per cent in 2014 and became Gap’s biggest business. Sales for the division were $6.62 billion, or 40.3 per cent of Gap’s total.
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.
Larsson, a Swede who before joining Gap was global head of sales at Hennes & Mauritz, brings experience of managing a fast fashion business with a supply chains considered to be among the most efficient within the apparel industry.
His appointment would be a good fit for Ralph Lauren which is seeking to reorganize and centralize business units and brands, Mr Snyder said.
“If he comes from a place like H&M, he understands global supply chains and that’s one of the things that Ralph Lauren is trying to implement right now,” Snyder said. “It’s going to be very positive for them.”
Reuters
