Polo Ralph Lauren is trying to restore its iconic status as it has endured some difficult fiscal times. One thing that won’t help its Way Forward Plan−which was launched last June to deliver sustainable, profitable sales growth and long-term value creation for shareholders−is the recent resignation of CEO Stefan Larsson less than two years after he took the helm.
Is the company headed toward renewed brand loyalty?
Larsson announced his resignation at the company’s Feb. 2 third-quarter earnings call. He will remain with the company until May and Jane Nielsen will serve as interim CEO while a search for Larsson’s successor continues.
“Ralph and I both love and respect to DNA of this great brand and we recognize the need to evolve,” Larsson said during the call. “However, we have found that we have different views on how to evolve the creative and consumer facing parts of the business. I want everyone on the call, shareholders and analysts, to know that the Board, Ralph and I have, over the last month, worked very hard to find common ground. After many serious conversations with one another, we mutually agree to part ways.”
Larsson said he’s very proud of the progress made against the Way Forward Plan.
“The Way Forward Plan is about refocusing on the core of what made us iconic in evolving that core for today, to strengthen the brand, and return the company to long-term profitable growth,” Larsson said. “Both Ralph and the Board are committed to continue the execution of our plan. We are on track to deliver on our commitments. A key driver to this is our strength and management team and their ability to drive high quality execution. Together we have already created a strong foundation, one that puts us in a position to continue to deliver.”
Is Polo Ralph Lauren headed in the right direction and what impact will Larsson’s resignation have?
Loyalty360 asked Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, for his thoughts.
“Ralph Lauren seems to be taking the right steps to turn around the brand through its Way Forward Plan—focusing on consumer insights, streamlined product logistics, and store reduction,” Magliocca explained. “But, it’s behind most of its competitors on those initiatives and it has some catching up to do. More importantly, it’s struggling to find an identity that resonates with today’s customer, making many challenges a difficult uphill battle. Its situation is similar to Abercrombie & Fitch, another iconic American brand with difficulties. Similarly, a change in leadership can bring fresh, evolved ideas to re-energize a stalwart in the American apparel industry.”
The company re-focused and evolved its iconic core product offering for Fall 2017:
Continued to drive quality of sales up by moderating discount levels across retail and wholesale
Lowered inventory levels by 23 percent to better match demand
Reduced SKUs for spring 2017 by more than 20 percent
Significantly improved the ability to match supply to demand by reducing pre-market commitments to 15 percent of inventory buys for fall 2017 from 60 percent for fall 2016
Platformed all core fabrics, accounting for about 50 percent of unit volume
Remained on track to get halfway to the goal of a nine-month lead time by the end of this fiscal year and 90 percent there by the end of next fiscal year
Optimized sales fleet by closing another 12 underperforming stores
Hired a new creative director for Lauren
Launched Ralph Lauren Icons marketing campaign.
Third-quarter net revenue fell 12 percent to $1.7 billion.