Clothing company Ralph Lauren Inc. has been in the news almost all week, with news from its first analyst meeting that it’s cutting its staff, hiring new executives and considering other changes.
Lisa Fickensher of the New York Post had the news:
Laying off 1,000 employees and closing about 50 full-price stores were necessary, Larsson told analysts on Tuesday at the company’s first investor day, because the iconic fashion house had become “undisciplined” in the way it had expanded its stores and brands, of which there are a dozen.
Over the past six months, Larsson developed a strategic plan that involves reducing the time it takes to develop new fashions from 15 months to nine; partnering with wholesale distributors; selling more full-price merchandise; and focusing more on its cash-cow brands: Ralph Lauren, Polo and Lauren, which account for the majority of the company’s sales.
That means such brands as Chaps and RLX will need to step up their game.
“We are keeping all the brands,” Larsson told The Post, “but moving more resources to the core brands.”
Larsson has the full blessings of his boss, designer Ralph Lauren, who said he is “entrusting [his] baby with him” and told the Wall Street crowd that he is “proud” of Larsson.
Joann S. Lublin and Suzanne Kapner of The Wall Street Journal report that the company is hiring a new CFO from rival Coach:
Shortly after unveiling a new strategy for Ralph Lauren, Chief Executive Stefan Larsson is expected to announce on Thursday several changes to his leadership team, according to one of these people.
Among the changes: Coach Chief Financial Officer Jane Hamilton Nielsen will be named to the same role at Ralph Lauren, according to the people. Ms. Nielsen, who will start the new job on Sept. 6, will have oversight of procurement, store operations and information technology, one of the people said.
Late Wednesday, Coach announced that Ms. Nielsen was leaving the company “to pursue another opportunity” and that it had launched a search for a permanent successor. She will remain at the handbag and accessories company into August.
At Ralph Lauren, she will replace Robert Madore, who has been CFO since April 2015. Mr. Madore is expected to remain with the company until Sept. 30, one of the people said.
The moves are the latest by Mr. Larsson to clean house and set a new course for the company after assuming his duties in November. He is the first outsider to hold the role of CEO, a position that Ralph Lauren, the company’s founder, had held for all of its 49-year-history. Mr. Lauren is chairman, chief creative officer and the company’s single largest shareholder.
Sheena Butler-Young of Footwear News examined analyst response to the news:
“We were impressed by the extensive analysis undertaken at Ralph Lauren, as well as the comprehensive plan laid out by Larsson and his team. We were particularly impressed and encouraged by the support exhibited by Lauren for Larsson,” Nomura Securities Inc. analyst Robert Drbul wrote Tuesday. “There is clearly a lot of change under way and ahead for this global brand and company, which retains significant brand equity and a very strong financial position … While we believe many of these initiatives are necessary, we are maintaining our neutral rating on the shares given the long road ahead.”
Other key aspects of the CEO’s strategy plan include cutting production lead times from 15 months to nine months while reducing excess inventory.
“We believe Ralph Lauren has growth opportunities overseas, especially in China where the brand is extremely underpenetrated, but this will take time to bear fruit as the company undergoes the ‘Way Forward’ strategic restructuring under CEO Stefan Larsson,” Cowen and Co. analyst John Kernan wrote Tuesday. “Operational improvements from the new strategy are expected to produce sales and margin expansion longer term, but near-term transitional reset will occur, weighing on sales and margins.”
