Another legend walks off the catwalk. Ralph Lauren, an icon in the fashion industry, is stepping aside as CEO at the company he founded nearly 50 years ago, naming Old Navy President (GPS) Stefan Larsson to take his place. For his part the 76-year old Lauren says he isn’t retiring, but will instead stay on as chief creative officer and remain executive chairman.
Traders are liking the move at the eponymous brand, sending Ralph Lauren Corp. (RL) shares soaring. Yahoo Finance’s Mike Santoli says the move heralds the massive change coming to the industry.
“I think [Larsson’s hiring] says a lot about what's happened to the fashion apparel industry,” Santoli says in the attached video. Ralph Lauren started out as a premium brand even from the beginning, Santoli notes, but Lauren was never one to stay still. “He's ridden so many developments in this industry in terms of international licensing, he’s diversified away from the core Ralph Lauren brand - the Polo brand. And now turning to someone from Old Navy, a guy who used to also work at H&M - low cost, value-priced kind of mass market stuff - it is pretty telling in terms of what's now valued as part of the industry.”
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Lauren’s acknowledgment in turning to someone from a down-market brand in order to jumpstart growth at his company looks like the man who was once the face of American luxury is now eating a little crow. In fact it’s been said that Lauren would never relinquish full creative control of the company, ever - but a changing landscape, and a share price that’s been chopped in half this year, apparently has Lauren thinking change might be good in an evolving fashion landscape.
Santoli believes it’s a telling moment in the fashion business. “[The business is] definitely global, it's definitely a much more flexible model - it's not about somebody sitting in a room in New York or San Francisco or L.A. or Milan and saying, “this is what everybody must wear next season,” he notes. “It's really much more about listening to the market and being able to quickly adapt to what the market seems to want.“ In a sense, the gaining success of “fast fashion” brands like H&M, Forever 21, and Zara is leaving its mark, even at the high end.
As for Lauren, Santoli notes his sheer staying power and business acumen won’t be tarnished by the move to step aside. “I do think it's a definite testament to Ralph Lauren that he managed to stay as chief executive of this company [for so long]. A lot of others - even if their name is on the door - don't really run the company, and a successful one at that,” he says.
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