Shares of clothing company Ralph Lauren fell by 10 percent on Thursday after it announced that its CEO would be leaving the company after slightly more than a year in the position due to conflicts with the company founder.
Mike Snider of USA Today had the news:
Stefan Larsson, the former global president of Old Navy, in November 2015 took over as CEO for Ralph Lauren, who remained as executive chairman and chief creative officer. But the company said a difference of opinion with Lauren himself over the company’s direction will result in Larsson leaving May 1.
Chief Financial Officer Jane Nielsen will step in during a CEO search, the company said. “Stefan and I share a love and respect for the DNA of this great brand, and we both recognize the need to evolve,” Lauren said in a statement. “However, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business. After many conversations with one another, and our Board of Directors, we have agreed to part ways. ”
Last year, the company began a refocusing plan to enhance the brand. “That plan is on track — I am proud of the progress the whole team has made and I am committed to ensuring its uninterrupted execution,” Larsson said in a statement. “Ralph will always be an inspiration to me, and I am grateful to have had this experience.”
Ralph Lauren shares were down more than 11% Thursday to dip to $77.39. Shares had been down about 6% over the past six months.
Lauren Gensler of Forbes writes that Larsson and Lauren had conflicting views about the company strategy:
Larsson, a veteran of Old Navy and H&M who took the top job from Lauren himself in October 2015, has agreed to leave the American retail empire on May 1. He will receive $10 million in severance over the next two years.
“Stefan and I share a love and respect for the DNA of this great brand, and we both recognize the need to evolve,” said Ralph Lauren, 77, who Forbes estimates is worth $5.6 billion. “However, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business. After many conversations with one another, and our Board of Directors, we have agreed to part ways.”
Shares, which have slid 22% over the past 12 months, fell another 11% to $77.69 in morning trading.
Ralph Lauren also reported third quarter earnings on Thursday. Net income slid to $82 million, or 98 cents per share, from $131 million, or $1.54 per share, a year earlier. Excluding certain items, earnings came in at $1.86 per share, which beat the $1.64 that Wall Street analysts were looking for.
Revenue fell 12% to $1.71 billion during its holiday quarter, which was in line with analyst estimates.
Vicki M. Young of Women’s Wear Daily noted Larsson said on a conference call that the company can turn around:
During the morning conference call to Wall Street analysts, Larsson said he remained confident about the ability of the management team to “drive the company back to high-performance.”
Larsson said that as he begins his transition, the company’s cfo will “take charge of the execution of our plan. Jane and I have been copilots since she joined and will work closely together to make this transition successful.”
Nielsen said on the call that the company’s improved discipline in the assortment creation is allowing “us to buy closer to market and reduce early commitments…. As a result, we are by far much more informed, which will significantly improve our ability to manage inventory to demand. The initial feedback from our wholesale customers that have seen our product has been very positive.”
She said that the company has begun rebalancing its distribution and its off-price wholesale business, as well as looking at quality of sales initiatives in its direct-to-consumer e-commerce business.