Ralph Lauren’s CEO quits after less than two years at the helm, citing differences with founder

Stefan Larsson was hired to reorganise the luxury brand, but with no improvement in sales and reports of low company morale, he is stepping down

PUBLISHED : Friday, 03 February, 2017, 12:02pm
UPDATED : Friday, 03 February, 2017, 12:02pm

Ralph Lauren’s chief executive Stefan Larsson, hired over a year ago to turn the company around, will step down following differences with founder Ralph Lauren over the direction of the luxury brand.

Larsson, who was credited with reviving sales at Gap’s Old Navy brand and has also worked at H&M, was hired for his experience in managing fast-fashion businesses with efficient supply chains.

At the time, his appointment was considered a good fit for Ralph Lauren, which was seeking to reorganise and centralise business units and brands.

In his short tenure, Larsson embarked on a major overhaul of the company, calling it the “Way Forward Plan”, which included shutting down underperforming stores, cutting back on inventory and shedding about 1,000 jobs. But things soon went sour.

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Larsson’s cost-cutting plan, which involved replacing incumbents with his own people, hit morale at the 50-year-old company, a fashion industry source said, citing people familiar with the matter.

Differences stemmed from the direction in which to take the company’s product, marketing and shopping experience, said Larsson.

Lauren, who is also the chairman and chief creative officer of the company, said they had different views on how to evolve the creative and consumer-facing parts of the business.

The company is yet to realise the benefits of the restructuring programme, with revenue falling for the seventh straight quarter in its latest earnings report on Thursday.

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The company’s shares have lost more than a fifth of their value since Larsson succeeded Lauren in November 2015.

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Ralph Lauren said a search was being conducted for a new chief executive. Until then, chief financial officer Jane Nielsen will head the company’s restructuring programme.

Lauren’s son David Lauren, who was appointed vice-chairman in October, is a likely CEO candidate, the source said.

Larsson, who will stay on until May 1, will get US$10 million in severance pay over two years and his bonus for the company’s 2017 fiscal year as part of his separation agreement.

He is also entitled to a bonus based on his performance until he exits the company.

The company was recently in the spotlight for dressing Melania Trump for Donald Trump’s presidential inauguration, leading to calls by some on Twitter to boycott the brand using the hashtag #boycottralphlauren.

Several top designers, including Tom Ford and Marc Jacobs, publicly declined to dress the first lady for the inauguration.